Is stamp act valid in the context of arbitral proceedings?

In Smt Kuldip Kaur v. Prakash Chandra, 1983 0 AIR(DEL) 328= 1983 23 DLT 131= 1983 4 DRJ 80= 1982 0 RLR 62= 1982 0 SUPREME(DEL) 285, the claimant died during the pendency of arbitration proceedings. An application was made pursuant to CPC O. 22 R. 3 et seq, by his ‘Legal Representatives’ to bring them on record through General Power Of Attorney, and for extension of time under old Sec (§) 28 of the Arbitration Act, 1940. The application was dismissed on the ground that GPA was not stamped. The Hon’ble Supreme Court has held -

“Dismissal was unjustified in the face of the provisions of Sec. (§) 35 of the Stamp Act, 1899.”

NO FORMAL DOCUMENT IS REQUIRED

In Associated Builders v. DDA, 1994 (2) Arb. LR 161, the existence of the very contract containing the arbitration clause was questioned by the builders to seek release of their earnest money forfeited by D.D.A., when the Builder on getting the contract failed to undertake the work. The argument was that the granting of the contract was a ‘counter-offer’ and not an acceptance as there was a change in the rate of rebate and the agreement was not executed on stamp paper. The court on facts -

“rejected the first ground. The second ground was not acceptable stating that execution of a formal agreement on stamp paper was not a condition precedent to a contract.”

In this context, in State of U.P v. Combined Chemicals, 2011 (1) ArbLR 91= 2011 (1) BBCJ (SC) 452= 2011 (2) CivCC 31= 2011 (2) RCR (Civ) 849 = 2011 2 SCC 151, it was held —

“Formal agreement is necessary only if the terms and conditions so required. Absence of formal agreement could not negative the agreement where Art. 289 of Constitution was substantially complied with.”

In Punjab State v. Dina Nath, 2007 (0) AIR(SC) 2157 = 2007 (0) AIR(SCW) 3694 = 2007 4 AllMR(SC) 791= 2007 2 ArbLR 345= 2007 7 JT 229= 2007 5 MhLJ(SC) 333 = 2007 5 SCC 28= 2007 5 Supreme 502 = 2007 0 Supreme(SC) 726, it was held —

“Arbitration Agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if any dispute arises, such a dispute shall be referred to arbitration.”

Reliance on the aforesaid principles can else be placed by referring to UOI v. Uttam Singh, 1972 0 AIR(Del) 110 = 1971 0 Supreme(Del) 187 in which observations were made in 15, stating thus —

“ … The law on the point has been laid down by Lord Parker in Von Hatzfeldt-Wilden-burg v. Alexander, (1912) 1 Ch D 284 at pp. 288 and 289 as follows:

"it appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. In the latter case there is a binding contract and the reference to the more formal document may be ignored. The fact that the reference to the more formal document is in words which according to their natural construction import a condition is generally if not invariably conclusive against the reference being treated as the expression of a mere desire."

This dictum has been approved by the Privy Council in Shankarlal Narayandas Mundade v. The New Mofussil Co. Ltd. , AIR 1946 PC 97, and it represents the correct state of law which has been followed by a number of other authorities in this country.”

SUGGESTED READINGS:

  • Indian Constitutional Law by Prof. G.C.V. Subba Rao’s.
  • Johari's, Commentary on Arbitration and Conciliation Act, 1996, Kamal Law House.
  • O.P. Tiwari, The Arbitration and Conciliation Act (2nd Ed.), Allahabad Law Agency.
  • Acharya N.K., Law relating to Arbitration and ADR, Asia Law House, Hyderabad
  • Tripathi S.C., Arbitration, Conciliation and ADR, Central Law Agency, Allahabad.
  • Avatar Singh, Arbitration and Conciliation, Eastern Law Book House, Lucknow.
  • KSR Murthy, An introduction to ADR Mechanism, Gogia Law Agency, Hyderabad
  • P.C. Rao, Alternate Dispute Resolution (2001 Ed.), Universal Book Traders, New Delhi.
  • S.D.  Singh, Alternate  Dispute  Resolution,  Universal  Book  Traders, New Delhi
  • Baddi, A. (2016, Dec 25). ARBITRAL AWARDS - LEGALITY, INTERPRETATION, APPEAL, MODIFICATION. Retrieved from http://satyagraha.com/portal/articles/9-business-law/1571-arbitral-awards-legality-interpretation-appeal-modification.html

Author Bio

Anil hails from a Consulting Background in the area of Business, Technology and Project Management. This Article is a humble effort to the aforementioned domains by making a foray into Legal Research. The Author may be reached via anil [at] Satyagraha [dot] com

 

Anil Satyagraha 
on 03 January 2017
Published in Civil Law
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