M/S. N.N. GLOBAL MERCANTILE PVT. LTD. versus M/S. INDO UNIQUE FLAME LTD. & OTHERS

M/S. N.N. GLOBAL MERCANTILE PVT. LTD. versus M/S. INDO UNIQUE FLAME LTD. & OTHERS

The arbitration agreement contained in the Work Order is independent and separable from the substantive contract and is not rendered non-existent, invalid or unenforceable by non-payment of stamp duty on the substantive contract; alleged civil fraud in the invocation of a bank guarantee is an arbitrable dispute; a writ under Articles 226/227 challenging an order refusing reference to arbitration was not maintainable where an appeal under amended Section 37 was available.

Parties
Appellant: M/s. N.N. Global Mercantile Pvt. Ltd.; Respondent No.1: M/s. Indo Unique Flame Ltd.; Respondent (banker): State Bank of India; Respondent (banker): Union Bank of India
Jurisdiction
India
Judgment Date
11 January 2021
Procedural Posture
Civil Appeal (civil Appellate Jurisdiction) / Appeal to the Supreme Court Against Bombay High Court Judgment; Final Judgment Delivered by Supreme Court
Outcome
Appeal allowed in part; judgment of the Bombay High Court dated 30.09.2020 set aside
Legal Topics
Validity of Arbitration Agreement in Unstamped Contracts, Doctrine of Separability of Arbitration Agreement, Kompetenz Kompetenz (competence of Arbitral Tribunal), Arbitrability of Allegations of Fraud (civil Vs Criminal), Impounding and Admissibility Under Stamp Act, Maintainability of Writ Petition Vs Statutory Remedy Under S.37
Arbitration Stamp Law Commercial Courts Contract Law Validity of Arbitration Agreement in Unstamped Contracts Doctrine of Separability of Arbitration Agreement Kompetenz Kompetenz (competence of Arbitral Tribunal) Arbitrability of Allegations of Fraud (civil Vs Criminal) +2 more

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Parties

M/s. N.N. Global Mercantile Pvt. Ltd.

Appellant

M/s. Indo Unique Flame Ltd.

Respondent No.1

State Bank of India

Respondent (banker)

Union Bank of India

Respondent (banker)

Procedural Posture

Civil Appeal (civil Appellate Jurisdiction) / Appeal to the Supreme Court Against Bombay High Court Judgment; Final Judgment Delivered by Supreme Court

Legal Issues

  1. 1 Whether an arbitration agreement would be enforceable and acted upon even if the underlying work order is unstamped and unenforceable under the Stamp Act
  2. 2 Whether allegations of fraudulent invocation of a bank guarantee are arbitrable
  3. 3 Whether a writ petition under Articles 226/227 is maintainable to challenge an order refusing reference to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996

Ratio Decidendi

The arbitration agreement contained in the Work Order is independent and separable from the substantive contract and is not rendered non-existent, invalid or unenforceable by non-payment of stamp duty on the substantive contract; alleged civil fraud in the invocation of a bank guarantee is an arbitrable dispute; a writ under Articles 226/227 challenging an order refusing reference to arbitration was not maintainable where an appeal under amended Section 37 was available.

Court Disposition

Appeal allowed in part; judgment of the Bombay High Court dated 30.09.2020 set aside

Orders

  • Impugned judgment and order dated 30.09.2020 in W.P. No. 1801 of 2020 set aside
  • Secretary General of the Supreme Court directed to impound the Work Order dated 28.09.2015 and forward it to the concerned Collector in Maharashtra for assessment of stamp duty to be completed within 45 days from receipt