GARWARE WALL ROPES LTD. versus COASTAL MARINE CONSTRUCTIONS & ENGINEERING LTD.

GARWARE WALL ROPES LTD. versus COASTAL MARINE CONSTRUCTIONS & ENGINEERING LTD.

An arbitration clause in an agreement that is unstamped does not legally 'exist' for the purposes of section 11; the court entertaining a section 11 application must impound the unstamped agreement, ensure payment of stamp duty and penalty, and only then proceed to appoint an arbitrator; section 11(6A) does not do away with this requirement and SMS Tea Estates case continues to apply.

Parties
Appellant: Garware Wall Ropes Ltd.; Respondent: Coastal Marine Constructions & Engineering Ltd.
Jurisdiction
India
Judgment Date
10 April 2019
Procedural Posture
Civil Appeal / Supreme Court Decision on Appeal From Bombay High Court Order on Arbitration Petition
Outcome
Appeal allowed; High Court judgment set aside, matter remitted to High Court.
Legal Topics
Appointment of Arbitrator Under Section 11, Effect of Unstamped Contract on Arbitration Clause, Harmonious Construction of Statutes, Speedy Disposal Under Section 11(13)
Arbitration Contract Law Stamp Act Appointment of Arbitrator Under Section 11 Effect of Unstamped Contract on Arbitration Clause Harmonious Construction of Statutes Speedy Disposal Under Section 11(13)

Case Brief

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Parties

Garware Wall Ropes Ltd.

Appellant

Coastal Marine Constructions & Engineering Ltd.

Respondent

Procedural Posture

Civil Appeal / Supreme Court Decision on Appeal From Bombay High Court Order on Arbitration Petition

Legal Issues

  1. 1 Whether an arbitration clause in an unstamped contract can be acted upon under section 11 of the Arbitration and Conciliation Act, 1996
  2. 2 Whether section 11(6A) removes the requirement to impound unstamped instruments at the stage of section 11 application
  3. 3 Harmonising the provisions of Stamp Act and section 11(13) of the Arbitration and Conciliation Act, 1996

Ratio Decidendi

An arbitration clause in an agreement that is unstamped does not legally 'exist' for the purposes of section 11; the court entertaining a section 11 application must impound the unstamped agreement, ensure payment of stamp duty and penalty, and only then proceed to appoint an arbitrator; section 11(6A) does not do away with this requirement and SMS Tea Estates case continues to apply.

Court Disposition

Appeal allowed; High Court judgment set aside, matter remitted to High Court.

Orders

  • High Court must impound the unstamped sub-contract, refer to stamp authority for adjudication of stamp duty and penalty.
  • Upon payment, parties may inform the High Court, which will then dispose of the section 11 application expeditiously.