Referred to Larger Bench XXV Answered: Doctrine of Separability of Arbitration Agreement

Posted on by Rudrajyoti Nath Ray

Intercontinental Hotels Group (India) Private Ltd. v. Waterline Hotels Pvt. Ltd., 2022 SCC OnLine SC 83 on issue of insufficiently/incorrectly stamped documents, proceeded to appoint an Arbitrator under Section 11(6) of The Arbitration and Conciliation Act, 1996 – considering, time-sensitivity. A sufferance of stamp deficiency is a curable defect.  

Arbitration Act does not specifically provide for necessary stamping for validity. The Indian Stamp Act, 1899 does not specifically refer to an Arbitration Agreement. No provision of Stamp Act would lead an Arbitration Agreement to be invalid/void-ab-initio when not stamped.    

For an Arbitration Agreement, which may even be non-contractual, requirement of a signature is not mandatory. If an Arbitration Agreement can be non-contractual and does not necessarily require signature, how far general provisions of Stamp Act and The Indian Contract Act, 1872 can apply to prove ‘formal’ validity of an Arbitration Agreement? A special law which provides for specific requirements cannot be rendered void by a general law [A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386].

We now have phenomenon of smart contracts and metaverse in sphere of commercial transactions where technology and artificial intelligence are integrated. Stamp Act is rooted in past. Brother Justice Ajay Rastogi and I [Minority Opinion] appeal to future as also Legislature’s powers to examine interplay between Arbitration Act and Stamp Act.

– Hon’ble Justice Hrishikesh Roy, M/s. N.N. Global Mercantile Private Limited v. M/s. Indo Unique Flame Limited, [Civil Appeal Nos. 3802-3803 of 2020].

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Stamp Act is primarily intended to collect revenue and it is not intended to raise ‘technical pleas’. This would hardly furnish justification for Court to ignore Legislature’s voice couched in unambiguous terms.

We express our inability to agree an Arbitration Agreement can be even non-contractual.

– Hon’ble Justice K.M. Joseph, M/s. N.N. Global Mercantile Private Limited v. M/s. Indo Unique Flame Limited, [Civil Appeal Nos. 3802-3803 of 2020].

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