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

Posted on by Rudrajyoti Nath Ray

Curative Petition (C) No. 44 of 2023

Review Petition (C) No. 704 of 2021

Civil Appeal No. 1599 of 2020

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Approach of Majority in N.N. Global 2 would render unstamped agreements void ab initio and not void.

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We enter into contracts or agreements several times in our interactions with others. To hold an insufficiently stamped instrument does not exist in law will cause disarray and disruption. An instrument whether unstamped or insufficiently stamped will not fall foul on ground of being immoral, neither will it fall foul as opposed to public policy.

– Hon’ble Justice Sanjiv Khanna

A presumption of separability ensures, an Arbitration Agreement survives termination/repudiation/frustration of a contract to give effect to true intention of parties and ensure sanctity of Arbitral Proceedings.

When parties append their signatures to a contract containing an Arbitration Agreement, they are regarded in effect as independently appending their signatures to an Arbitration Agreement whereby i) parties intend all their disputes over substantive rights and obligations under underlying contracts to be resolved by an Arbitral Tribunal [Mulheim Pipecoatings GmbH v. Welspun Fintrade Ltd., 2013 SCC OnLine Bom 1048] and ii) Arbitrators must have first opportunity to hear challenges relating to their jurisdiction, which is subject to subsequent review by Courts. Principle of negative competence-competence requires, Courts to leave issue of stamping to be decided by an Arbitral Tribunal in first instance.

– Hon’ble Chief Justice of India, Hon’ble Justice Dr. D.Y. Chandrachud

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Seven-Judge Bench of this Court in In Re: Interplay Between Arbitration Agreements under The Arbitration and Conciliation Act, 1996 and The Stamp Act, 1899, (2024) 6 SCC 1 noted, Section 35 of The Indian Stamp Act, 1899 unambiguously requires an instrument chargeable with stamp duty to only be ‘admitted in evidence’ if it is properly stamped. Court further noted, improper stamping does not render an instrument void or invalid. It is a defect which is curable upon payment of requisite stamp duty and penalty.

– Hon’ble Justice S.V.N. Bhatti, Seetharama Shetty v. Monappa Shetty, [Civil Appeal Nos. 10039-40 of 2024] decided on 02.09.2024.

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'The Last Word' seeks to include not only wise and witty sayings but also curiosities. These words are not of obligation but of delight. I am not alone in my refusal to believe, law is tedious. For all who escaped these percipient eyes, mea culpa maxima. History, after all, has many cunning passages, contrived corridors and issues.