Calcutta High Court on whether stampability of agreement relevant for appointment of arbitrator where the existence of arbitration admitted

The High Court of Calcutta (“Court”) in the case of Shri Bhagwandas Jain v. CTS Industries Limited and Anr (AP 453 of 2018) has held that the inadequate stamping of an instrument would not be a bar in appointing an arbitrator under Section 11 of the Arbitration Act, where the existence of arbitration agreement is not in dispute. Facts The arbitration agreement had a named arbitrator who had withdrawn himself from the arbitration proceedings. The plaintiff prayed for appointing a new independent arbitrator for the pending arbitration proceedings. The defendants however contested the same as the disputes between the parties related to an agreement for sale of an immovable property situate in Jharkhand which is not registered or duly stamped. They argued that the Court should first impound the agreement for sale and the petitioner should pay the appropriate stamp duty and penalty and only then could the petitioners enforce the arbitration agreement contained in the agreement. Courts Observation and Ruling The High Court of Calcutta upheld the arguments of the plaintiff and noted as follows “I have considered the facts of the case, as well as the arguments advanced by the learned Counsel appearing for the respective parties. The only ground of objection urged by the respondents to the maintainability of this application is based on the decision of the Supreme Court in the case of SMS Tea Private Limited (supra). The decision of the Supreme Court in the case of SMS Tea Private Limited (supra) was rendered in an application under Section 11(6) of the Act of 1996 where in order to ascertain the existence of the arbitration agreement, the Court was required to look into the agreement for lease which was not duly registered nor sufficiently stamped. Thus, when the lease deed itself was not sufficiently stamped, the Court would not look into the same to ascertain the existence of the arbitration agreement. However, in the present case, the existence of the arbitration agreement containing the named arbitrator is not in dispute. Though the named arbitrator has withdrawn himself from the arbitral proceeding, but in view of the decision of the Supreme Court in the case of ACC Limited (supra), the arbitration agreement between the parties still subsists and they are entitled to have their disputes relating to the said agreement for sale being adjudicated by a new arbitrator. It is not the case of either of the parties that the arbitrator should hold any technical qualification. In the facts of the present case, I find merit in the contention raised on behalf of the petitioner that in order to appoint a new arbitrator to adjudicate the disputes between the parties herein, this Court is not required to look into the said agreement for sale to ascertain the arbitration agreement between the parties herein and accept such contention.” Download Pdf