In Re: Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 v. .

Supreme Court of India · 2023 INSC 1066 · 2023

Coram: D.Y. CHANDRACHUD, SANJAY KISHAN KAUL, SANJIV KHANNA, BHUSHAN RAMKRISHNA GAVAI, SURYA KANT, J.B. PARDIWALA, MANOJ MISRA

Source: sci_open_data

JUDGMENT DR. DHANANJAYA Y CHANDRACHUD, CJI A. Reference .................................................................................. 5* B. Submissions ............................................................................ 12* C. Maintainability ....................................................................... 18* D. The Indian Stamp Act 1899 ................................................... 22* i. Overview ........................................................ ...................... 22* ii. The consequences of the failure to stamp an instrument 27* a. The procedure under the Stamp Act .......................... 27* b. The diﬀ erence between inadmissibility and voidness ...32* c. Section 35 of the Stamp Act renders a document inadmissible and not void ...........................................34* iii. The purpose of the Stamp Act ..................................... ..... 38* E. The Arbitration and Conciliation Act 1996........................... 40* i. Arbitral autonomy ............................................................. 42* ii. Principle of minimum judicial interference ................... 45* iii. The Arbitration Act is a self-contained code ................. 52* iv. Principles of modern arbitration .................................... 54* F . The law on the arbitration agreement ................................... 55* i. Separability of the arbitration agreement .......................... 56* d. United Kingdom ................................................................. 58* e. United States of America .................................................... 61* f. Singapore ............................................................................. 62* IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 * Ed Note: Pagination is as per the original judgment. g. International Conventions ................................................... 62* h. India .................................................................................... 64* G. The doctrine of competence-competence .............................. 70* i. Comparative analysis ........................................................ 71* ii. India ................................................................................... 73* iii. Negative competence-competence .................................. 79* H. Judicial interference under the Arbitration Act ................... 81* I. Harmonious construction of the Arbitration Act, the St amp Act, and the Contract Act ...............................................................97* i. The Arbitration Act will have primacy with respec t to arbitration agreements .....................................................101* a. The Arbitration Act is a special law and the Indian Contract Act and the Stamp Act are general laws ........................101* b. Section 5 of the Arbitration Act .................................... 104* c. Parliament was aware of the Stamp Act when it enacted the Arbitration Act ...............................................................106* ii. Harmonious construction of the three statutes under consideration ........................................................................106* a. The eﬀ ect of the competence-competence doctrine ..... 106* b. The eﬀ ect of the word “shall” in Sections 33 and 35 of the Stamp Act .......................................................................111* c. The object of the Stamp Act is preserved .....................113* d. The interpretation of the law must give eﬀ ect to the pur pose of the Arbitration Act in addition to the Stamp Act ......114* 1095 J. SMS Tea Estates and Garware Wall Ropes were wrongly decided ................................................................. .................. 115* i. SMS Tea Estates ................................................................115* ii. Garware Wall Ropes........................................................119* K. The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996 ..................................................................... ...124* L. Vidya Drolia does not deal with the issue of stamping ....... 126* M. Conclusions .......................................................................... 129* A*. Reference 1. This Court has been called upon to resolve an issue which arose in the context of three statutes – the Arbitration and Conciliation Ac t 1996 1 , the Indian Stamp Act 1899 2 , and the Indian Contract Act 1872. 3 The Stamp Act imposes duty on “instruments”. An instrument which is unstamped or insuﬃ ciently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions. Arbitration agreements are often embedd ed in underlying instruments or substantive contracts. When an application is made for the appointment of an arbitrator, an objection is raised on t he ground that the arbitration agreement is inadmissible because it is in an instrument which is unstamped or inadequately stamped. The primary issue that arises is whether such arbitration agreements would be non-existent, unenforceable, or invalid if the underlying contract is not stamped. A brief description of the context in which this question arises follows. 2. In N N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 4 (hereinafter referred to as “N N Global 1”) a Bench of three Judges of this Court was called upon in a Special Leave Petition to de termine the enforceability of an arbitration agreement containe d in an unstamped work order. The Bench, speaking through Justice Indu Malhotra, held that * Ed. Note: PART A 1 “Arbitration Act” 2 “Stamp Act” 3 “Contract Act” 4 (2021) 4 SCC 379 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] an arbitration agreement, being separate and distinct from the unde rlying commercial contract, would not be rendered invalid, unenforce able, or non-existent. The Court held that the non-payment of stamp-duty would not invalidate even the underlying contract because it is a curable defect. In the process, this Court adopted a view at variance with SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd 5 and Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd. 6 In SMS Tea Estates (supra), a two-Judge Bench of this Court held that an arbitration agreement in an unstamped contract could not be acted upon. A two-Judge Bench of this Court in Garware Wall Ropes (supra) relied on SMS Tea Estates (supra) to hold that an arbitration agreement in an unstamped commercial contract would not “exist” as a matter of law and could not be acted upon until the underlying contract was duly stamped: “22. When an arbitration clause is contained “in a contract”, it is signiﬁ cant that the agreement only becomes a co ntract if it is enforceable by law. We have seen how, under the Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of Section 11(6-A), when read with Section 7(2) of the 1996 Act and Section 2( h ) of the Contract Act, would make it clear that an arbitration clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates [ SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] has, in no manner, been touched by the amendment of Section 11(6-A). […] 29. This judgment in Hyundai Engg. case [ United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530] is important in that what was speciﬁ cally under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration 5 (2011) 14 SCC 66 6 (2019) 9 SCC 209 1097 clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the sub-contract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6-A) deals with “existence”, as opposed to Section 8, Section 16 and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court’s understanding of the expression “existence” in Hyundai Engg. case [ United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530], as followed by us.” Thereafter, a three-Judge Bench of this Court in Vidya Drolia v. Durga Trading Corporation, 7 cited paragraph 29 of Garware Wall Ropes (supra) (extracted above) with approval for the proposition that an arbitration agreement exists only when it is valid and legal: “146. We now proceed to examine the question, whether the word “existence” in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudent ially and textualism it is possible to diﬀ erentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word “existence”. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not binding. Existence of an arbitration agreement presupposes a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of “exis tence” requires understanding the context, the purpose and the relevant legal 7 (2021) 2 SCC 1 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] norms applicable for a binding and enforceable arbitration agreement. An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party can not sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisﬁ es the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law. 147. We would proceed to elaborate and give further reasons: 147.1. ( i ) In Garware Wall Ropes Ltd. [ Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd. , (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] , this Court had examined the question of stamp duty in an underlying contract with an arbitration clause and in the context had drawn a distinction between the ﬁ rst and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to “existence” and “validity” of the arbit ration agreement being apposite and extremely important, we would repeat the same by reproducing para 29 thereof : (SCC p. 238) […] Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.” 3. N N Global 1 (supra) noted the decision of the co-ordinate Bench in Vidya Drolia (supra) and doubted the correctness of the view adopted in paragraphs 22 and 29 of Garware Wall Ropes (supra) and in paragraphs 146 and 147 of Vidya Drolia (supra) (extracted above). It referred the following issue to a Bench of ﬁ ve Judges: “58. […] Whether the statutory bar contained in Section 35 of the Stamp Act, 1899 applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument, w hich is not chargeable to payment of stamp duty, as being non-existent, 1099 unenforceable, or invalid, pending payment of stamp duty on the substantive contract/ instrument?” 4. The Constitution Bench in N N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. 8 (hereinafter referred as “N N Global 2”) answered the reference. By a majority of 3:2, it was held that NN Global 1 (supra) does not represent the correct position of law. The majo rity judgment (authored by Justice K. M. Joseph for himself and Justice Aniruddha Bose with a concurring judgment by Justice C. T. Ravikumar) upheld the vie w taken by this Court in SMS Tea Estates (supra) and Garware Wall Ropes (supra). Justice Ajay Rastogi and Justice Hrishikesh Roy delivered separate dissenting judgments. The conclusions of the majority can be summarized in the following terms: a. An unstamped instrument containing an arbitration agreement is void under Section 2(g) of the Contract Act; b. An unstamped instrument, not being a contract and not enforceable in law, cannot exist in law. The arbitration agreement in such an instrument can be acted upon only after it is duly stamped; c. The “existence” of an arbitration agreement contemplated un der Section 11(6A) of the Arbitration Act is not merely a fac ial existence or existence in fact, but also “existence in law”; d. The Court acting under Section 11 of the Arbitration Act cannot disregard the mandate of Sections 33 and 35 of the Stamp Act requiring it to examine and impound an unstampe d or insuﬃ ciently stamped instrument; and e. The certiﬁ ed copy of an arbitration agreement mus t clearly indicate the stamp duty paid. 5. The minority judgment adopted a diﬀ erent legal approach. Justice Ajay Rastogi noted that the scope of the referral court under Section 11 is limited to the examination of the “existence” of an arbitration agreement. He held that all the other debatable issues, including the issue of stamping, 8 (2023) 7 SCC 1 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] must be left for the arbitral tribunal to decide in view of Section 16 of the Arbitration Act. 6. Justice Hrishikesh Roy relied on the scheme of the Stamp Act t o hold that an unstamped or insuﬃ ciently stamped document is not rendered invalid or void ab initio because the failure to stamp an instrument is a curable defect. Further, Justice Roy traced the evolution of the Arbitration Act to observe that it promotes minimum judicial interference in the arbitral process. He held that Section 11 of the Arbitration Act should be harmonized with Section 35 of the Stamp Act by deferring the issue of stamping to the arbitrator. In conclusion, Justice Roy held that SMS Tea Estates (supra) and Garware Wall Ropes (supra) do not set out the correct position of law. 7. On 14 February 2020, a three-Judge Bench of this Court in Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudal iar Chattram v. Bhaskar Raju and Brothers 9 cited SMS Tea Estates (supra) with approval. In Bhaskar Raju (supra), this Court reversed the decision of the High Court which had relied on an insuﬃ ciently stamped lease deed to refer the parties to arbitration under Section 11(6) of the Arbitration Act. Bhaskar Raju (supra) was decided before N N Global 1 (supra). However, while the reference made by the three-Judge Bench in N N Global 1 (supra) was pending, review petitions were ﬁ led in Bhaskar Raju (supra). On 20 July 2021, the review petition was dismissed on the ground of delay as well as on merits. 10 On 7 December 2022, a curative petition was ﬁ led seeking a reconsideration of Bhaskar Raju (supra). The Constitution Bench in N N Global 2 (supra) answered the reference and delivered its verdict on 25 April 2023. 8. On 8 May 2023, a three-Judge Bench of this Court issued notice in a petition for the appointment of an arbitrator in Seka Dobric v. SA Eonsoftech Private Limited. 11 In the meantime, on 18 July 2023, a ﬁ ve- Judge Bench of this Court issued notice in the curative petition in Bhaskar Raju (supra) and listed the matter for hearing in open court on 24 August 9 (2020) 4 SCC 612 10 Review Petition (Civil) No. 704/2021 in CA No. 1599/2020. 11 Arbitration Petition No. 25 of 2023 1101 2023. 12 On 14 August 2023, the Bench in Seka Dobric (supra) observed that one of the objections in that matter pertained to non-stamping o f the arbitration agreement. Therefore, the arbitration petition was directed to be listed along with the curative petition in Bhaskar Raju (supra). The relevant part of the order is extracted below: “1. One of the objections which has been raised on behalf of t he respondent in response to the petition under Section 11(6) and 11(9) of the Arbitration and Conciliation Act, 1996, is that the arbitra tion agreement is not stamped. 2. Notice has already been issued by this Court on Curative Petition (Civil) No 44 of 2023 which has been directed to be listed in the open Court on 24 August 2023. 3. These proceedings shall be accordingly listed on 24 August 2023 together with the Curative Petition. 4. Counter aﬃ davit, if any, be ﬁ led in the meantime.” 9. On 26 September 2023, a Bench of ﬁ ve Judges took up the arbitration petition along with the curative petition. Considering the larger ramiﬁ cations and consequences of the decision in N N Global 2 (supra), the Court referred the proceedings to a seven-Judge Bench. The relevant portion of the order is extracted below: “2. Having regard to the larger ramiﬁ cations and consequences of the view of the majority in N N Global Mercantile Private Limite d vs Indo Unique Flame Limited and Others, we are of the considered view that the proceedings should be placed before a seven-Judge Bench to reconsider the correctness of the view of the ﬁ ve-Judge Bench.” 10. It is in this context that the proceedings were listed before this Bench of seven Judges on 11 October 2023, when this Court directed the cause title to be changed to: “In Re: Interplay between t he arbitration agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899.” We are not reproducing the factual matrix of the case(s) 12 Curative Petition (Civil) No. 44 of 2023 in Review Petition (Civi l) No. 704 of 2021 in Civil Appeal No. 1599 of 2020. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] in question as we have been called upon to determine the question of law. In the process, we will consider the correctness of the view adopted in N N Global 2 (supra) as well as other ancillary issues. B*. Submissions 11. The petitioners broadly contend that N N Global 2 (supra) does not lay down the correct position of law. The submissions of the learned counsel on behalf of the petitioners and the intervenors are summarized below. 12. Mr Arvind Datar, learned senior counsel, made the following submissions: a. Section 11(6A) of the Arbitration Act expressly conﬁ nes t he referral court’s power to the examination of the existence of an arbitration agreement. Such examination does not extend to the adequacy of the stamping under Section 33 of the Stamp Act; b. The majority in N N Global 2 (supra) has eﬀ ectively nulliﬁ ed Section 11(6A) which conﬁ ned the jurisdiction of this Court and High Court to the examination of the existence of an arbitration agreement; c. Mandating the courts at the referral stage to fol low the prescriptions contained under Section 33 of the Stamp Act would amount to exceeding the remit of examination. The Arbitration Act conﬁ nes the authority of referral court to the examination of an arbitration agreement and not the instrument; d. The arbitral tribunal has the competence to rule on it s own jurisdiction, including on issues pertaining to stamping; e. The inclusion of the non-obstante clause in Section 5 of the Arbitration Act limits the judicial intervention of courts in the arbitral process and must be read harmoniously with the provisions of the Stamp Act; and f. The requirement of stamping does not render an instrumen t void. It only makes the instrument inadmissible in evidence until the defect is cured in accordance with the provisions of the Stamp Act. * Ed. Note: PART B 1103 13. Mr Nikhil Sakhardande, learned senior counsel, made the following submissions: a. The deﬁ ciency in stamping is a curable defect, the eﬀ ect of which ceases to operate as soon as the revenue interest of the state is secured; b. The non-payment of stamp duty, being a temporary aﬄ iction, cannot aﬀ ect the validity of an arbitration agreement; and c. Mandating the courts at the Section 8 or Section 11 stage of t he Arbitration Act to examine the issue of stamping will defeat the legislative purpose of minimal judicial interference enshrined in Section 5 of the Arbitration Act. 14. Mr Darius J Khambata, learned senior counsel, made the following submissions: a. The doctrine of separability recognizes that an a rbitration agreement is a self-contained agreement, distinct f rom the underlying contract; b. An arbitration agreement contained within an unde rlying contract would be a “distinct matter” in terms of Section 5 of the Stamp Act, and would therefore continue to remain valid and enforceable notwithstanding the non-stamping or inadequate stamping of the contract; c. The majority in N N Global 2 (supra) failed to give full eﬀ ect to the doctrine of separability by incorrectly holding that non- stamping of the underlying contract would ipso facto invalidate the arbitration agreement contained in such contract; d. The inadmissibility of a document on account of non-stamping or insuﬃ cient stamping does not result in the document being void, invalid, or non-existent in law; e. The majority in N N Global 2 (supra) disregarded the principle of competence-competence by mandating the referral court under Section 11 to examine an instrument for stamping; IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] f. At the pre-arbitral stage, the referral courts should leave all issues pertaining to the stamping for the decision of the arbitral tribunal; and g. Section 33 of the Stamp Act provides that a person can have authority by “consent of parties” to determine issues of stamping. Such authority necessarily includes an arbitral tribunal which is constituted by the consent of parties through an arbitration agreement. 15. Mr Gourab Banerjee, learned senior counsel, made the following submissions: a. The object of the legislature in enacting the Stamp Act is t o protect public revenue and not to interfere with commercial life by invalidating instruments vital to the smooth ﬂ ow of trade and commerce; b. Non-stamping does not render an instrument null and void. Such instrument, even if unstamped, exists in fact and law; c. Investigation into the aspects of stamping at the referral st age under Section 11(6A) of the Arbitration Act is contrary to the plain language and legislative intent of the said provision; and d. The adjudication of stamp duty is a time-consuming process. Mandating the court under Section 11 of the Arbitration Act to adjudicate on the issue of stamp duty would be against the goal of expeditious appointment of arbitrators contained under Section 11(13) of the Arbitration Act. 16. Mr Jayant Mehta, learner senior counsel, made the following submissions: a. Although compliance with the provisions of the Stamp Act is imperative, its non-compliance is curable and does not render an unstamped or insuﬃ ciently stamped instrument void or invalid; b. The majority view in N N Global 2 (supra) does not deal with Section 9 of the Arbitration Act creating a serious diﬃ culty in seeking interim measures of protection in both domestic as well as international arbitrations seated in India; and 1105 c. A ﬁ scal statute does not bar the entertainability of a lis , except where the statute speciﬁ cally so prescribes. The Stamp Act does not prescribe a bar on the entertainability of a lis . 17. The respondents largely contend that N N Global 2 (supra) is correct and is in line with the consistent position adopted by this Court in SMS Tea Estates (supra) and Garware Wall Ropes (supra), which ought not to be disturbed. The submissions of the learned counsel for the respondents and intervenors are summarized below. 18. Mr Shyam Divan, learned senior counsel, made the following submissions: a. The curative petition is not maintainable because none of the pleaded grounds meet the requirements set out in Rupa Ashok Hurra v. Ashok Hurra. 13 Since the curative petition is not maintainable, the reference to a seven-Judge Bench is without jurisdiction; b. The examination by the court under Section 11(6A) of the Arbitration Act is not conﬁ ned to mere facial existence of a n arbitration agreement. The referral court has to prima facie examine both the existence and validity of an arbit ration agreement; c. Section 33 of the Stamp Act casts a mandatory legal requir ement on courts under Section 11 proceedings to impound an unstamped or insuﬃ ciently stamped instrument. Such an instrument cannot be admitted in evidence or otherwise acted upon until the stamp duty and requisite penalty is paid; and d. Section 5 of the Arbitration Act does not limit the operation of the mandatory provisions of the Stamp Act. 19. Mr. Nikhil Nayyar, learned senior counsel, made the following submissions: a. The expression “examination” used in Section 11(6 A) contemplates the examination of the validity of an arbitration 13 (2002) 4 SCC 388 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] agreement, including the examination of suﬃ ciency of stamping; and b. The inclusion of Section 11(6A) in the Arbitration Act was not intended to overcome the eﬀ ect of SMS Tea Estates (supra). 20. Mr Nakul Dewan, learned senior counsel, made the following submissions: a. The principle of separability contained in Section 16 of the Arbitration Act implies that an arbitration agreement can be treated as a distinct agreement only for the purpose of determining its validity or enforceability; b. The court exercising powers under Section 11 is not designated by the parties to receive evidence for the purpose of substantive adjudication of the rights and obligations of the parties; and c. Even if an instrument containing an arbitration a greement is unstamped or insuﬃ ciently stamped, such inadequ acy or insuﬃ ciency should not derail the appointment of an arbitrator at the referral stage under Section 11(6A) of the Arbitration Act. 21. Ms Madhavi Divan, Mr Prashanto Chandra Sen, Mr Arvind Varma, Mr Ramesh Singh, Mr K Ramakant Reddy, Mr Rahul G. Tanwani, Mr Abir Phukan, Mr Tejas Karia, Mr Pallav Mongia, Mr Kunal Vajani, Ms Apporva Neral, Mr Varun K Chopra, Dr. P. V. Amamadha Prasad, Mr Gauhar Mirza, Ms Hiral Gupta, Mr George Poothan Poothicote, Ms Manisha Singh, M r Shadan Farasat, Mr Saurav Agarwal, Mr Siddhant Buxy, Ms Priyanka Vora, Mr Debanshu Khettry, Mr Shivam Singh, Ms Diya Kapur and Mr Jatinder Kumar Sethi supplemented these submissions. C*. Maintainability 22. We address the preliminary issue of the maintainability of the present proceedings in this segment. The record of proceedings indica tes that notice was issued in the curative petition on 18 July 2023. Subsequently, in Seka Dobric (supra), a three-Judge Bench of this Court while hearing a Section 11 application for the appointment of arbitrators, di rected the proceedings to be listed along with the curative petition. On 26 September 2023, the ﬁ ve-Judge Bench diﬀ ered with the view taken in N N Global 2 * Ed. Note: PART C 1107 (supra) and referred the issue to a seven-Judge Bench. Thus, it is important to note that along with the curative petition, a Section 11 petiti on is also listed before this Court in the present proceedings. 23. The maintenance of judicial discipline is important for ensuring consistency and certainty in the development of law. The rule of j udicial discipline demands that a Bench of lower strength is bound by the decision of a larger Bench. 14 Judicial discipline also dictates that generally, a Bench of the same strength can question the correctness of a decision rendered by a co-ordinate Bench. In such a situation, the matter is placed before a Bench of larger strength. 15 24. However, there have been situations where a Bench of lower strength has diﬀ ered with the decision rendered by a Bench of larger strength. In Union of India v. Hansoli Devi, 16 a Bench of two Judges of this Court diﬀ ered with a three-Judge Bench in matter pertaining to the interpretation of the Land Acquisition Act 1894 and referred the matter to a Constitution Bench. The Constitution Bench observed that the reference made by the two-Judge Bench was “ improper ”. Nevertheless, the Constitution Bench decided to answer the reference “ since the questions involved are pending in many cases in diﬀ erent High Courts and certain doubts have arisen with regard to the interpretation to the provisions of Section 28-A of the Act. ” In Central Board of Dawoodi Bohra Community v. State of Maharashtra, 17 a Constitution Bench of this Court held that the judicial course adopted in Hansoli Devi (supra) was by way of exception rather than a rule. Therefore, the rule of judicial discipline also has certain well-deﬁ ned exceptions. 25. The respondent has relied on the Constitution Bench decision of this Court in Shilpa Sailesh v. Varun Sreenivasan, 18 to submit that there is no live cause or matter to justify the invocation of this Court’s jurisdiction. The issue before the three-Judge Bench in Seka Dobric (supra) pertains to the appointment of an arbitrator at Section 11 stage when the unde rlying contract is unstamped or insuﬃ ciently stamped. The Bench directed the 14 Bharat Petroleum Corporation v. Mumbai Shramik Sangha, (2001) 4 SCC 448 15 Pradip Chandra Parija v. Pramod Chandra Patnaik, (2002) 1 SCC 1 16 (2002) 7 SCC 273 17 (2005) 2 SCC 673 18 2023 SCC OnLine SC 544 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] Section 11 application to be listed along with the curative petition in view of the wider legal ramiﬁ cations ﬂ owing from N N Global 2 (supra). Therefore, the respondent’s argument is misplaced because Seka Dobric (supra), which is a live cause or matter, is also listed along with the curative petition. 26. The respondent has also argued that it was impr oper for the Constitution Bench to exercise its curative jurisdiction to re fer the matter to this Bench of seven Judges. Order VI Rule 2 of the Supreme Court Rules 2013 provide that if a Bench in the course of hearing any cause, appeal or “other proceedings” considers that the matter be dealt with by a larger bench, it shall refer the matter to the Chief Justice, who shall thereupon constitute such a Bench for the hearing of the matter. In Kantaru Rajeevaru v. Indian Young Lawyers Association, 19 a nine-Judge Bench of this Court held that the term “other proceeding” used in Order VI Rule 2 of the Supreme Court Rules, 2013 is a comprehensive term giving widest freedom to a court of law to do justice to the parties in the case. Accordingly, it was held that review petitions also fall within the purview of the expression “other proceeding.” In view of the decision in Kantaru Rajeevaru (supra), the term “other proceeding” under Order VI Rule 2 of the Supreme Court Rules, 2013 will also include curative petitions. Therefore, we ﬁ nd no impropriety in t he reference made to this Bench. 27. Moreover, the reference raises important issues on points of law, which require immediate consideration. In Central Board of Dawoodi Bohra Community (supra), this Court laid down two exceptions to the rules mentioned above: “12. (3) The above rules are subject to two exceptions: ( i ) the abovesaid rules do not bind the discretion of the Chief Justice in whom vests the power of framing the roster and who can direct any particular matter to be placed for hearing before any particular Bench of any strength; and ( ii ) in spite of the rules laid down hereinabove, if the matter has already come up for hearing before a Bench of larger quorum and that Bench itself feels that the view of the law taken by a Bench of lesser quorum, which view is in doubt, needs correction or reconsideration then by way of exception (and not as a rule) and for reasons given by 19 (2020) 9 SCC 121 1109 it, it may proceed to hear the case and examine the correctness of the previous decision in question dispensing with the need of a speciﬁ c reference or the order of the Chief Justice constituting the Bench and such listing. Such was the situation in Raghubir Singh [(1989) 2 SCC 754] and Hansoli Devi [(2002) 7 SCC 273].” 28. The two exceptional situations laid down in Central Board of Dawoodi Bohra community (supra) have to be invoked cautiously, and in situations involving wide ramiﬁ cations for the law. In Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh , 20 Justice V R Krishna Iyer speaking for the Constitution Bench observed that the “ legislative policy in the country must accept as ﬁ nal the pronouncements of this Court by a Constitution Bench unless the subject be of such fundamental imp ortance to national life or the reasoning is so plainly erroneous in lig ht of the later thought that it is wiser to be ultimately right than to be consistently wrong. ” We are of the opinion that the reference by the ﬁ ve-Judge Bench raises question of seminal importance with regard to the interpretation and application of the arbitration law in India, which in tu rn has implications for business and commerce in the country. Accordingly, we will answer the reference without delving into the facts of the individual cases. The issue of maintainability of the curative petition is left open and co uld be raised by the respondent before an appropriate Bench. D*. The Indian Stamp Act 1899 i. Overview 29. As the title suggests, the Stamp Act is a legis lation which consolidates the laws relating to the payment of stamp-duty on the execution of certain instruments in the manner speciﬁ ed in the statute. Section 2(14) deﬁ nes “instrument” as follows: “(14) “instrument” includes— (a) every document, by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded; * Ed. Note: PART D 20 (1980) 1 SCC 223 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] (b) a document, electronic or otherwise, created for a transaction i n a stock exchange or depository by which any right or liability is , or purports to be, created, transferred, limited, extended, extinguished or recorded; and (c) any other document mentioned in Schedule I, but does not include such instruments as may be speciﬁ ed by the Government, by notiﬁ cation in the Oﬃ cial Gazette” 30. The term “instrument” is deﬁ ned broadly, in an inclusive sense. It includes electronic documents. Schedule I to the Stamp Act conta ins descriptions of various instruments along with the stamp duty payable on each of them. Stamp-duty is liable to be paid under Section 3, whi ch provides as follows: “3. Instrument chargeable with duty.—Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore, respectively, that is to say— (a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the ﬁ rst day of July, 1899; (b) every bill of exchange payable otherwise than on demand, or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and (c) every instrument (other than a bill of exchange or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India: Provided that no duty shall be chargeable in respect of— (1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument; 1111 (2) any instrument for the sale, transfer or other disposition, ei ther absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act, 1894, or under Act, 19 of 1838, or the India Registration of Ships Act, 1841, as amended by subsequent Acts. (3) any instrument executed, by, or, on behalf of, or, in favour of, the Developer, or Unit or in connection with the carrying out of purposes of the Special Economic Zone. Explanation.—For the purposes of this clause, the e xpressions “Developer”, “Special Economic Zone” and “Unit” sha ll have meanings respectively assigned to them in clauses (g), (za) and (zc ) of Section 2 of the Special Economic Zones Act, 2005.” 31. Section 3 provides that the three categories of instrument s in clauses (a), (b) and (c) shall be chargeable with duty of the amount indicated in Schedule I. The proviso to Section 3 indicates three other categ ories in respect of which no duty shall be chargeable. In terms of Sect ion 5 of the Stamp Act, the duty chargeable on any instrument which compr ises or relates to several distinct matters is the aggregate amount of the duties with which separate instruments (each comprising or relating to one of the many matters) would be chargeable under the same statute. Se ction 6 governs situations where the same instrument falls within two or more of the descriptions in Schedule I. In such a situation, if the duties chargeable under the diﬀ erent descriptions are diﬀ erent, the instrument shall be chargeable with the highest of them. The rule in Section 6 is subject to the provisions of Section 5. As a consequence, Section 6 cannot be relied on to avoid the payment of stamp-duty if an instrument relates to several disti nct matters with each such matter covered by a distinct entry in Schedule I. Section 6 is applicable only when an instrument relates to a single ma tter which is covered by two or more descriptions in Schedule I, or when a single matter in an instrument relating to several distinct matters is cov ered by two or more descriptions in that schedule. 32. Sections 13 and 14 indicate the mode of stamping. In terms of Section 13, every instrument written upon paper stamped with an impressed IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] stamp shall be written in such manner that the stamp may appear on the face of the instrument and cannot be used for or applied to any other instrument. Section 14 stipulates that no second instrument cha rgeable with duty shall be written upon a piece of stamped paper upon which a n instrument chargeable with duty has already been written. 21 Section 15 is signiﬁ cant because it indicates the eﬀ ect of non-compliance with Sections 13 and 14: instruments written in contravention of Section 13 or Section 14 shall be deemed to be unstamped. 22 33. Chapter II of the Stamp Act provides for variou s other contingencies or situations, including inter alia policies of sea-insurance, 23 bonds, debentures, and securities, 24 transactions in stock exchanges and depositories, 25 and instruments executed outside India. 26 Chapter II also provides for the valuation of stamp-duty, including for the conversion of amounts expressed in foreign currencies, 27 how to value stock and marketable securities, 28 the eﬀ ect of statement of rate of exchange or average price,29 instruments reserving interest, 30 instruments connected with mortgages of marketable securities, 31 how the transfer and consideration of debt etc. is to be charged, 32 valuation in case of annuity, 33 stamp where value of subject- matter is indeterminate. 34 21 The proviso to Section 14 provides as follows “Provided that nothing in this section shall prevent any endorsement which is duly stamped or is not chargeable with duty being made upon any instrument for the purpose of transf erring any right created or evidenced thereby, or of acknowledging the receipt of any money or goods the payment or delivery of which is secured thereby.” 22 Section 15, Stamp Act 23 Section 7, Stamp Act 24 Sections 8 to 8F, Stamp Act 25 Section 9A, Stamp Act 26 Sections 18, 19, Stamp Act 27 Section 20, Stamp Act 28 Section 21, Stamp Act 29 Section 22, Stamp Act 30 Section 23, Stamp Act 31 Section 23A, Stamp Act 32 Section 24, Stamp Act 33 Section 25, Stamp Act 34 Section 26, Stamp Act 1113 34. Section 29 indicates who the stamp duty is to be borne by (in the absence of an agreement to the contrary) and Section 30 stipulate s that a receipt must be given in certain cases. 35. A person may also apply to the Collector for his opinion as to the duty (if any) which is payable on a particular instru ment, under Section 31 of the Stamp Act. The instrument given to the Collector for his opinion may be executed or previously stamped, but there is no requirement that it must be either executed or previously stamped. 35 If an instrument brought to the Collector under Section 31 is in their opini on chargeable with duty, and they determine that it is already fully stampe d, or that the duty determined by them under Section 31 has already been paid, then they shall certify by endorsement on such instrument that t he full duty with which it is chargeable has been paid. 36 If the Collector is of the opinion that the instrument is not chargeable with duty, they sha ll certify that it is not so chargeable. 37 Any instrument upon which an endorsement has been made under Section 32 shall be deemed to be duly st amped or not chargeable with duty, as the case may be. 38 The proviso to Section 32 lists three categories of instruments which the Collector is not authorised to endorse under the same section. 36. Chapter IV of the Stamp Act details with the proced ure to be followed by various authorities if instruments whic h are liable to be stamped are not duly stamped. The provisions of this Chapter are examined in detail in the subsequent segment. Chapter V provides for allowances for stamps (such as spoiled or misused stamps) in certain cases and Chapter VI provides for reference of cases arising under the enact ment to authorities including the High Courts as well as for the revision of certain decisions of courts regarding the suﬃ ciency of stamps. Chapter VII of the Stamp Act indicates the penalties for non-compliance with i ts provisions and ﬁ nally, Chapter VIII contains certain supplementary provisions in relation to the statute. 35 Section 31(1), Stamp Act 36 Section 32(1), Stamp Act 37 Section 32(2), Stamp Act 38 Section 32(3), Stamp Act IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] ii. The consequences of the failure to stamp an instrument a. The procedure under the Stamp Act 37. Section 17 of the Stamp Act provides that all i nstruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution. Section 62 inter alia penalises a failure to comply with Section 17. However, despite the mandate that all instruments chargeable with duty must be stamped, many instruments are not stamped or are insuﬃ ciently stamped. The parties executing an instrum ent may, contrary to the mandate of law, attempt to avoid the payment of stamp duty and may therefore refrain from stamping it. Besides this situation, there are other ways in which an instrument may not be properly stamped, including the following: a. The duty may have been paid under an incorrect description under Schedule I; b. The duty paid may be of a suﬃ cient amount but of improper description; c. The provisions of Section 5 which govern instruments relating to several distinct matters may not have been complied with; or d. The instrument may be written in contravention of Sections 13 and 14, and thereby deemed to be unstamped in terms of Section 15. 38. The legislature recognized that the mandate of the Stamp Act may not be complied with because of the reasons listed in the prec eding paragraph or otherwise. It was in recognition of this fact that the provisions in Chapter IV were enacted. Section 33 provides that every person who has authority to receive evidence (either by law or by consent of parties) shall impound an instrument which is, in their opinion, chargeable with duty but which appears to be not duly stamped. The power under Section 33 may be exercised when an instrument is produced before the authority or when they come across it in the performance of their functions. Persons in cha rge of public oﬃ ce except police oﬃ cers are similarly empowered under Section 33, which is reproduced below: 1115 “33. Examination and impounding of instruments.—(1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public oﬃ ce, except an oﬃ cer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall , if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the va lue and description required by the law in force in India when such instrument was executed or ﬁ rst executed: Provided that— (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think ﬁ t so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such oﬃ cer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt,— (a) the State Government may determine what oﬃ ces shall be deemed to be public oﬃ ces; and (b) the State Government may determine who shall be deemed to be persons in charge of public oﬃ ces.” 39. Section 35 is of particular signiﬁ cance to the issue before thi s Court – it renders instruments which are not duly stamped inadmissible in evidence. Section 35 reads as follows: “35. Instruments not duly stamped inadmissible in evidence, etc.— No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] authenticated by any such person or by any public oﬃ cer, unless such instrument is duly stamped: Provided that— (a) any such instrument [shall] be admitted in evidence on pa yment of the duty with which the same is chargeable or, in the case of an instrument insuﬃ ciently stamped, of the amount required to make up such duty, together with a penalty of ﬁ ve rupees, or, when ten times the amount of the proper duty or deﬁ cient portion thereof exceeds ﬁ ve rupees, of a sum equal to ten times such duty or portion; (b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it; (c) where a contract or agreement of any kind is ef fected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement sha ll be deemed to be duly stamped; (d) nothing herein contained shall prevent the admi ssion of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); (e) nothing herein contained shall prevent the admi ssion of any instrument in any Court when such instrument has been executed by or on behalf of the Government or where it bears the certiﬁ cate of the Collector as provided by Section 32 or any other provision of this Act.” (emphasis supplied) In terms of Section 35, an instrument which is not duly stam ped is inadmissible in evidence for any purpose and it shall not be acte d upon, registered, or authenticated. 39 Clause (a) of the proviso to Section 35 39 Subject to the proviso to Section 35. 1117 stipulates that the bar contained in the provision is removed upon the payment of duty and the penalty (if any). The party or parties may pay the duty chargeable to the person who has the authority to receive evidence by law or by consent of parties. Section 35 is signiﬁ cant because it gives teeth to the Stamp Act by ensuring that stamp-duty is paid before rights and obligations arising from an agreement are enforced. 40. Section 38(1) indicates how an instrument which is impounded is to be dealt with: “38. Instruments impounded how dealt with.— (1) Where the person impounding an instrument under Section 33 has by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provide d by Section 35 or of duty as provided by Section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certiﬁ cate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf. (2) In every other case, the person so impounding an instrument shall send it in original to the Collector.” 41. The Collector is conferred with the power to impound an instrument under Section 33. If any other person or authority impounds an instrument, it must be forwarded to the Collector under clause (2) of Section 38. Once the Collector receives an instrument, he has the power to stamp it under Section 40, if it is not a bill of exchange, a promissory note, or an instr ument that is chargeable with a duty that exceeds ten naye paise. The Collector may: a. Certify by endorsement that the instrument is duly stamped, if they are of such an opinion; 40 b. Certify by endorsement that the instrument is not chargeab le with duty, if they are of such an opinion; 41 and 40 Section 40(1)(a), Stamp Act 41 ibid IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] c. Require the payment of the proper duty or the amount required to make up the proper duty, if they are of the opinion that the instrument is chargeable with duty and is not duly stamped. 42 The Collector may also levy a penalty, as provided by Section 40. If the instrument has been sent to the Collector un der Section 38, it must be returned to the impounding oﬃ cer after it is d ealt with as described above. 43 42. In terms of Section 42 of the Stamp Act, an instrument is admissible in evidence once the payment of duty and a penalty (if any) is complete. It stipulates that either the person admitting the instrument in evidence or the Collector, as the case may be, shall certify by endorsement that the proper duty has been paid. 43. The procedure contemplated by the Stamp Act facilitat es the collection of revenue. It permits instruments to be impounded not only by persons in charge of a public oﬃ ce or those who are empowered by law to receive evidence but also by any person who is empowered to recei ve evidence by consent of parties. The statute then sets out the pro cedure to be followed upon impounding a document. This procedure ensures that stamp-duty is paid. After the payment of the appropriate amount under the appropriate description in Schedule I and the penalty (if any), t he Stamp Act provides for the certiﬁ cation of such payment by an endorsement by the appropriate authority. Once an instrument has been endorsed, it may be admitted into evidence, registered, acted upon or authenticated as if it had been duly stamped. b. The diﬀ erence between inadmissibility and voidness 44. The admissibility of an instrument in evidence is distinct from its validity or enforceability in law. Section 2(g) of the Contract Act provides that an agreement not enforceable by law is said to be void. The admissibility of a particular document or oral testimony, on the other hand, refers to whether or not it can be introduced into evidence. P Ramanatha Aiyar’s The Law Lexicon deﬁ nes ‘admissible’ thus: 42 Section 40(1)(b), Stamp Act 43 Section 40(3), Stamp Act 1119 “Admissible Proper to be received, capable and worthy of being admitted. As applied to evidence, the term means that it is of such a character that the court or judge is bound to receive it, that is, allow it to be introduced in evidence” 44 Many statutes have rules on the admissibility of documents, with the Indian Evidence Act 1872 45 being one of them. 45. An agreement can be void without its nature as a void agreement having an impact on whether it may be introduced in evidence. Similarly, an agreement can be valid but inadmissible in evidence. For instance, A and B may enter into an agreement by which B is restrained from undertaking a particular trade. This agreement would be void under Section 27 of the Contract Act 46 but this does not impact its admissibility in evidence should A attempt to enforce it against B. The court will not enforce the agreement between the parties because it is void but the agreement is none theless admissible in evidence. 46. When an agreement is void, we are speaking of its enforceability in a court of law. When it is inadmissible, we are referring to whether the court may consider or rely upon it while adjudicating the case. This is the essence of the diﬀ erence between voidness and admissibility. c. Section 35 of the Stamp Act renders a document inadmissible and not void 47. The majority judgment in N N Global 2 (supra) summed up its holding in the following terms: 44 P Ramanatha Aiyar, The Law Lexicon (Second edition, 1997) 45 “Evidence Act” 46 “27. Agreement in restraint of trade void.— Every agreeme nt by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. Exception 1.—Saving of agreement not to carry on business of w hich goodwill is sold.—One who sells the goodwill of a business may agr ee with the buyer to refrain from carrying on a similar business, within speciﬁ ed local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein: Provided that such limits appear to the Court reasonable , regard being had to the nature of the business.” IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] “109. … An agreement which is unstamped or insuﬃ ciently stamped is not enforceable, as long as it remains in the said condition. Such an instrument would be void as being not enforceable [see Section 2(g) of the Contract Act].” The above observation conﬂ ates the distinction between enforceability and admissibility. 48. Section 35 of the Stamp Act is unambiguous. It stipulates, “ No instrument chargeable with duty shall be admitted in evidence … ” The term “admitted in evidence” refers to the admissibility of the inst rument. Sub- section (2) of Section 42, too, states that an instrument in respect of which stamp-duty is paid and which is endorsed as such will be “ admissible in evidence .” The eﬀ ect of not paying duty or paying an inadequate amount renders an instrument inadmissible and not void. Non-stamping or improper stamping does not result in the instrument becoming invalid. The St amp Act does not render such an instrument void. The non-payment of stam p duty is accurately characterised as a curable defect. The St amp Act itself provides for the manner in which the defect may be cured and se ts out a detailed procedure for it. It bears mentioning that there is no procedure by which a void agreement can be “cured.” 49. In Thiruvengadam Pillai v. Navaneethammal, 47 this Court noted that the trial court and the High Court had doubted the authenticity of an agreement for the sale of certain immoveable property because it was written on two stamp papers purchased on diﬀ erent dates. This Court held that this by itself would not invalidate the agreement. It noticed the distinction between the legal validity of the agreement and its admissibility: “13. The Stamp Act is a ﬁ scal enactment intended to secure revenue for the State. In the absence of any rule requiring consecutively numbered stamp papers purchased on the same day, being used for an instrument which is not intended to be registered, a document cannot be termed as invalid merely because it is written on t wo stamp papers purchased by the same person on diﬀ erent dates. Even assuming that use of such stamp papers is an irregularity , 47 (2008) 4 SCC 530 1121 the court can only deem the document to be not properly stamped, but cannot, only on that ground, hold the document to be invalid. Even if an agreement is not executed on requisite stamp paper, it is admissible in evidence on payment of duty and penalty unde r Sections 35 or 37 of the Stamp Act, 1899. If an agreement executed on a plain paper could be admitted in evidence by paying duty and penalty, there is no reason why an agreement executed on two stamp papers, even assuming that they were defective, cannot be accept ed on payment of duty and penalty. But admissibility of a document into evidence and proof of genuineness of such docum ent are diﬀ erent issues.” (emphasis supplied) 50. This has long been the position of law in India with respect to the Stamp Act. In Gulzari Lal Marwari v. Ram Gopal, 48 one of the parties contended that the agreement was invalid because it was not properly stamped. The portion of Section 35 which bars the a dmissibility of unstamped instruments was the same then as it is now. The Calcutta High Court held: “…The eﬀ ect of the section is to make such an unstamped document inadmissible in evidence, and unable to be acted upon by persons having authority to receive evidence or by any public oﬃ cer. It does not aﬀ ect the validity of the document. There is a clear distinction to be drawn between in validity and inadmissibility of documents. Certain statutes and sections re nder documents invalid if they are not stamped. No section of the India n Stamp Act has this eﬀ ect…” The position of law has also been noticed by the High Courts in other cases including the Andhra Pradesh High Court in Boottam Pitchiah v. Boyapati Koteswara Rao 49 . 51. In N N Global 2 (supra), this Court held that the failure to stamp an arbitration agreement is not a “curable defect.” Relying on the provisions 48 1936 SCC OnLine Cal 275 49 1964 SCC OnLine AP 5 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] of the Contract Act as well as Section 11(6-A) of the Arbitration Act, it held that an unstamped arbitration agreement is void. The relevant p aragraphs of the judgment of the majority are extracted below: “103. … It may not be apposite to merely describe an unstamped arbitration agreement as a “curable defect”. As long it remains an unstamped instrument, it cannot be taken notice of for any purpose, as contemplated in Section 35 of the Stamp Act. It remains unenforceable. … It is “not enforceable in law”. In the said sense, it also cannot exist in law. It would be void. Our view in this regard that voidness is conﬂ ated to unenforceability receives fortiﬁ cation from Section 2(j) of the Contract Act which renders a contract which ceases to be enforceable void.” (emphasis in original) 52. The above observation of this Court is incorrect. Section 2(j) of the Contract Act provides as follows: “( j ) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.” 53. Section 2(j) is not attracted when an instrumen t is rendered inadmissible under Section 35 of the Stamp Act. The eﬀ ect of the latter is not to render an unstamped agreement unenforceable. If it was unenforceable, it would imply that it was void. We have already discussed why an unstamped or inadequately stamped agreement is not void in the preceding paragraphs. Indeed, the approach of the majority in N N Global 2 (supra) to the Contract Act would render unstamped agreements void ab initio and not void. 54. In N N Global 2 (supra), this Court also relied on Section 11(6A) of the Arbitration Act to reach its conclusion: “104. What Section 11(6-A) contemplates is a contract and it is not an agreement which cannot be treated as a contract. This is de spite the use of the words “arbitration agreement” in Section 11(6-A) . In other words, contract must conform to Section 7 of the Act. It must also, needless to say, fulﬁ l the requirements of the Contract Act.” (emphasis supplied) 1123 55. Section 11(6-A) 50 of the Arbitration Act is extracted below: “(6-A) The Supreme Court or, as the case may be, the High Cour t, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any court, conﬁ ne to the examination of the existence of an arbitration agreement .” (emphasis supplied) 56. A plain reading of Section 11(6A) makes it eviden t that it is referring to an arbitration agreement . Section 11(6A) provides that courts must conﬁ ne themselves to an examination of the existence of the arbitration agreement. The word “conﬁ ne” indicates the intention of the legis lature to limit the jurisdiction of the courts at the stage of the ap pointment of an arbitrator. 57. In Vidya Drolia (supra), this Court held: “21. The term “agreement” is not deﬁ ned in the Arbitra tion Act, albeit it is deﬁ ned in Section 10 of the Contract Act, 1872 (for short “the Contract Act”), … as contracts made by free consent of p arties competent to contract, for a lawful consideration and with a lawful object, and are not thereby expressly declared to be void. Section 10 of the Contract Act also stipulates that aforesaid requirements shall not aﬀ ect any law in force in India (and not expressly repealed) by which a contract is required to be made in writing, in presence of witnesses or any law relating to registration of documents. Thus, an arbitration agreement should satisfy the mandate of Section 10 of the Contract Act, in addition to satisfying other requirements stipulated in Section 7 of the Arbitration Act.” 58. The above observations are correct insofar as t he arbitration agreement must satisfy the requirements of the Contract Act. However, the authority empowered to adjudicate whether the requirements of the Contract Act are satisﬁ ed is the arbitral tribunal, under Section 16 of the Arbitration Act. This is addressed in greater detail in the following segments. 50 Omitted by Act 33 of 2019. The omission is yet to be notiﬁ ed / take eﬀ ect. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] iii. The purpose of the Stamp Act 59. The Stamp Act is a ﬁ scal legislation which is intended to raise revenue for the government. It is a mandatory statute. In Hindustan Steel Ltd. v. Dilip Construction Co., 51 this Court dealt with the import of Sections 35, 36 and 42 of the Stamp Act. One of the parties relied on the diﬀ erence in the phraseology between Sections 35 and 36 to argue that an instrument which was insuﬃ ciently stamped or not stamped could be a dmitted in evidence upon the payment of duty and a penalty (if any) but that it could not be acted upon, once admitted. It was argued that Section 35 operates as a bar in two respects, namely, the admission of an instrument into evidence as well as acting upon that instrument. It was argued that Section 36, in contrast to Section 35, removed the bar in one respect alone – the admissibi lity of the instrument into evidence. This Court rejected this argument and hel d that the provisions of the Stamp Act clearly provide that an instrument could be admitted into evidence as well as acted upon once the appropriate duty has been paid and the instrument is endorsed: “6. … The argument ignores the true import of Section 36. By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of Section 42(2) which enact, in terms unmistakable, that every instrument endorsed by the Collector under Section 42(1) shall be admissible in evidence and may be acted upon as if it has been duly stamped.” (emphasis in original) 60. In so holding, this Court made a signiﬁ cant observation about the purpose of the Stamp Act and the manner in which it is to be inter preted by courts: 51 (1969) 1 SCC 597 1125 “7. The Stamp Act is a ﬁ scal measure enacted to secure revenue for the State on certain classes of instruments: It is not enacted to arm a litigant with a weapon of technicality to meet the case of h is opponent. The stringent provisions of the Act are conceived in the interest of the revenue once that object is secured according to l aw, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear.” (emphasis supplied) The Stamp Act is a legislation which is enacted in the interest of the revenue. The statute must be interpreted with due regard to its purpose. E*. The Arbitration and Conciliation Act 1996 61. Arbitration is a method of alternative dispute resolution where parties agree to refer their disputes to a neutral third part y known as an arbitrator. The aim of arbitration is to provide speedy, eﬃ cient, and binding resolution of disputes that have arisen between the parties i n regard to their substantive obligations. The thrust of arbitration law is succinctly encapsulated in Redfern and Hunter: “ It is to be expeditious where the law is slow, cheap where the law is costly, simple where the law is technical, a peacemaker instead of a stirrer-up of strife. ” 52 62. Before the enactment of the Arbitration Act, the law on arbitration was contained in the Arbitration Act 1940, 53 the Arbitration (Protocol and Convention) Act 1937, and Foreign Awards (Recognition and Enforcement) Act 1961. In 1978, the Law Commission of India suggested substantial amendments to the 1940 Act to make it more responsive to the contemporary legal and economic requirements. In the meanwhile, the United Nat ions Commission on International Trade Law 54 adopted the Model Law in 1985 to foster the development of a uniﬁ ed legal framework for the fair and eﬃ cient settlement of disputes arising in international com mercial arbitration. * Ed. Note: PART E 52 Redfern and Hunter on International Arbitration (7th edn, O xford University Press, 2023) 3. 53 “1940 Act” 54 “UNCITRAL” IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] The General Assembly of the United Nations recommended to a ll states to give due consideration to the Model Law in view of the desirabili ty of achieving uniformity of the law of arbitral procedure and the speciﬁ c needs of international commercial arbitration practice. 55 63. The Arbitration Act was enacted to “consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to deﬁ ne the law relating to the conciliation and for matters connected therewith or incidental thereto.” In the process, the Arbitration Act repealed the 1940 Act, the Arbi tration (Protocol and Convention) Act 1937, and the Foreign Awards (Recognition and Enforcement) Act 1961. It also brought domestic as well as international commercial arbitration in consonance with the Model Law, the New York Convention, and the Geneva Convention. The Arbitration Act is divided into four parts: (i) Part I deals with domestic and international ar bitration that takes place in India; (ii) Part II deals with the enforc ement of foreign arbitral awards under the New York Convention and the Geneva Convention; (iii) Part III deals with conciliation; and (iv) Part IV contains supplementary provisions. In the present reference, we are largely concerned with Part I of the Arbitration Act. The important principles which animate t he law on arbitration as indeed the Arbitration Act are discussed in the following segment. These principles act as important aids to interpret the Arbitration Act. i. Arbitral autonomy 64. In medieval England, recourse to arbitration was commonplace among merchants and traders. During the seventeenth and the eighteent h century, settlement of commercial disputes by arbitration was encouraged by both Chancery and the courts. 56 In light of the widespread use of arbitration, coupled with a rapid decline in court litigation, the English courts began to actively discourage arbitration as a dispute resolution mechanism. 57 Judicial 55 General Assembly of the United Nations, ‘Model Law on International Commercial Arbitration of the United Nations Commission on Internati onal Trade Law’ 40/72 112th Plenary Session, 11 December 1985. 56 Henry Horwitz and James Oldham, ‘John Locke, John M ansﬁ eld, and Arbitration during the Eighteenth Century’ (1993) 36(1) The Historical Journal 137, 139. 57 Earl Wolaver, ‘The Historical Background of Commercial Arbitra tion’ (1934) 83 University of Pennsylvania Law Review 132, 142. 1127 scepticism towards arbitration proceedings mainly stemmed from the attitude of judges that “ every activity that occurred within a jurisdiction should be within the purview of state law and court. ” 58 65. As cross-border commerce and transactions proliferated, companies and businesses sought diﬀ erent ways to resolve their commercial disputes. The formality, customs, and legal traditions of national courts w ere at variance with the intention of the parties to achieve a speedy and eﬃ cient resolution of their disputes. The internationalization of trade and commerce in the middle of the nineteenth century necessitated the regulat ion and institutionalization of arbitration. In the process , arbitration was also detached from the national legal systems, with the growth of arbitral institutions such as the London Chamber of Arbitration and International Chamber of Commerce. This new regime of arbitration law paved the way for greater recognition of the mutual intention of parties and the authority of arbitral tribunals to resolve disputes without being bogged down by the intricacies of national legal systems. This was commended and reﬂ ected in various international instruments such as the New York Convention and the UNCITRAL Model Law. Accordingly, national laws were changed to reﬂ ect the principle of judicial non-interference in arbitration proceedings. The demands of commerce and business eﬃ ciency meant that control by national courts became subordinate to the intention of the partie s and the authority of the arbitral tribunal. 59 66. The principle of arbitral autonomy is an integral element of the ever-evolving domain of arbitration law. Arbitral autonomy means that the parties to an arbitration agreement can exercise their contrac tual freedom to bestow the arbitral tribunal with the authority to decide disputes that may arise between them. The basis of arbitral autonomy is to give eﬀ ect to the true intention of parties to distance themselves from the “ risk of domestic judicial parochialism. ” 60 58 Julian D M Lew, ‘Achieving the Dream: Autonomous Arb itration’ (2006) 22(2) Arbitration International 179, 183. 59 Ibid, at 185 60 Redfern and Hunter on International Arbitration (7th edn, O xford University Press, 2023) 388 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 67. The principle of judicial non-interference reﬂ ects the autonomy of arbitral tribunals. Arbitral tribunals are autonomous in the sense that they are constituted to give eﬀ ect to the mutual intention of the parties to settle their disputes through a neutral and expert authority of their choice. Moreover, the competence of an arbitral tribunal to rule on i ts own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, also indicates that the arbitral tribunal enjoys suﬃ cient autonomy from the national courts. 68. Section 9 of the Code of Civil Procedure 1908 provides that the courts shall have jurisdiction to try all suits of a civil nature excepting suits of which cognizance is either expressly or impliedly barred. Section 28 of the Contract Act states that agreements that restrict a pa rty to a contract absolutely from enforcing their rights under or in respect of any contract by way of usual legal proceedings are void. However, the provision expressly saves contracts by which two or more persons agree to refer to arbitration any dispute which may arise between them in respect of any subject or class of subjects. By choosing to settle their disputes through arbitration, parties surrender their right to litigate before the national courts in fa vour of the arbitral tribunal. By surrendering their right to litigate in nationa l courts, parties also surrender their right to be bound by national procedural laws in favour of expedition, informality, and eﬃ ciency of the arbitral process. The arbitral tribunal is not subject to the procedural laws of a country. For instance, Section 19 of the Arbitration Act expressly provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure 1908 or the Indian Evidence Act 1872. Moreover, it stipulates that an arbitral trib unal may conduct the proceedings in any manner it deems appropriate if the parties fail to agree on the procedure to be followed by the tribunal. Although arbitral tribunals have autonomy in the procedural and substantive sense, they are not completely independent of the law of the country in which the arbitral tribunal has its juridical seat, as discussed in the following segments. ii. Principle of minimum judicial interference 69. The principle of judicial non-interference in arbitral proceedings is fundamental to both domestic as well as internat ional commercial arbitration. The principle entails that the arbitral proceedi ngs are carried out pursuant to the agreement of the parties or under the direction of the 1129 tribunal without unnecessary interference by the national courts. 61 This principle serves to proscribe judicial interference in arbitra l proceedings, which would undermine the objective of the parties in agreeing to arbitrate their disputes, their desire for less formal and more ﬂ exible p rocedures, and their desire for neutral and expert arbitral procedures. 62 The principle of judicial non-interference in arbitral proceedings respects the autonomy of the parties to determine the arbitral procedures. This princi ple has also been incorporated in international instruments, including the New York Convention 63 and the Model Law. 70. Article 5 of the Model Law deals with the exten t of court intervention. It states that “[i]n matters governed by this Law, no court shall intervene except where so provided in this Law.” The drafters of the Model Law deemed it important to incorporate this article to provide “certainty to the parties and the arbitrators about the instances in which court supervision or assistance was to be expected.” 64 By including the introductory words “in matters governed by this law” , the scope of the provision was limited only to matters which were governed by or regulated in the Model Law. The purpose was to ensure that no judicial authority assigns to itself the power that has been expressly and exclusively bestowed upon the arbitral tri bunal. For instance, Article 16 of the Model Law confers upon the arbitral tribunal an exclusive power to rule on its jurisdiction including dealing with objections pertaining to the existence and validity of an arbitration agreement. 71. The Model Law does not regulate or govern all matters related to international commercial arbitration as well as the arbi tral process. 65 Similarly, Article 5 does not bar the national courts from inte rvening in 61 Gary Born, The Principle of Judicial Non-Interference in Internation al Arbitration Proceedings’ (2009) 30 University of Pennsylvania Journal of International Law 999, 1002. 62 Gary Born, International Arbitration Law and Practice (3rd ed , 2021) 2361 63 Article II(3), New York Convention 64 Report of the Working Group on International Contract Practic es on the work of its seventh session, A/CN.9/246 (New York, 23 January-3 February 1984) 45. 65 Manuel A Gomez, ‘Article 5: Extent of Court Intervention’ in Ilias Bantekas (eds) UNCITRAL Model Law on International Commercial Arbitration: A Commentary 89 (2020) IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] matters not governed by the Model Law. 66 The UNCITRAL Working Group itself identiﬁ ed certain situations not dealt with under the Model Law where the national courts could intervene: “Article 5 would, for example, not exclude court control or assistance in those matters which the Working Group had decided not to deal with in the law (e.g., capacity of parties to conclude arbitration agreement; impact of state immunity; competence of arbitral tribunal to adapt contracts; enforcement by courts of interim measures of protection ordered by arbitral tribunal; ﬁ xing of fees or request for deposit , including security for fees or costs; time-limit for enforcement of awards).” 72. This indicates that Article 5 of the Model Law emphasizes on arbitral tribunal being the ﬁ rst instance to determine all issues relating to matters of law or construction as well as issues of jurisdict ion and scope of authority. 67 It exclusively determines the manner and form of judicial intervention in the arbitration process. National courts can i ntervene with respect to matters not expressly governed by the Model Law. 68 73. Section 5 of the Arbitration Act is based on Article 5 of the Model Law. However, Section 5 also incorporates a non-obstante clause se tting out the scope of judicial intervention. It reads as follows: “5. Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being in force , in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.” Two aspects become clear from a comparison of Section 5 of the Arbitration Act with Article 5 of the Model Law: ﬁ rst, Se ction 5 begins with a non-obstante clause unlike Article 5; and second, it limits the scope of judicial intervention to the extent “so provided” in Part I. 66 Digest of Case Law on the Model Law on International Commercial Arbitration (2012) 21 67 Rio Algam v. Sammi Steel Co., Ontario Court of Justic e, Canada, 1 March 1991, [1991] O.J. No. 268 68 Richard Garnett, ‘Article 5 of the Model Law: Protector of the Arbitral Process?’ (2021) 38(2) Journal of International Arbitration 127-146. 1131 74. One of the main objectives of the Arbitration Act is to minimize the supervisory role of courts in the arbitral process. Party autonomy and settlement of disputes by an arbitral tribunal are the hallmarks of arbitration law. Section 5 gives eﬀ ect to the true intention of the parties to have their disputes resolved through arbitration in a quick, eﬃ cient, and eﬀ ective manner by minimizing judicial interference in the arbitral procee dings. 69 Parliament enacted Section 5 to minimize the supervisory role of courts in the arbitral process to the bare minimum, and only to the e xtent “so provided” under the Part I of Arbitration Act. In doing so, the legisla ture did not altogether exclude the role of courts or judicial authorities in arbitral proceedings, but limited it to circumstances where the support of judicial authorities is required for the successful implementation and enforcement of the arbitral process. 70 The Arbitration Act envisages the role of courts to “ support arbitration process ” 71 by providing necessary aid and assistance when required by law in certain situations. 75. Section 5 begins with the expression “ notwithstanding anything contained in any other law for the time being in force. ” The non-obstante clause is Parliament’s addition to the Article 5 of the Model L aw. It is of a wide amplitude and sets forth the legislative intent of limi ting judicial intervention during the arbitral process. In the context of Section 5, thi s means that the provisions contained in Part I of the Arbitration Act ought to be given full eﬀ ect and operation irrespective of any other law for the time being in force. It is now an established proposition of law that the legislature uses non-obstante clauses to remove all obstructions which might arise out of the provisions of any other law, which stand in the way of the operation of the legislation which incorporates the non-obstante clause. 72 76. A non-obstante clause is appended in a provisio n to give such provision overriding eﬀ ect over other provisions of the law. 73 In 69 Food Corporation of India v. Indian Council of Arbitration, (2003 ) 6 SCC 564 70 Union of India v. Popular Construction Co., (2001) 8 SCC 470; P Anand Gajapathi Raju v. P.V .G. Raju, (2000) 4 SCC 539 71 Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677 72 State of Bihar v. Bihar Rajya M.S.E.S.K.K. Mahasangh, (2005) 9 SCC 129 73 Owners and Parties Interested in the Vessel M.V . Polaris Galaxy v. Banque Cantonale De Geneva, 2022 SCC OnLine SC 1293 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, 74 Justice Sabyasachi Mukharji explained the purport of non-obstante clause in the foll owing terms: “67. A clause beginning with the expression “notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract” is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conﬂ ict an overriding eﬀ ect over the provision of the act or the contract mentioned in the non obstante clause. It is equivalent to saying that in spite of the provisions of the Act or any other Act mentioned in the non obstante clause or any contract or document mentioned the enactment following it will have its full operation or that the provisions emb raced in the non obstante clause would not be an impediment for an operation of the enactment.” 77. Although a non-obstante clause must be allowed to operate with full vigour, its eﬀ ect is limited to the extent intended by the legislature. In ICICI Bank Ltd v. SIDCO Leathers Ltd, 75 a two-Judge Bench of this Court held that a non-obstante clause must be interpreted by conﬁ ning it to the legislative policy. Thus, even if a non-obstante clause has wide amplitude, the extent of its impact has to be measured in view of the legislative intention and legislative policy. 76 In view of this settled legal position, the issue that arises for our consideration is the scope of the non-obstante clause contained in Section 5 of the Arbitration Act. 78. In Morgan Securities & Credit (P) Ltd. v. Modi Rubber Ltd., 77 the issue before the two-Judge Bench was whether the provisions of the Arbitration Act would prevail over the provisions of the Si ck Industrial Companies (Special Provisions) Act, 1985. 78 While noting the non-obstante clause contained in Section 5 of the Arbitration Act, this Court held that the non-obstante clause has “ limited application aiming at the extent of judicial 74 (1986) 4 SCC 447 75 (2006) 10 SCC 452 76 JIK Industries Ltd. v. Amarlal V . Jumani, (2012) 3 SCC 255 77 (2006) 12 SCC 642 78 “SICA” 1133 intervention .” It was held that the Arbitration Act would not prevail over SICA since the latter enactment seeks to “ achieve a higher goal. ” In other words, the scope of the non-obstante clause is limited to prohib iting the intervention of judicial authorities, unless it has been express ly provided for under Part I of the Arbitration Act. 79. Similar to Article 5 of the Model Law, Section 5 uses the expression “ in matters governed by this Part. ” The use of this expression circumscribes the scope of judicial intervention to matters expressly governed b y Part I of the Arbitration Act. The matters governed by Part I inter alia include (i) Section 8 which mandates judicial authorities to refer parties to arbitration when prima facie there is a valid arbitration agreement; (ii) Section 9 which allows courts to issue interim measures on an application made by a party to an arbitration agreement; (iii) Section 11 which empowers the Supreme Court or the High Courts to appoint arbitrators on an application made by parties to an arbitration agreement; (iv) Section 27 which allows the arbitral tribunal to request the court for assistance in taking evidence; and (v) Section 34 which empowers the court to set aside an arbitral award on the basis of the limited grounds mentioned therein. 80. Section 5 has two facets – positive and negative. T he positive facet vests judicial authorities with jurisdiction over arbitral proceedings in matters expressly allowed in or dealt with under Part I of the Arbitration Act. The ﬂ ip side to this approach is that judicial authorities are prohibited from intervening in arbitral proceedings in situations where the arbitral tribunal has been bestowed with exclusive jurisdiction. This is the negative facet of Section 5. The non-obstante clause limits the e xtent of judicial intervention in respect of matters expressly provided under the Arbitration Act. 79 In Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd, 80 a Bench of three Judges of this Court observed tha t the “ non- obstante clause is provided to uphold the intention of the legislature as provided in the Preamble to adopt UNCITRAL Model Law and Rules, to reduce excessive judicial interference which is not c ontemplated under the Arbitration Act.” 79 Secur Industries Ltd v. Godrej & Boyce Mfg. Co. Ltd, (2004) 3 SCC 447 80 (2022) 1 SCC 75 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 81. One of the main objectives behind the enactment of the Arbitration Act was to minimize the supervisory role of courts in the a rbitral process by conﬁ ning it only to the circumstances stipulated by the legislature. For instance, Section 16 of the Arbitration Act provides that the arbitral tribunal may rule on its own jurisdiction “ including ruling on any objection with respect to the existence or validity of the arbitration agreement. ” The eﬀ ect of Section 16, bearing in view the principle of minimum judicial interference, is that judicial authorities cannot intervene in matters deal ing with the jurisdiction of the arbitral tribunal. Although Sections 8 and 11 allow courts to refer parties to arbitration or appoint arbitrators, Secti on 5 limits the courts from dealing with substantive objections pertaining to the existence and validity of arbitration agreements at the referral or appointment stage. A referral court at Section 8 or Section 11 stage can only enter into a prima facie determination. The legislative mandate of prima facie determination ensures that the referral courts do not trammel the arbitral tribunal’s authority to rule on its own jurisdiction. 82. Section 5 is of aid in interpreting the extent of judicial interference under Sections 8 and 11 of the Arbitration Act. Sec tion 5 contains a general rule of judicial non-interference. Therefore, every provision of the Arbitration Act ought to be construed in view of Section 5 to give true eﬀ ect to the legislative intention of minimal judicial intervention. iii. The Arbitration Act is a self-contained code 83. In Girnar Traders v. State of Maharashtra, 81 a Constitution Bench of this Court observed that a self-contained code is a complete legislation with regard to the purpose for which it is enacted. Suc h a self- contained code provides for a complete machinery to deal with the purpose sought to be achieved by that law and its dependence on other legislations is either absent or minimal. 84. A two-Judge Bench of this Court, in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd, 82 explained the nature of the Arbitration Act in the following terms: 81 (2011) 3 SCC 1 82 (2011) 8 SCC 333 1135 “89. It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P .S. Sathappan [(2004) 11 SCC 672]) was held to be a self-contained code. Now, if the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration, the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much a s possible, in harmony with the Uncitral Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it “a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done”. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self- contained code the applicability of the general law procedure would be impliedly excluded.” 85. The Arbitration Act is a self-contained code inter alia with respect to matters dealing with appointment of arbitrators, commencement of arbitration, making of an award and challenges to the arbitral award, as well as execution of such awards. 83 When a self-contained code sets out a procedure, the applicability of a general legal procedure would be impliedly excluded. 84 Being a self-contained and exhaustive code on arbit ration law, the Arbitration Act carries the imperative that wha t is permissible under the law ought to be performed only in the manner indicated, a nd not otherwise. Accordingly, matters governed by the Arbitration Act such as the arbitration agreement, appointment of arbitrators and competence of the arbitral tribunal to rule on its jurisdiction have to be assessed in the manner speciﬁ ed under the law. The corollary is that it is not permissible to do what is not mentioned under the Arbitration Act. Therefore, provisions of other statutes cannot interfere with the working of the Arbit ration Act, unless speciﬁ ed otherwise. 83 Pasl Wind Solutions (P) Ltd v. GE Power Conversion (India) (P) Ltd., (2021) 7 SCC 1; Kandla Export Corporation v. OCI Corporation, (2018) 14 SCC 715 84 Subal Paul v. Malina Paul, (2003) 10 SCC 361 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] iv. Principles of modern arbitration 86. The Stamp Act and the Indian Arbitration Act, 1899 came into force on the same day, that is, 1 July 1899. The Arbitration Act, 1899, which was enacted more than a century ago, did not have minimum judicial interference as its avowed object. However, the law on arbitration has undergone a sea change over the course of a century. 87. The Arbitration Act represents the principles of modern arbitration, which seeks to give eﬀ ect to the mutual intention of the parties to resolve their disputes by a neutral third-party arbitral tribunal, whose decision is ﬁ nal and binding on all the parties. Arbitration law allows the parties to design arbitral procedures, which ensures eﬃ ciency and expediency of the arbitration process. One of the reasons that business and commercial e ntities prefer arbitration is because it obviates cumbersome judicial processes, which can often prove expensive, complex, and interminable. Most legal jurisdictions have also recognized and adopted legal approaches that favor a rbitration at both the domestic and international level. In the process, national courts have given eﬀ ect to principles such as the separability pres umption and jurisdictional competence of the arbitral tribunal. Modern ar bitration law does not completely restrict the role of national courts in the ar bitration process, but gives priority to the arbitral tribunal to decide on disputes and issues pertaining to arbitration agreements as well as the substantive rights of the parties. The Arbitration Act reﬂ ects these aspects of modern arbitration law. It is the duty of this Court to interpret the Arbitration Act in a manner which gives life to the principles of modern arbitration in India. F*. The law on the arbitration agreement 88. An arbitration agreement is the foundation of arbit ration as it records the consent of the parties to submit their disp utes to arbitration. 85 In Bihar State Mineral Development Corporation v. Encon Builders, 86 this Court enlisted the essential elements of an arbit ration agreement as follows: * Ed. Note: PART F 85 Redfern and Hunter on International Arbitration (7th edn, O xford University Press, 2023) 49 86 (2003) 7 SCC 418 1137 a. There must be a present or future diﬀ erence in connection with some contemplated aﬀ air; b. There must be the intention of the parties to settle such dis putes by a private tribunal; c. The parties must agree in writing to be bound by the decision of such tribunal; and d. The parties must be ad idem. 89. Section 2(b) of the Arbitration Act defines an “arbitration agreement” to mean an agreement referred to in Section 7. Section 7 deﬁ nes an “arbitration agreement” to mean an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a deﬁ ned legal relationship, whether contractual or not. It provides that an arbitration agreement could be in the form of an arbitration clause in a contract or in the form of a separa te agreement. Further, Section 7 mandates that an arbitration agr eement shall be in writing. According to Section 7(4), an arbitration agreement is in wri ting if it is contained in: (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. Section 7(5) provides that a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. i. Separability of the arbitration agreement 90. The concept of separability or severability of an arbitration agreement from the underlying contract is a legal ﬁ ction which acknowledges the separate nature of an arbitration agreement. The separate nature of the arbitration agreement from the underlying contract is one of the cornerstones of arbitration law. As Redfern and Hunter explain, an arbitration agreement is juridically independent from the underlying contract in which it is contained. 87 87 Redfern and Hunter on International Arbitration (7th edn, O xford University Press, 2023) 81 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] The concept of separability reﬂ ects the presumptive intention of the parties to distinguish the underlying contract, which captures the substantive rights and obligations of the parties, from an arbitration agreement which provides a procedural framework to resolve the disputes arising out of the underlying contract. This presumption has various consequences in theory and practice, the most important being that an arbitration agreement survives the invalidity or termination of the underlying contract. 91. Schwebel, Sobota and Manton explain in a book on International Arbitration that the separability presumption 88 is based on four factors: ﬁ rst, the intention of the parties to require arbitration of any dispute arising between them, including disputes over the validity of the contract; second, preventing an unwilling party from avoiding its earlier commitment by alleging the invalidity of the underlying contract; third, since the arbitration agreement and the underlying contract are considered as t wo separate agreements, the insuﬃ ciency in fulﬁ lling formalities in the underlying contract would not result in the invalidity of the arbitration agreement; and fourth, if the separability presumption is discarded, courts will have to rule on the merits of the disputes instead of the arbitral tribunals. 92. The rationale for the separability presumption lies in the contractual freedom of the parties to an arbitration agreement to settle their disputes by proceedings before an arbitral tribunal to the exclusion of courts. According to the common grain of business understanding and expectation, the parties intend all their disputes over substantive rights and obligations unde r the underlying contract to be resolved by the arbitral tribunal. 89 Therefore, the separability presumption ensures that an arbitration agreement survives a termination, repudiation, or frustration of a contract to give eﬀ ect to the true intention of the parties and ensure sanctity of the arbitral proceedings. 93. Switzerland was one of the ﬁ rst jurisdictions to recognize t he separability presumption. In a decision rendered by the Swiss Federal Tribunal in 1933, it was observed that “ [e]ven where the arbitration clause is contained in the same document as the substantive contract to which it relates 88 Stephen Schwebel, Luke Sobota, and Ryan Manton, Internation al Arbitration: Three Salient Problems (Cambridge University Press, 2nd edn, 2020) 4. 89 Mulheim Pipecoatings GmbH v. Welspun Fintrade Ltd., 2013 SCC OnLine Bom 1048 1139 and therefore from the outside appears as a part of the main agr eement, it still does not constitute a single provision of the main agreement but an independent agreement of a special nature.” 90 However, Gary Born points out that although an arbitration agreement could be separated from t he underlying contract, it can never be independent or autonomous from such contract. 91 This is largely due to the fact that in certain situations, the defects in the underlying contract could also invalidate the arbitration agreement. 94. To properly understand the contours of the separability presumption, it is necessary to understand its origin and development in the international context. Such an analysis is important because any ruling by this Court on the separability presumption ought to be with the aid of international best practices. d. United Kingdom 95. The separability presumption developed gradually in English law starting with the decision of the House of Lords in Heyman v. Darwins. 92 The issue before the House of Lords was whether an arbitration agreement contained in an underlying contract could survive the termination of such contract for a repudiatory breach. It was held that an arbitration agreement is collateral to the substantive contract and could survive its termination. Lord Macmillan observed that an arbitration agreement is materially diﬀ erent from other ordinary contracts, the reason being that breach of obli gations under ordinary contracts cannot (in general) be speciﬁ cally enforced and breach of them results only in damages, but an arbitration agreeme nt can be speciﬁ cally enforced by the machinery of the arbitration Ac ts. Lord Macmillan concluded that repudiation or breach of a contract does not extinguish the arbitration agreement, because it survives for the purpose of resolving the outstanding claims arising out of the breach: “I am, accordingly, of the opinion that what is commo nly called repudiation or total breach of a contract, whether acquiesce d in by the other party or not, does not abrogate the contract, though it may 90 Judgment of 7 October 1933, Tobler v. Justizkommission des Kantons Schwyz, DFT 59 | 177 (1933) 91 Gary Born (n 62) 377 92 [1942] AC 356 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] relieve the injured party of the duty of further fulﬁ lling the obligations which he has by the contract undertaken to the repudiating party. The contract is not put out of existence, though all further performance of the obligations undertaken by each party in favour of the other may cease. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have fail ed, but the arbitration clause is not one of the purposes of the contract.” 96. In subsequent decisions, the English courts rei terated the separability presumption. In Harbour Assurance Co. (U.K.) Ltd. v. Kansa General International Insurance Co. Ltd. 93 , the Court of Appeal held that an arbitration agreement is “ a self-contained contract collateral to the containing contract. ” The separability presumption is also enshrined in Section 7 of the UK Arbitration Act 1996 94 in the following terms: “Unless otherwise agreed by the parties, an arbitration agreeme nt which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existent or ineﬀ ective because that other agreement is invalid, or did not come into existence or has become ineﬀ ective, and it shall for that purpose be treated as a distinct agreement.” 97. Chitty on Contracts states that Section 7 of the UK Arbitration Act maintains the established common law principle which treats an arbitration agreement as distinct from the contract of which it forms part. 95 According to Chitty, treating an arbitration agreement distinct and separate from the underlying contract has two consequences: ﬁ rst, an arbitration agreement can be void or voidable only on the grounds which directly relate to it; and second, if the arbitration agreement is valid and binding and is suﬃ ciently wide in its terms, issues relating to the validity, existence, or eﬀ ectiveness of the underlying contract are within the substantive jurisdiction of the arbitral tribunal. 96 93 [1993] Q.B. 701 94 “UKG Arbitration Act” 95 Chitty on Contracts, Hugh Beale (ed), (32nd edn, Sweet and Maxwell, 2015) para 32- 028 96 ibid 1141 98. In Premium Nafta Products Limited v. Fili Shipping Co. Ltd., 97 the House of Lords further explained the separability presumption in Section 7 of the UK Arbitration Act. In that case, the issue was whether a party was bound by an arbitration agreement contained in an underlying contract which was allegedly procured by fraud and bribery. Lord Hoﬀ man, writing for the House of Lords, held that it could be enforced in view of the separabi lity presumption. The Law Lord held that an arbitration agreement in te rms of Section 7 of the UK Arbitration Act is a “distinct agree ment” from the underlying contract and, therefore, can be void or voidable only on grounds which relate directly to the arbitration agreement. Lord Hoﬀ man, built on his past decision in Harbour Assurance (supra), by holding that Section 7 protects an arbitration agreement from any indirect challenge. e. United States of America 99. The US Federal Arbitration Act presupposes that an arbitration agreement can be separate and distinct from the underlying contract. 98 The separability presumption was subsequently reiterated by US courts with respect to both international and domestic arbitrat ion. In Prima Paint Corporation v. Flood & Conklin Mfg. Co., 99 the Supreme Court of the United States aﬃ rmed the separability presumption by observing that “arbitration clauses as a matter of federal law are ‘separable’ from the contracts in which they are embedded.” In reaching this conclusion, the court emphasized upon the presumptive desire of the parties to insulate the arbitration agreement from challenges directed at the underlying contract. The position of law which was laid down in Prima Paint (supra) was reiterated by the Supreme Court of the United S tates in Buckeye Check Cashing Inc v. Cardegna 100 and Rent-A-Center, West, Inc. v. Jackson. 101 In Rent-A-Center (supra), it was held that application of the severability rule does not depend on the substa nce of the remainder of the contract. 97 [2007] UKHL 40 98 Gary Born (n 62) 382 99 388 US 395 (1967) 100 546 U.S. 440, 440 (2006) 101 2 561 U.S. 63 (2010) IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] f. Singapore 100. The doctrine of separability has been statutoril y recognized under the domestic arbitration regime in Singapore through Section 21 of the Singaporean Arbitration Act, 2001. 102 The provision is that “an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.” The separability presumption has been further explained by the Singapore High Court in BNA v. BNB. The High Court observed that the “parties intend their arbitration agreement to remain eﬀ ective if a provision of the substantive contract into which it is integrated could, in certain circumstances of fact or law, operate to render their arbitration agreement invalid .” 103 Thus, the Singapore High Court held that the purpose of the separability presumption is to insulate an arbitration agreement from invalidity that may arise from a challenge to the substantive contract. g. International Conventions 101. The New York Convention does not expressly provide for the separability presumption. Article II of the Convention deﬁ nes an arbitration agreement as including “an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.” Moreover, Article V(1)(a) provides that the recognition and enforcement of an arbitral award may be refused where the arbitrati on agreement “is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.” The provision rests on the premise that international arbitration agreements could be subjected to diﬀ erent national laws and legal rules than the underlying contract, and, therefore, an arbitration agreement is presumptively separate from the underlying contract. According to Gary Born, Article II and Article V(1)(a) of the New York Convention indicate that the Convention treats an arbitration agreement as being diﬀ erent from the underlying contract. 104 102 Arbitration Act 2001 (No. 37 of 2001) 103 [2019] SGHC 142 104 Gary Born (n 62) 378 1143 102. Article 16 of the Model Law deals with the competence of an arbitral tribunal to rule on its own jurisdiction. Article 16(1) provides: “The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitrat ion agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall entail ipso jure the invalidity of the arbitration clause.” (emphasis supplied) 103. Rule 23 of the UNCITRAL Arbitration Rules, 2021 also provides that “an arbitration clause that forms part of a contract s hall be treated as an agreement independent of the other terms of the contract.” In cont rast to the New York Convention, the Model Law expressly recognizes the separability presumption. 104. According to the UNCITRAL Working Group, the separability presumption is incorporated under Article 16(1) to complement the principle of competence-competence. The separability presumption further ensures that the invalidity of the underlying contract does not aﬀ ect the jurisdiction of the arbitral tribunal to decide on the nullity of the contract or any other issues submitted to its jurisdiction by the parties “unless it ﬁ nds that the defect which causes the nullity of the contract aﬀ ects also the arbitration clause itself.” 105 The last sentence of Article 16(1) (extracted above) states the general principle of contractual valid ity of arbitration clauses. 106 It connotes that the invalidity of the underlying co ntract will not necessarily entail the invalidity of an arbitration agreement contained in the contract. Accordingly, the arbitral tribunal’s juri sdiction will be aﬀ ected only when the defect causing invalidity is directed at the arbitration agreement. 107 105 Analytical Commentary on Draft Text of a Model Law on Inte rnational Commercial Arbitration, A/CN.9/264 (25 March 1985) 38. 106 Gary Born (n 62) 403 107 Digest of Case Law on the Model Law on International Commercial Arbitration (2012) 76. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] h. India 105. The Arbitration Act also incorporates the separability presumption in Section 16(1) along the lines of the Model Law. Section 16(1) reads a s follows: “16. Competence of arbitral tribunal to rule on its jurisdiction – (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, - (a) an arbitration agreement which forms part of a contrac t shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” 106. The separability presumption, as incorporated under Article 16(1) of the Model Law, as well as Section 16 of the Arbitration A ct, is qualiﬁ ed by the expression “for that purpose.” A plain reading may suggest that Section 16 has incorporated the separability presumption only for the particular purpose of allocation of competence over jurisdictional disputes. However, the Digest of Case Laws on UNCITRAL Model Law states that “ the language used in the second sentence does not prevent the application of the separability presumption when a jurisdictional question is raised before a court. ” 108 Gary Born suggests that the better view is that the separability presumption contained in Article 16(1) states a general rule of contractual validity “ which is applicable for all purposes. ” 109 The judicial view that emerges from the Indian courts also seems to suggest that an a rbitration agreement is treated as distinct and separate from the under lying contract as a general rule of substantive validity. 107. The separability presumption has undergone a s ignificant evolution in India. Initially, the Indian courts viewed an arbitration agreement as an integral part of the underlying contract without any existence beyond 108 Ibid. 109 Gary Born (n 62) 403 1145 such contract. For instance, in Union of India v. Kishorilal Gupta, 110 the issue before this Court was whether an arbitration clause in the ori ginal contract survived after the enactment of a subsequent contract. J ustice K Subba Rao (as the learned Chief Justice then was) considered Heyman (supra) but distinguished it on the ground that it only dealt with repudiation, where rights and obligations of parties survive the termination of contract. It was held that in situations where the original contract is superseded by a subsequent contract, the arbitration clause in the original contract will also cease to exist. Justice K Subba Rao, speaking for the majority, held that ﬁ rst, an arbitration clause is a collateral term of a contract as distinguished from its substantive terms, but nonetheless it is an integral part of it; second, the existence of the underlying contract is a necessary condition for the operation of an arbitration clause; third, if the underlying contract was non-est in the sense that it never came legally into existence or was void-ab -initio, the arbitration clause also cannot operate; fourth, if the parties put an end to a validly executed contract and substitute it with a new contract, the arbitration clause of the original contract also perishes with it; and ﬁ fth, in situations such as repudiation, frustration, or breach of contract, only the performance of the contract comes to an end, the arbitration clause persists because the contract continues to exist for the purposes of disputes arising under it. 108. In Damodar Valley Corporation v. K K Kar, 111 a two-Judge Bench of this Court held that the plea that a contract is voi d, illegal, or fraudulent aﬀ ects the entire contract along with the arbitration clause. However, the enactment of the Arbitration Act in 1996 enabled the Indian courts to give eﬀ ect to the separability presumption with greater impetus. Section 16(1)(b), which provides that a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invali dity of the arbitration clause, renders the decisions in Kishorilal Gupta (supra) and Damodar Valley Corporation (supra) redundant. Consequently, even if the underlying contract is declared null and void, it will not ipso jure result in the invalidity of the arbitration agreement. 110 1959 SCC OnLine SC 6 111 (1974) 1 SCC 141 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 109. In Firm Ashok Traders v. Gurumukh Das Saluja, 112 the issue before this Court was whether an application under Sect ion 9 of the Arbitration Act moved by a partner of a non-registered ﬁ rm or by a person not shown as a partner in the Register of Firms was maintainable in view of Section 69(3) of the Indian Partnership Act, 1932. Section 69(3) creates a bar against the institution of a suit to enforce a right arising from a contract unless the ﬁ rm is registered and the person suing is or has been shown in the Register of Firms as partner. This Court considered the overall scheme of the Arbitration Act to hold that an “ arbitration clause is separable from the other clauses of the partnership deed” and “constitutes an agreement by itself. ” 110. In National Agricultural Coop. Marketing Federation India Ltd. v. Gains Trading Co., 113 the issue before this Court in an application under Section 11 was whether an arbitration clause comes to an end if the contract containing such clause is repudiated. While an swering this in negative, this Court observed that even if the underlying contract comes to an end, the arbitration agreement contained in such contract survives for the purpose of the resolution of disputes between the parties. Similarly, in P Manohar Reddy & Bros. v. Maharashtra Krishna Valley Development Corp., 114 this Court referred to Buckeye Check Cashing Inc. (supra) to observe that an arbitration agreement contained in an underlying cont ract is a collateral term which may survive the termination of the contract. 111. In Magma Leasing & Finance Ltd. v. Potluri Madhavilata, 115 this Court cited Heyman (supra) with approval to hold that the termination of the underlying contract does not render an arbitration agreement inoperative. It was further observed that the arbitration agreement survives for the purpose of resolution of disputes arising “in respect of”, “with regard to”, or “under” the underlying contract. The emphasis on the expressions “in respect of”, “with regard to” or “under” in Magma Leasing & Finance Ltd. (supra) indicates that the purpose of an arbitration agreement is to embody the mutual intention of the parties to settle any disputes that may arise “in 112 (2004) 3 SCC 155 113 (2007) 5 SCC 692 114 (2009) 2 SCC 494 115 (2009) 10 SCC 103 1147 respect of” the substantive obligations under the underlying contract. It is, therefore, a logical conclusion that the parties mutually intend to make an arbitration agreement distinct and separate from the underlying c ontract, so that even if the underlying contract comes to an end, the arbitrati on agreement survives to resolve any outstanding disputes that may arise out the substantive obligations under the contract. 112. In view of the above discussion, we formulate our conclusions on this aspect. First, the separability presumption contai ned in Section 16 is applicable not only for the purpose of determining the juri sdiction of the arbitral tribunal. It encapsulates the general rule on the substantive independence of an arbitration agreement. Second, parties to an arbitration agreement mutually intend to confer jurisdiction on the arbitral tribunal to determine questions as to jurisdiction as well as substantive contractual disputes between them. The separability presumption gives effect to this by ensuring the validity of an arbitration agreement contained in an underlying contract, notwithstanding the invalidity, illegality, or termination of such contract. Third, when the parties append their signatures to a contract containing an arbitration agreement, they are regarded in eﬀ ect as independently appending their signatures to the arbitration agreement. The reason is that the parties intend to treat an arbitration agreement contained in an underlying contract as distinct from the other terms of the contract; and Fourth, the validity of an arbitration agreement, in the face of the invalidity of the underlying contract, allows the arbitral tribunal to assume jurisdiction and decide on its own jurisdiction by determining the existence and validity of the arbitration agreement. In the process, the separability presumption gives eﬀ ect to the doctrine of competence-competence. 113. In view of the legal position, we now proceed to analyze the correctness of the decision in N N Global 2 (supra). The Constitution Bench acknowledged the separability presumption, but refused to apply it in the context of Sections 33 and 35 of the Stamp Act. The relevant observation of the Court is as follows: “157. […] The evolution of the principle that an arbitration is a separate and distinct agreement from the contract, would indicate that it would have no play in the context of the duty of a Court, within the meaning of Sections 33 and 35 of the Stamp Act, to act in consonance therewith.” IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 114. The above position of law is contrary to the s eparability presumption which treats an arbitration agreement as separate fr om the underlying contract. G*. The doctrine of competence-competence 115. The doctrine of kompetenz-kompetenz (also know n as competence-competence), as originally developed in Germany, was traditionally understood to imply that arbitrators are empowered to make a ﬁ nal ruling on their own jurisdiction, with no subsequent judicial review of the decision by any court. 116 However, many jurisdictions allow an arbitral tribunal to render a decision on its jurisdiction, subject to substantive judicial review. 117 116. It is a well-recognized principle of public international law that a legal authority possessing adjudicatory powers has the right to decide its own jurisdiction. 118 Similarly, it is a general rule of international arbitration law that an arbitral tribunal has the power to determine its own jurisdiction. The ability of an arbitral tribunal to determine its own jurisdiction is an important facet of arbitration jurisprudence because it gives eﬀ ect to the separability presumption. The separability presumption insulates the arbitration agreement from the defects of the underlying contract, and thereby ensures the sustenance of the tribunal’s jurisdiction over the substantive rights and obligations of the parties under the underlying contract even after suc h a contract is put to an end. The doctrine of competence-competence allows the tribunal to decide on all substantive issues arising out of the underlying contract, including the existence and validity of the arbitration agreement. i. Comparative analysis 117. The doctrine of competence-competence is now a part of all major jurisdictions. Section 30 of the UK Arbitration Act provides that the arbitral tribunal may rule on its own substantive jurisdictio n with respect to: ﬁ rst, whether there is a valid arbitration agreement; second, whether the * Ed. Note: PART G 116 Fouchard, Gaillard, Goldman on International Commercial Arbitrat ion (edited by Emmanuel Gaillard and John Savage, 1999) 396 117 Gary Born (n 62) 1143 118 Interpretation of Greco-Turkish Agreement of December 1st, 1926, Advisory Opinion, Series B – No. 16 (August 28, 1928). 1149 tribunal is properly constituted; and third, what matters have been submitted to arbitration in accordance with the arbitration agreement. T he basis for the jurisdictional competence of an arbitral tribunal can be evinced from the following observation of Lord Hoﬀ man in Fili Shipping Company Limited (supra): “In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute rising out of the re lationship into which they have entered or purported to enter to be decided by t he same tribunal.” In Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious Aﬀ airs, Government of Pakistan, 119 the United Kingdom Supreme Court held that the tribunal’s own view of its jurisdiction has no legal or evidential value when the issue pertains to the e xercise of legitimate authority by the tribunal. Thus, the UK position is that although the arbitral tribunal is empowered to consider whether it ha s jurisdiction, its determination is subject to the examination of the courts. 118. The courts in the United States have considered the principle of competence-competence to be intertwined with the separability presumption. In Prima Paint (supra), the United States Supreme Court held that if a claim is made to the eﬀ ect that the underlying contract was induced fraudulently, then the issue should be determined by the courts. The Supreme Court concluded that all the other issues should be left for the dete rmination of the arbitral tribunal to “not only honor the plain meaning of the statute, but also the unmistakably clear congressional purpose that the arbitration procedure, when selected by the parties to a contract, be speed y, and not subject to delay and obstruction in the courts.” In Buckeye Check Cashing (supra), the United States Supreme Court reiterated Prima Paint (supra) by holding that the arbitral tribunal should consider the issue of the validity of underlying contract in the ﬁ rst instance. Thus, the position in the US is that the courts should only check if any invalidity is directed at the arbi tration agreement, leaving all the other issues, including that of the validity of the underlying contract, to the arbitral tribunal. 119. Under Singaporean law, Article 21(1) of the Arbitration Act, 2001 incorporates the doctrine of competence-competence in so far as domestic 119 [2010] UKSC 46 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] arbitration is concerned. It provides that an arbitral tribunal may rule on its own jurisdiction, including a plea that it has no jurisdicti on and any objections to the existence or validity of the arbitration agre ement at any stage of the arbitral proceedings. The conduct of international commercial arbitrations in Singapore is governed by the International Arbitration Act, 1994. 120 Section 3 of the IIA states that the Model Law has the force of law in Singapore. In Malini Ventura v. Knight Capital Pte Ltd, 121 the issue before the Singapore High Court was whether the arbitral trib unal has primacy to determine the existence of an arbitration agreement in the context of international commercial arbitration. The Court analysed the scope and purpose of Article 16(1) of the Model Law to hold that an arbitral tribunal has ﬁ rst priority in determining whether an arbitration agreement exists and the court’s consideration must come after the tribunal’s own examination of the issue. It was further observed that “the tribunal’ s powers in relation to the issue are wide because it can consider not only validity but also the very existence of the arbitration agreement.” Thus, the Singapore High Court has given full eﬀ ect to the doctrine of competence-competence since the arbitral tribunal gets the ﬁ rst priority to determine issues even with respect to the very existence of the arbitration agreement, while the jurisdiction of the courts is limited to a prima facie determination. ii. India 120. Under the previous arbitration regime in India, that is the 1940 Act, the issue of determining the existence or validity of arbitration agreement was exclusively within the domain of the courts. To that eﬀ ect, Section 33 of the 1940 Act allowed any party to the arbitration agreement to ﬁ le an application before the courts challenging the existence or validit y of an arbitration agreement. In view of this, this Court consistently held that the question as to the existence or validity of an arbitration agreem ent was to be decided only by application to courts and not by the arbitral tribunal. 122 This position has now undergone a complete metamorphosis in the present 120 “IIA” 121 [2015] SGHC 225 122 Dhanrajamal Gobindram v. Shamji Kalidas & Co., 1961 SCC OnLine SC 28; Khardah Co. Ltd. v. Raymon & Co. (India) Private Ltd., 1962 SCC OnLi ne SC 28. 1151 legislation. Section 16 of the Arbitration Act, which is based on Article 16 of the Model Law, recognizes the doctrine of competence-competenc e in Indian arbitration law. Section 16 empowers the arbitral tri bunal to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of arbitration agreement. Importantly, the parties have a right under Section 16(2) and 16(3) to challenge the jurisdiction of the arbitral tribunal on grounds such as the non-existence or invalidit y of the arbitration agreement. The arbitral tribunal is obligated to decide on the challenge to its jurisdiction, and where it rejects the challenge, it can proceed with the arbitral proceedings and make an arbitral award. It is the principle of procedural competence-competence which recognizes the power of an arbitral tribunal to hear and decide challenges to its jurisdiction. Once the arbitral tribunal makes an arbitral award, Section 16(6) allows the aggrieved party to make an application for setting aside the award under Section 34. Sections 16(5) and 16(6) further show that Parliament has completely ousted the jurisdiction of courts to interfere during the arbitral proceedings - courts can intervene only after the tribunal has made an award. Thus, Section 16 is intended to give full eﬀ ect to the procedural and substantive aspects of the doctrine of competence-competence. 121. Section 34 of the Arbitration Act deals with applications for setting aside arbitral awards. Section 34(2) provides that an arbitral award may be set aside by the Court only if the party making the application establishes, on the basis of the record of the arbitral tribunal, any of the following ﬁ ve grounds: (i) a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making an application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplate d by or not failing within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] to arbitration, provided that if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conﬂ ict with a provision of Part I from which the parties cannot derogate, or, failing such agreement, was not in accordance with Part I. Moreover, the court can set aside an arbitral award if it ﬁ nds that: (i) the subject-matter of the dispute is not capable of settlem ent by arbitration under the law for the time being in force; or (ii) the arbitral award is in conﬂ ict with the public policy of India. 122. Under Section 34, the grounds for setting aside an arbitral award are speciﬁ c. The provision requires a party challenging an award to plead and prove the existence of one or more such grounds. 123 The scheme of the Arbitration Act shows that although an arbitral tribunal is given priority to determine all issues pertaining to its jurisdiction based on the principle of competence-competence, the tribunal’s decision is subject to judicial review at the stage when an award is challenged. Moreover, one of the grounds on which an arbitral award can be set aside is that the arb itration agreement is not valid under law. This indicates that the Arbitration Ac t does not contemplate the court determining the validity of an arbitration agreement at a pre-arbitral stage. 123. In Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products, 124 one of the issues before this Court was whether a decision on the issue of limitation would go to the root of the jurisdiction of the arbitral tribunal, and therefore be covered by Section 16 of the Arbitration Act. This Court referred to Section 16(1) to observe that “the Arbitral Tribunal may rule on its own jurisdiction, which makes it clear that it refe rs to whether the Arbitral Tribunal may embark upon an inquiry into the issues raised by 123 Fiza Developers and Inter-Trade (P) Ltd. v. Amci (I) (P) Ltd., (2009) 17 SCC 796 124 (2018) 2 SCC 534 1153 the parties to the dispute.” In Bhadra Products (supra), it was held that the issue of limitation concerns the jurisdiction of the tribunal which tries the proceedings. 124. In Uttarakhand Purv Sainik Kalyan Nigam Ltd v. Northern Coal Field, 125 the issue before this Court was whether a referral court at the stage of appointment of arbitrators would be required to decide the issue of limitation or leave it to the arbitral tribunal. A Bench of two Judges of this Court held that the doctrine of competence-competence is “intended to minimize judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties.” Moreover, this Court held that Section 16 is an inclusive provision of very wide ambit: “7.13. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, “including any objections” with respec t to the existence or validity of the arbitration agreement. Section 16 is an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be requi red to be decided by the arbitrator under Section 16, and not the High Court at the pre-reference stage under Section 11 of the Act. O nce the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator.” (emphasis supplied) 125. In view of the above discussion, the issue that comes up for our consideration is whether an issue of stamping is a jurisdictional issue. Jurisdiction is generally deﬁ ned as the power of a court or tribunal to hear and determine a cause, and to adjudicate or exercise any judicial power in relation to such cause. 126 Jurisdiction refers to the authority of a court or 125 (2020) 2 SCC 455 126 Sukh Lal Sheikh v. Tara Chand Ta, 1905 SCC OnLine Cal 164 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] tribunal to decide matters that are litigated before it or to take cognizance of matters presented before it in a formal way for its decisi on. In Oﬃ cial Trustee, West Bengal v. Sachindra Nath Chatterjee, 127 this Court held that for a court to have jurisdiction to decide a particular matter, it must not only have jurisdiction to try the suit brought but must also have the authority to pass the orders sought. In NTPC v. Siemens Atkeingesllchaft, 128 this Court observed that any refusal to go into the merits of a claim may be in the realm of jurisdiction. Accordingly, it was observed that the i ssue of limitation goes to jurisdiction because if a claim is barred by limitation, a tribunal can refuse to exercise its jurisdiction. 126. Section 35 of the Stamp Act mandates that an u nstamped instrument cannot be acted upon unless it is duly stamped. The question is whether a tribunal can eﬀ ectively exercise its jurisdiction to settle the claims between the parties until stamp duty is paid on the underlying instrument. In view of the decision of this Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd (supra), the scope of an arbitral tribunal’s authority is wide enough as to comprehend all preliminary issues aﬀ ecting its jurisdiction, including the issue of suﬃ ciency of stamping. 127. In case the issue of stamping is raised before an arbitral tribunal, Sections 33 and 35 of the Stamp Act make it evident that a person having authority by “consent of parties” to receive evidence is empow ered to impound and examine an instrument. A person having authority “by consent of parties” to receive evidence includes an arbitral tribunal which is constituted by consent of parties. iii. Negative competence-competence 128. The international arbitration law as well as domestic law prioritize the arbitral tribunal by permitting them to initially decide challenges to their authority instead of the courts. The policy consideration behind this approach is two-fold: ﬁ rst, to recognize the mutual intention of the parties of choosing the arbitrator to resolve all their disputes about the substan tive rights and obligations arising out of contract; and second, to prevent parties from 127 (1969) 3 SCR 128 (2007) 4 SCC 451 1155 initiating parallel proceedings before courts and delaying the arbitral process. This is the positive aspect of the doctrine of competence-competence. 129. The negative aspect, in contrast, speaks to the national courts. It instructs the courts to limit their interference at the referral stage by deferring to the jurisdiction of the arbitral tribunal in issues pertaining to the existence and validity of an arbitration agreement. Thus, the nega tive aspect of the doctrine of competence-competence suggests that the courts should refrain from entertaining challenge to the jurisdiction of the arbitral tribunal before the arbitrators themselves have had an oppor tunity to do so. 129 Allowing arbitral tribunals to ﬁ rst rule on their own jurisdiction and later allowing the courts to determine if the tribunal exercis ed its powers properly safeguards both the power and authority of the arbitral tribunal as well as the courts. The negative aspect of the doctrine has been expressly recognized by Indian courts. Considering both the positive and negative facets, the principle can be deﬁ ned as a rule whereby arbitrators must have the ﬁ rst opportunity to hear challenges relating to their jurisdiction, which is subject to subsequent review by courts. 130 130. In Chloro Controls India (P) Ltd. v. Severn Trent Water Puriﬁ cation Inc., 131 one of the issues before this Court was whether the court at the referral stage under Section 45 is required to dete rmine the validity of an arbitration agreement. This Court recognized that the doctrine of competence-competence has both the positive and the negative aspects. It was observed that while the positive aspect enables the arbitrator to rule on its own jurisdiction, the negative aspect deprives the courts of thei r jurisdiction. However, this Court noted the absence of a provision similar to Section 16 in Part II to conclude that the referral court is required to test for the ingredients of Section 45 at the threshold stage itself. 131. Thereafter, this Court in Vidya Drolia (supra) held that the doctrine of competence-competence has both negative and positive connotations. The relevant extract from the decision is set out below: 129 George A Bermann, ‘The “Gateway” Problem in International Commercial Arbitration’ (2012) 37 Yale Journal of International Law 1, 16. 130 Fouchard (n 116) 401 131 (2013) 1 SCC 641 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] “129. Principles of competence-competence have positive and negative connotations. As a positive implication, the Arbitral Tribuna ls are declared competent and authorised by law to rule as to their jurisdiction and decide non-arbitrability questions. In case of expressed negative eﬀ ect, the statute would govern and should be followed. Im plied negative eﬀ ect curtails and constrains interference by the court at the referral stage by necessary implication in order to allow the Arbitral Tribunal to rule as to their jurisdiction and decide non-arbitrabil ity questions. As per the negative eﬀ ect, courts at the referral stage are not to decide on merits, except when permitted by the legisla tion either expressly or by necessary implication, such questions of non- arbitrability. Such prioritisation of the Arbitral Tribunal over the courts can be partial and limited when the legislation provides for some or restricted scrutiny at the “ﬁ rst look” referral stage. We would, therefore, examine the principles of competence-competence with reference to the legislation, that is, the Arbitration Act.” 132. In Arcelormittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., 132 this Court held that negative competence-competence prohibits courts from hearing disputes which the parties have mut ually intended to submit to the jurisdiction of arbitral tribunal. As h eld in the preceding sections, the issue of stamping is a jurisdictiona l issue. The principle of negative competence-competence requires the courts to leave the issue of stamping to be decided by the arbitral tribunal in the ﬁ rst instance. H*. Judicial interference under the Arbitration Act 133. When parties enter into an arbitration agreement, it is their mutual and unequivocal intention to submit their disputes to an arbitral tribunal. The arbitration law recognizes this aspect by granting autonomy to the parties to adopt a procedural mechanism for the appointment of arbitrators. Party autonomy has also been expressly recognized by international arbi tration covenants as well as national arbitration legislations. For instance, Article 11(2) of the Model Law states that parties to an arbitration agre ement are free to agree on a procedure for appointing the arbitrator or arbitrators. In a situation where the agreed procedure of the parties fails, the Model Law * Ed. Note: PART H 132 (2022) 1 SCC 712 1157 permits the national courts to appoint arbitrators on a request of a party. The recourse to judicial appointment of arbitrators is often invoked as a last resort by the parties when their agreed procedure becomes unworkable. The power of appointment of arbitrators is vested with national courts to resolve the deadlock in appointment of an arbitrator. 133 134. As discussed in the preceding segments of this judgment, Section 5 of the Arbitration Act disallows a judicial authority from intervening unless expressly provided under Part I. In the present proceedings, the exercise of the powers by the courts or judicial authorities as provided under Section 8 and 11 becomes particularly relevant for our consideration. 135. According to Fouchard, an arbitration agreement has both a positive and negative eﬀ ect. The positive eﬀ ect is that the parties ought to honor their undertaking to submit to arbitration any disputes covered by their arbitration. On the ﬂ ip side, the negative eﬀ ect of the arbitration agreement is that courts are prohibited from hearing such disputes. 134 Most international covenants have recognised the principle that courts lack jurisdiction to hear disputes covered by an arbitration agreement. For instance, Article II(3) of the New York Convention states that “ [t]he court of a Contracting State, when seized of an action in a matter in respect of which the p arties have made an agreement within the meaning of this article, shall, a t request of one of the parties, refer the parties to arbitration, unless it ﬁ nds that the said agreement is null and void, inoperative or incapable of being performed. ” 136. In the Indian context, Section 8 provides that when an action is brought before a judicial authority in a matter which is t he subject of an arbitration agreement, such judicial authority shall refer the parties to arbitration on an application made by a party to the arbitrati on agreement or any person claiming through or under him not later than the date of submitting their ﬁ rst statement on the substance of the dispute. Section 8 mandates the judicial authority to refer the parties to arbitration “ unless it ﬁ nds that prima facie no valid arbitration agreement exists. ” Section 8 is based on Article 8 of the Model Law which provides that a “court” before 133 Digest of Case Law on the Model Law on International Commercial Arbitration (2012) 60 134 Fouchard (n 116) 402 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] which an action is brought in a matter which is the subject of an arbitration agreement shall refer the parties to arbitration “ unless it ﬁ nds that the agreement is null and void, inoperative or incapable of being performed. ” It is evident that Section 8 has made a departure from Article 8 by using the expansive term “judicial authority” rather than “court.” The int ention of the legislature to provide an expansive application can also be gauged from the fact that the expression “ unless it ﬁ nds that the agreement is null and void, inoperative or incapable of being performed ” does not ﬁ nd place in Section 8. 135 137. According to the UNCITRAL Working Group Commentar y on the Model Law, Article 8 of the Model Law enshrines the “negati ve eﬀ ect” of an arbitration agreement. 136 Moreover, Article 8 gives eﬀ ect to the intention of the parties to submit their disputes to arbit ration to the exclusion of courts, irrespective of whether such exclusion is expresse d in the agreement. Similar legislation has also been incorporated under the English 137 and French 138 national laws. It is worth noting that most of the national legislations entitle the courts at the referral stage to review the existence and validity of arbitration agreements. For example, Section 9(4) of the English Arbitration Act, 1996 provides that a court can stay the legal proceedings unless satisﬁ ed that the arbitration agreement “is null and void, inoperative, or incapable of being performed. ” Similarly, Article 1458 of 135 A Ayyasamy v. A Paramsivam, (2016) 10 SCC 386 136 Analytical Commentary on Draft Text of a Model Law on Inte rnational Commercial Arbitration, A/CN.9/264 (25 March 1985) 38. 137 Article 9(1) of UK Arbitration Act: It reads: “(1)A party t o an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply t o the court in which the proceedings have been brought to stay the proceedings so fa r as they concern that matter. […] (4) On an application under this section the court shall gra nt a stay unless satisﬁ ed that the arbitration agreement is null and void, inoperative , or incapable of being performed.” 138 Article 1458 of French Code of Civil Procedure, 1981. It re ads: “If a dispute pending before an arbitral tribunal on the basis of an arbitration agreement is brought before a State court, it shall declare itself incompetent. If the dispute is not yet before an arbitral tribunal, t he State court shall also declare itself incompetent, unless the arbitration agreement is manifestly null and void.” 1159 the French Civil Code provides that a state court is incompetent to decide on issues pertaining to an arbitration agreement, unless the arbitration agreement is “ manifestly null and void. ” Thus, the standard of review that the court should adopt at the pre-arbitral stage diﬀ ers considerably across jurisdictions. 138. One of the major bottlenecks in the smooth functioning of arbitral proceedings is the inability of the parties to ensure the const itution of the arbitral tribunal once the dispute has arisen. To ensure that such disagreement between the parties does not derail the arbitral proceedings, international covenants as well as national laws allow judicial authorities t o assist the parties in appointing arbitrators. For instance, Article 14 44 of the French Civil Code in the context of domestic arbitration provides that “[i]f a dispute has arisen and problems occur with regard to the constitution of the arbitral tribunal due to the behavior of a party or to the implementation o f the appointment method, the arbitrator or arbitrators shall be appointed by the President of the Tribunal de Grande Instance.” 139 The said provision further provides that the President shall declare that there is no basis for appointment if the “ arbitration clause is manifestly null and void or insuﬃ cient to constitute an arbitral tribunal. ” The basis for providing judicial intervention to the extent of determining the validity of arbitration agreement is to ensure that the courts do not mechanically appoint arbitrators in situations where the arbitration does not have any contractual basis. 140 139. Section 11 of the Arbitration Act deals with the appo intment of arbitrators. It recognizes the autonomy of the parties to agree upon a procedure for appointment of an arbitrator or arbitrat ors. Section 11 requires the intervention of the court only when there i s a deadlock or failure of the parties to follow the appointment proced ure. In the process, Section 11 is meant to give eﬀ ect to the mutual intention of the parties to settle their disputes by arbitration in situations wh ere the parties fail to appoint an arbitrator or arbitrators. In an arbitration with three arbitrators, each party is required to appoint one arbitrator each , and subsequently the two arbitrators will appoint the third arbitrator. Se ction 11(6) confers 139 Article 1444, French Code of Civil Procedure. 140 Fouchard (n 116) 495 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] powers on the Supreme Court and the High Court, as the case may be, on the failure of the parties to comply with the agreed a rbitration procedure. Section 11(6) enlists three possible defects in the appointment procedure, namely: ﬁ rst, a party fails to act as required by the agreed procedure; second, the parties or the two appointed arbitrator s fail to reach an agreement expected of them under that procedure; or third, a person, including an institution, fails to perform any function entrusted to them or under the agreed procedure. 140. Section 11(6) has had a long and chequered history before this Court, particularly in respect of the nature of function of the Chief Justice or his designate in the appointment of an arbitrator. In SPB & Co. v. Patel Engineering Ltd., 141 a seven-Judge Bench of this Court held that the power exercised by the Chief Justice of India or a Chief Justice of the High Court under Section 11(6) is a judicial power. In the process, this Court analysed the scope of the powers and authority of the referral court under Sect ion 11(6). Moreover, this Court noted that Sections 8 and 11 are complementary in nature. Consequently, if the judicial authority acting under Section 8 has to mandatorily decide the issue of jurisdiction before referring t he parties to arbitration, the same standard of scrutiny was also held to be applicable to the reference under Section 11. In conclusion, it was held that the Chief Justice or their designate at the referral stage under Section 11(6) had the right to determine all preliminary issues: “47 ( iv ) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlie r part of this judgment. These will be his own jurisdiction to entert ain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualiﬁ cations of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to s eek the opinion of an institution in the matter of nominating an arbitrator qualiﬁ ed in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge.” 141 (2005) 8 SCC 618 1161 141. The extent of judicial interference at the refe rral stage was scrutinised by a Bench of two Judges of this Court in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. 142 This Court held that when the intervention of the court is sought under Section 11 of the Arbitration Act, the following categories of issues will arise before the referral court: (i) The issues which the Chief Justice or his designate is bound to decide. These issues were: ﬁ rst, whether the party making the application has approached the appropriate High Court; and second, whether there is a valid arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement; (ii) The issues which the Chief Justice or his designate may choose to decide or leave them to the decision of the arbitral tribunal. These issues were: ﬁ rst, whether the claim is a dead (long-barred) claim or a live claim; and second, whether the parties have concluded the contract/ transaction by recording the satisfaction of their mutual rights and obligations or by receiving the ﬁ nal payment without objection; and (iii) The issues which the Chief Justice or their designate shoul d leave exclusively to the arbitral tribunal. These issues were: ﬁ rst, whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for ﬁ nal decision of a departmental authority and excepted or excluded from arbitration); and second, merits or any claim involved in the arbitration. 142. The decisions of this Court in Patel Engineering (supra) and Boghara Polyfab (supra) allowed for greater judicial interference at the pre-arbitral stage. In eﬀ ect, the referral courts were encouraged to conduct mini-trials instead of summarily dealing with the preliminary issues. This was also noted by the Law Commission of India, which observed that judicial intervention in the arbitral proceedings is a pervasi ve problem in 142 (2009) 1 SCC 267 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] India leading to signiﬁ cant delays in the arbitration process. 143 The Law Commission recognized that one of the problems plaguing implementation of the Arbitration Act was that Section 11 applications were kept pending for years by the courts. To remedy the situation, the Law Commissi on proposed changing the then existing scheme of the power of appointment being vested in the “Chief Justice” to the “High Court” and the “Supreme Court”. It also clariﬁ ed that the power of appointment of arbitrators ought not to be regarded as a judicial act. 143. Signiﬁ cantly, the Law Commission observed that there was a need to reduce judicial intervention at the pre-arbitral stage, that is, prior to the constitution of the arbitral tribunal. Accordingly, it proposed li miting the scope of the judicial intervention at the referral stage under Sections 8 and 11 of the Arbitration Act “ to situations where the Court/ Judicial Authority ﬁ nds that the arbitration agreement does not exist or is null and void. ” The Law Commission suggested insertion of sub-section 6A under Section 11 which would read: “ Any appointment by the High Court or the person or institution designated by it under sub-section (4) or sub-section (5) or sub- section (6) shall not be made only if the High Court ﬁ nds that the arbitration does not exist or is null and void. ” In light of the recommendations of the Law Commission, Parliament passed the Arbitration a nd Conciliation (Amendment) Act 2015 144 to incorporate Section 11(6-A). 144. The Statement of Objects and Reasons of the 2015 Amendment Act states that sub-section (6A) is inserted in Section 11 to provide that the Supreme Court or the High Court while considering application under sub-section (4) to (6) “ shall conﬁ ne to the examination of an arbitration agreement. ” With the coming into force of the 2015 Amendment Act, the nature of preliminary examination at the referral stage under Section 11 was conﬁ ned to the existence of an arbitration agreement. It also incorporates a non-obstante clause which covers “ any judgment, decree or order of any Court. ” By virtue of the non-obstante clause, Section 11(6A) has set out a new position of law, which takes away the basis of the position laid down by the previous decisions of this Court in Patel Engineering (supra) and 143 Law Commission of India, 246th Report (2014) 144 “2015 Amendment Act” 1163 Boghara Polyfab (supra). It is also important to note that Parliament did not incorporate the expression “ or is null and void ” as was suggested by the Law Commission. This indicates that Parliament intende d to conﬁ ne the jurisdiction of the courts at the pre-arbitral stage to as minimum a level as possible. 145. The effect and impact of the 2015 Amendment Ac t was subsequently clariﬁ ed by this Court. In Duro Felguera, S A v. Gangavaram Port Ltd., 145 Justice Kurien Joseph noted that the intention of the legislature in incorporating Section 11(6A) was to limit the scope of the referral court’s jurisdiction to only one aspect – the existence of an arbitration agreement. To determine the existence of an arbitration agreement, the court only needs to examine whether the underlying contract contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement. This Court further held that Sectio n 11(6A) incorporates the principle of minimal judicial intervention: “59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. and Boghara Polyfab . This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to se e is whether an arbitration agreement exists—nothing more, nothing less. The legislative policy and purpose is essentially to minimise the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.” 146. In 2017, the High-Level Committee to Review th e Institutionalization of Arbitration Mechanism in India submitt ed a report noting that while the 2015 amendment facilitated the speedy disposa l of Section 11 applications, they failed to limit judicial interference in arbitral proceedings. Accordingly, the High-Level Committee recommended the amendment of Section 11 to provide for appointment of arbitrators solely by arbitral institutions designated by the Supreme Court in case of international commercial arbitrations or the High Court in case of all other arbitrations. In view of the report of the High-Level committee, Parliament enacted the 145 (2017) 9 SCC 729 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] Arbitration and Conciliation (Amendment) Act 2019 146 omitting Section 11(6A) so as to leave the appointment of arbitrators to arbitral institutions. Section 1(2) of the 2019 Amendment Act provides that amended provisions shall come into force on such date as notiﬁ ed by the Central Government in the oﬃ cial gazette However, Section 3 of the 2019 Amendment Act which amended Section 11 by omitting Section 11(6A) is yet to be notiﬁ ed. Till such time, Section 11(6A) will continue to operate. 147. In Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman, 147 a three-Judge Bench of this Court aﬃ rmed the reasoning in Duro Felguera (supra) by observing that the examination under Section 11(6A) is “ conﬁ ned to the examination of the existence of an arbitration agreement and i s to be understood in the narrow sense. ” Moreover, it held that the position of law prior to the 2015 Amendment Act, as set forth by the decisions of this Court in Patel Engineering (supra) and Boghara Polyfab (supra), has been legislatively overruled. Thus, this Court gave eﬀ ect to the intention of the legislature in minimizing the role of the courts at the pre-a rbitral stage to the bare minimum. 148. Thereafter, in Vidya Drolia (supra), another three-Judge Bench of this Court, aﬃ rmed the ruling in Mayavati Trading (supra) that Patel Engineering (supra) has been legislatively overruled. In Vidya Drolia (supra), one of the issues before this Court was whether the court at the reference stage or the arbitral tribunal in the arbitration proceedings would decide the question of non-arbitrability. This Court began its a nalysis by holding that an arbitration agreement has to satisfy the mandate of the Contract Act, in addition to satisfying the requirements stipul ated under Section 7 of the Arbitration Act to qualify as an agreement. 149. In the course of the decision, one of the questions before this Court in Vidya Drolia (supra) was the interpretation of the word “existence” as appearing in Section 11. It was held that existence and validity are intertwined. Further, it was observed that an arbitration agr eement does not exist if it is illegal or does not satisfy mandatory legal requi rements. Therefore, this Court read the mandate of valid arbit ration agreement 146 “2019 Amendment Act” 147 (2019) 8 SCC 714 1165 contained in Section 8 into the mandate of Section 11, that is, “existence of an arbitration agreement.” 150. At the outset, Vidya Drolia (supra) noted that “ Section 11 has undergone another amendment vide Act 33 of 2019 with eﬀ ect from 9-8- 2019. ” The purport of the omission of the said clause was further explained in the following terms: “145. Omission of sub-section (6-A) by Act 33 of 2019 was with the speciﬁ c object and purpose and is relatable to by substitution of sub- sections (12), (13) and (14) of Section 11 of the Arbitration Act by Act 33 of 2019, which, vide sub-section (3-A) stipulates that the High Court and this Court shall have the power to designate the arbitral institutions which have been so graded by the Council under Section 43-I, provided where a graded arbitral institution is not available, the H igh Court concerned shall maintain a panel of arbitrators for dischargi ng the function and thereupon the High Court shall perform the duty of an arbitral institution for reference to the Arbitral Tribunal. Therefore, it would be wrong to accept that post omission of sub-section (6-A) of Section 11 the ratio in Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd. , (2005) 8 SCC 618] would become applicable.” 151. Vidya Drolia (supra) proceeds on the presumption that Section 11(6A) was effectively omitted from the statute boo ks by the 2019 Amendment Act. This is also reﬂ ected in the conclusion arrived at by the Court, as is evident from the following extract: “154.1. Ratio of the decision in Patel Engg. Ltd. [ SBP & Co. v. Patel Engg. Ltd. , (2005) 8 SCC 618] on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective eﬀ ect from 23-10-2015) and even post the amendments vide Act 33 of 2019 (with eﬀ ect from 9-8-2019), is no longer applicable.” (emphasis supplied) 152. We are of the opinion that the above premise of the Court in Vidya Drolia (supra) is erroneous because the omission of Section 11(6A) has not been notiﬁ ed and, therefore, the said provision continues to remain IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] in full force. Since Section 11(6A) continues to remain in force, pending the notiﬁ cation of the Central Government, it is incumbent upon this Court to give true eﬀ ect to the legislative intent. 153. The 2015 Amendment Act has laid down diﬀ erent parameters for judicial review under Section 8 and Section 11. Where Section 8 requires the referral court to look into the prima facie existence of a valid arbitration agreement, Section 11 conﬁ nes the court’s jurisdiction to the examination of the existence of an arbitration agreement. Although the object an d purpose behind both Sections 8 and 11 is to compel parties to abide by their contractual understanding, the scope of power of the referral courts under the said provisions is intended to be diﬀ erent. The same is also evident from the fact that Section 37 of the Arbitration Act allows an appeal from the order of an arbitral tribunal refusing to refer the parties to arbitration under Section 8, but not from Section 11. Thus, the 2015 Amendment Act has legislatively overruled the dictum of Patel Engineering (supra) where it was held that Section 8 and Section 11 are complementary in nature. Accordingly, the two provisions cannot be read as laying down a similar standard. 154. The legislature conﬁ ned the scope of reference under Secti on 11(6A) to the examination of the existence of an arbitration agreement. The use of the term “examination” in itself connotes that the scope of the power is limited to a prima facie determination. Since the Arbitration Act is a self- contained code, the requirement of “existence” of an arbitration agreement draws eﬀ ect from Section 7 of the Arbitration Act. In Duro Felguera (supra), this Court held that the referral courts only need to consider one aspect to determine the existence of an arbitration agreement – whether the underlying contract contains an arbitration agreement which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement. Therefore, the scope of examination under Section 11(6A) should be conﬁ ned to the existence of an arbitration agreement on the basis of Section 7. Similarly, the validity of an arbitration agreement, in view of Section 7, should be restricted to the requirement of formal validity such as the requirement that the agreement be in writing. This interpretation also gives true eﬀ ect to the doctrine of competence-competence by leaving the issue of substantive existence and validity of an arbitration agre ement to be decided by arbitral tribunal under Section 16. We accordingly clarify the 1167 position of law laid down in Vidya Drolia (supra) in the context of Section 8 and Section 11 of the Arbitration Act. 155. The burden of proving the existence of arbitration agreement generally lies on the party seeking to rely on such agreement. In jurisdictions such as India, which accept the doctrine of competence-competence, only prima facie proof of the existence of an arbitration agreement must be adduced before the referral court. The referral court is not the appropriate forum to conduct a mini-trial by allowing the parties to adduce the evidence in regard to the existence or validity of an arbitration a greement. The determination of the existence and validity of an arbitration agreement on the basis of evidence ought to be left to the arbitral tribunal. This position of law can also be gauged from the plain language of the statute. 156. Section 11(6A) uses the expression “examination of the existence of an arbitration agreement.” The purport of using the word “examination” connotes that the legislature intends that the referral court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. Moreover, the expression “examination” does not connote or imply a laborious or contested inquiry. 148 On the other hand, Section 16 provides that the arbitral tribunal can “rule” on its jurisdic tion, including the existence and validity of an arbitration agreement. A “ruling” connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral court is only required to examine the existence of arbitration agreements, whereas the arbitral tribunal ought to rule on its jurisdiction, including the issues pertaining to the existenc e and validity of an arbitration agreement. A similar view was adopted by this Co urt in Shin-Etsu Chemical Co. Ltd. v. Aksh Optiﬁ bre Ltd. 149 157. In Shin-Etsu (supra), this Court was called upon to determine the nature of adjudication contemplated by unamended Section 45 of the Arbitration Act when the objection with regards to the arbitration agreement being “ null and void, inoperative or incapable of being performed” is raised before a judicial authority. Writing for the majority, Justice B N Srikrishna 148 P Ramanatha Aiyar, The Law Lexicon (Second edition, 1997) 666 149 (2005) 7 SCC 234 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] held that Section 45 does not require the judicial authority to give a ﬁ nal determination. The court observed that: “74. There are distinct advantages in veering to the view that Section 45 does not require a ﬁ nal determinative ﬁ nding by the court. First, under the Rules of Arbitration of the International Chamber of Commerce (as in force with eﬀ ect from 1-1-1998), as in the present case, invariably the Arbitral Tribunal is vested with the power to rule upon its ow n jurisdiction. Even if the court takes the view that the arbitral agreement is not vitiated or that it is not invalid, inoperative or unenforceab le, based upon purely a prima facie view, nothing prevents the arbitrator from trying the issue fully and rendering a ﬁ nal decision thereupon. If the arbitrator ﬁ nds the agreement valid, there is no problem as the arbitration will proceed and the award will be made. However, if the arbitrator ﬁ nds the agreement invalid, inoperative or void, this means that the party who wanted to proceed for arbitration was given an opportunity of proceeding to arbitration, and the arbitrator after fully trying the issue has found that there is no scope for arbitration. Since the arbitrator's ﬁ nding would not be an enforceable award, there is no need to take recourse to the judicial intercession availabl e under Section 48(1)(a) of the Act.” 158. When the referral court renders a prima facie opinion, neither the arbitral tribunal, nor the court enforcing the arbitral award will be bound by such a prima facie view. If a prima facie view as to the existence of an arbitration agreement is taken by the referral court, it still allows the arbitral tribunal to examine the issue in-depth. Such a legal approach will help the referral court in weeding out prima facie non-existent arbitration agreements. It will also protect the jurisdictional competence of the arbitral tribunals to decide on issues pertaining to the existence and validity of an arbitration agreement. I*. Harmonious construction of the Arbitration Act, the Stamp Act, and the Contract Act 159. One of the cardinal principles of the interpretation of statutes is to discover and give eﬀ ect to the legislative intention. If a statute is susceptible to two interpretations, the court will have to reject the construction which * Ed. Note: PART I 1169 will defeat the plain intention of the legislation. 150 The court has to ascertain the intention of the legislation by considering not only the clause to b e interpreted, but also the entirety of the statute. The legislature often enacts a statute to give eﬀ ect to legislative policy. When enacting a statute, the legislature often endeavors to ensure that the provisions of a statute do not contradict the provisions of the same statute or provisions of another statute. However, inconsistencies or contradictions may nonetheless arise between statutes. In such situations, it is left to the court to bring about a harmony between the working of such statutes. 160. In Sultana Begum v. Prem Chand Jain, 151 this Court analysed the relevant decisions of this Court and laid down the following principles pertaining to the harmonious construction of statutes: a. It is the duty of the courts to avoid a head-on clash betwee n two sections of the Act and to construe the provisions which appear to be in conﬂ ict with each other in such a manner as to harmonise them; b. The provisions of one section of a statute cannot be used to defeat the other provisions unless the court, in spite of its eﬀ orts, ﬁ nds it impossible to eﬀ ect reconciliation between them; c. When there are two conﬂ icting provisions in an Act, which cannot be reconciled with each other, they should be so interpreted that, if possible, eﬀ ect should be given to both. This is the essence of the rule of harmonious construction; d. The courts have also to keep in mind that an interpretation which reduces one of the provisions to a “dead letter” or “useless lumber” is not harmonious construction; and e. To harmonize is not to destroy any statutory provision or to render it otiose. 150 CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 151 (1997) 1 SCC 373 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 161. In Kandla Export Corporation v. OCI Corporation 152 , the issue before this Court was whether an appeal which was not maintainable under Section 50 of the Arbitration Act was nonetheless maintainable under Section 13(1) of the Commercial Courts Act 2015. Section 50 the Arbitration Act provides that no appeal shall lie from the order refusing to: (a) refer the parties to arbitration under section 45; and (b) enforce a foreign award under section 48. Section 13(1) of the Commercial Courts Act, 2015 allows any person aggrieved by the decision of the Commercial Court or Commercial Division of a High Court to ﬁ le an appeal before the Commercial Appellate Division of that High Court. 162. This Court referred to the objects of both the statutes to observe that the Arbitration Act is meant to eﬀ ectuate a speedy resolution of disputes between parties, while the Commercial Courts Act 2015 is for the sp eedy resolution of commercial disputes involving signiﬁ cant amounts of money. It was held that the provision of another appeal under Section 13(1) of the Commercial Courts Act 2015 in matters of foreign arbitrati on would be against the object of speedy enforcement of foreign arbitral aw ards. Therefore, this Court held that any construction of Section 13 of the Commercial Courts Act, 2015 which would lead to further delay, instead of an expeditious enforcement of a foreign award must be eschewed: “Even on applying the doctrine of harmonious construction of both statutes, it is clear that they are best harmonized by giving e ﬀ ect to the special statute i.e. the Arbitration Act, vis-à-vis the more general statute, namely, the Commercial Courts Act, being left to operate in spheres other than arbitration.” 163. In Silpi Industries v. Kerala State Road Transport Corporation, 153 the issue before this Court was whether a counter-claim was maintainable in arbitration proceedings initiated under Section 18(3) of the Micro, Small and Medium Enterprises Development Act 2006. Section 18(3) provides that where the conciliation proceedings initiated by any party are not successful and stand terminated without any settlement between the parties, the Micro and Small Enterprises Facilitation Council shall either take 152 (2018) 14 SCC 715 153 2021 SCC OnLine SC 439 1171 up the dispute for arbitration or refer it to any institution or centre. The said provision further states that the provisions of the Arbitration Act shall then apply to the disputes as if the arbitration was in pursuance of an arbitration agreement referred to in Section 7(1) of the Arbitration Act. 164. This Court noted that Section 23(2A) of the Arbitration Act gives the respondent a right to submit a counter-claim or plead a set -oﬀ , which shall be adjudicated upon by the arbitral tribunal. It was held t hat since Section 18(3) of the MSME Act expressly provides that proceedings initiated under Section 18(3) shall be carried out as if they were in pursuance of an arbitration agreement under Section 7(1) of the Arbitration Act , the right to make a counter-claim before the statutory authorities exists under the MSMED Act. In this way, the two statutes were harmonized. 165. In the present reference, the challenge before this Court is to harmonize the provisions of the Arbitration Act and the Stamp A ct. The object of the Arbitration Act is to inter alia ensure an eﬃ cacious process of arbitration and minimize the supervisory role of courts in the arbitral process. On the other hand, the object of the Stamp Act is to secure revenue for state. It is a cardinal principle of interpretation of statutes that provisions contained in two statutes must be, if possible, interpreted in a harmonious manner to give full eﬀ ect to both the statutes. 154 In providing a harmonious interpretation, this Court has to be cognizant of the fact that it does not defeat the purpose of the statutes or render them ineﬀ ective. 155 The challenge, therefore, before this Court is to preserve the workability and eﬃ cacy of both the Arbitration Act and the Stamp Act. 156 i. The Arbitration Act will have primacy with respect to arbitration agreements 166. As discussed in the preceding segments, the Arbitration Act is a legislation enacted to inter alia consolidate the law relating to arbitration in India. It will have primacy over the Stamp Act and the Contract Act in relation to arbitration agreements for multiple reasons. 154 Jagdish Singh v. Lt. Governor, Delhi, (1997) 4 SCC 435 155 State of Tamil Nadu v. M K Kandaswami, (1975) 4 SCC 745 156 CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] a. The Arbitration Act is a special law and the Indian Contra ct Act and the Stamp Act are general laws 167. It is trite law that a general law must give way to a sp ecial law. This rule of construction stems from the doctrine generalia specialibus non derogant. In LIC v. D.J. Bahadur, 157 this Court held: “52. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with ﬁ ner points of law.” In Sundaram Finance Ltd. v. T. Thankam, 158 this Court held: “13. … Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statute, the civil court should ﬁ rst see whether there is ouster of jurisdiction in terms or compliance with the procedure under the special statute. The general law should yield to the special law— generalia specialibus non derogant . In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil cou rt under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of cou rse unnecessarily increase the pendency in the court.” 169. The following position of law emerges from these precedents: a. The principal subject-matter as well as the particula r perspective or focus illuminate the path to ascertain whether a law is a general law or a special law; and b. The court should examine whether its jurisdiction has been ousted in terms of the procedure prescribed by a special law. 170. To determine which of the three statutes that this Court is faced with is a special law, it is necessary to ﬁ rst refer to their subject-matter: 157 (1981) 1 SCC 315 158 (2015) 14 SCC 444 1173 a. The Stamp Act is a law governing the payment of stamp-duty for all manner of instruments. Schedule I to the Stamp Act sets out various types instruments which fall within the ambit of the said legislation; b. The Contract Act, as the name suggests, sets out the rules in relation to contracts in general. An arbitration agreement is one of the many diﬀ erent types of contracts to which it is applicable; and c. The Arbitration Act contains the law relating to domestic arbitration, international commercial arbitration, the enforcement of foreign arbitral awards, and conciliation. 171. Second, the “particular perspective” of this cas e pertains to whether an unstamped arbitration agreement is rendered unenforceable pending the payment of stamp-duty so as to interpose a bar on the referral court to refer parties to arbitration. The issue is not whether all agreements are rendered unenforceable under the provisions of the Stamp Act but whether arbitration agreements in particular are unenforceable. 172. The Arbitration Act is a special law in the context of thi s case because it governs the law on arbitration, including arbitration agreements – Section 2(1)(b) and Section 7 of this statute deﬁ ne an arbitration agreement. In contrast, the Stamp Act deﬁ nes ‘instruments’ 159 as a whole and the Contract Act deﬁ nes ‘agreements’ 160 and ‘contracts.’ 161 173. It is not only the deﬁ nition of ‘arbitration agreement’ but also the other provisions of the Arbitration Act and the purpose for which it was enacted that makes it a special law. As observed by this C ourt in Bhaven Construction. (supra), “ the Arbitration Act is a code in itself. ” 162 It provides for a detailed mechanism by which arbitration may be conducted, wit h a view to ensuring its success as a speedy and eﬃ cacious alt ernative to the courts. The Statements of Objects and Reasons of the Arbitra tion Act 159 Section 2(14), Stamp Act 160 Section 2(e), Contract Act 161 Section 2(h), Contract Act 162 Ibid at paragraph 12 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] records that the main objective of this law was to comprehensively cover international and commercial arbitration and conciliation as also domestic arbitration and conciliation. b. Section 5 of the Arbitration Act 174. In the above segments, we have dealt with the scope of Section 5 of the Arbitration Act. It restricts the extent of judicia l intervention in various matters governed by Part I of the Arbitration Act. 163 The non- obstante clause in this provision is of particular signiﬁ cance. It indicates that the rule in Section 5 (and consequently, the provisions of the Arbitration Act) must take precedence over any other law for the time being in force. Any intervention by the courts (including impounding an agreement in which an arbitration clause is contained) is, therefore, permi tted only if the Arbitration Act provides for such a step, which it does not. S ections 33 and 35 cannot be allowed to operate in proceedings under Sec tion 11 (or Section 8 as the case may be), in view of the non-obstante c lause in Section 5. This being the case, we are unable to agree with the decision in N N Global 2 (supra), that the court in a proceeding under section 11 must give eﬀ ect to Sections 33 and 35 of the Stamp Act despite the interdict in Section 5. The court held: “129. Section 5 no doubt provides for a non obstante clause. It provides against judicial interference except as provided in the Act. T he non obstante clause purports to proclaim so despite the presenc e of any law which may provide for interference otherwise. However, this does not mean that the operation of the Stamp Act, in particular, Sections 33 and 35 would not have any play. We are of the clear view that the purport of Section 5 is not to take away the eﬀ ect of Sections 33 and 35 of the Stamp Act. The Court under Section 11 purporting to give eﬀ ect to Sections 33 and 35 cannot be accused of judicial interference contrary to Section 5 of the Act.” 163 CDC Financial Services (Mauritius) Ltd. v. BPL Communicat ions Ltd., (2003) 12 SCC 140; Empire Jute Co. Ltd. v. Jute Corpn. of India Lt d., (2007) 14 SCC 680; Associate Builders v. DDA, (2015) 3 SCC 49; Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75 1175 175. Section 5 is eﬀ ectively rendered otiose by the interpretation given to it in N N Global 2 (supra). The court failed to provide a reason for holding that Section 5 of the Arbitration Act does not have the eﬀ ect of excluding the operation of Sections 33 and 35 of the Stamp Act in proceedings under Section 11 of the Arbitration Act. The non-obstante clause in Sec tion 5 does precisely this. In addition to the eﬀ ect of the non-obstante clause, the Arbitration Act is a special law. We must also be cognizant of the fact that one of objectives of the Arbitration Act was to minimise the sup ervisory role of courts in the arbitral process. 164 176. In Hameed Joharan v. Abdul Salam, 165 this Court made the following observations on the interplay between the Stamp Ac t and the Limitation Act 1963: “38. … The intent of the legislature in engrafting the Limitation Act shall have to be given its proper weightage. Absurdity cannot be the outcome of interpretation by a court order and wherever there is even a possibility of such absurdity, it would be a plain exercise of judicial power to repel the same rather than encouraging it. The whole purport of the Indian Stamp Act is to make available certain dues and to collect revenue but it does not mean and imply overriding the eﬀ ect over another statute operating in a completely diﬀ erent sphere.” c. Parliament was aware of the Stamp Act when it enacted the Arbitration Act 177. Parliament was aware of the Stamp Act when it enacted the Arbitration Act. Yet, the latter does not specify stamping as a pre-condition to the existence of a valid arbitration agreement. Further, Section 11(6-A) of the Arbitration Act requires the court to conﬁ ne itself to the examination of the existence of the arbitration agreement. This provision stands in contrast to Section 33(2) of the Stamp Act which also uses the word “exam ine.” Section 33(2) requires the person before whom an instrument is produced, to examine whether it is stamped with a stamp of the value and description required by the law when such instrument was executed or ﬁ rst executed. 164 Statements of Objects and Reasons, Arbitration Act 165 (2001) 7 SCC 573 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] Although Parliament was aware of the mandate of Section 33(2), it did not require the court acting under Section 11 to also undertake the examination required by Section 33(2). ii. Harmonious construction of the three statutes u nder consideration a. The eﬀ ect of the competence-competence doctrine 178. In A. Ayyasamy v. A. Paramasivam, 166 a two-judge Bench of this Court of which one of us, DY Chandrachud, J, was a part emphasized that arbitration must provide a “one-stop forum” for the resolution of disputes and held that (a) Courts must give eﬀ ect to the commercial understanding of parties to arbitration agreements that arbitration is e ﬃ cacious; and (b) This can be done by minimising judicial intervention: “48. The basic principle which must guide judicial decision-making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal. The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into such dealings, they do so with a knowledge of the eﬃ cacy of the arbitral process. The commercial understanding is reﬂ ected in the terms of the agreement between the parties. The duty of the court is to impart to that commercial understanding a sense of business eﬃ cacy. … 53. … Jurisprudence in India must evolve towards strengthening the institutional eﬃ cacy of arbitration. Deference to a forum chosen by parties as a complete remedy for resolving all their claims is but part of that evolution. Minimising the intervention of courts is again a recognition of the same principle.” (emphasis supplied) 179. The decision of the majority in N N Global 2 (supra) assumes that the inadmissibility of the document in evidence renders it unenforce able. 166 (2016) 10 SCC 386 1177 However, the eﬀ ect of the principle of competence-competence is that the arbitral tribunal is vested with the power and authority to determi ne its enforceability. The question of enforceability survives, pending the curing of the defect which renders the instrument inadmissible. By appointing a tribunal or its members, this Court (or the High Court s, as the case may be) is merely giving eﬀ ect to the principle enshrined in Section 16. The appointment of an arbitral tribunal does not necessarily mean that the agreement in which the arbitration clause is contained as well as the arbitration agreement itself are enforceable. The arbitral tribunal will answer precisely these questions. 180. In terms of Section 10 of the Contract Act, agree ments are contracts if they are: a. Made by the free consent of parties competent to contract; b. For a lawful consideration; c. With a lawful object; and d. Not expressly declared to be void under its provisions. 181. These requirements do not aﬀ ect any law in fo rce and not expressly repealed, which: 167 a. Requires contracts to be made in writing; b. Requires contracts to be made in the presence of witnesses; or c. Laws relating to the registration of documents. 182. In addition, Section 7 of the Arbitration Act specifies the requirements for the existence of an arbitration agreement. 183. It is the arbitral tribunal and not the court which may test whether the requirements of a valid contract and a valid arbitration agreement are met. If the tribunal ﬁ nds that these conditions are not met, it will decline to hear the dispute any furthe r. If it ﬁ nds that a valid arbitration agreement exists, it may assess whethe r the underlying agreement is a valid contract. 167 Section 10, Contract Act IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 184. By enacting Section 16 of the Arbitration Act, Parliament has (in a manner of speaking) permitted an agreement to arbitrate to be preliminarily enforced even if it is only an agreement. After parties have been referred to arbitration under Section 8 of the Arbitration Act or after the appointment of arbitrators under Section 11 of the Arbitration Act the arbitral tribunal will have jurisdiction to determine all questions and issues in dispute between the parties. The legitimate concerns of the revenue in the realization of stamp duty are not defeated because the arbitral tribunal has the jurisdiction to act in pursuance of the provisions of the Stamp Act. 185. The corollary of the doctrine of competence-competence is that courts may only examine whether an arbitration agreement exists on the basis of the prima facie standard of review. The nature of objections to the jurisdiction of an arbitral tribunal on the basis that stamp-duty has not been paid or is inadequate is such as cannot be decided on a prima facie basis. Objections of this kind will require a detailed consideration of evidence and submissions and a ﬁ nding as to the law as well as the facts. Obligating the court to decide issues of stamping at the Section 8 or Section 11 stage will defeat the legislative intent underlying the Arbitration Act. 186. The purpose of vesting courts with certain pow ers under Sections 8 and 11 of the Arbitration Act is to faci litate and enable arbitration as well as to ensure that parties compl y with arbitration agreements. The disputes which have arisen between them remain the domain of the arbitral tribunal (subject to the scope of i ts jurisdiction as deﬁ ned by the arbitration clause). The exercise of the jurisdiction of the courts of the country over the substantive dispute be tween the parties is only possible at two stages: a. If an application for interim measures is ﬁ led under Section 9 of the Arbitration Act; or b. If the award is challenged under Section 34. Issues which concern the payment of stamp-duty fall within the remit of the arbitral tribunal. The discussion in the preceding segments also make it evident that courts are not required to deal with the issue of stamping at the stage of granting interim measures under Section 9. 1179 187. One of the intervenors, the Singapore International Arbitration Centre, submitted that the decision in N N Global 2 (supra) reversed the prima facie standard by observing that the court may refer a dispute to the arbitral tribunal if objections as to its being duly stamped are “ on the face of it, wholly without foundation. ” We agree with this submission. 188. Once the arbitral tribunal has been appointed, it will act in accordance with law and proceed to impound the agre ement under Section 33 of the Stamp Act if it sees ﬁ t to do so. It has the authority to receive evidence by consent of the parties, in terms of Section 35. The procedure under Section 35 may be followed thereafter. In this manner, the competence-competence doctrine is given life and arbitration proceedings can continue to remain a faster alternative to suits b efore the trial courts or other, similar actions. b. The eﬀ ect of the word “shall” in Sections 33 and 35 of t he Stamp Act 189. Sections 33 and 35 of the Stamp Act use the word “shall.” While this ordinarily indicates that the provision is mandatory, it may be read as directory. In Sainik Motors v. State of Rajasthan, 168 this Court held: “The word ‘shall’ is ordinarily mandatory, but it is sometimes not so interpreted if the context or the intention otherwise demands.” 190. In State of U.P. v. Babu Ram Upadhya, 169 this Court held that the principles for the construction of statutes which used the manda tory word “shall” were as follows: “29. The relevant rules of interpretation may be brieﬂ y stated thus : When a statute uses the word “shall”, prima facie, it is ma ndatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature the Court may consider, inte r alia, the nature and the design of the statute, and the consequenc es which would follow from construing it the one way or the other, the 168 1961 SCC OnLine SC 15 169 1960 SCC OnLine SC 5 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that ﬂ ow therefrom, and, above all, whether the object of the legislation will be defeated or furthered.” 191. This Court must therefore interpret Sections 33 and 35 to assess whether they are mandatory in relation to a court presiding over proceedings under Section 8 or Section 11 by examining: a. Whether the context indicates that the provision is directory; b. The scope of the statute; c. The nature and design of the statute; d. The consequences which would follow from construing it one way or another; e. The impact of other provisions; f. The consequences of non-compliance; and g. Whether the object of the legislation will be furt hered or destroyed. 192. The decisions adverted to in the preceding paragrap hs were delivered in the context of a single provision in a single statute. Additional factors must be considered in cases such as the present one, where multiple statutes appear to operate in relation to a single issue (or a single agreement such as the arbitration agreement in the present ca se). To this list of considerations which must animate the court’s evaluation of whethe r a provision is mandatory or directory, we would add that the sco pe, nature, and design of all the statutes which appear to operate simultaneously must be considered. Their interplay and the intention of the legislature must be evaluated in the context of all such statutes. The question of w hether the object(s) of the applicable legislation(s) will be furthered or destroyed must also be considered in view of all such statutes. 1181 c. The object of the Stamp Act is preserved 193. In N N Global 2 (supra), the majority judgment observed as follows: “92. While the Stamp Act is a ﬁ scal enactment intend ed to raise revenue, it is a law, which is meant to have teeth. The point of time, at which the stamp duty is to be paid is expressly provided for in Section 17 of the Stamp Act. There cannot be any gainsaying, that call it a ﬁ scal enactment, it is intended that it is to be implemented with full vigour. The duty of a Court must be to adopt an interpretation which results in the enforcement of the law, rather than allowing the law to be ﬂ outed with impunity. Once this principle is borne in mind, the task of the Court becomes less diﬃ cult.” 194. The interpretation accorded to the Stamp Act by this Court in the present judgment does not allow the law to be ﬂ outed. The arbitral tribunal continues to be bound by the provisions of the Stamp Act, including those relating to its impounding and admissibility. The interpretation of the law in this judgment ensures that the provisions of the Arbitration Act are given eﬀ ect to while not detracting from the purpose of the Stamp Act. 195. The interests of revenue are not jeopardised in any manner because the duty chargeable must be paid before the agreement in question is rendered admissible and the lis between the parties adjudicated. The question is at which stage the agreement would be impounded and not whether it would be impounded at all. The courts are not abdicating their duty but are instead giving eﬀ ect to: a. The principle of minimal judicial intervention in Secti on 5 of the Arbitration Act; b. The prima facie standard applicable to Sections 8 and 11 of the Arbitration Act; and c. The purpose of the Stamp Act which is to protect the intere sts of revenue and not arm litigants with a weapon of technicality by which they delay the adjudication of the lis . d. The interpretation of the law must give eﬀ ect to the purpos e of the Arbitration Act in addition to the Stamp Act IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] 196. The decision of the Constitution Bench in N N Global 2 (supra) gives eﬀ ect exclusively to the purpose of Stamp Act. It prioritises the objective of the Stamp Act, i.e., to collect revenue at t he cost of the Arbitration Act. As discussed previously, the purpose of the Arbitration Act is to ensure that a speedy and eﬃ cacious alternative dispute resolution system is available to parties both commercial and otherwise. This purp ose is in danger of being undermined by the interpretation accorded to the Stamp Act in N N Global 2 (supra). The impounding of an agreement which contains an arbitration clause at the stage of the appointment of an arbitrator under Section 11 (or Section 8 as the case may be) of the Arbitration Act will delay the commencement of arbitration. It is a well-known fact that c ourts are burdened with innumerable cases on their docket. This has the inevitab le consequence of delaying the speed at which each case progresses. Arbitral tribunals, on the other hand, deal with a smaller volume of cases. They are able to dedicate extended periods of time to the adjudication of a single case before them. If an agreement is impounded by the arbitral tribunal in a particular case, it is far likelier that the process of payment of stamp-duty and a penalty (if any) and the other procedures under the Stamp Ac t are completed at a quicker pace than before courts. J*. SMS Tea Estates and Garware Wall Ropes were wrongly decided i. SMS Tea Estates 197. The genesis of the present issue stems from a two-Judge Bench decision of this Court in SMS Tea Estates (supra). In that case, the appellant and respondent executed a lease deed with respect to two tea estates in favor of the appellant. The lease deed provided for the settlement of disputes between the parties by arbitration. When the appellant sought to invoke the arbitration clause, the respondent opposed the same on the ground that the lease deed was unregistered and not duly stamped, and was therefore invalid, unenforceable, and not binding. The High Court dismissed the appellant’s application for the appointment of an arbitrator. On appeal, inter alia the following issues came for consideration before this Court: ﬁ rst, whether an arbitration agreement contained in an unregistered (but compulsorily registerable) instrument is valid and enforceable; and second, whether an arbitration agreement in an unregistered instrument which is not duly stamped, is valid and enforceable. 198. With regard to the ﬁ rst issue, the Court analysed Section 49 of the Registration Act. Section 49 of the Registration Act provides that an * Ed. Note: PART J 1183 unregistered document cannot be received as evidence of any transacti on affecting such property or conferring such power un less it has been registered. However, the proviso to Section 49 provides that an unregistered instrument can be used as evidence of any collateral transaction not required to be eﬀ ected by such instrument. In view of the aforesaid provision, this Court held that an arbitration agreement contained in an unregistered instrument is a collateral term relating to the resolution of disputes, which was unrelated to the performance of the contract. Therefore, it was held that an arbitration agreement contained in an unregistered but compulsorily registerable document can be acted upon and enforced for the purpose of dispute resolution by arbitration. 199. With regard to the second issue, it was noted that Section 35 of the Stamp Act does not contain a proviso like Section 49 of the Registration Act enabling the unstamped instrument to be used for a collateral purpose. Thereafter, this Court observed that Section 33 casts a duty upon e very court, as also an arbitrator, before whom an unregi stered instrument chargeable with stamp duty is produced to examine the instrument in order to ascertain whether it is duly stamped. If the Court or arbitrator comes to the conclusion that the instrument is not duly stamped, it has to necessarily impound the document. The Court laid down the procedure to be adopted when an arbitration is contained in a document which is not duly stamped in the following terms: a. The Court should, before admitting any document into evidence or acting upon such document, examine whether the instrument/ document is duly stamped and whether it is an instrument which is compulsorily registerable. b. If the document is found to be not duly stamped, Section 35 of the Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under Section 33 of the Stamp Act and follow the procedure under Sections 35 and 38 of the Stamp Act. c. If the document is found to be duly stamped, or if the deﬁ cit stamp duty and penalty is paid, either before the court or before IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] the Collector (as contemplated in Section 35 of Section 49 of the Stamp Act), and the defect with reference to deﬁ cit duty is cured, the court may treat the document as duly stamped. 200. SMS Tea Estates (supra) allowed the courts to impound the document under Section 33 of the Stamp Act at the Section 11 stage. Thus, the courts were mandated to intervene at the pre-arbitral stage before the arbitral tribunal could assume jurisdiction. SMS Tea Estates (supra) was decided in 2011. At that time, Patel Engineering (supra) and Boghara Polyfab (supra) held the ﬁ eld, which held that the referral cour ts had wide powers to decide a large number of preliminary issues, inc luding the existence and validity of arbitration agreements. As discusse d in the segments above, the Law Commission of India recommended amendments to Sections 8 and 11 with a view to restrict the scope of the judicial intervention “ to situations where the Court/Judicial Authority ﬁ nds that the arbitration agreement does not exist or is null and void. ” 201. Pursuant to the recommendations of the Law Commission of India, Parliament incorporated Section 11(6A) which clariﬁ ed that the scope of judicial intervention was limited to the examination of the existence of an arbitration agreement. The legislative note on Clause 11(6A) states that “ [s]ub-section (6A) is inserted to provide that the Supreme Court or the High Court while considering applications under sub-section (4 ) to (6) shall conﬁ ne to the examination of an arbitration agreement.” More importantly, the said provision contains a non-obstante clause which reads: “notwithstanding any judgment, decree or order of any Court.” 202. In Emmar MGF Land Ltd. v. Aftab Singh, 170 this Court was examining the purport of Section 8 which included a similar non-obstante clause as contained in Section 11(6A). This Court explained the purpos e of the non-obstante clause contained in Section 8 in the following terms: “52. […] The words “notwithstanding any judgment, decree or order of the Supreme Court or any court” added by amendment in Section 8 were with intent to minimise the intervention of judicial authority in the context of arbitration agreement. As per the amended Section 8(1), 170 (2019) 12 SCC 751 1185 the judicial authority has only to consider the question “whether t he parties have a valid arbitration agreement?” The Court cannot refuse to refer the parties to arbitration “unless it ﬁ nds that prima facie no valid arbitration agreement exists”. The amended provision, thus, limits the intervention by judicial authority to only one aspect i.e. refusal by judicial authority to refer is conﬁ ned to only one aspect, when it ﬁ nds that prima facie no valid arbitration agreement exists.” 203. In Emmar MGF Land (supra), this Court clariﬁ ed that the expression “notwithstanding any judgment” referred to in Sectio n 8(1) relates to those judicial precedents which explained the discretion and power of judicial authority to examine various aspects while exerci sing powers under Section 8. In a similar vein, Section 11(6A) intended to mini mize judicial interference to the examination of the existence of an ar bitration agreement. Accordingly, the non-obstante clause con tained in Section 11(6A) pertains to those judicial precedents which delved into the discretion and power of referral courts to intervene and examine the existence a nd validity of an arbitration agreement at the Section 11 stage. This includes SMS Tea Estates (supra) considering the fact that it mandated the referral court to judicially intervene in the arbitration process by im pounding the unstamped instrument containing the arbitration agreement. Therefore, we hold that Section 11(6A) also legislatively altered the basis o f SMS Tea Estates (supra) to the extent that it dealt with judicial interventio n at the Section 11 stage. ii. Garware Wall Ropes 204. In Garware Wall Ropes (supra), a Bench of two Judges of this Court was called upon to decide the eﬀ ect of an arbitration clause contained in a contract which requires to be stamped. Since SMS Tea Estates (supra) was decided before the introduction of Section 11(6A) of the Arbitration Act, another pertinent issue before this Court was whether introduction of this provision removed the basis for the decision in SMS Tea Estates (supra) to the extent that an unstamped instrument could be impounded not by the referral court under Section 11 but by the arbitrator. This Court held that the referral court under Section 11(6A) would be bound by the mandatory provisions of the Stamp Act to examine and impound the unstamped instrument. It was further observed that since the Stamp Act applied to the IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] instrument as a whole, it was not possible to bifurcate the arbitration clause contained in such instrument and give it an independent existence. 205. This Court in Garware Wall Ropes (supra) further analysed the purport of the word “existence” contained in Section 11 of the Arbitration Act. It was held that an arbitration agreement contained in an unst amped instrument would not exist in law. The relevant paragraph is extracted below: “22. When an arbitration clause is contained “in a contract”, it is signiﬁ cant that the agreement only becomes a co ntract if it is enforceable by law. We have seen how, under the Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of section 11(6-A), when read with Section 7(2) of the 1996 Act and Section 2(h) of the Contract Act, would make it clear that an arbitration clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates has, in no manner, been touched by the amendment of Section 11(6-A).” 206. Further, this Court noted Section 11(13) of the Arbitration Act which provides a timeline of sixty days for disposal of any application for appointment of an arbitrator. In view of Section 11(13), this Court held that the provisions of the Stamp Act and the Arbitration Act ne ed to be harmoniously construed. Accordingly, the Court held that once the High Court impounds an unstamped instrument at the Section 11 stage, i t shall hand it over to the relevant authority under the Maharashtra Stamp Act to be decided within a period of forty-ﬁ ve days from which such authority receives the instrument. Once the stamp duty and penalty was pai d, the High Court could proceed expeditiously to hear and dispose of the Section 11 application. 207. The conclusions of this Court in Garware Wall Ropes (supra) can be summarized as follows: ﬁ rst, there was no legislative intent to overrule SMS Tea Estates (supra) because neither the Statement of Objects and Reasons of the 2015 Amendment Act nor the Law Commission of India Report, 2014 mentions it; second, the referral court at the Section 11 stage is only giving eﬀ ect to the provisions of the Stamp Act and not deciding any preliminary issues between the parties; third, the separability presumption could only be applied for limited purposes. Since the Stamp Act a pplies to the instrument as a whole, it is not possible to bifurca te the arbitration 1187 clause contained in such agreement; and fourth, an arbitration clause in an unstamped contract would not exist, leading to the conclusion that Section 11(6A) has not overruled SMS Tea Estates (supra). 208. The Statement of Objects and Reasons of the 2015 Amendment Act are as follows: “(iii) an application for appointment of an arbitrator shall be disposed of by the High Court or Supreme Court, as the case m ay be, as expeditiously as possible and an endeavour should be made to dispose of the matter within a period of sixty days. “(iv) to provide that while considering any application for appointment of arbitrator, the High Court or the Supreme Court shall examine the existence of a prima facie arbitration agreement and not other issues.” 209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall “examine the existence of a prima facie arbitration agreement and not other issues” . These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the “other issues” also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a time-bound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators. Therefore, even though the Law Commission of India Report or the Statement of Objects and Reasons of the 2015 Amendment Act do not speciﬁ cally refer to SMS Tea Estates (supra), it nevertheless does not make any diﬀ erence to the position of law as has been set out above. 210. Garware Wall Ropes (supra) relied on Patel Engineering (supra) to observe that “it is diﬃ cult to accede to the argument made by the learned counsel on behalf of the respondent that Section 16 makes it clear that an arbitration agreement has an independent existence of its own, and must be applied while deciding an application under Section 11 of the 1996 Act .” In view of this observation, it was held that the separability presumption cannot be applied in case of an unstamped instrument because the Stamp Act applies to the instrument as a whole. As discussed in the preceding segments, the separability presumption ensures the validity of an arbitration IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] agreement notwithstanding the invalidity, illegality, or non-existence of the underlying contract. 211. The scope of authority of an arbitral tribunal under Section 16 is wide because it can deal with issues pertaining to the existence and validity of an arbitration agreement. In his dissenting opinion in NN Global 2 (supra), Justice Roy correctly observes that since “[s]ection 16 speciﬁ cally deals with both existence and validity whereas Section 11 only deals with existence, the former should be given more weight.” This observation comports with the stated goal of the Arbitration Act to minimize the supervisory role of courts in the arbitral process. Post the 2015 Amendment Act the referral courts are only required to prima facie determine the existence or validity of an arbitration agreement. The basis for such prima facie determination lies in the fact that the arbitral tribunal will later have the com petence to rule on the issue of existence and validity of the arbitration agreement. Therefore, the separability presumption applies at the referral stage. 212. In Intercontinental Hotels Group (India) (P) Ltd v. Waterline Hotels (P) Ltd., 171 the issue before a Bench of three Judges of this Court in a Section 11 application was: whether the court can proceed to appoint an arbitrator when the underlying contract is incorrectly stamped. In that case, it was observed that although “stamp duty has been paid, whether it be insuﬃ cient or appropriate is a question that may be answered at a later stage as this Court cannot review or go into this aspect under Section 11(6).” 213. The discussion in preceding segments has held that non-stamping or insuﬃ cient stamping of an instrument does not render it invalid or non- existent. Therefore, paragraphs 22 and 29 of Garware Wall Ropes (supra), which held that an arbitration agreement contained in an unstamped or insuﬃ ciently stamped contract would be non-existent in law, does not set forth the correct position of law. K*. The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996 214. In N N Global 2 (supra), the majority considered the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996. 172 Para 2 of the 1996 Scheme reads as follows: * Ed. Note: PART K 171 (2022) 7 SCC 662 172 “1996 Scheme” 1189 “2. Submission of request.- The request to the Chief Justice under sub-section (4) or sub-section (5) or sub-section (6) of section 11 shall be made in writing and shall be accompanied by- (a) the original arbitration agreement or a duly certiﬁ ed copy thereof; The 1996 Scheme provides that an application under Section 11 for the appointment of an arbitrator shall be accompanied by the original arbitration agreement or a duly certiﬁ ed copy. 215. In SMS Tea Estates (supra), it was observed that a certiﬁ ed copy of the agreement/ contract/ instrument containin g the arbitration clause should disclose the stamp duty that has been paid on the original. N N Global 2 (supra) has endorsed this view. In that case, this Court further referred to paragraph 5 of the 1996 Scheme which allows the Chief Justice or the person or the institution designated by him under para 3 to see k further information or clariﬁ cation from the party making request under the Scheme. Consequently, it was held that a Judge dealing with an application under Section 11 could seek further clariﬁ cation or information with respect to the payment of stamp duty to satisfy the requirements as laid down in SMS Tea Estates (supra). 216. N N Global 2 (supra) also refers to the two-Judge Bench decision of this Court in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao 173 where it was held that Section 35 of the Stamp Act renders any secondary evidence of an unstamped or insuﬃ ciently stamped instrument inadmissible in evidence. It was further held that any secondary evidence of such instrument cannot be acted upon in terms of Section 35. Subsequent ly, a three-Judge Bench of this Court in Hariom Agrawal v. Prakash Chand Malviya 174 affirmed Jupudi Kesava Rao (supra) by observing that Sections 33 and 35 of the Stamp Act are not concerned with any copy of the instrument. The relevant paragraph is extracted below: “10. It is clear from the decisions of this Court and a plain readin g of Sections 33, 35 and 2(14) of the Act that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be ta ken in 173 (1971) 1 SCC 545 174 (2007) 8 SCC 514 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] evidence under Section 35 of the Stamp Act. Sections 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Section 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Stamp Act, 1899.” 217. An arbitration agreement or its certiﬁ ed copy is not re ndered void or unenforceable because it is unstamped or insuﬃ ciently stamped. We accordingly clarify that the position of law laid down in Jupudi Kesava Rao (supra) and Hariom Agrawal (supra) cannot constrain a referral court at Section 11 stage (as well as Section 8 stage) from acting upon a certiﬁ ed copy of an arbitration agreement and referring the parties to arbitral tribunal. 218. The discussion in preceding segments indicates that the referral court at Section 11 stage should not examine or impound an unstamped or insuﬃ ciently stamped instrument, but rather leave it for the determination by the arbitral tribunal. When a party produces an arbitration agreement or its certiﬁ ed copy, the referral court only has to examine whether an arbitration agreement exists in terms of Section 7 of the Arbitration Act. The referral court under Section 11 is not required to examine whether a certiﬁ ed copy of the agreement/ instrument/ contract discloses the fact of payment of stamp duty on the original. Accordingly, we hold that the holding of this Court in SMS Tea Estate (supra), as reiterated in N N Global 2 (supra), is no longer valid in law. L*. Vidya Drolia does not deal with the issue of stamping 219. The genesis of these proceedings lies in N N Global 1 (supra) doubting the correctness of the ﬁ nding in Vidya Drolia (supra). N N Global 1 (supra) doubted the correctness of the view taken in paragraphs 146 and 147 of the co-ordinate Bench in Vidya Drolia (supra), where the three-Judge Bench relied on Garware Wall Ropes (supra). 220. In paragraph 146, this Court was dealing with the issue of whether the expression “existence” as contained in Section 11(6A ) also presupposes the validity of an arbitration agreement. The Court answered this proposition by observing that an arbitration agreement “e xists” only * Ed. Note: PART L 1191 when it is valid and enforceable. Accordingly, it was held that existence of an arbitration agreement means an arbitration agreement which s atisﬁ es the requirements of both the Arbitration Act and the Contract Act. In the succeeding paragraphs, this Court sought to reinforce its conclusion. In the process, it referred to various precedents of this Court including Garware Wall Ropes (supra). 221. Paragraph 147.1 clariﬁ es that it is referring to Garware Wall Ropes (supra) only for the purposes of establishing the correlation between existence and validity of an arbitration agreement. The relevant paragraph of Garware Wall Ropes (supra) refers to United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd. 175 in which the arbitration clause was triggered only if one of the parties admitted or accepted its liability. In that case, since the relevant party (the insurer) did not accept its liability, the court held that the arbitration clause did not exist in law although it existed in fact. Garware Wall Ropes (supra) relied on Hyundai Engg. (supra) to hold, albeit incorrectly, that an unstamped agreement would not exist as a matter of law until the underlying instrument is duly stamped. We a re of the opinion that Vidya Drolia (supra) did not, in any manner, determine the eﬀ ect of an unstamped or insuﬃ ciently stamped underlying contract on an arbitration agreement. It referred to Garware Wall Ropes (supra) only to buttress its interpretation that an arbitration agreement does not exist if it is invalid or illegal, which has been clariﬁ ed in the above segments of this judgment. 222. Signiﬁ cantly, a two-Judge Bench of this Court in Career Institute Educational Society v. Om Shree Thakurji Educationa l Society 176 clariﬁ ed that Vidya Drolia (supra) referred to Garware Wall Ropes (supra) only “ to interpret the word ‘existence’, and whether an ‘invalid’ arbitration agreement can be said to exist ” The two-Judge Bench further clariﬁ ed that Vidya Drolia (supra) did not decide the issue of the eﬀ ect of an unstamped or insuﬃ ciently stamped underlying contract on the arbitration clause. The relevant extract is as follows: “3. The judgement in Vidya Drolia v. Durga Trading Corporation did not examine and decide the issue of eﬀ ect of unstamped or under- 175 (2018) 17 SCC 607 176 2023 SCC OnLine SC 586 IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ] stamped underlying contract on the arbitration agreement. As this issue and question has not been decided in Vidya Drolia (supra), the decision is not a precedent on this question.” 223. We agree with these observations in Career Institute Educational Society (supra). Vidya Drolia (supra) did not deal with the issue of the eﬀ ect of an unstamped or insuﬃ ciently stamped instrument on the existence or validity of an arbitration agreement. Therefore, the reasoning in Vidya Drolia (supra) does not lead to the conclusion that Garware Wall Ropes (supra) was rightly decided either on the aspect of exa mination and impounding of unstamped or insuﬃ ciently stamped instrument with respect to arbitration proceedings, or the validity of on arbitration agreement contained in an unstamped or insuﬃ ciently stamped underlying contract. M*. Conclusions 224. The conclusions reached in this judgment are summarised below: a. Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable; b. Non-stamping or inadequate stamping is a curable defect; c. An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine whether the arbitration agreement prima facie exists; d. Any objections in relation to the stamping of the agreement fall within the ambit of the arbitral tribunal; and e. The decision in NN Global 2 (supra) and SMS Tea Estates (supra) are overruled. Paragraphs 22 and 29 of Garware Wall Ropes (supra) are overruled to that extent. 225. The Registry is directed to take administrative directions from Hon’ble Chief Justice of India for placing the matters before an appropriate Bench. * Ed. Note: PART M 1193 SANJIV KHANNA, J. I respectfully agree with the view expressed by the Hon’ble the Chief Justice of India Dr. D.Y. Chandrachud in his elaborate expo sition of the diﬀ erent contours which arise for consideration in the present reference. Complementing the same, I would like to provide additional justiﬁ cations for the ﬁ nal conclusion,viz., unstamped or insuﬃ ciently stamped instruments inadmissible in evidence in terms of Section 35 of the Indian Stamp Act, 1899 1 , are not rendered void and void ab initio ; an objection as to the under-stamping or non-stamping of the underlying contract will not have any bearing when the prima facie test, “the existence of arbitration agreement”, is applied by the courts while deciding applications under Sections 82 or 11 3 of the Arbitration 1 For short, “the Stamp Act” 2 8. Power to refer parties to arbitration where there is an arbitration agreement.— (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his ﬁ rst statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it ﬁ nds that prima facie no valid arbitration agreement exists. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certiﬁ ed copy thereof. Provided that where the original arbitration agreement or a certiﬁ ed copy thereof is not available with the party applying for reference to arb itration under sub-section (1), and the said agreement or certiﬁ ed copy is retained by the other party to that agreement, then, the party so applying shall ﬁ le such application along with a copy of the arbitration agreement and a petition praying the court to call upon the other party to produce the original arbitration agreement or its duly certiﬁ ed copy before that court. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. 3 11. Appointment of arbitrators .—(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an a rbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) If the appointment procedure in sub-section (3) applies and— (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] party, by 1[the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court]; (5) Failing any agreement referred to in sub-section (2), in an ar bitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court. (6) Where, under an appointment procedure agreed upon by the parties,— (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any fun ction entrusted to him or it under that procedure, a party may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (6A) The Supreme Court or, as the case may be, the High Court , while considering any application under sub-section (4) or sub-section (5) or sub-se ction (6), shall, notwithstanding any judgment, decree or order of any Court, conﬁ ne to the examination of the existence of an arbitration agreement. (6B) The designation of any person or institution by the Supreme Court or, as the case may be, the High Court, for the purposes of this section s hall not be regarded as a delegation of judicial power by the Supreme Court or the High Court. (7) A decision on a matter entrusted by sub-section (4) or sub-se ction (5) or sub- section (6) to the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is ﬁ nal and no appeal including Letters Patent Appeal shall lie against such decision. (8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-sec tion (1) of section 12, and have due regard to— (a) any qualiﬁ cations required for the arbitrator by the agreement of the parties; and (b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Supreme Court or the person or insti tution designated by that Court] may appoint an arbitrator of a nationality other than the national ities of the parties where the parties belong to diﬀ erent nationalities. (10) The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6), to it. (11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of diﬀ erent High Courts or their designates, diﬀ erent High Courts or their designates, the High Court or its designate to whom the request has been ﬁ rst made] under the relevant sub-section shall alone be competent 1195 and Conciliation Act, 1996 4 ; and an objection as to insuﬃ cient stamping of the underlying agreement can be examined and decided by the arbitral tribunal. Accordingly, the majority decision of the Constitution Bench in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. 5 should be overruled. 2. The judgment authored by Hon’ble the Chief Justice, under the heading ‘D. Indian Stamp Act, 1899’, gives an overall view of the S tamp Act, and the procedures it prescribes. It also refers to Sections 33, 35and 36 of the Stamp Act, which I would like to elaborate on and elucidate. 3. Sections 33 and 35 of the Stamp Act are reproduced for reference: “ 33. Examination and impounding of instruments.— (1) Every person having by law or consent of parties authorit y to receive evidence, and every person in charge of a public oﬃ ce, except an oﬃ cer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his to decide on the request. (12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub- section (10) arise in an international commercial arbitrati on, the reference to the “Supreme Court or, as the case may be, the High Court” in those sub-sections shall be construed as a reference to the “Supreme Court”; and (b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to “the Supreme Court or, as the case may be, the High Court” in those sub-sections shall be construed as a reference to the “High Court” within whose local limits the principal Civi l Court referred to in clause (e) of sub-section (1) of section 2 is situate, and where the High Court itself is the Court referred to in that clause, to that High Court. (13) An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party. (14) For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates speciﬁ ed in the Fourth Schedule. Explanation.—For the removal of doubts, it is hereby clariﬁ ed that this sub-section shall not apply to international commercial arbitration a nd in arbitrations (other than international commercial arbitration) in case where parti es have agreed for determination of fees as per the rules of an arbitral institution. 4 For short, “the Arbitration Act”. 5 (2023) 7 SCC 1. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the va lue and description required by the law in force in India when such instrument was executed or ﬁ rst executed: Provided that— ( a ) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think ﬁ t so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); ( b ) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such oﬃ cer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt,— ( a ) the State Government may determine what oﬃ ces shall be deemed to be public oﬃ ces; and ( b ) the State Government may determine who shall be deemed to be persons in charge of public oﬃ ces.” ×× ×× ×× 35.Instruments not duly stamped inadmissible in evidence, etc.— No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public oﬃ cer, unless such instruments is duly stamped: Provided that— ( a ) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable or, in the case of an instrument insuﬃ ciently stamped, of the amount required to make up such duty, 1197 together with a penalty of ﬁ ve rupees, or, when ten times the amount of the proper duty or deﬁ cient portion thereof exceeds ﬁ ve rupees, of a sum equal to ten times such duty or portion; ( b ) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it; ( c ) where a contract or agreement of any kind is effe cted by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement sha ll be deemed to be duly stamped; ( d ) nothing herein contained shall prevent the admiss ion of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); ( e ) nothing herein contained shall prevent the admiss ion of any instrument in any Court when such instrument has been executed by or on behalf of the Government or where it bears the certiﬁ cate of the Collector as provided by Section 32 or any other provision of this Act.” 4. Section 33 of the Stamp Act is cautiously worded,to not over expand its ambit and scope. The section applies on production of an inst rument before a person who by law or consent of the parties has the a uthority to receive evidence. 6 It also applies when an instrument is produced before a person in charge of a public oﬃ ce. Production of the instrument m ust be during the course of performance of functions by such person orpublic oﬃ cer. The proviso states that Section 33 shall not be deemed to require any Magistrate or Judge of a criminal court to examine or impound an instrument if he does not think ﬁ t to do so, except in proceedings under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure, 1973).Police oﬃ cers are not public oﬃ cers under Section 33 of the Stamp Act. 6 Hereinafter also referred to as ‘such person’. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] 5. Sub-section (3) to Section 33 states that in case of doubt, the State Government may determine which oﬃ ces shall be deemed to be public oﬃ ces and who shall be deemed to be persons in charge of the public oﬃ ces. 6. Sub-section (2) to Section 33 states that for the purpose of su b- section (1), such person or public oﬃ cer shall examine the instrument so chargeable and so produced or coming before him,in order to ascertain whether it is duly stamped as per the law in force in India when the instrument was executed or ﬁ rst executed. 7. Section 35 states that an instrument not duly stamped and chargeable with duty shall not be admitted in evidence by any person hav ing by law or by consent of the parties the authority to receive evidence. The words “for any purpose” mean that the instrument cannot be relied upon for a collateral purpose either. Further, the instrument shall not be a cted upon, registered or authenticated by such person or by any public oﬃ cer, unless it is duly stamped. The words ‘acted upon’ are with reference to the acts or the proceedings before such oﬃ cer or public oﬃ cer, as the case may be. 8. Section 35 permits admission of an unstamped or under-stamped instrument after the same instrument is duly stamped. Proviso (a) requires payment of the chargeable duty and penalty, before a n insufficiently stamped instrument is admitted in evidence, or is acted upon, registered or authenticated. 9. Section 40(1)(b) of the Stamp Act provides for payment of proper duty if the instrument impounded is not duly stamped. Section 42(1) provides for certifying that proper duty has been paid on the impounded instrument. Sub-section (2) of Section 42 provides that after certiﬁ cation the instrument shall be admissible in evidence, and may be registered, acted upon and authenticated as if it has been duly stamped. 10. Sections 33 and 35donot apply when an instrument is produced or is acted upon by the parties themselves, or by a person who does not have authority by law or by consent of the parties to receive evidence, or a person who is not a public oﬃ cer. Sections 33 does not authorise a police oﬃ cer to examine and impound an instrument, even when insuﬃ ciently stamped. A Magistrate or a Judge of a criminal court may not examine or impound an instrument coming before him,and can admit an insuﬃ ciently stamped 1199 instrument in evidence, other than in the proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure, 1973).Thus, the same instrument may be admissible and acted upon before a criminal court, while being inadmissible before a civil court, public oﬃ cer etc. 11. The negative stipulations in Sections 33 and 35 are speciﬁ c, albeit not so absolute as to make the instrument invalid in law. A “void ab initio ” instrument, which is stillborn,has no corporeality in the eyes of law. It cannot confer or give rights, or create obligations. However, an instrument which is “inadmissible” exists in law, albeit cannot be admitted in evidence by such person, or be registered, authenticated or be acted upon by such person or a public oﬃ cer till it is duly stamped. As rightly observed by Hon’ble the Chief Justice, Section 35 deals with admissibility etc. of an instrument and not invalidity. 12. Section 36 of the Stamp Act refers to the situation where the admission of an instrument is not to be questioned, and reads: “ 36. Admission of instrument where not to be questioned. —Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61, be called in question at any st age of the same suit or proceeding on the ground that the instrument has not been duly stamped.” Thus, where an instrument has been admitted in evid ence, such admission shall not be called in question, except as provided in Section 61, at any stage of the same suit or proceedings on the ground that the instrument is not duly stamped. Consequently, where an instrument has been admitted in evidence, such instrument cannot be impounded as it cannot be cal led in question at any stage of the same suit or proceeding on t he ground of insuﬃ cient stamping. 13. An instrument which is void ab initio or void, cannot be validated by mere consent or waiver, unless consent or wavier undoes the cause of invalidity. On the other hand, Section 36 of the Stamp Act incorpora tes the doctrine of waiver, estoppel and implied consent. That apart,a fter due stamping as per the Stamp Act, the unstamped or insuﬃ ciently stamped IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] instrument can be admitted in evidence, or be registered, authenticated or be acted upon by such person or public oﬃ cer. 14. This has long been a recognised position of law, as accepted by this Court in several decisions, which I would like to refer to. 15. In Javer Chand and Others. v. Pukhraj Surana 7 , way back in 1961, a four Judges’ Bench of this Court had examined the interplay between Sections 35 and 36 of the Stamp Act to hold that Section 36 is categorical in terms that when a document has been admitted in evidence, such admission cannot be called in question at any stage of the suit or proceedings on the ground that the instrument had not been duly stamped. The only exception recognised by Section 36 is the class of cases contemplated by Section 61 of the Stamp Act. Section 36 does not admit of any other exception. It does not matter whether the court has wrongly decided to admit the document in evidence. Section 35 is in the nature of a penal provision which has far reaching eﬀ ects. The parties to the litigation have to be circumspect and have to be alert so as to challenge the admissibility of an instrument before it is admitted in evidence. 16. A ﬁ ve Judges’ Bench in The State of Bihar v. M/s Karam Chand Thapar and Brothers Ltd. 8 , has held that the instrument that can be validated under Section 35 is only the original, when it is unstamped or insuﬃ ciently stamped. A copy cannot be validated and acted upon, albeit where multiple copies are prepared and signed and sent to respective parties, each one would be an original instrument. 17. In Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and Others 9 , a two Judges’ Bench of this Court observed that T he Indian Evidence Act, 1872 does not purport to deal with admissibi lity of the documents which are required to be stamped under the provisions of th e Stamp Act. Thereafter, it is observed: “13. The ﬁ rst limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second 7 AIR 1961 SC 1655. 8 AIR 1962 SC 110. 9 (1971) 1 SCC 545. 1201 limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable w ith duty was not stamped or insuﬃ ciently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso ( a ) is only applicable when the original instrument is actually before the Court of law and t he deﬁ ciency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulﬁ l the requirements of the proviso which enjoins upon the authorit y to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. “Instrument” is deﬁ ned in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act. 14. If Section 35 only deals with original instruments and not copies Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its beneﬁ t. The words “an instrument” in Section 36 must have the same meaning as that in Section 35. The legislature only relented from the strict provisions of Section 35 in cases where the original instrument was admitted in evidence without objection at the initial stage of a suit or proceeding. In other words, alt hough the objection is based on the insuﬃ ciency of the stamp aﬃ xed to the document, a party who has a right to object to the reception of it must do so when the document is ﬁ rst tendered. Once the time for raising objection to the admission of the documentary evidence is passed, no objection based on the same ground can be raised at a later stage. But this in no way extends the applicability of Section 36 to secondar y evidence adduced or sought to be adduced in proof of the contents of a document which is unstamped or insuﬃ ciently stamped.” IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] This judgment also holds that a copy of the instrument cannot be validated. It overruled the dictum that Section 36 will also apply where secondary evidence of an instrument unduly stamped, has been wrongly admitted. 18. In Hameed Joharan (਄ਅਁ਄) and Others v. Abdul Salam (਄ਅਁ਄) by LRs. and Others 10 , this Court observed that applicability of the Stamp Act stands restricted to the scheme of the Stamp Act. The Stamp Act being a true ﬁ scal statute in nature, strict construction and not liberal interpretation is required to be eﬀ ected . Section 2(15) includes a decree of partit ion and Section 35 lays down a bar on unstamped or insuﬃ cient stamp being admitted in evidence or being acted upon. The law howe ver does not prescribe that the period for ﬁ ling appeal shall remain suspended still stamp paper is furnished and the partition decree is drawn thereon and signed by the judge. The whole purport of the Stamp Act is to make available certain dues and collect revenue, but it does not mean and imply an overriding eﬀ ect on another statute operating in a completely diﬀ erent sphere. Enforceability of a decree cannot be a subject matter of Section 35 of the Stamp Act, neither can the limitation be said to be under suspension. The heading of Se ction 35 itself denotes the limited sphere of applicability. 19. In Dr. Chiranji Lal (D) by LRs. v. Hari Das (D) by LRs . 11 , a three Judge Bench of this Court rejected the contention that an unstamped preliminary decree is not enforceable and, therefore, the period of limitation begins to run when the decree is engrossed on the stamp paper. The Stamp Act is a ﬁ scal measure with the object to secure revenue for the State on certain classes of instruments. The Stamp Act is not ena cted to arm the litigant with a weapon of technicality to meet the case of his opponent. As there is no rule which prescribes any time for furnishing of stamp paper or to call upon a person to pay stamp duty on a preliminary decree of partition, the proposition that period of limitation would remain suspended till stamp paper is furnished and decree engrossed thereon was rejected. 10 (2001) 7 SCC 573. 11 (2005) 10 SCC 746. 1203 20. In Hariom Agrawal v. Prakash Chand Malviya 12 , a three Judge Bench has referred to Karam Chand Thapar (supra), Jupudi Kesava Rao (supra), to observe: “10. It is clear from the decisions of this Court and a plain reading of Sections 33, 35 and 2(14) of the Act that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be taken in evidence u nder Section 35 of the Stamp Act. Sections 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Section 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Stamp Act, 1899.” 21. In Shyamal Kumar Roy v. Sushil Kumar Agarwal 13 , this Court observed that Section 36 is a standalone clause which categorically prohibits the court of law from reopening the matter with regard to the suﬃ ciency or otherwise of the stamp duty paid on an instrument in the event the same has been admitted in evidence, the only exception being Section 61 providing for reference and revision. Reliance was placed on Javer Chand (supra). 22. Avinash Kumar Chauhan v. Vijay Krishna Mishra 14 expounds the meaning of the words ‘for any purpose’ used in Section 35 of the St amp Act. These words are to be given natural meaning and eﬀ ect. They would include collateral purpose, as was held in the decision of the Privy Council in Ram Rattan v. Parma Nand 15 . Distinction was drawn between non-eﬀ ect of registration of a document in terms of Section 49 of the Registration Act, 1908, which does not bar use of an unregistered document for a collateral purpose. Section 35 is diﬀ erently worded, and when applicable, bars use of insuﬃ ciently stamped instrument for a collateral purpose. 12 (2007) 8 SCC 514. 13 (2006) 11 SCC 331. 14 (2009) 2 SCC 532. 15 AIR 1946 PC 51. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] 23. It is necessary to aﬃ rm this legal position, as we enter into contracts or agreements several times in our interactions with others during the course of the day. Even written documents in the form of invoices, receipts or standard format agreements are often exchanged, and form the terms of the interactions. An unstamped or under-stamped contract or agreement cannot be impounded, except when it is produced for being received in evide nce before a person authorised to do so or a public oﬃ cer in terms of Section 33 of the Stamp Act. To hold that insuﬃ ciently stamped instrument does not exist in law, will cause disarray and disruption. 24. Predictability and certainty are central tenets of law, especi ally in matters of commercial and routine nature. Adherence to the principle of stare decisis is essential for parties to be able to rely on the law to de ﬁ ne their conduct in commercial or ordinary day to day dealings. Transient laws undermine public legitimacy and faith in the mandate of Rule of Law. This Court has previously observed that before reviewing and revising its earlier decision, the Court must satisfy itself whether it i s necessary to do so in the interest of public good or for any other compelling r eason, and the Court must endeavour to maintain certainty and continuity in the interpretation of the law in the country. 16 On several occasions, this Court has emphasised on certainty and consistency in judicial pronouncement s as being the cornerstone of the administration of justice. 17 Consistency in judicial decisions is conducive to reassuring parties of the consequences of the transactions forming part of their daily aﬀ airs. 18 25. An instrument is to be stamped as per Section 33 when it is executed or ﬁ rst executed. The expressions ‘executed’ and ‘execution’ have b een deﬁ ned in clause (12) to Section 2 of the Stamp Act to mean ‘signed’ or ‘signature’. 19 It includes attribution of electronic record within the meaning 16 Keshav Mills Co. Ltd. v. Commissioner of Income Tax, Bombay North, Ahmedabad, AIR 1965 SC 1636. 17 Government of Andhra Pradesh and Others v. A.P . Jaiswal and Others , (2001) 1 SCC 748. 18 Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes and Others , 2022 SCC OnLine SC 953; Union of Indiaand Another v. Raghubir Singh (Dਅਁ਄) by LRs. etc. , (1989) 2 SCC 754. 19 2. Deﬁ nitions. —In this Act, unless there is something repugnant in subj ect or context,— (12) Executed and execution.—“Executed” and “execution”, used with reference 1205 of Section 11 of the Information Technology Act, 2000 20 . I shall now analyse the relevance of execution or ‘signature’, with reference to an arbitra tion agreement as deﬁ ned in Section 7 of the Arbitration Act. 26. Section 7of the Arbitration Act reads: “ 7. Arbitration agreement. —(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a deﬁ ned legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or oth er means of telecommunication including communication through electronic means which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which t he existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” to instruments, mean “signed” and “signature”and includes attri bution of electronic record within the meaning of Section 11 of the Information Technology Act, 2000 (21 of 2000). 20 11. Attribution of electronic records. —An electronic record shall be attributed to the originator— (a) if it was sent by the originator himself; (b) by a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) by an information system programmed by or on behalf of the originator to operate automatically. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] An ‘arbitration agreement’ is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or may arise between them. The disputes may be in respect of a deﬁ ned legal relationship, whether contractual or not. An arbitration agreement has to be in writing. 27. Sub-section (4) to Section 7 speciﬁ es when an arbitration agreement can be said to be in writing. Clause (a) to sub-section (4) st ates that an arbitration agreement can be a document signed by the parties. According to clause (b) to sub-section (4) to Section 7, an ar bitration agreement can be established or inferred from exchange of letters, telex, telegram s or other forms of communication, including communic ation through electronic means. The provision does not mention the need for ‘execution’ or signatures of the parties. 21 Similarly, clause (c) to sub-section (4) to Section 7 which refers to exchange of statements of claim and defence, in which the existence of the arbitration agreement is alleged b y one party and not denied by the other, does not refer to an instrument which is signed by the parties. Clause (c) incorporates the principle wherein the parties by “consent” agree to the existence of an arbitration agreement, or impliedly agree by not denying its existence when alleged by one party and not denied by the other. An arbitration agreement is deﬁ ned in the widest terms, and may be in the form of a clause in the underlying contract or separate from an underlying agreement. Signiﬁ cantly, even when it is a clause of the underlying agreement, it is treated as a separate agreement, an as pect to which I shall advert. 28. Section 16 22 of the Arbitration Act, empowers the arbitral tribunal 21 Caravel Shipping Services (P) Ltd. v. Premier Sea Foods Exim (P) Ltd. (2019) 11 SCC 461; Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia Pvt. Ltd. (2015) 13 SCC 477. 22 16. Competence of arbitral tribunal to rule on its juri sdiction.— (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on an y objections with respect to the existence or validity of the arbitration agreement, and for that purpose,— (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. (2) A plea that the arbitral tribunal does not have juri sdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded 1207 to rule on its own jurisdiction. This includes the authority to de cide the existence and validity of the arbitration agreement. This has ref erence to Section 7 of the Arbitration Act, which I have examined. As per Section 16, an arbitration agreement is an agreement independent of the other terms of the contract, even when it is only a clause in the underlying contrac t. The section speciﬁ cally states that a decision by the arbitral tribunal holding the underlying contract to be null and void, will not lead to ipso jure the invalidity of the arbitration clause. The existence of an arbitration agreement is to be ascertained with reference to the requirements of Sec tion 7 of the Arbitration Act. In a given case the underlying contract may be nul l and void, but the arbitration clause may exist and be enforceable. Invalidity of an underlying agreement may not,unless relating to its formation, result in invalidity of the arbitration clause in the underlying agreement. Hon’ble the Chief Justice has elaborately explained the negative and positive contours of the doctrine of separability in reference to an arbitration agreement, with which I respectfully agree. 29. In this connection, I may note a decision of the Singapore High Court in the case of BNA v. BNB and Another 23 which holds that a defect in the arbitration agreement does not render it void ab initio unless the defect is so fundamental or irretrievable as to negate the parti es’ intent or agreement to arbitrate. This principle is based upon the observations of the Court of Appeal of Singapore in the judgment in Insigma Technology Co Ltd v. Alstom Technology Ltd 24 . from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub- section (3), admit a later plea if it considers the delay justiﬁ ed. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub- section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an ap plication for setting aside such an arbitral award in accordance with Section 34. 23 [2019] SGHC 142. 24 [2009] SGCA 24. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] 30. Jurisprudentially it is important to distinguis h the terms and consequences of an agreement void ab initio , and a voidable agreement, and the eﬀ ect of illegality and violation of law on an agreement. 31. As per the Indian Contract Act, 1872 25 , an agreement not enforceable by law is said to be void, and an agreement enforceable by law is a contract. 26 A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. 27 32. The requirements of Section 10 of the Contract Act 28 are that the contract should be made by parties competent to contract, for la wful consideration and with lawful object. Consent of the parties should be free. The contract should not be expressly declared to be void. Section 2 has to be read with Section 10 and not in isolation, in order to avoid contradiction and to harmoniously apply the two sections. 33. Sections 11 29 and 12 30 deal with persons entitled to contract. In instances where a person is explicitly declared as incomp etent or does not fall within the deﬁ nition of a competent person under the aforesa id provisions, like a minor or a person of unsound mind, a contract entered into by such person would be void. An agreement is also rendered void whe n both parties are under mistake of fact 31 . As per Section 24, agreements are void if consideration and objects are unlawful in part. 32 This section does not have any application to the present issue, and neither are we concerned with Section 25, which relates to agreements without consideration and in 25 For short, “the Contract Act”. 26 2 (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract 27 2 (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable. 28 10. What agreements are contracts.— All agreements are contracts if they are made by the free consent of parties competent to contract, for a l awful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall aﬀ ect any law in force in India and not hereby expressly repealed, by which any contract is required to be made in writingor in the presence of witnesses, or any law relating to the registration of documents. 29 Section 11, The Indian Contract Act, 1872. 30 Section 12, The Indian Contract Act, 1872. 31 Section 20, The Indian Contract Act, 1872. 32 Section 24, The Indian Contract Act, 1872. 1209 which situation they have to be treated as void 33 . Agreements which are in restraint of marriage or in restraint of trade are void. 34 Agreements by way of wager are also void. 35 Agreements, the meaning of which is not certain, or capable of being made certain, are void. 36 Section 28 states that agreements in restraint of legal proceedings are void, but Exception 1 states that a contract by which parties agree for disputes arising between them to be referred to arbitration shall not render the contract illegal. 37 34. Sections 13 to 19A relate to consent 38 , free consent 39 , coercion 40 , undue inﬂ uence 41 , fraud 42 , misrepresentation 43 , void ability of agreements without free consent 44 , and power to set aside contract induced by undue inﬂ uence 45 . The Contract Act declares contracts aﬀ ected by the preceding provisions to be voidable at the option of the aggrieved party. 35. Under Section 21, a contract is not voidable because it is caused by mistake as to law enforced in India 46 , and a contract where mistake of fact is made by one party is also not voidable as per Section 22 47 . 36. According to Section 23 of the Contract Act, the consideration or object of an agreement is lawful unless it is forbidden by law or is of such nature as to defeat the provisions of law, or is fraudulent. Neither are these provisions applicable in case of unstamped or insuﬃ ciently stamped instruments, nor is the consideration or object unlawful as it involves or implies injury to a person or property of another. The last clause of Section 23 applies when the consideration or object of an agreement is regarded as 33 Section 25, The Indian Contract Act, 1872. 34 Sections 26 and 27, The Indian Contract Act, 1872. 35 Section 30, The Indian Contract Act, 1872. 36 Section 29, The Indian Contract Act, 1872. 37 Section 28, The Indian Contract Act, 1872. 38 Section 13, The Indian Contract Act, 1872. 39 Section 14, The Indian Contract Act, 1872. 40 Section 15, The Indian Contract Act, 1872. 41 Section 16, The Indian Contract Act, 1872. 42 Section 17, The Indian Contract Act, 1872. 43 Section 18, The Indian Contract Act, 1872. 44 Section 19, The Indian Contract Act, 1872. 45 Section 19A, The Indian Contract Act, 1872. 46 Section 21, The Indian Contract Act, 1872. 47 Section 22, The Indian Contract Act, 1872. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] immoral or opposed to public policy. An instrument whether unstamped or insuﬃ ciently stamped will not fall foul on the ground of consideration or object of the agreement being immoral, neither will it fall foul as opposed to public policy. 37. In B.O.I. Finance Ltd. v. Custodian and Others 48 this Court after examining the case law on the subject of public policy, observe d that in pursuant to an agreement to do an illegal act, a transaction, i n part, takes place which would otherwise be valid if there was no such prior agreement, then notwithstanding the illegality of the contract, the completed transaction itself cannot be regarded as invalid. 38. Following this judgment, in Canara Bank and Others v. Standard Chartered Bank 49 , it is held that for the contract to be declared void on the ground of public policy, it must be shown that the object and consideration of the contract was one which was illegal. Where the object and consideration of the contract is not illegal as in the case of sale/ purchas e of securities and payment of price, the contract will not be void on the ground of being opposed to public policy. The contention that the performance of contract in violation of law will be void on ground of public policy was reje cted. These observations were made in the context of the argument that there was violation of law while carrying out the contract and the arrangement wa s opposed to public policy. 39. A judgment by Mr. Justice S.S. Nijjar in Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee 50 , has elaborately dealt with the terms ‘void’ and ‘voidable’ and states that they are us ed loosely and interchangeably with each other, though strictly in law, they are not so. It is also important to draw a distinction between contract s which are void, and those which are void ab initio due to lack of elements of oﬀ er or acceptance, which prevents a contract from coming into operati on. Thus, a contract by a minor or by a person of unsound mind would be void due to lack of eﬀ ectual oﬀ er or acceptance. But once the contract is made, that is to say where parties, whatever their innermost state of mind, have to all 48 (1997) 10 SCC 488. 49 (2002) 10 SCC 697. 50 (2014) 6 SCC 677. 1211 outward appearances, agreed with suﬃ cient certainty in the same terms of the subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of contract depe nds, or for fraud, or on some other equitable ground. Neither party can rely upon its own mistake to say that it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamental, no matter that the other party knew that he was under a mistake. 51 40. The judgment in Vidya Drolia and Others v. Durga Trading Corporation 52 , after referring to Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd. 53 , draws a distinction between contract obtained through fraud, and post contract fraud or cheating. The latter falls outside the scope of Section 17 of the Contract Act. It observes that the fraud may permeate the entire contract and above all the agreement of ar bitration, rendering it void. However, it may not be so when the allegations of fraud touch upon the internal aﬀ airs of the parties inter se , having no implication in the public domain. 41. There are also two aspects of the judgment in Vidya Drolia (supra), which need to be noticed. First, I agree to and accept the error made by me in the judgment which observes that Section 11(6A) of the Arbitration Act has ceased to be operative in view of the enforcement of Sect ion 3 of the Arbitration and Conciliation (Amendment) Act, 2019. As rightly observed by Hon’ble the Chief Justice, Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019which relates to the amendment to Sect ion 11 has not been enforced. Secondly, as has been noted in the judgment of Hon’ble the Chief Justice and in Career Institute Educational Society v. Om Shree Thakurji Educational Society 54 , the issue before this Court in Vidya Drolia (supra)was not the validity of an unstamped or under-stamped arbitration agreement. No speciﬁ c opinion was expressed on this question. 51 See ITC Ltd. v. George Joseph Fernandes and Another (1989) 2 SCC 1, which quotes from Smith v. Hughes LR (1871) 6 QB 597 and Solle v. Butcher (1950) 1 KB 671. The judgment in ITC Ltd.(supra) was under the Arbitration Act,1940 and s hould not be applied to interpret the Arbitration and Conciliation Act, 1996. 52 (2021) 2 SCC 1. 53 (2021) 4 SCC 713. 54 2023 SCC OnLine SC 586. IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UND ER THE ARBITRATION AND CONCILIATION ACT 1996 AND THE I NDIAN STAMP ACT 1899 [ SANJIV KHANNA, J.] The reference to the validity of an unstamped arbitration agree ment, as mentioned in Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd. 55 , was only to serve the purpose of drawing a comparison between the ‘existence’ and the ‘validity’ of an arbitration agreement, and not a comment or opinion on the ‘existence’ of unstamped or under-stamped arbitration agreements. 42. For the reasons set out in detail by Hon’ble the Chief Justice and recorded herein, I agree with the conclusions drawn, and referred to above. I also concur with the other ﬁ ndings and ratio in the judgment by Hon’ble the Chief Justice.