Case Note & Summary
The appeal arose from an order dated 30 August 2013 passed by the learned Principal District Judge, Thane, allowing an application filed by the respondents under Section 9 of the Arbitration and Conciliation Act, 1996. The appellants challenged the order on various grounds, but the primary issue raised was the maintainability of the Section 9 application itself on the ground that the Memorandum of Understanding (MOU) dated 6 November 2008, which formed the basis of the application, was insufficiently stamped. The respondents had claimed that the appellants granted development rights over a suit property under the MOU. The appellants disputed that any rights were created. The court focused on the preliminary objection regarding stamp duty. The appellants argued that under Section 35 of the Bombay Stamp Act, 1958, an insufficiently stamped instrument cannot be admitted in evidence or acted upon for any purpose, including for seeking interim measures under Section 9 of the Arbitration Act. The respondents contended that the issue of stamp duty could be decided later by the arbitrator. The court analyzed the provisions of the Bombay Stamp Act and the Arbitration Act. It held that the MOU being insufficiently stamped, it could not be looked into for any purpose, including for determining the existence of an arbitration agreement or for granting relief under Section 9. The court reasoned that Section 35 of the Bombay Stamp Act imposes a complete bar on the admissibility of insufficiently stamped instruments. Therefore, the application under Section 9 was not maintainable. The court allowed the appeal, set aside the impugned order, and dismissed the respondents' Section 9 application. The court also disposed of the connected civil application.
Headnote
A) Stamp Act - Insufficiently Stamped Instrument - Section 35 Bombay Stamp Act, 1958 - An insufficiently stamped document cannot be admitted in evidence or acted upon for any purpose - The court held that an application under Section 9 of the Arbitration and Conciliation Act, 1996 based on an insufficiently stamped MOU is not maintainable as the MOU cannot be looked into for any purpose including for referring parties to arbitration (Paras 2-4).
Issue of Consideration
Whether an application under Section 9 of the Arbitration and Conciliation Act, 1996 is maintainable when the underlying agreement (MOU) is insufficiently stamped?
Final Decision
Appeal allowed. Impugned order dated 30 August 2013 set aside. Application under Section 9 of Arbitration and Conciliation Act, 1996 filed by respondents dismissed. Civil Application No. 41 of 2013 disposed of.
Law Points
- Insufficiently stamped document cannot be acted upon or admitted in evidence
- Section 35 of Bombay Stamp Act
- 1958 bars consideration of unstamped/insufficiently stamped instruments
- Section 9 of Arbitration and Conciliation Act
- 1996 application based on insufficiently stamped MOU is not maintainable
