INDU MALHOTRA, J.

1 This case raises interesting issues with respect to the application of the doctrine of separability of an arbitration agreement from the underlying substantive contract in which it is embedded; whether an arbitration agreement would be non-existent in law, invalid or un-enforceable, if the underlying contract was not stamped as per the relevant Stamp Act ; and, whether allegations of fraudulent invocation of the bank guarantee furnished under the substantive contract, would be an arbitrable dispute. 1 1.1 The Respondent No.1-Indo Unique Flame Ltd. (“Indo Unique”) applied for grant of work of beneficiation/washing of coal to the Karnataka Power Corporation Ltd. (“KPCL”) in an open tender. KPCL awarded the Work Order vide letter of Award No.A1M1B3/Washed Coal/1052 dated 18.09.2015 to Indo Unique.

In pursuance of the Work Order dated 18.09.2015, the Respondent No.1 Company furnished Bank Guarantees for Rs.29.29 crores in favour of KPCL through its bankers, State Bank of India (“SBI”), the Respondent No.2 herein.

1.2 Indo Unique, the Respondent No.1 herein, subsequently entered into a sub-contract termed as a Work Order dated 28.09.2015 with the Appellant Company – M/s. N.N. Global Mercantile Pvt. Ltd. (“Global Mercantile”), for the transportation of coal from its washery at Village Punwat, District Yavatmal to the stockyard, siding, coal handling and loading into the wagons at Pandharpaoni siding, District Chanderpur, Maharashtra.

Clause 9 of the Work Order provided for furnishing a security deposit which reads as :

The Bank Guarantee was extended from time to time, and was last extended on 10.11.2017.

1.4 Under the principal contract with KPCL dated 18.09.2015, certain disputes and differences arose with Indo Unique, which led to the invocation of the Bank Guarantee by KPCL on 06.12.2017.

1.5 Indo Unique, on 07.12.2017, invoked the Bank Guarantee furnished by Global Mercantile under the Work Order.

It is the invocation of this Guarantee which has led to the present proceedings.

1.6 Global Mercantile filed a Civil (Commercial) Suit No.62 of 2017 against Indo Unique, and its banker SBI, as also the banker of the Appellant i.e. the Union Bank of India (Respondent No.3 herein), before the Commercial Court, Nagpur praying inter alia for a declaration that Indo Unique was not entitled to encash the bank guarantee as the Work Order had not been acted upon. It was expressly stated that Indo Unique had not allotted any work under the Work Order, nor were any invoices raised, or payments made by it. Consequently, there was no loss suffered which would justify the invocation of the Bank Guarantee. It was alleged that the invocation of the Bank Guarantee was fraudulent, since it was not in terms 3 of the Work Order, being a conditional guarantee linked to the performance of work.

The Commercial Court vide an ex parte ad interim Order dated 15.12.2017 directed status-quo to be maintained with respect to the enforcement of the Bank Guarantee.

1.7 Indo Unique filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (“ Arbitration Act ”) in Civil (Commercial) Suit No.62 of 2017, seeking reference of disputes to arbitration.

Global Mercantile opposed the application under Section 8 as being not maintainable since the Bank Guarantee was a separate and independent contract, and did not contain any arbitration clause. 1.8 The Commercial Court vide Order dated 18.01.2018 rejected the application under Section 8 , and held that the arbitration clause in the Work Order dated 28.09.2015 was not a general arbitration clause, which would cover the Bank Guarantee. The Bank Guarantee was an independent contract between SBI and Union Bank of India for due performance of the contract. The Court noted the contention of Global Mercantile that neither of the parties had performed any part of the Work Order dated 28.09.2015, and consequently held that the jurisdiction of the Commercial Court was not ousted by the arbitration agreement.

1.9 Indo Unique then filed Civil Revision Petition No.9 of 2018 before the Bombay High Court challenging the Order passed by the Commercial Court.

On an objection being raised on the maintainability of the Civil Revision Petition, the High Court vide Order dated 09.07.2020 permitted the 4 withdrawal of the Civil Revision Petition, with liberty to file a petition under Articles 226 and 227 of the Constitution of India.

1.10 Indo Unique filed W.P. No.1801 of 2020 before the Bombay High Court to quash and set aside the Order dated 18.01.2018 passed by the Commercial Court/District Judge-I, Nagpur in Civil (Commercial) Suit No.62/2017.

The High Court vide the Impugned Judgment dated 30.09.2020 held that it was the admitted position that there was an arbitration agreement between the parties, and therefore the application under Section 8 was maintainable. With respect to the contention that the invocation of the Bank Guarantee was fraudulent, it was held that the allegations of fraud did not constitute a criminal offence which would entail recording of voluminous evidence. The disputes could be resolved through arbitration, and the filing of the Suit before the Commercial Court was not justified. The Commercial Court was not justified in restraining the invocation of the bank guarantee in the absence of any finding on fraud or special equities.

On the issue of the arbitration agreement being unenforceable since the Work Order was unstamped, it was held that the plaintiff/ Appellant herein, could raise the issue either under Section 11 of the Arbitration Act, or before the arbitral tribunal at the appropriate stage. The Writ Petition was held to be maintainable, since there is no absolute bar to entertain a Writ Petition even if an alternate remedy is available. The Writ Petition was allowed vide Judgment and Order dated 30.09.2020, and the Order dated 18.01.2018 passed by the Commercial Court was set aside. 5 On the request of the counsel for the Appellant, the High Court suspended the operation of its Order for a period of one month from 30.09.2020.

1.11 The Review Petition filed by the Appellant was withdrawn vide Order dated 28.10.2020 passed in Review Application (ST) No. 9819 of 2020.

On the request by the counsel for the Appellant, the Order of stay was continued till 20.11.2020.

1.12 Aggrieved by the judgment of the High Court, Global Mercantile has filed the present Special Leave Petition before this Court.

2. The issues which have arisen for our consideration are :

We will now deal with each of these issues.

6 3 Validity of an arbitration agreement in an unstamped agreement 3.1 It is well settled in arbitration jurisprudence that an arbitration agreement is a distinct and separate agreement, which is independent from the substantive commercial contract in which it is embedded. This is based on the premise that when parties enter into a commercial contract containing an arbitration clause, they are entering into two separate agreements viz. (i) the substantive contract which contains the rights and obligations of the parties arising from the commercial transaction; and, (ii) the arbitration agreement which contains the binding obligation of the parties to resolve their disputes through the mode of arbitration.

3.2 The autonomy of the arbitration agreement is based on the twin concepts of separability and kompetenz – kompetenz. The doctrines of separability and kompetenz – kompetenz though inter-related, are distinct, and play an important role in promoting the autonomy of the arbitral process. 3.3 The doctrine of separability of the arbitration agreement connotes that the invalidity, ineffectiveness, or termination of the substantive commercial contract, would not affect the validity of the arbitration agreement, except if the arbitration agreement itself is directly impeached on the ground that the arbitration agreement is void ab initio.

3.4 The doctrine of kompetenz – kompetenz implies that the arbitral tribunal has the competence to determine and rule on its own jurisdiction, including objections with respect to the existence, validity, and scope of the arbitration agreement, in the first instance, which is subject to judicial scrutiny by the courts at a later stage of the proceedings. Under the 7 Arbitration Act , the challenge before the Court is maintainable only after the final award is passed as provided by sub-section (6) of Section 16 .

The stage at which the order of the tribunal regarding its jurisdiction is amenable to judicial review, varies from jurisdiction to jurisdiction. The doctrine of kompetenz – kompetenz has evolved to minimize judicial intervention at the pre-reference stage, and reduce unmeritorious challenges raised on the issue of jurisdiction of the arbitral tribunal. 3.5 The doctrine of separability was expounded in the judgment of Heyman v. Darwins Ltd1 by the House of Lords wherein it was held that English common law had been evolving towards the recognition of an arbitration clause as a separate contract which survives the termination of the main contract.

Lord Wright in his opinion stated that :

“The arbitration clause constitutes a self-contained contract collateral or ancillary to the shipbuilding agreement itself.” 3.7 In Harbour Assurance v. Kansa General International Insurance,3 the Court of Appeal held that if the arbitration clause is not directly impeached, an arbitration agreement is capable of surviving the invalidity of the contract, so that the arbitrator has the jurisdiction to determine the initial validity of the contract. It was opined that:

“21. It is part of the very alphabet of arbitration law as explained in Harbour Assurance Co v. Kansa General International Insurance, … spelled out in s. 7 of the Act, that the arbitration agreement is a distinct and separable agreement from the underlying or principal contract.” 3.9 Article 16(1) of the Model Law incorporates the doctrine of separability :

The Court of Appeal in the seminal decision rendered in Fiona Trust & Holding Corporation v. Privalov,6 held that the allegation of invalidity of the underlying contract, would not preclude the arbitral tribunal from determining the said issue in the first instance, even though the alleged illegality would render the contract void from inception. In this case, the arbitration agreement was contained in a charter party agreement, wherein it was alleged that it had been procured through bribery by the owner’s agent, and was invalid from its inception. It was held that only if the arbitration agreement is itself directly impeached, and rendered void or unenforceable on grounds which relate to the arbitration agreement itself, and not merely as a consequence of the invalidity of the underlying contract, 5 Cass. Civ. Lere, 7 May 1963 (Dalloz, 1963), 545.

6 [2007] EWCA Civ 20.

10 that the courts may refuse reference to arbitration. To discourage parasitical challenges and dilatory tactics in resisting reference to arbitration, the Court of Appeal held in paragraph 38 that :

7 [2007] UKHL 40.

11 3.13 The law as it stands in U.K. today is that if the court while entertaining a plea to refer the parties to arbitration, is satisfied of the existence of the arbitration agreement, it is incumbent to refer the parties to arbitration, even if objections to the validity of the substantive contract are raised. Where the arbitration agreement is embedded in an underlying contract, the court would not entertain the dispute on the issue of jurisdiction until the arbitral tribunal has ruled on this issue. Lord Hoffman opined that :

those provisions are enforceable apart from the remainder of the contract.” Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440, 446 (2006).

…… The second line of cases bearing on who decides the validity of an arbitration agreement, as the Court explains, involves the Prima Paint rule. See ante, at

71. That rule recognizes two types of validity challenges. One type challenges the validity of the arbitration agreement itself, on a ground arising from an infirmity in that agreement. The other challenges the validity of the arbitration agreement tangentially—via a claim that the entire contract (of which the arbitration agreement is but a part) is invalid for some reason. See Buckeye, 546 U.S., at 444. Under Prima Paint, a challenge of the first type goes to the court; a challenge of the second type goes to the arbitrator. See 388 U.S., at 403-404; see also Buckeye, 546 U.S., at 444-445. The Prima Paint rule is akin to a pleading standard, whereby a party seeking to challenge the validity of an arbitration agreement must expressly say so in order to get his dispute into court.” 4 The Indian Arbitration and Conciliation Act, 1996 is based on the Model Law. Section 16 gives statutory recognition to the doctrine of separability and kompetenz – kompetenz. Section 16 provides :

4.2 This Court in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v.

Northern Coal Field Ltd.13, speaking through one of us (Indu Malhotra, J.) discussed the application of the doctrine of kompetenz – kompetenz in the Indian legislation, and observed :

7.11. The doctrine of “kompetenz-kompetenz”, also referred to as “compétence-compétence”, or “compétence de la recognized”, implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise 13 (2020) 2 SCC 455.

15 judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified [ Dresser Rand S.A. v. Bindal Agro Chem Ltd. , (2006) 1 SCC 751. See also BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213 : (2010) 2 SCC (Civ)

352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust , (2018) 10 SCC 525 : (2019) 1 SCC (Civ) 1] . If an arbitration agreement is not valid or non-existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement “is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made”.

7.13. In view of the provisions of Section 16 , and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, “including any objections” with respect to the existence or validity of the arbitration agreement. Section 16 is as an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under Section 16 , and not the High Court at the pre- reference stage under Section 11 of the Act. Once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator.” 4.3 In A. Ayyasamy v. Parmasivam & Ors.,14 Dr. D.Y. Chandrachud, J. in his separate opinion observed that :

5. We will now apply the law to the facts of the present case. 5.1 The Appellant-Global Mercantile submitted that the application under Section 8 for reference of disputes to arbitration was not maintainable, since as per Section 34 of the Maharashtra Stamp Act, 1958 the Work Order being an unstamped document could not be received in evidence for any purpose, or acted upon, unless it is duly stamped. Consequently, the arbitration clause in the unstamped agreement also could not be acted upon or enforced since the arbitration clause would have no existence in law, unless the applicable stamp duty (and penalty, if any) is paid on the Work Order. Reliance was placed on paragraph 22 of the judgment in Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited,15 wherein it has been held : “.. that an arbitration clause in an agreement would not exist when it is not enforceable by law”. It was submitted that the High Court while allowing the application under Section 8 , had enforced a non-existent arbitration clause, which was in violation of Section 34 of the Maharashtra Stamp Act, 1958 and the law laid down by this Court.

It was further contended that since 03.01.2018 to date, the Respondent No.1 had not indicated its willingness to pay the stamp duty, even though the Appellant had raised this objection. There was no justifiable reason to grant any further opportunity to Respondent No.1 to pay the stamp duty, and enforce the clause in view of the judgment of this Court in Naina Thakkar v. Annapurna Builders.16 15 (2019) 9 SCC 209.

16 (2013) 14 SCC 354.

17 5.2 Indo Unique – the Respondent No.1 submitted that even though the Work Order dated 28.09.2015 is an unstamped agreement, it would be enforceable after it is duly stamped, for which an opportunity must be given to the parties to make up the deficient stamp duty and penalty as may be assessed by the Collector. Non-payment of stamp duty would not render the agreement unenforceable, but was a curable defect. 5.3 Statutory scheme under the Maharashtra Stamp Act, 1958 . —

(a) Section 3 of the Maharashtra Stamp Act, 1958 is the charging section, which specifies the instruments which are chargeable to stamp duty of the amount specified in Schedule I of the Act .

Section 3 provides:

Provided that, in case of such instruments executed on or after the 4th July 1980, to the date of commencement of the Bombay Stamp (Amendment) Act, 1985, an extract of the instrument to be taken from the registration record shall be deemed to be the true copy accompanying the instrument, presented for registration for the purposes of sub-section (1). …“

(d) Section 33 provides:

(1) Subject to the provisions of section 32A, every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, or any other officer, empowered by law to investigate offences under any law for the time being in force, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions shall, if it appears to him that such instrument is not duly stamped, impound the same irrespective whether the instrument is or is not valid in law. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order to ascertain whether it is stamped with a stamp of the value and description required by the law for the time being in force in the State when such instrument was executed or first executed:

Section 34 provides:

(a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of—

(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty, and

(ii) a penalty at the rate of 2 per cent of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of such instrument:

(2) In every other case, a person so impounding the original instrument shall prepare an authentic copy of such instrument and where it is a true copy or an abstract referred to in section 31 or true copy referred to in section 33A, he shall send such authentic copy or, the true copy or, as the case may be, an abstract to the Collector, for the purpose of taking action on the authentic copy or a true copy or, as the case may be, an abstract as if it were the original instrument and endorsing thereon a certificate with reference to the instrument under clause (a) of sub-section (1) of section 39 or under sub-section (1) of section 41 , as the case may be. On receipt of the authentic copy, the true copy or, as the case may be, an abstract with the certificate as aforesaid endorsed thereon, the person who has impounded the original instrument shall copy on the original instrument the certificate endorsed on the authentic copy and shall authenticate such certificate; and where it is a true copy or an abstract on which the certificate as aforesaid is endorsed, the registering officer who has forwarded the true copy or an abstract shall make appropriate entries in respect of the instrument of which it was a true copy or an abstract, in the relevant register maintained by him and on an application made in this behalf issue under his signature a certificate to the effect that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect of that instrument, and the name and residence of the person paying such duty and penalty.” Once the duty (and penalty, if any) leviable under Schedule I is paid on the instrument, and the instrument is duly endorsed by the Collector, the instrument shall be admissible in evidence, and acted upon as provided by Section 41 of the Maharashtra Stamp Act.

(i) Section 41 provides :

“ 41. Endorsement of instruments on which duty has been paid under section 34 , 39 or 40 – (1) When the duty and penalty (if any) leviable in respect of any instrument (not being any instrument referred to in sub-section (1) of section 32A), have been paid under section 34 , section 39 or section 40 , the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) 22 have been levied in respect thereof, and the name and residence of the person paying them.

(2) Subject to the provisions of section 53A, every instrument so endorsed shall thereupon be admissible in evidence, and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on the application in this behalf, to the person who produced it or to the person from whose possession it came into the hands of the Officer impounding it, or to any other person according to the directions of such person:

i. the party or person concerned to make the payment of the proper duty or the amount required to make up the same, together with a penalty under section 34 , or payment of a higher duty and penalty than those paid, to itself or to the Collector; and ii. any person in whose possession or power such instrument then is, to produce the same, and may impound the same when produced.

(3) When any declaration has been recorded under sub-section (2), the Court recording the same shall send a copy thereof to the Collector, and, where the instrument to which it relates has been impounded or is otherwise in the possession of such Court, shall also send him such instrument.

23 (3A) When the duty and penalty leviable in respect of any instrument in accordance with, the declaration made under sub -section (3) and required to be paid thereunder are paid to the Court or to the Collector, then the Court or, as the case may be, the Collector shall certify by endorsement thereon that the proper duty and penalty, stating the amount of each, have been le-vied in respect of such instrument, and the name and residence of the person paying the same. (3B) Every instrument so endorsed shall thereupon be delivered, on an application in this behalf, to the person from whose possession the instrument came in the possession of such Court, or as such person may direct, to any other person authorised by him.

(4) The Collector may thereupon, notwithstanding anything contained in the order admitting such instrument in evidence, or in any certificate granted under section 41 , or in section 42 , prosecute any person for any offence against the stamp law which the Collector considers him to have committed in respect of such instrument:

The words “for any purpose” occurring in the Indian Stamp Act was interpreted by the Privy Council in Ram Rattan v. Parma Nand,19 wherein it was held :

Pvt. Ltd.20 considered the issue whether an arbitration agreement in an unregistered and unstamped lease deed, which required compulsory registration under Sections 17 and 19 of the Registration Act 1908, was valid and enforceable, being a part of the said lease deed which was invalid and unenforceable. A two-judge bench of this Court considered the following two issues :

With respect to the first issue, the Court held as follows :

20(2011) 14 SCC 66.

Followed in Naina Thakkar v. Annapurna Builders, (2013) 14 SCC 354. 26

13. Similarly, when an instrument or deed of transfer (or a document affecting immovable property) contains an arbitration agreement, it is a collateral term relating to resolution of disputes, unrelated to the transfer or transaction affecting the immovable property. It is as if two documents—one affecting the immovable property requiring registration and the other relating to resolution of disputes which is not compulsorily registerable—are rolled into a single instrument. Therefore, even if a deed of transfer of immovable property is challenged as not valid or enforceable, the arbitration agreement would remain unaffected for the purpose of resolution of disputes arising with reference to the deed of transfer.

16. An arbitration agreement does not require registration under the Registration Act . Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of the Registration Act read with Section 16(1)(a) of the Act, an arbitration agreement in an unregistered but compulsorily registerable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.” With respect to a contract or instrument which is voidable at the option of a party (as by way of illustration u/S. 19 of the Indian Contract Act, 1872) in paragraph 15 of the judgment, it was held that the invalidity which attaches itself to the main agreement, may also attach itself to the arbitration agreement, if the reasons which make the main agreement voidable, exist in relation to the making of the arbitration agreement also. Paragraph 15 reads as follows :

Boghara Polyfab22, Master Construction Company v. Union of India23 etc. held that at the pre-reference stage in an application u/S. 11(6) , the Court may determine certain threshold issues, such as whether the claim was time-barred, a stale claim, or whether there had been accord and satisfaction, which would preclude the necessity of reference to arbitration. 5.8 Section 11 was amended by the 2016 Amendment Act, which inserted clause (6A), which now provides that notwithstanding any judgment, decree or order of any Court, the examination would be confined only to the existence of an arbitration agreement. The amendment of 2016 legislatively overruled the position with respect to the jurisdiction u/S. 11 of 21 (2005) 8 SCC 618.

22 (2009) 1 SCC 267.

23 (2011) 12 SCC 357.

28 the Arbitration Act , and confined the examination only to the existence of an arbitration agreement. In Duro Felguera v. Gangavaram Port Ltd.24 it was held that the legislative intent was clear that at the pre-reference stage, there must be minimal judicial intervention, and the only issue to be decided would be the existence of the arbitration agreement, and nothing more. This position was affirmed by a three-judge bench in Mayavati Trading Private Limited v. Pradyuat Deb Burman.25 5.9 The issue whether an arbitration clause in a document / agreement / conveyance which requires compulsorily to be stamped under the relevant Stamp Act , but is not duly stamped, would be enforceable after the insertion of clause (6A) in Section 11 , came up for consideration before a two-judge bench of this Court in Garware Wall Ropes Ltd. (supra).

In Garware Wall Ropes Limited (supra), the Court held as under:

by Raveendran, J. in SMS Tea Estates when it comes to an unregistered agreement or conveyance.

However, the Stamp Act, containing no such provision as is contained in Section 49 of the Registration Act, 1908, has been held by the said judgment to apply to the agreement or conveyance as a whole, which would include the arbitration clause contained therein. It is clear, therefore, that the introduction of Section 11 (6-A) does not, in any manner, deal with or get over the basis of the judgment in SMS Tea Estates, which continues to apply even after the amendment of Section 11 (6-A).

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 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 under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability. Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the sub-contract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6-A) deals with “existence”, as opposed to Section 8, Section 16 and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court's understanding of the expression “existence” in Hyundai Engg. case [United India Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530] , as followed by us.

37. One reasonable way of harmonising the provisions contained in Sections 33 and 34 of the Maharashtra Stamp Act, which is a general statute insofar as it relates to safeguarding revenue, and Section 11(13) of the 1996 Act, which applies specifically to speedy resolution of disputes by appointment of an arbitrator expeditiously, is by declaring that while proceeding with the Section 11 application, the High Court must impound the instrument which has not borne stamp duty and hand it over to the authority under the Maharashtra Stamp Act , who will then decide issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date on which the authority receives the instrument. As soon as stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the High Court, which will then proceed to expeditiously hear and dispose of the Section 11 application. This will also ensure that once a Section 11 application is allowed and an arbitrator is appointed, the arbitrator can then proceed to decide the dispute within the time-frame provided by Section 29- A of the 1996 Act.” (emphasis supplied) 30 6 We have carefully perused the provisions of the Maharashtra Stamp Act, 1958 and Schedule I appended thereto, which enlists the instruments specified in Section 3 , on which stamp duty is chargeable. We find that an arbitration agreement is not included in the Schedule as an instrument chargeable to Stamp Duty.

Item 12 of Schedule I to the Maharashtra Stamp Act, 1958 includes an Award passed by an arbitrator to be chargeable for payment of Stamp Duty, which reads as follows:

Description of Instrument Proper Stamp Duty

12. AWARD, that is to say, any decision in writing by an arbitrator or umpire, not being an award directing a partition, on a reference made otherwise than by an order of the Court in the course of a suit-

(a) where the amount of value of the property to which The same duty as a Bond the award relates as set forth in such award does not (No. 15) for such amount. exceed Rs. 1,000;

Award under the Bombay District Municipal Act, 1873, section 81, or the Bombay Hereditary Offices Act, 1874 , section 18 .

In Shriram EPC Limited v. Rioglass Solar SA,26 this Court held that the payment of Stamp Duty is applicable to awards made in India, but does not include a “foreign award” which has not been included in the Schedule to the Stamp Act, 1899 .

6.1 The issue which has arisen in the present case is whether the arbitration agreement incorporated in the unstamped Work Order dated 26 (2018) 18 SCC 313.

31 28.09.2015, would also be legally unenforceable, till such time that the Work Order is subjected to payment of Stamp Duty. Undisputedly, the Work Order is chargeable to payment of Stamp Duty under Item No. 63 of the First Schedule to the Maharashtra Stamp Act, 1958 .

6.2 In our view, the non-payment or deficiency of Stamp Duty on the Work Order does not invalidate the main contract. Section 34 provides that an unstamped instrument would not be admissible in evidence, or be acted upon, till the requisite stamp duty is paid. This would amount only to a deficiency, which can be cured on the payment of the requisite stamp duty. 6.3 The point for consideration is whether the non-payment of Stamp Duty on the Work Order, would render the arbitration clause invalid, non- existent, or unenforceable in law, till the stamp duty is paid on the substantive commercial contract.

6.4 The arbitration agreement contained in the Work Order is independent and distinct from the underlying commercial contract. The arbitration agreement is an agreement which provides the mode of dispute resolution. Section 3 of the Maharashtra Stamp Act does not subject an arbitration agreement to payment of Stamp Duty, unlike various other agreements enlisted in the Schedule to the Act . This is for the obvious reason that an arbitration agreement is an agreement to resolve disputes arising out of a commercial agreement, through the mode of arbitration. On the basis of the doctrine of separability, the arbitration agreement being a separate and distinct agreement from the underlying commercial contract, would survive independent of the substantive contract. The arbitration 32 agreement would not be rendered invalid, un-enforceable or non-existent, even if the substantive contract is not admissible in evidence, or cannot be acted upon on account of non-payment of Stamp Duty.

6.5 A three-Judge Bench of this Court in Hindustan Steel Limited v.

M/s. Dilip Construction Company27 held that :

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, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the 27 (1969) 1 SCC 597.

33 instrument. Viewed in that light the scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and sub-section (2) of Section 42 enacts the consequences resulting from such certification.” (emphasis supplied) 6.6 In our view, there is no legal impediment to the enforceability of the arbitration agreement, pending payment of Stamp Duty on the substantive contract. The adjudication of the rights and obligations under the Work Order or the substantive commercial contract would however not proceed before complying with the mandatory provisions of the Stamp Act . 6.7 The Stamp Act is a fiscal enactment for payment of stamp duty to the State on certain classes of instruments specified in the Stamp Act . Section 40 of the Indian Stamp Act,1899 provides the procedure for instruments which have been impounded, and sub-section (1) of Section 42 requires the instrument to be endorsed after it is duly stamped by the concerned Collector. Section 42(2) provides that after the document is duly stamped, it shall be admissible in evidence, and may be acted upon. 6.8 In our view, the decision in SMS Tea Estates does not lay down the correct position in law on two issues i.e. (i) that an arbitration agreement in an unstamped commercial contract cannot be acted upon, or is rendered un-enforceable in law; and (ii) that an arbitration agreement would be invalid where the contract or instrument is voidable at the option of a party, such as u/ S. 19 of the Indian Contract Act, 1872.

We hold that since the arbitration agreement is an independent agreement between the parties, and is not chargeable to payment of stamp duty, the non-payment of stamp duty on the commercial contract, would not 34 invalidate the arbitration clause, or render it un-enforceable, since it has an independent existence of its own. The view taken by the Court on the issue of separability of the arbitration clause on the registration of the substantive contract, ought to have been followed even with respect to the Stamp Act . The non-payment of stamp duty on the substantive contract would not invalidate even the main contract. It is a deficiency which is curable on the payment of the requisite Stamp Duty.

6.9 The second issue in SMS Tea Estates that a voidable contract would not be arbitrable as it affects the validity of the arbitration agreement, is in our view not the correct position in law. The allegations made by a party that the substantive contract has been obtained by coercion, fraud, or misrepresentation has to be proved by leading evidence on the issue. These issues can certainly be adjudicated through arbitration.

We overrule the judgment in SMS Tea Estates with respect to the aforesaid two issues as not laying down the correct position in law. 6.10 The Garware judgment has followed the judgment in SMS Tea Estates. The Counsel for the Appellant has placed reliance on paragraph 22 of the judgment to contend that the arbitration clause would be non- existent in law, and unenforceable, till Stamp Duty is adjudicated and paid on the substantive contract.

We hold that this finding is erroneous, and does not lay down the correct position in law. We have already held that an arbitration agreement is distinct and independent from the underlying substantive commercial contract. Once the arbitration agreement is held to have an independent 35 existence, it can be acted upon, irrespective of the alleged invalidity of the commercial contract.

6.11 We notice that the judgment in Garware Wall Ropes Limited has been cited with approval by a co-ordinate bench of this Court in Vidya Drolia & Ors. v. Durga Trading Corporation.28 Paragraph 92 of the judgment reads thus :

subcontract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above. The argument that Section 11(6A) deals with “existence”, as opposed to Section 8 , Section 16 and Section 45 , which deal with “validity” of an arbitration agreement is answered by this Court's understanding of the expression “existence” in Hyundai Engg. case, as followed by us.” Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.” 6.12 We doubt the correctness of the view taken in paragraph 92 of the three-judge bench in Vidya Drolia. We consider it appropriate to refer the findings in paras 22 and 29 of Garware Wall Ropes Limited, which has been affirmed in paragraph 92 of Vidya Drolia, to a Constitution Bench of five judges.

7 The next issue which arises is as to which authority would exercise the power of impounding the instrument under Section 33 read with Section 34 of the Maharashtra Stamp Act, in a case where the substantive contract contains an arbitration agreement.

7.1 In an arbitration agreement, the disputes may be referred to arbitration by three modes.

a) The first mode is where the appointment of the arbitrator takes place by the parties consensually in accordance with the terms of the arbitration agreement, or by a designated arbitral institution, without the intervention of the court. In such a case, the arbitrator / tribunal is obligated by Section 33 of the Indian Stamp Act, 1899 (or the applicable State Act) to impound the instrument, and direct the parties to pay the requisite Stamp Duty (and penalty, if any), and obtain an endorsement from the concerned Collector.

37 This would be evident from the provisions of Section 34 of the Stamp Act which provides that “any person having by law or consent of parties authority to receive evidence” is mandated by law to impound the instrument, and direct the parties to pay the requisite stamp duty.

b) The second mode of appointment is where the parties fail to make the appointment in accordance with the arbitration agreement, and an application is filed under Section 11 before the Court to invoke the default power for making the appointment.

In such a case, the High Court, or the Supreme Court, as the case may be, while exercising jurisdiction under Section 11 , would impound the substantive contract which is either unstamped or inadequately stamped, and direct the parties to cure the defect before the arbitrator / tribunal can adjudicate upon the contract.

c) The third mode is when an application is filed under Section 8 before a judicial authority for reference of disputes to arbitration, since the subject matter of the contract is covered by an arbitration agreement. In such a case, the judicial authority will make the reference to arbitration. However, in the meanwhile, the parties would be directed to have the substantive contract stamped in accordance with the provisions of the relevant Stamp Act , so that the rights and obligations emanating from the substantive contract can be adjudicated upon.

38 7.2 In the case of an application under Section 9 of the Arbitration Act, 1996 the situation would be different. If an application for urgent interim reliefs is filed under Section 9 before the Court, and it is brought to the attention of the Court that the substantive contract is not duly stamped, the Court would grant ad-interim relief to safeguard the subject-matter of the arbitration. However, the substantive contract would then be impounded, and the concerned party be directed to take the necessary steps for payment of the requisite stamp duty in accordance with the provisions of the relevant Stamp Act , within a time-bound period.

It is made clear that the payment of Stamp Duty on the substantive contract as assessed by the Collector, would however be subject to the right of revision / appeal available under the relevant Stamp Act . 8 Whether the fraudulent invocation of the Bank Guarantee is arbitrable? 8.1 In the present case, the Appellant-Plaintiff in the Commercial Suit inter alia submitted that the Bank Guarantee was furnished to ensure due execution of the Work Order dated 28.09.2015. It was submitted on behalf of the Appellants that the invocation of the bank guarantee was fraudulent, since the agreement had never been acted upon. There was no invoice raised or payment received under the Work Order. In the absence of any legal liability for payment under the Work Order, the invocation of the bank guarantee was fraudulent.

8.2 The High Court held that the allegations of fraud made in this case are simple, which do not in the normal course constitute any criminal 39 offence, nor are the allegations so complex in nature which would entail extensive evidence being led, hence the disputes could be resolved through arbitration.

8.3 Under the Arbitration Act , the earliest decision on the issue of arbitrability of allegations of fraud was considered by a two-judge bench in N. Radhakrishnan v. Maestro Engineers.29 In this case, the applicant had made serious allegations against the respondents of having committed malpractices in the account books, and manipulation of finances of the partnership firm. An application under Section 8 was filed by the respondents for reference of disputes to arbitration. The Court took the view that since the issues involved detailed investigation into the allegations and production of elaborate evidence, it could not be properly dealt by an arbitrator, and ought to be settled by a court of law. This decision relied on the judgment in Abdul Kadir v. Madhav Prabhakar,30 which was passed under the 1940 Act. The judgment in Abdul Kadir in turn relied upon an English judgment rendered in Russel v. Russel,31 wherein it was held that a party against whom an allegation of fraud is made, has the right to defend himself in a public forum.

8.4 The judgment in N. Radhakrishnan (supra) is based on an outdated view of the law propounded in Russel v. Russel , which ante-dates even the first English Arbitration Act of 1899. Arbitrability of fraud is no longer an issue 29 (2010) 1 SCC 72.

Followed in Ivory Properties & Hotels Pvt. Ltd. v. Nusli Neville Wadia , 2011 (2) Arb LR 479 (Bom); See also article by Justice D.R. Dhanuka (Retd.) reported in Journal Section of 2010 (2) Arb LR 13; RRB Energy Ltd. v. Vestas Wind System & Ors. , (2015) 219 DLT 516. 30 AIR 1962 SC 406: [1962] 3 SCR 702.

31 [1880] 14 Ch. D 471.

40 relating to the competence of the arbitrator, or dealing with voluminous evidence. Arbitrators are competent to deal with allegations of civil fraud. The judgment in Russel is obsolete, which would be evident from the various enactments of the English Arbitration Act . Under Section 24(2) of the 1950 Act, the court could revoke the authority of a tribunal to deal with claims involving issues of fraud. This provision was repealed by Section 107(2) of the English Arbitration Act, 1996 Act. Russel in his Commentary on Arbitration observed that an arbitral tribunal does not have the jurisdiction to impose criminal sanctions on a party, its power is limited to the civil consequences of fraud.32 8.5 In Bharat Rasiklal Ashra v. Gautam Rasiklal Ashra,33 a two-judge bench took a different view by holding that at the pre-reference stage under Section 11 , the court is not required to examine the allegations of fraud and forgery. The scope of examination is only the existence of a valid and enforceable arbitration agreement as a condition precedent for making a reference. The ground that allegations of fraud, forgery and fabrication are likely to involve recording of evidence, or involve some delay in disposal, were not relevant grounds to be considered at the pre-reference stage. 8.6 The legislature amended sub-section (1) of Section 8 to provide that a judicial authority shall refer the parties to arbitration, ‘unless it finds that prima facie no valid agreement exists’. The amended Section 8 reads :

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) … (3) … ” The issue of arbitrability of fraud was subsequently considered by a two-judge bench in A. Ayyasamy v. A. Paramasivam & Ors.34 . The Court held that Section 8 mandates reference to arbitration, unless the arbitration agreement is found to be invalid. It has been recognised that certain categories of disputes which are of public nature, are not capable of adjudication and settlement by arbitration, which is a private forum constituted by consent of parties.

The Court made a distinction between cases where there are allegations of serious fraud and fraud simplicitor. Mere allegations of fraud simplicitor are not a sufficient ground to decline reference to arbitration. Parties may be referred to arbitration where allegations of fraud pertain to disputes between parties inter se, and have no implication for third parties. The courts may, however, refuse to make a reference to arbitration only in those cases where there are very serious allegations of fraud, which make a virtual case of criminal offence of fraud, or where allegations of fraud are so complicated, that it becomes absolutely essential that such complex issues be decided only by the civil courts on appreciation of voluminous evidence. This would also include those cases where there are serious allegations of 34 (2016) 10 SCC 386.

42 forgery or fabrication of documents, or where fraud is alleged with respect to the arbitration clause itself, or where the fraud alleged is of such a nature that it permeates the entire contract, including the agreement to arbitrate. The judicial authority must carefully sift the materials for the purpose of determining whether the defence is merely a pretext to avoid arbitration. It was opined that the Arbitration Act must be interpreted to bring it in consonance with the prevailing arbitration jurisprudence in the common law world.

8.7 The judgment in Ayyasamy (supra) was followed in Rashid Raza v.

Sadaf Akhtar,35 wherein the twin test laid down in para 25 of Ayyasamy was followed i.e. : (i) does the plea of fraud permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (ii) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.

8.8 In the subsequent decision of Ameet Lalchand Shah & Ors. v.

Rishabh Enterprises & Anr.,36 allegations of fraud arising from criminal breach of trust and misrepresentation regarding the equipment procured and leased for the setting up and operating of a Photovoltaic solar plant were made. A civil suit was filed praying for a declaration that all the agreements were vitiated by fraud and misrepresentation. An application was filed under Section 8 seeking reference of the disputes to arbitration under all the four agreements. This Court held that only where the court is 35 (2019) 8 SCC 710.

36 (2018) 15 SCC 678.

43 satisfied that the allegations of fraud are serious and complicated in nature, would it be more appropriate for the court to deal with the subject matter of the disputes, rather than relegate the parties to arbitration. It is the duty of the court to impart a sense of business efficacy to commercial transactions, and mere allegations of fraud would not be sufficient to decline reference of disputes to arbitration.

8.9 In a recent judgment delivered in Avitel Post Studioz Ltd. & Ors. v.

HSBC PI Holdings (Mauritius Limited),37 which pertains to an international commercial contract, the issue of arbitrability of fraud arose for consideration. This Court held that the same set of facts may have civil as well criminal consequences. If it is clear that a civil dispute involves questions of fraud, misrepresentation, etc. which can be the subject matter of a proceeding under Section 17 of the Indian Contract, 1872, and/or the tort of deceit, the mere fact that criminal proceedings can or have been instituted in respect of the same subject matter, would not lead to the conclusion that a dispute which is otherwise arbitrable, ceases to be so.

This view has been affirmed by a co-ordinate bench in Deccan Paper Mills v. Regency Mahavir38 and Vidya Drolia & Others v. Durga Trading Corporation39 .

8.10 In our view, all civil or commercial disputes, either contractual or non-

contractual, which can be adjudicated upon by a civil court, in principle, can 37 (2020) SCCOnLine SC 656.

38 (2020) SCCOnLine SC 655.

39 Civil Appeal No.2402 of 2019 decided vide Judgment dated 14.12.2020. 44 be adjudicated and resolved through arbitration, unless it is excluded either expressly by statute, or by necessary implication. The Arbitration and Conciliation Act, 1996 does not exclude any category of disputes as being non arbitrable. Section 2(3) of the Arbitration Act however recognizes that certain categories of disputes by law may not be submitted to arbitration.40 In all jurisdictions, certain categories of disputes are reserved by the legislature, as a matter of public policy, to be adjudicated by a court of law, since they lie in the realm of public law.

8.11 Traditionally, disputes relating to rights in rem are required to be adjudicated by courts and / or statutory tribunals. A right in rem is a right exercisable against the world at large. Actions in rem refer to actions which create a legal status such as citizenship, divorce, testamentary and probate issues, etc. A lis in rem is not arbitrable by a private tribunal constituted by the consent of parties. Actions in personam determine the rights and interests of parties to the subject matter of the dispute, which are arbitrable.

The broad categories of disputes which are considered to be non arbitrable are penal offences which are visited with criminal sanction; offences pertaining to bribery / corruption; matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody and guardianship matters, which pertain to the status of a person; testamentary matters which pertain to disputes relating to the validity of a Will, grant of 40 Section 2(3) . This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

45 probate, letters of administration, succession, which pertain to the status of a person, and are adjudicated by civil courts.

Certain categories of disputes such as consumer disputes41; insolvency and bankruptcy proceedings; oppression and mismanagement, or winding up of a company; disputes relating to trusts, trustees and beneficiaries of a trust42 are governed by special enactments.

This Court in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.43 has recognized some examples of disputes which are not arbitrable, and held that :

42 Vimal Kishor Shah & Others v. Jayesh Dinesh Shah & Others . (2016) 8 SCC 788. 43 (2011) 5 SCC 532.

44 Section 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.

46 entered into by a minor (without following the procedure prescribed under the Guardian and Wards Act, 1890 ) or a lunatic, which would be with a party incompetent to enter into a contract.

8.13 The civil aspect of fraud can be adjudicated by an arbitral tribunal.

The civil aspect of fraud is defined by Section 17 of the Indian Contract Act, 1872 as follows :

Voidable agreements are defined by Section 19 of the Contract Act as :

Even though Swiss Timing Ltd. was a decision of a designate of the Chief Justice under Section 11 of the 1996 Act (prior to the Amendment), and 45 (2014) 6 SCC 677.

48 would have no precedential value in view of the judgment of this Court in State of West Bengal v. Associated Contractors,46 the reasoning in Swiss Timing Ltd. has been cited with approval by this Court in Avitel Post Studioz Ltd. & Ors. v. HSBC PI Holdings (Mauritius Limited )47. 8.16 The ground on which fraud was held to be non arbitrable earlier was that it would entail voluminous and extensive evidence, and would be too complicated to be decided in arbitration. In contemporary arbitration practice, arbitral tribunals are required to traverse through volumes of material in various kinds of disputes such as oil, natural gas, construction industry, etc. The ground that allegations of fraud are not arbitrable is a wholly archaic view, which has become obsolete, and deserves to be discarded. However, the criminal aspect of fraud, forgery, or fabrication, which would be visited with penal consequences and criminal sanctions can be adjudicated only by a court of law, since it may result in a conviction, which is in the realm of public law.48 8.17 In the present case, the allegations of fraud with respect to the invocation of the Bank Guarantee are arbitrable, since it arises out of disputes between parties inter se, and is not in the realm of public law. 9 Maintainability of the Writ Petition 9.1 We are of the view that the Writ Petition filed by the Respondent No. 1 to challenge the Order dated 18.01.2018 passed by the Special Commercial Court / District Judge-I in Commercial Dispute No. 62/2017 was 46 (2015) 1 SCC 32.

47 (2020) SCCOnLine SC 656.

48 Malhotra’s Commentary on the Law of Arbitration, [4th ed., Wolters Kluwer (2020)], p.339, Volume I. 49 not maintainable, since a statutory remedy under the amended Section 37 of the Arbitration Act is available. Section 37(1) has been amended by Act 3 of 201649. Section 37(1)(a) provides for an appeal to be filed against an Order refusing to refer the parties to arbitration.

Section 37(1)(a) reads as :

49 which came into effect on 23.10.2015.

50 In view of the availability of a statutory remedy, the judgment of the High Court passed under Articles 226 and 227 of the Constitution is liable to be set aside on the ground of maintainability.

10 In the present case, since both parties have admitted the existence of the arbitration agreement between the parties, as recorded in the judgment of the High Court, and even before this Court during oral submissions, parties may either appoint a sole arbitrator consensually; failing which, an application u/S. 11 for appointment of the arbitrator may be made before the High Court.

11 In view of the discussion hereinabove, we hold that :

The Stamp Duty assessed by the Collector will, however, be subject to the statutory right available to file a revision / appeal under the Maharashtra Stamp Act .

(iv) With respect to the invocation of the Bank Guarantee, the Appellant may seek interim relief u/S. 9 of the Arbitration and Conciliation Act, 1996.

We extend the stay granted by the High Court for a further period of eight weeks.

12 We are of the considered view that the finding in SMS Tea Estates and Garware that the non-payment of stamp duty on the commercial contract would invalidate even the arbitration agreement, and render it non-existent in law, and un-enforceable, is not the correct position in law.

In view of the finding in paragraph 92 of the judgment in Vidya Drolia by a co-ordinate bench, which has affirmed the judgment in Garware, the aforesaid issue is required to be authoritatively settled by a Constitution bench of this Court.

We consider it appropriate to refer the following issue, to be authoritatively settled by a Constitution bench of five judges of this Court :