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, 18991, 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 1 For short, “the Stamp Act ”.

Curative Petition (C) No. 44 of 2023 and Anr. Page 1 of 25 existence of arbitration agreement”, is applied by the courts while deciding applications under Sections 82 or 113 of the Arbitration and 2 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 than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that court. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

3 11. Appointment of arbitrators.—(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and—

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by 1[the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court]; (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party 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 by the Supreme Court or, as the case may be, the High Court, for the purposes of this section shall not be regarded as a delegation of judicial power by the Supreme Court or the High Court.

Curative Petition (C) No. 44 of 2023 and Anr. Page 2 of 25 Conciliation Act, 19964; and an objection as to insufficient stamping of the underlying agreement can be examined and decided by the arbitral tribunal. Accordingly, the majority decision of the Constitution Bench in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.5 should be overruled.

(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court is final and no appeal including Letters Patent Appeal shall lie against such decision. (8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of section 12 , and have due regard to—

(a) any qualifications required for the arbitrator by the agreement of the parties; and

(b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Supreme Court or the person or institution designated by that Court] may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Supreme Court or, as the case may be, the High Court, may make such scheme as the said Court may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6), to it.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub- section (6) to the Chief Justices of different High Courts or their designates, different High Courts or their designates, the High Court or its designate to whom the request has been first made] under the relevant sub-section shall alone be competent to decide on the request. (12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in an international commercial arbitration, the reference to the “Supreme Court or, as the case may be, the High Court” in those sub-sections shall be construed as a reference to the “Supreme Court”; and

(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and sub-section (10) arise in any other arbitration, the reference to “the Supreme Court 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 arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution. 4 For short, “the Arbitration Act ”.

5 (2023) 7 SCC 1.

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2. The judgment authored by Hon’ble the Chief Justice, under the heading ‘ D. Indian Stamp Act, 1899 ’, gives an overall view of the Stamp Act , and the procedures it prescribes. It also refers to Sections 33 , 35 and 36 of the Stamp Act, which I would like to elaborate on and elucidate.

3. Sections 33 and 35 of the Stamp Act are reproduced for reference:

4. Section 33 of the Stamp Act is cautiously worded, to not overexpand its ambit and scope. The section applies on production of an instrument before a person who by law or consent of the parties has the authority to receive evidence.6 It also applies when an instrument is produced before 6 Hereinafter also referred to as ‘such person’.

Curative Petition (C) No. 44 of 2023 and Anr. Page 5 of 25 a person in charge of a public office. Production of the instrument must be during the course of performance of functions by such person or public officer. The proviso states that Section 33 shall not be deemed to require any Magistrate or Judge of a criminal court to examine or impound an instrument if he does not think fit to do so, except in proceedings under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure , 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure , 1973). Police officers are not public officers under Section 33 of the Stamp Act.

5. Sub-section (3) to Section 33 states that in case of doubt, the State Government may determine which offices shall be deemed to be public offices and who shall be deemed to be persons in charge of the public offices.

6. Sub-section (2) to Section 33 states that for the purpose of sub-section (1), such person or public officer shall examine the instrument so chargeable and so produced or coming before him, in order to ascertain whether it is duly stamped as per the law in force in India when the instrument was executed or first executed.

7. Section 35 states that an instrument not duly stamped and chargeable with duty shall not be admitted in evidence by any person having by law or by consent of the parties the authority to receive evidence. The words “for any purpose” mean that the instrument cannot be relied upon for a Curative Petition (C) No. 44 of 2023 and Anr. Page 6 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 authority by law or by consent of the parties to receive evidence, or a person who is not a public officer. Sections 33 does not authorise a police officer to examine and impound an instrument, even when insufficiently stamped. A Magistrate or a Judge of a criminal court may not examine Curative Petition (C) No. 44 of 2023 and Anr. Page 7 of 25 or impound an instrument coming before him, and can admit an insufficiently stamped instrument in evidence, other than in the proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure , 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure , 1973). Thus, the same instrument may be admissible and acted upon before a criminal court, while being inadmissible before a civil court, public officer etc.

11. The negative stipulations in Sections 33 and 35 are specific, albeit not so absolute as to make the instrument invalid in law. A “void ab initio” instrument, which is stillborn, has no corporeality in the eyes of law. It cannot confer or give rights, or create obligations. However, an instrument which is “inadmissible” exists in law, albeit cannot be admitted in evidence by such person, or be registered, authenticated or be acted upon by such person or a public officer till it is duly stamped. As rightly observed by Hon’ble the Chief Justice, Section 35 deals with admissibility etc. of an instrument and not invalidity.

12. Section 36 of the Stamp Act refers to the situation where the admission of an instrument is not to be questioned, and reads:

13. An instrument which is void ab initio or void, cannot be validated by mere consent or waiver, unless consent or wavier undoes the cause of invalidity. On the 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 Surana7, 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 7 AIR 1961 SC 1655.

Curative Petition (C) No. 44 of 2023 and Anr. Page 9 of 25 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 which has far reaching effects. The parties to the litigation have to be circumspect and have to be alert so as to challenge the admissibility of an instrument before it is admitted in evidence.

16. A five Judges’ Bench in The State of Bihar v. M/s Karam Chand Thapar and Brothers Ltd.8, has held that the instrument that can be validated under Section 35 is only the original, when it is unstamped or insufficiently stamped. A copy cannot be validated and acted upon, albeit where multiple copies are prepared and signed and sent to respective parties, each one would be an original instrument.

17. In Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and Others9 , a two Judges’ Bench of this Court observed that The Indian Evidence Act, 1872 does not purport to deal with admissibility of the documents which are required to be stamped under the provisions of the Stamp Act . Thereafter, it is observed:

upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfil the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35 . “Instrument” is defined in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of 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 Curative Petition (C) No. 44 of 2023 and Anr. Page 11 of 25 secondary evidence of an instrument unduly stamped, has been wrongly admitted.

18. In Hameed Joharan (DEAD) and Others v. Abdul Salam (DEAD) by LRs . and Others10, this Court observed that applicability of the Stamp Act stands restricted to the scheme of the Stamp Act . The Stamp Act being a true fiscal statute in nature, strict construction and not liberal interpretation is required to be effected . Section 2(15) includes a decree of partition and Section 35 lays down a bar on unstamped or insufficient stamp being admitted in evidence or being acted upon. The law however does not prescribe that the period for filing appeal shall remain suspended still stamp paper is furnished and the partition decree is drawn thereon and signed by the judge. The whole purport of the Stamp Act is to make available certain dues and collect revenue, but it does not mean and imply an overriding effect on another statute operating in a completely different sphere. Enforceability of a decree cannot be a subject matter of Section 35 of the Stamp Act, neither can the limitation be said to be under suspension. The heading of Section 35 itself denotes the limited sphere of applicability.

19. In Dr. Chiranji Lal (D) by LRs. v. Hari Das (D) by LRs.11, a three Judge Bench of this Court rejected the contention that an unstamped preliminary decree is not enforceable and, therefore, the period of 10 (2001) 7 SCC 573.

11 (2005) 10 SCC 746.

Curative Petition (C) No. 44 of 2023 and Anr. Page 12 of 25 limitation begins to run when the decree is engrossed on the stamp paper. The Stamp Act is a fiscal measure with the object to secure revenue for the State on certain classes of instruments. The Stamp Act is not enacted to arm the litigant with a weapon of technicality to meet the case of his opponent. As there is no rule which prescribes any time for furnishing of stamp paper or to call upon a person to pay stamp duty on a preliminary decree of partition, the proposition that period of limitation would remain suspended till stamp paper is furnished and decree engrossed thereon was rejected.

20. In Hariom Agrawal v. Prakash Chand Malviya12 , a three Judge Bench has referred to Karam Chand Thapar (supra), Jupudi Kesava Rao (supra), to observe:

21. In Shyamal Kumar Roy v. Sushil Kumar Agarwal13 , this Court observed that Section 36 is a standalone clause which categorically 12 (2007) 8 SCC 514.

13 (2006) 11 SCC 331.

Curative Petition (C) No. 44 of 2023 and Anr. Page 13 of 25 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 Mishra14 expounds the meaning of the words ‘for any purpose’ used in Section 35 of the Stamp Act. These words are to be given natural meaning and effect. They would include collateral purpose, as was held in the decision of the Privy Council in Ram Rattan v. Parma Nand15 . Distinction was drawn between non-effect of registration of a document in terms of Section 49 of the Registration Act, 1908, which does not bar use of an unregistered document for a collateral purpose. Section 35 is differently worded, and when applicable, bars use of insufficiently stamped instrument for a collateral purpose.

23. It is necessary to affirm this legal position, as we enter into contracts or agreements several times in our interactions with others during the course of the day. Even written documents in the form of invoices, receipts or standard format agreements are often exchanged, and form the terms of the interactions. An unstamped or under-stamped contract or agreement cannot be impounded, except when it is produced for being 14 (2009) 2 SCC 532.

15 AIR 1946 PC 51.

Curative Petition (C) No. 44 of 2023 and Anr. Page 14 of 25 received in evidence before a person authorised to do so or a public officer in terms of Section 33 of the Stamp Act. To hold that insufficiently stamped instrument does not exist in law, will cause disarray and disruption.

24. Predictability and certainty are central tenets of law, especially in matters of commercial and routine nature. Adherence to the principle of stare decisis is essential for parties to be able to rely on the law to define their conduct in commercial or ordinary day to day dealings. Transient laws undermine public legitimacy and faith in the mandate of Rule of Law. This Court has previously observed that before reviewing and revising its earlier decision, the Court must satisfy itself whether it is necessary to do so in the interest of public good or for any other compelling reason, and the Court must endeavour to maintain certainty and continuity in the interpretation of the law in the country.16 On several occasions, this Court has emphasised on certainty and consistency in judicial pronouncements as being the cornerstone of the administration of justice.17 Consistency in judicial decisions is conducive to reassuring parties of the consequences of the transactions forming part of their daily affairs.18 16 Keshav Mills Co. Ltd. v. Commissioner of Income Tax, Bombay North, Ahmedabad , AIR 1965 SC 1636.

17 Government of Andhra Pradesh and Others v. A.P. Jaiswal and Others , (2001) 1 SCC 748. 18 Total Environment Building Systems Pvt. Ltd. v. Deputy Commissioner 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.

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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’.19 It includes attribution of electronic record within the meaning of Section 11 of the Information Technology Act, 2000 20. I shall now analyse the relevance of execution or ‘signature’, with reference to an arbitration agreement as defined in Section 7 of the Arbitration Act.

26. Section 7 of the Arbitration Act reads:

(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 operate automatically. Curative Petition (C) No. 44 of 2023 and Anr. Page 16 of 25 An ‘arbitration agreement’ is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or may arise between them. The disputes may be in respect of a defined legal relationship, whether contractual or not. An arbitration agreement has to be in writing.

27. Sub-section (4) to Section 7 specifies when an arbitration agreement can be said to be in writing. Clause (a) to sub-section (4) states that an arbitration agreement can be a document signed by the parties. According to clause (b) to sub-section (4) to Section 7 , an arbitration agreement can be established or inferred from exchange of letters, telex, telegrams or other forms of communication, including communication through electronic means. The provision does not mention the need for ‘execution’ or signatures of the parties.21 Similarly, clause (c) to sub- section (4) to Section 7 which 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 21 Caravel Shipping Services (P) Ltd. v. Premier Sea Foods Exim (P) Ltd. (2019) 11 SCC 461; Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia Pvt. Ltd. (2015) 13 SCC 477. Curative Petition (C) No. 44 of 2023 and Anr. Page 17 of 25 agreement, it is treated as a separate agreement, an aspect to which I shall advert.

28. Section 1622 of the Arbitration Act, empowers the arbitral tribunal to rule on its own jurisdiction. This includes the authority to decide the existence and validity of the arbitration agreement. This has reference to Section 7 of the Arbitration Act, which I have examined. As per Section 16 , an arbitration agreement is an agreement independent of the other terms of the contract, even when it is only a clause in the underlying contract. The section specifically states that a decision by the arbitral tribunal holding the underlying contract to be null and void, will not lead to ipso jure the invalidity of the arbitration clause. The existence of an arbitration agreement is to be ascertained with reference to the requirements of Section 7 of the Arbitration Act. In a given case the underlying contract may be null and void, but the arbitration clause may exist and be 22 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 arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34 .

Curative Petition (C) No. 44 of 2023 and Anr. Page 18 of 25 enforceable. Invalidity of an underlying agreement may not, unless relating to its formation, result in invalidity of the arbitration clause in the underlying agreement. Hon’ble the Chief Justice has elaborately explained the negative and positive contours of the doctrine of separability in reference to an arbitration agreement, with which I respectfully agree.

29. In this connection, I may note a decision of the Singapore High Court in the case of BNA v. BNB and Another23 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 Ltd24.

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, 187225, an agreement not enforceable by law is said to be void, and an agreement enforceable by law is a contract.26 A contract which ceases to be enforceable by law becomes 23 [2019] SGHC 142.

24 [2009] SGCA 24.

25 For short, “the Contract Act ”.

26 2 (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract Curative Petition (C) No. 44 of 2023 and Anr. Page 19 of 25 void when it ceases to be enforceable.27

32. The requirements of Section 10 of the Contract Act28 are that the contract should be made by parties competent to contract, for lawful consideration and with lawful object. Consent of the parties should be free. The contract should not be expressly declared to be void. Section 2 has to be read with Section 10 and not in isolation, in order to avoid contradiction and to harmoniously apply the two sections.

33. Sections 1129 and 1230 deal with persons entitled to contract. In instances where a person is explicitly declared as incompetent or does not fall within the definition of a competent person under the aforesaid provisions, like a minor or a person of unsound mind, a contract entered into by such person would be void. An agreement is also rendered void when both parties are under mistake of fact31. As per Section 24 , agreements are void if consideration and objects are unlawful in part. 32 This section does not have any application to the present issue, and neither are we concerned with Section 25 , which relates to agreements without consideration and in which situation they have to be treated as 27 2 (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.

28 10. What agreements are contracts.—All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.

Nothing herein contained shall affect any law in force in India and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.

29 Section 11 , The Indian Contract Act, 1872.

30 Section 12 , The Indian Contract Act, 1872.

31 Section 20 , The Indian Contract Act, 1872.

32 Section 24 , The Indian Contract Act, 1872.

Curative Petition (C) No. 44 of 2023 and Anr. Page 20 of 25 void33. Agreements which are in restraint of marriage or in restraint of trade are void.34 Agreements by way of wager are also void.35 Agreements, the meaning of which is not certain, or capable of being made certain, are void.36 Section 28 states that agreements in restraint of legal proceedings are void, but Exception 1 states that a contract by which parties agree for disputes arising between them to be referred to arbitration shall not render the contract illegal.37

34. Sections 13 to 19A relate to consent38, free consent39, coercion40, undue influence41, fraud42, misrepresentation43, voidability of agreements without free consent44, and power to set aside contract induced by undue influence45. 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 India46, and a contract where mistake of fact is made by one party is also not voidable as per Section 2247. 33 Section 25 , The Indian Contract Act, 1872.

34 Sections 26 and 27 , The Indian Contract Act, 1872.

35 Section 30 , The Indian Contract Act, 1872.

36 Section 29 , The Indian Contract Act, 1872.

37 Section 28 , The Indian Contract Act, 1872.

38 Section 13 , The Indian Contract Act, 1872.

39 Section 14 , The Indian Contract Act, 1872.

40 Section 15 , The Indian Contract Act, 1872.

41 Section 16 , The Indian Contract Act, 1872.

42 Section 17 , The Indian Contract Act, 1872.

43 Section 18 , The Indian Contract Act, 1872.

44 Section 19 , The Indian Contract Act, 1872.

45 Section 19A , The Indian Contract Act, 1872.

46 Section 21 , The Indian Contract Act, 1872.

47 Section 22 , The Indian Contract Act, 1872.

Curative Petition (C) No. 44 of 2023 and Anr. Page 21 of 25

36. According to Section 23 of the Contract Act, the consideration or object of an agreement is lawful unless it is forbidden by law or is of such nature as to defeat the provisions of law, or is fraudulent. Neither are these provisions applicable in case of unstamped or insufficiently stamped instruments, nor is the consideration or object unlawful as it involves or implies injury to a person or property of another. The last clause of Section 23 applies when the consideration or object of an agreement is regarded as immoral or opposed to public policy. An instrument whether unstamped or insufficiently stamped will not fall foul on the ground of consideration or object of the agreement being immoral, neither will it fall foul as opposed to public policy.

37. In B.O.I. Finance Ltd. v. Custodian and Others48 this Court after examining the case law on the subject of public policy, observed that in pursuant to an agreement to do an illegal act, a transaction, in part, takes place which would otherwise be valid if there was no such prior agreement, then notwithstanding the illegality of the contract, the completed transaction itself cannot be regarded as invalid.

38. Following this judgment, in Canara Bank and Others v. Standard Chartered Bank49 , it is held that for the contract to be declared void on the ground of public policy, it must be shown that the object and consideration of the contract was one which was illegal. Where the object 48 (1997) 10 SCC 488.

49 (2002) 10 SCC 697.

Curative Petition (C) No. 44 of 2023 and Anr. Page 22 of 25 and consideration of the contract is not illegal as in the case of sale/ purchase of securities and payment of price, the contract will not be void on the ground of being opposed to public policy. The contention that the performance of contract in violation of law will be void on ground of public policy was rejected. These observations were made in the context of the argument that there was violation of law while carrying out the contract and the arrangement was opposed to public policy.

39. A judgment by Mr. Justice S.S. Nijjar in Swiss Timing Ltd. v.

Commonwealth Games 2010 Organising Committee50, has elaborately dealt with the terms ‘void’ and ‘voidable’ and states that they are used loosely and interchangeably with each other, though strictly in law, they are not so. It is also important to draw a distinction between contracts which are void, and those which are void ab initio due to lack of elements of offer or acceptance, which prevents a contract from coming into operation. Thus, a contract 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 50 (2014) 6 SCC 677.

Curative Petition (C) No. 44 of 2023 and Anr. Page 23 of 25 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.51

40. The judgment in Vidya Drolia and Others v. Durga Trading Corporation52 , after referring to Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.53 , draws a distinction between contract obtained through fraud, and post contract fraud or cheating. The latter falls outside the scope of Section 17 of the Contract Act. It observes that the fraud may permeate the entire contract and above all the agreement of arbitration, rendering it void. However, it may not be so when the allegations of fraud touch upon the internal affairs of the parties inter se, having no implication in the public domain.

41. There are also two aspects of the judgment in Vidya Drolia (supra), which need to be noticed. First, I agree to and accept the error made by me in the judgment which observes that Section 11(6A) of the Arbitration Act has ceased to be operative in view of the enforcement of Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019. As rightly observed by Hon’ble the Chief Justice, Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019 which relates to the amendment to 51 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 .

52 (2021) 2 SCC 1.

53 (2021) 4 SCC 713.

Curative Petition (C) No. 44 of 2023 and Anr. Page 24 of 25 Section 11 has not been enforced. Secondly, as has been noted in the judgment of Hon’ble the Chief Justice and in Career Institute Educational Society v. Om Shree Thakurji Educational Society54 , the issue before this Court in Vidya Drolia (supra) was not the validity of an unstamped or under-stamped arbitration agreement. No specific opinion was expressed on this question. The reference to the validity of an unstamped arbitration agreement, as mentioned in Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd.55 , was only to serve the purpose of drawing a comparison between the ‘existence’ and the ‘validity’ of an arbitration agreement, and not a comment or opinion on the ‘existence’ of unstamped or under-stamped arbitration agreements.

42. For the reasons set out in detail by Hon’ble the Chief Justice and recorded herein, I agree with the conclusions drawn, and referred to above . I also concur with the other findings and ratio in the judgment by Hon’ble the Chief Justice.

........................................J. (SANJIV KHANNA) NEW DELHI;

DECEMBER 13, 2023.

54 2023 SCC OnLine SC 586.

55 (2019) 9 SCC 209.

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