Application Seeking Interim Relief Can Be Entertained Even If Contract Containing Arbitration Clause Is Insufficiently Stamped: Bombay HC (FB) [Read Judgment]

The full bench of the High Court also held that, in view of Section 11 (6A) of the Arbitration and Conciliation Act, 1996, it would not be necessary for the Court before considering and passing final orders on an application under Section 11(6) of the Act to await the adjudication by the stamp authorities, in a case where the document objected to, is not adequately stamped.

The Chief Justice Naresh H. Patil, authored the judgment for the bench also comprising of Justice R. D. Dhanuka and Justice G. S. Kulkarni.

The bench said that under the scheme of the Arbitration and Conciliation Act, an arbitration clause is severable from other clauses of the contract and an arbitration agreement is not required to be stamped or required to be registered. The court also added that the court in considering a relief under Section 9 is acting upon the arbitration agreement only, and not the main contract. After taking note of various pronouncements on the scope and ambit of Section 9, the bench observed:

"If we accept the argument advanced on behalf of the respondents that the court shall wait till the document is stamped and not to act upon the document for granting relief under Section 9, may lead to severe consequences which may cause irreparable damage, prejudice to the cause brought before the court. The issue relating to stamping of the document could further be dragged on before the revenue authority, which may take considerable time for its final decision or conclusion and by that time the party may suffer damage and would be without any remedy in respect of seeking protection under Section 9."

On the issue whether, in view of Section 11 (6A) of the Arbitration and Conciliation Act, 1996, inserted by Arbitration and Conciliation (Amendment) Act, 2016, it would be necessary for the Court before considering and passing final orders on an application under Section 11(6) of the Act to await the adjudication by the stamp authorities, in a case where the document objected to, is not adequately stamped, the bench observed thus:

"If an application under Section 11 or under Section 9 is required to be postponed till the order of adjudication is passed by the learned Collector of Stamps with such uncertainty of the time it would take to decide and the hierarchy of remedies after such order, as it would be subject to an appeal or a revision, as the case may be and till such time no order either under Section 11 of under Section 9 should be passed, then the Legislature would not have provided for speedy disposal of the applications under Section 11 or under Section 9 of the Act by inserting sub-Section (13) in Section 11 and sub-Section (2) in Section 9 of the Act."

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