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TMI Blog2023 (12) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... .................................................................................... 22 ii. The consequences of the failure to stamp an instrument .......................................... 27 a. The procedure under the Stamp Act ............................................................................................ 27 b. The difference 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the Stamp Act when it enacted the Arbitration Act ............................. 106 ii. Harmonious construction of the three statutes under consideration ..................... 106 a. The effect of the competence-competence doctrine .................................................................. 106 b. The effect 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 effect to the purpose of the Arbitration Act in addition to the Stamp Act ............................................................................................................................. 114 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied 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 significant that the agreement only becomes a contract 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 specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence" requires understanding the context, the purpose and the relevant legal 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 cannot 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 satisfies 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 first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act cannot disregard the mandate of Sections 33 and 35 of the Stamp Act requiring it to examine and impound an unstamped or insufficiently stamped instrument; and e. The certified copy of an arbitration agreement must clearly indicate the stamp duty paid. 5. The minority judgment adopted a different 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, 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 to hold that an unstamped or insufficiently 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 conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. 3. These proceedings shall be accordingly listed on 24 August 2023 together with the Curative Petition. 4. Counter affidavit, if any, be filed in the meantime." 9. On 26 September 2023, a Bench of five Judges took up the arbitration petition along with the curative petition. Considering the larger ramifications 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: PART B "2. Having regard to the larger ramifications and consequences of the view of the majority in N N Global Mercantile Private Limited 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 five-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 the 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Arbitration Act. 14. Mr Darius J Khambata, learned senior counsel, made the following submissions: a. The doctrine of separability recognizes that an arbitration agreement is a self-contained agreement, distinct from the underlying contract; b. An arbitration agreement contained within an underlying 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 effect 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 insufficient 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; f. At the pre-arbitral stage, the referral courts should leave all issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable because none of the pleaded grounds meet the requirements set out in Rupa Ashok Hurra v. Ashok Hurra., (2002) 4 SCC 388 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 confined to mere facial existence of an arbitration agreement. The referral court has to prima facie examine both the existence and validity of an arbitration agreement; c. Section 33 of the Stamp Act casts a mandatory legal requirement on courts under Section 11 proceedings to impound an unstamped or insufficiently 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(6A) contemplates the examination of the validity of an arbitration agreement, including the examination of sufficiency of stamping; and b. The inclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration v. Mumbai Shramik Sangha, (2001) 4 SCC 448 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., Pradip Chandra Parija v. Pramod Chandra Patnaik, (2002) 1 SCC 1 24. However, there have been situations where a Bench of lower strength has differed with the decision rendered by a Bench of larger strength. In Union of India v. Hansoli Devi, (2002) 7 SCC 273 a Bench of two Judges of this Court differed 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 different 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, (2005) 2 SCC 673 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 it, it may proceed to hear the case and examine the correctness of the previous decision in question dispensing with the need of a specific 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 ramifications for the law. In Ganga Sugar Corporation Ltd. v. State of Uttar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first 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; (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trument chargeable with duty has already been written., 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 transferring 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." Section 15 is significant because it indicates the effect of non-compliance with Sections 13 and 14: instruments written in contravention of Section 13 or Section 14 shall be deemed to be unstamped., Section 15, Stamp Act 33. Chapter II of the Stamp Act provides for various other contingencies or situations, including inter alia policies of sea-insurance, Section 7, Stamp Act bonds, debentures, and securities, Sections 8 to 8F, Stamp Act transactions in stock exchanges and depositories, Section 9A, Stamp Act and instruments executed outside India., Sections 18, 19, Stamp Act Chapter II also provides for the valuation of stamp-duty, including for the conversion of amounts expressed in foreign currencies, Section 20, Stamp Act how to value stock and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of courts regarding the sufficiency of stamps. Chapter VII of the Stamp Act indicates the penalties for non-compliance with its provisions and finally, Chapter VIII contains certain supplementary provisions in relation to the statute. 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 instruments 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 insufficiently stamped. The parties executing an instrument 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 sufficient amount but of improper description; c. The provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed to be public offices; and (b) the State Government may determine who shall be deemed to be persons in charge of public offices." 39. Section 35 is of particular significance to the issue before this 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 authenticated by any such person or by any public officer, unless such instrument 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 insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 instrument 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;, Section 40(1)(a), Stamp Act b. Certify by endorsement that the instrument is not chargeable with duty, if they are of such an opinion; ibid and 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., Section 40(1)(b), Stamp Act The Collector may also levy a penalty, as provided by Section 40. If the instrument has been sent to the Collector under Section 38, it must be returned to the impounding officer after it is dealt with as described above., Section 40(3), Stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 27 of the Contract Act, "27. Agreement in restraint of trade void.- Every agreement 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 which goodwill is sold.-One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified 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." 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 nonetheless 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 difference between voidness and admissibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 under 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 accepted on payment of duty and penalty. But admissibility of a document into evidence and proof of genuineness of such document are different 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, 1936 SCC OnLine Cal 275 one of the parties contended that the agreement was invalid because it was not properly stamped. The portion of Section 35 which bars the admissibility of unstamped instruments was the same then as it is now. The Calcutta High Court held: "...The effect 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 pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is despite 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, fulfil the requirements of the Contract Act." (emphasis supplied) 55. Section 11(6-A), Omitted by Act 33 of 2019. The omission is yet to be notified / take effect. of the Arbitration Act is extracted below: "(6-A) 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-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement." (emphasis supplied) 56. A plain reading of Section 11(6A) makes it evident that it is referring to an arbitration agreement. Section 11(6A) provides that courts must confine themselves to an examination of the existence of the arbitration agreement. The word "confine" indicates the intention of the legislature to limit the jurisdiction of the courts at the stage of the appointment of an arbitrator. 57. In Vidya Drolia (supra), this Court held: "21. The term "agreement" is not defined in the Arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 significant observation about the purpose of the Stamp Act and the manner in which it is to be interpreted by courts: PART E "7. The Stamp Act is a fiscal 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 his opponent. The stringent provisions of the Act are conceived in the interest of the revenue once that object is secured according to law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso to define 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 Arbitration (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 arbitration that takes place in India; (ii) Part II deals with the enforcement 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 the 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 tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the ever-evolving domain of arbitration law. Arbitral autonomy means that the parties to an arbitration agreement can exercise their contractual 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 effect to the true intention of parties to distance themselves from the "risk of domestic judicial parochialism.", Redfern and Hunter on International Arbitration (7th edn, Oxford University Press, 2023) 388 67. The principle of judicial non-interference reflects the autonomy of arbitral tribunals. Arbitral tribunals are autonomous in the sense that they are constituted to give effect 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 its 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 sufficient autonomy from the national courts. 68. Section 9 of the Code of Civil Procedure 1908 provides that the courts shall have jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and their desire for neutral and expert arbitral procedures., Gary Born, International Arbitration Law and Practice (3rd ed, 2021) 2361 The principle of judicial non-interference in arbitral proceedings respects the autonomy of the parties to determine the arbitral procedures. This principle has also been incorporated in international instruments, including the New York Convention, Article II(3), New York Convention and the Model Law. 70. Article 5 of the Model Law deals with the extent 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.", Report of the Working Group on International Contract Practices on the work of its seventh session, A/CN.9/246 (New York, 23 January-3 February 1984) 45. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion. 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: first, Section 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. 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 effect to the true intention of the parties to have their disputes resolved through arbitration in a quick, efficient, and effective manner by minimizing judicial interference in the arbitral proceedings., Food Corporation of India v. Indian Council of Arbitration, (2003) 6 SCC 564 Parliament enacted Section 5 to minimize the supervisory role of courts in the arbitral process to the bare minimum, and only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of conflict an overriding effect 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 embraced 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 effect is limited to the extent intended by the legislature. In ICICI Bank Ltd v. SIDCO Leathers Ltd, (2006) 10 SCC 452 a two-Judge Bench of this Court held that a nonobstante clause must be interpreted by confining 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., JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Godrej & Boyce Mfg. Co. Ltd, (2004) 3 SCC 447 In Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd, (2022) 1 SCC 75 a Bench of three Judges of this Court observed that 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 contemplated under the Arbitration Act." 81. One of the main objectives behind the enactment of the Arbitration Act was to minimize the supervisory role of courts in the arbitral process by confining 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 effect of Section 16, bearing in view the principle of minimum judicial interference, is that judicial authorities cannot intervene in matters dealing with the jurisdiction of the arbitral tribunal. Although Sections 8 and 11 allow courts to refer parties to arbitration or appoint arbitrators, Section 5 limits the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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., 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 When a self-contained code sets out a procedure, the applicability of a general legal procedure would be impliedly excluded., Subal Paul v. Malina Paul, (2003) 10 SCC 361 Being a selfcontained and exhaustive code on arbitration law, the Arbitration Act carries the imperative that what is permissible under the law ought to be performed only in the manner indicated, and 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 specified under the law. The corollary is that it is not permiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : a. There must be a present or future difference in connection with some contemplated affair; b. There must be the intention of the parties to settle such disputes 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 defines 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 defined 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 separate agreement. Further, Section 7 mandates that an arbitration agreement shall be in writing. According to Section 7(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 other means of telecommunication including communication through electronic means which provide a record of the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 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 under the underlying contract to be resolved by the arbitral tribunal., Mulheim Pipecoatings GmbH v. Welspun Fintrade Ltd., 2013 SCC OnLine Bom 1048 Therefore, the separability presumption ensures that an arbitration agreement survives a termination, repudiation, or frustration of a contract to give effect to the true intention of the parties and ensure sanctity of the arbitral proceedings. 93. Switzerland was one of the first jurisdictions to recognize the 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 and therefore from the outside appears as a part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bligations 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 failed, but the arbitration clause is not one of the purposes of the contract." 96. In subsequent decisions, the English courts reiterated the separability presumption. In Harbour Assurance Co. (U.K.) Ltd. v. Kansa General International Insurance Co. Ltd. [1993] Q.B. 701, 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, "UK Arbitration Act" in the following terms: "Unless otherwise agreed by the parties, an arbitration agreement 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 ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement." 97. Chitty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te 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 States in Buckeye Check Cashing Inc v. Cardegna, 546 U.S. 440, 440 (2006) and Rent-A-Center, West, Inc. v. Jackson., 2 561 U.S. 63 (2010) In Rent-A-Center (supra), it was held that application of the severability rule does not depend on the substance of the remainder of the contract. f. Singapore 100. The doctrine of separability has been statutorily recognized under the domestic arbitration regime in Singapore through Section 21 of the Singaporean Arbitration Act, 2001., Arbitration Act 2001 (No. 37 of 2001) 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 effective if a provision of the substantive contract into which it is integrated could, in certain circumstances of fact or l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is incorporated under Article 16(1) to complement the principle of competencecompetence. The separability presumption further ensures that the invalidity of the underlying contract does not affect 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 finds that the defect which causes the nullity of the contract affects also the arbitration clause itself.", Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, A/CN.9/264 (25 March 1985) 38. The last sentence of Article 16(1) (extracted above) states the general principle of contractual validity of arbitration clauses., Gary Born (n 62) 403 It connotes that the invalidity of the underlying contract will not necessarily entail the invalidity of an arbitration agreement contained in the contract. Accordingly, the arbitral tribunal's jurisdiction will be affected only when the defect causing invalidity is directed at the arbitration agreement., Digest of Case Law on the Model Law on International Commercial Arbitration (2012) 76 h. India 105. The Arbitration Act also inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract. 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 first, 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 fifth, 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, (1974) 1 SCC 141 a two-Judge Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9) 10 SCC 103 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 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 contract, so that even if the underlying contract comes to an end, the arbitration 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 contained in Section 16 is applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent judicial review of the decision by any court., Fouchard, Gaillard, Goldman on International Commercial Arbitration (edited by Emmanuel Gaillard and John Savage, 1999) 396 However, many jurisdictions allow an arbitral tribunal to render a decision on its jurisdiction, subject to substantive judicial review., Gary Born (n 62) 1143 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., Interpretation of Greco-Turkish Agreement of December 1st, 1926, Advisory Opinion, Series B - No. 16 (August 28, 1928). 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 effect 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 first instance. Thus, the position in the US is that the courts should only check if any invalidity is directed at the arbitration 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 arbitration is concerned. It provides that an arbitral tribunal may rule on its own jurisdiction, including a plea that it has no jurisdiction and any objections to the existence or validity of the arbitration agreement at any stage of the arbitral proceedings. The conduct of international commercial arbitrations in Singapore is governed by the International Arbitration Act, 1994., "IIA" 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, [2015] SGHC 225 the issue before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 effect 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 five grounds: (i) a party was under some incapacity; or (ii) the arbitration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 refers to whether the Arbitral Tribunal may embark upon an inquiry into the issues raised by 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, (2020) 2 SCC 455 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 affecting its jurisdiction, including the issue of sufficiency 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 empowered 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 twofold: first, to recognize the mutual intention of the parties of choosing the arbitrator to resolve all their disputes about the substantive rights and obligations arising out of contract; and second, to prevent parties from initiating parallel proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... positive and negative connotations. As a positive implication, the Arbitral Tribunals are declared competent and authorised by law to rule as to their jurisdiction and decide non-arbitrability questions. In case of expressed negative effect, the statute would govern and should be followed. Implied negative effect 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 nonarbitrability questions. As per the negative effect, courts at the referral stage are not to decide on merits, except when permitted by the legislation 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 "first 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., (2022) 1 SCC 712 this Court held that negative competence-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction 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 parties have made an agreement within the meaning of this article, shall, at request of one of the parties, refer the parties to arbitration, unless it finds 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 the subject of an arbitration agreement, such judicial authority shall refer the parties to arbitration on an application made by a party to the arbitration agreement or any person claiming through or under him not later than the date of submitting their first statement on the substance of the dispute. Section 8 mandates the judicial authority to refer the parties to arbitration "unless it finds 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 which an action is brought in a matter which is the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple, Section 9(4) of the English Arbitration Act, 1996 provides that a court can stay the legal proceedings unless satisfied that the arbitration agreement "is null and void, inoperative, or incapable of being performed." Similarly, Article 1458 of 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 differs 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 constitution 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 to assist the parties in appointing arbitrators. For instance, Article 1444 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 Section 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 the 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 earlier part of this judgment. These will be his own jurisdiction to entertain 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 qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that Section 11 applications were kept pending for years by the courts. To remedy the situation, the Law Commission 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 clarified that the power of appointment of arbitrators ought not to be regarded as a judicial act. 143. Significantly, 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 limiting 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 finds 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 finds that the arbitration does not exist or is null and void." In light of the recommenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entially 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 the Institutionalization of Arbitration Mechanism in India submitted a report noting that while the 2015 amendment facilitated the speedy disposal 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 Arbitration and Conciliation (Amendment) Act 2019, "2019 Amendment Act" 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 notified by the Central Government in the official gazette However, Section 3 of the 2019 Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution of sub-sections (12), (13) and (14) of Section 11 of the Arbitration Act by Act 33 of 2019, which, vide subsection (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 High Court concerned shall maintain a panel of arbitrators for discharging 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 books by the 2019 Amendment Act. This is also reflected 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 applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to the disputes which have arisen between the parties to the agreement. Therefore, the scope of examination under Section 11(6A) should be confined 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 effect to the doctrine of competence-competence by leaving the issue of substantive existence and validity of an arbitration agreement to be decided by arbitral tribunal under Section 16. We accordingly clarify the 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 minitrial by allowing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not invalid, inoperative or unenforceable, based upon purely a prima facie view, nothing prevents the arbitrator from trying the issue fully and rendering a final decision thereupon. If the arbitrator finds the agreement valid, there is no problem as the arbitration will proceed and the award will be made. However, if the arbitrator finds 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 finding would not be an enforceable award, there is no need to take recourse to the judicial intercession available under Section 48(1)(a) of the Act." PART I 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andla Export Corporation v. OCI Corporation (2018) 14 SCC 715, 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 file 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 effectuate a speedy resolution of disputes between parties, while the Commercial Courts Act 2015 is for the speedy resolution of commercial disputes involving significant 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 arbitration would be against the object of speedy enforcement of foreign arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provisions contained in two statutes must be, if possible, interpreted in a harmonious manner to give full effect to both the statutes., Jagdish Singh v. Lt. Governor, Delhi, (1997) 4 SCC 435 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 ineffective., State of Tamil Nadu v. M K Kandaswami, (1975) 4 SCC 745 The challenge, therefore, before this Court is to preserve the workability and efficacy of both the Arbitration Act and the Stamp Act., CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 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. a. The Arbitration Act is a special law and the Indian Contract Act and the Stamp Act are general laws 167. It is trite law that a general law must give way to a special law. This rule of construction stems from the doctrine generalia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 this case because it governs the law on arbitration, including arbitration agreements - Section 2(1)(b) and Section 7 of this statute define an arbitration agreement. In contrast, the Stamp Act defines 'instruments', Section 2(14), Stamp Act as a whole and the Contract Act defines 'agreements', Section 2(e), Contract Act and 'contracts.', Section 2(h), Contract Act 173. It is not only the definition 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 Court in Bhaven Construction. (supra), "the Arbitration Act is a code in itself.", Ibid at paragraph 12 It provides for a detailed mechanism by which arbitration may be conducted, with a view to ensuring its success as a speedy and efficacious alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra). The court failed to provide a reason for holding that Section 5 of the Arbitration Act does not have the effect 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 Section 5 does precisely this. In addition to the effect 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 supervisory role of courts in the arbitral process., Statements of Objects and Reasons, Arbitration Act 176. In Hameed Joharan v. Abdul Salam, (2001) 7 SCC 573 this Court made the following observations on the interplay between the Stamp Act 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 colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 unenforceable. However, the effect of the principle of competence-competence is that the arbitral tribunal is vested with the power and authority to determine 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 Courts, as the case may be) is merely giving effect 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, agreements are contracts if they are: a. Made by the free consent of parties competent to contract; b. For a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that parties comply with arbitration agreements. The disputes which have arisen between them remain the domain of the arbitral tribunal (subject to the scope of its jurisdiction as defined by the arbitration clause). The exercise of the jurisdiction of the courts of the country over the substantive dispute between the parties is only possible at two stages: a. If an application for interim measures is filed 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. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 furthered or destroyed. 192. The decisions adverted to in the preceding paragraphs 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 case). To this list of considerations which must animate the court's evaluation of whether a provision is mandatory or directory, we would add that the scope, 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 whether the object(s) of the applicable legislation(s) will be furthered or destroyed must also be considered in view of all such statutes. c. The object of the Stamp Act is preserved 193. In N N Global 2 (supra), the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 courts are burdened with innumerable cases on their docket. This has the inevitable 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 PART J far likelier that the process of payment of stamp-duty and a penalty (if any) and the other procedures under the Stamp Act 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 respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 deficit stamp duty and penalty is paid, either before the court or before the Collector (as contemplated in Section 35 of Section 49 of the Stamp Act), and the defect with reference to deficit 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), this Court clarified that the expression "notwithstanding any judgment" referred to in Section 8(1) relates to those judicial precedents which explained the discretion and power of judicial authority to examine various aspects while exercising powers under Section 8. In a similar vein, Section 11(6A) intended to minimize judicial interference to the examination of the existence of an arbitration agreement. Accordingly, the non-obstante clause contained 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 and 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 impounding the unstamped instrument containing the arbitration agreement. Therefore, we hold that Section 11(6A) also legislatively altered the basis of SMS Tea Estates (supra) to the extent that it dealt with judicial intervention at the Section 11 stage. ii. Garware Wall Ropes 204. In Garware Wall Ropes (supra), a Bench of two Judges of this Court was calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch authority receives the instrument. Once the stamp duty and penalty was paid, 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: first, 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 effect 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 applies to the instrument as a whole, it is not possible to bifurcate the arbitration 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 specifically 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 competence 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., (2022) 7 SCC 662 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n evidence. It was further held that any secondary evidence of such instrument cannot be acted upon in terms of Section 35. Subsequently, a three-Judge Bench of this Court in Hariom Agrawal v. Prakash Chand Malviya, (2007) 8 SCC 514 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 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 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." PART L 217. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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., (2018) 17 SCC 607 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 are of the opinion that Vidya Drolia (supra) did not, in any manner, determine the effect of an unstamped or insufficiently 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 clarified in the above segments of this judgment. 222. Significantly, a two-Judge Bench of this Court in Career I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Chief Justice of India for placing the matters before an appropriate Bench. JUDGMENT 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 exposition of the different contours which arise for consideration in the present reference. Complementing the same, I would like to provide additional justifications for the final conclusion, viz., unstamped or insufficiently stamped instruments inadmissible in evidence in terms of Section 35 of the Indian Stamp Act, 1899, For short, "the Stamp Act"., 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 8, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 function 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-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. (6B) The designation of any person or institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Civil 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 specified in the Fourth Schedule. Explanation.-For the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 officer, 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 insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five 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 effected by correspondence consisting of two or more letters and any one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2023 and Anr. Page 7 of 25 collateral purpose either. Further, the instrument shall not be acted upon, registered or authenticated by such person or by any public officer, unless it is duly stamped. The words 'acted upon' are with reference to the acts or the proceedings before such officer or public officer, 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 an 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 certification 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 35 do not apply when an instrument is produced or is acted upon by the parties themselves, or by a person who does not have au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, Section 36 of the Stamp Act incorporates the doctrine of waiver, estoppel and implied consent. That apart, after due stamping as per the Stamp Act, the unstamped or insufficiently stamped instrument can be admitted in evidence, or be registered, authenticated or be acted upon by such person or public officer. 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 AIR 1961 SC 1655, 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 benefit. 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, although the objection is based on the insufficiency of the stamp affixed to the document, a party who has a right to object to the reception of it must do so when the document is first 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 secondary evidence adduced or sought to be adduced in proof of the contents of a document which is unstamped or insufficiently stamped." This judgment also holds that a copy of the instrument cannot be validated. It overruled the dictum that Section 36 will also apply where second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been paid for such instrument it can be taken in 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." 21. In Shyamal Kumar Roy v. Sushil Kumar Agarwal, (2006) 11 SCC 331, 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 sufficiency 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, (2009) 2 SCC 532 expounds the meaning of the words 'for any purpose' used in Section 35 of the Stamp Act. These words are to be given natural me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Commercial Taxes and Others, 2022 SCC OnLine SC 953; Union of India and Another v. Raghubir Singh (DEAD) by LRs. etc., (1989) 2 SCC 754. 25. An instrument is to be stamped as per Section 33 when it is executed or first executed. The expressions 'executed' and 'execution' have been defined in clause (12) to Section 2 of the Stamp Act to mean 'signed' or 'signature'., 2. Definitions.-In this Act, unless there is something repugnant in subject or context,- (12) Executed and execution.-"Executed" and "execution", used with reference to instruments, mean "signed" and "signature" and includes attribution of electronic record within the meaning of Section 11 of the Information Technology Act, 2000 (21 of 2000). It includes attribution of electronic record within the meaning of Section 11 of the Information Technology Act, 2000, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to exchange of statements of claim and defence, in which the existence of the arbitration agreement is alleged by 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 defined in the widest terms, and may be in the form of a clause in the underlying contract or separate from an underlying agreement. Significantly, even when it is a clause of the underlying agreement, it is treated as a separate agreement, an aspect to which I shall advert. 28. Section 16, 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 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 arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 29. In this connection, I may note a decision of the Singapore High Court in the case of BNA v. BNB and Another, [2019] SGHC 142. 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 parties' 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, [2009] SGCA 24. 30. Jurisprudentially it is important to distinguish the terms and consequences of an agreement void ab initio, and a voidable agreement, and the effect of illegality and violation of law on an agreement. 31. As per the Indian Contract Act, 1872, For short, "the Contract Act", an agreement not enforceable by law is said to be void, and an agreement enforceable by law is a contract., 2 (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable., 2 (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitration shall not render the contract illegal., Section 28, The Indian Contract Act, 1872 34. Sections 13 to 19A relate to consent, Section 13, The Indian Contract Act, 1872, free consent, Section 14, The Indian Contract Act, 1872, coercion, Section 15, The Indian Contract Act, 1872, undue influence, Section 16, The Indian Contract Act, 1872, fraud, Section 17, The Indian Contract Act, 1872, misrepresentation, Section 18, The Indian Contract Act, 1872, voidability of agreements without free consent, Section 19, The Indian Contract Act, 1872, and power to set aside contract induced by undue influence, Section 19A, The Indian Contract Act, 1872. The Contract Act declares contracts affected 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, Section 21, The Indian Contract Act, 1872, and a contract where mistake of fact is made by one party is also not voidable as per Section 22, Section 22, The Indian Contract Act, 1872. 36. According to Section 23 of the Contract Act, the consideration or object of an agreement is lawful unless it is forbidd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a minor or by a person of unsound mind would be void due to lack of effectual offer or acceptance. But once the contract is made, that is to say where parties, whatever their innermost state of mind, have to all outward appearances, agreed with sufficient 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 depends, 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., 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 should not be applied to interpret the Arbitration and Conciliation Act, 1996. 40. The judgment in Vidya Drolia and Others v. Durga Trading Corporation, (2021) 2 SCC 1, after referring to Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius ..... X X X X Extracts X X X X X X X X Extracts X X X X
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