Mr. Milind S/O Dattatraya Mahajan And Others vs Mr. Pramod S/O Deshraj Budhraja Through His P.O.A. Mr. Rahul S/O Pramod Budhraja

Rule. Heard forthwith by consent of parties.

This petition challenges the legality and correctness of the order passed by the learned sole Arbitrator on 8.4.2018.

By the order passed on 8.4.2018, the learned Arbitrator rejected the application filed by the petitioners taking objection that the agreement being not

duly stamped, could not be acted upon or read in evidence unless it is impounded under Section 33 of the Maharashtra Stamp Act (for short, the

“Stamp Actâ€​) and dealt with as per the provisions contained in Chapter IV of the Stamp Act.

The respondent filed a summary civil suit under Order 37 of the Code of Civil Procedure against the petitioners seeking a decree in the sum of Rs.

3,51,26,260/ together with interest @ 21% per annum with quarterly rests. In response to the suit summons, the petitioner at the first available

opportunity filed an arbitration agreement dated 9.4.2014 and moved an application (exhibit 23) under Section 8 of the Arbitration and Conciliation

Act, 1996 (for short, the “Arbitration Actâ€) read with Section 9A of the Code of Civil Procedure for referring the matter to an Arbitrator named

therein. The application was resisted by the respondent. The trial Court by an order dated 27.10.2015 rejected the application and not being satisfied

with the same, the petitioners filed an appeal under Section 37 (1) (a) of the Arbitration Act before this Court. The learned single Judge by order

dated 29.2.2016 upset the order of the trial Court and allowed the appeal. The learned single Judge directed that the parties be referred to

arbitration in terms of clause 11 of the said agreement/memorandum of understanding dated 9.4.2014 for adjudication of the dispute as per subÂ‐

section (1) of Section 8 of the Arbitration Act. Thereafter, the respondent filed an application under Section 11 (6) of the Arbitration Act before this

Court and the application was disposed of by appointing the former Judge of this Court as an arbitrator to resolve the dispute between the parties.Â

Later on, the Judge appointed as an arbitrator by this Court in terms of Section 11 (6) of the Arbitration Act, though acceptable to both the parties,

was sought to be substituted by the parties by another Arbitrator. So, one more application was filed by the respondent and in reply to this

application several objections were raised by the petitioner one of which was relating to an objection under Section 33 of the Court Fees Act.Â

However, as the parties disclosed their agreement over the one name of a former Hon'ble Judge of this Court to be appointed as an Arbitrator in place

of the previous Arbitrator, the application was disposed of keeping all objections raised in the reply open to be agitated before and decided in

accordance with law by the learned arbitrator. Thus, the application so filed by the respondent came to be disposed on 20.11.2017.

Now, the dispute was before the newly appointed learned Arbitrator and it was at this juncture, an application raising the objection referable to

Section 33 of the Stamp Act was filed by the petitioners. As stated earlier, the learned Arbitrator after hearing both sides rejected the application by

his order dated 8.4.2018.

As the hearing on admission of the petition commenced, Shri M. G. Bhangde, learned Senior Advocate for the respondent raised an objection on

the maintainability of the petition.

Considering the nature of objection, it would be necessary for this Court to deal with the objection first. Of course, Shri S. P. Dharmadhikari,

learned Senior Advocate for the petitioners has submitted his argument not only in respect of the preliminary objection, but also on merits of the

matter. But, Shri Bhangde has confined himself only to the basic objection of maintainability of the petition stating that he would reserve his right to

address this Court on merits of the matter in case the preliminary objection is rejected by this Court.

Relying upon the law laid down by the Hon'ble Apex Court in the case of SBP & Co. v. Patel Engineering Ltd & anr reported in (2005) 8 SCC 618,

learned Senior Advocate for the respondent has submitted that as the dispute has reached the sole Arbitrator, the High Court cannot interfere with the

order passed by the Arbitrator during the course of arbitration proceedings and the only remedy available to the parties would be to approach the

Court in terms of Section 37 or Section 34 of the Arbitration Act. He points out that the law laid down by the Hon'ble Supreme Court has also

been followed by the Division Bench of this Court in the case of Sandip Industries v. Superpack &Â anr reported in (2008) 6 Mah LJ 313. According

to him. According to him, the judgments in the case of Dowell Leasing and Finance Co. v. Radheshyam B. Khandelwal reported in 2008 (1) Bom.

C. R. 768 and M/s Sanwal Coal Carriers v. Western Coalfields Limited reported in 2010 SCC OnLine Bom 1256 are distinguishable on facts.

Shri S. P. Dharmadhikari, learned Senior Advocate submits that the impugned order is not an order which is referable to Section 5 or any other

section in Part I of the Arbitration Act and, therefore, petition filed under Article 227 of the Constitution of India is maintainable. He submits that

by examining the legality or otherwise of the impugned order, this Court would not be intervening in the arbitration proceedings and would only be

performing its duty to keep all the judicial authorities and the Tribunal under it within the bounds of law. He submits that Section 33 of the Stamp

Act casts a duty upon every person having by law or consent of parties authority to receive evidence to examine a document or instrument which

comes before him and form an opinion about it being duly stamped or otherwise. He submits that the section requires such person or authority to

impound the document or the instrument if it is found by him that it is not duly stamped and then deal with it as per the procedure prescribed in

Chapter IV of the Maharashtra Stamp Act. He submits that this is a duty which such person or the authority is required to perform mandatorily and,

therefore, there is no question of an objection being raised or not being raised or abandoned after having it being raised by any of the parties. He

further submits that an objection referable to Section 33 of the Stamp Act was raised by the petitioners for the first time when the petitioners filed

their reply to the second application filed under Section 11 (6) of the Arbitration Act being CAO No. 1148 of 2017, which was allowed by this Court

on 20th November 2017 keeping all those objections open and this order of the Court was an order by which there was a delegation by this court of

its duty to examine and impound the instrument in question, if required, to the sole Arbitrator as per proviso (b) to Section 33 of the Stamp Act.

Learned Senior Advocate for the petitioners further submits that once the duty to examine an instrument is delegated by this Court to an

arbitrator appointed by it, the officer so appointed in the present case, the learned sole Arbitrator,  cannot refuse to perform the duty on the

ground that the objection was never taken when the arbitration agreement was acted upon for the purpose of appointment of Arbitrator or was

later on abandoned after having raised it.

Shri Dharmadhikari further submits that such being the nature of the objection taken by the petitioners and also the nature of duty to be performed

by the learned Arbitrator and there being no appeal provided for challenging the order rejecting such an objection, a writ petition would be

maintainable. He places his reliance on the judgment of the Division Bench of this Court in the case of Dowell Leasing (supra). He also places

reliance upon the cases of Government of AP & ors v. P. Laxmi Devi reported in (2008) 4 SCC 720 and SMS Tea Estates Pvt Ltd v.

Chandmarik Tea Company Pvt Ltd reported in (2011) 14 SCC 66.

Under Section 5 of the Arbitration Act, it has been laid down that notwithstanding anything contained in any other law for the time being in

force, no judicial authority shall intervene in matters governed by Part I except as provided in the Part. There are two sections viz. Section 34

and Section 37 which provide for judicial intervention in the arbitral awards or such orders passed by the Arbitral Triobunal or the Arbitrator as are

expressly stated in Section 37. The impugned order is neither an arbitral award so as to be vulnerable to challenge under Section 34 nor an orderÂ

falling in any of the categories of the appellable orders prescribed under Section 37 of the Arbitration Act. It would mean that such an order cannot

be assailed by resorting to the remedy provided in 1st Part of the Arbitration Act. Then, the question would be, what should be the remedy, if at all

there it be ? Would it mean that even if such an order is not acceptable to any of the parties, the party would have to bear with it till the culmination of

the proceedings, there being a general embargo upon the judicial intervention under Section 5 or would have a way out. The answer would have to

be found out by referring to the law settled by the Hon'ble Apex Court in the case of SBP & Co. (supra) which has also been followed by this

Court in the case of sandeep Industries (supra) and explained by the Division Bench of this Court in Dowell Leasing (supra).

In the case of SBP & Co. the Hon'ble Supreme Court has held very clearly that no judicial intervention is permissible against the orders which are

interlocutory in nature. The Hon'ble Supreme Court has held that once the dispute goes to the Arbitral Tribunal or before the Arbitrator, the High

Court would not interfere with the orders passed by the Arbitrator during the course of arbitration proceedings and the parties should approach the

Court only in terms of Section 37 or Section 34 of the Arbitration Act. The relevant observations of the Hon'ble Supreme

Court as they appear in paragraph 47 are as under:“47. We, therefore, sum up our conclusions as follows:

(i) The power exercised by the Chief Justice of the High Court orthe Chief Justice of India under Section 11(6) of the Act is not an administrative

power. It is a judicial power.

(ii) The power under Section 11(6) of the Act, in its entirety,could be delegated, by the Chief Justice of the High Court only to another judge of that

court and by the Chief Justice of India to another judge of the Supreme Court.

(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of

the Chief Justice as conferred by the statute.

(iv) The Chief Justice or the designated Judge will have theright to decide the preliminary aspects as indicated in the earlier part of this judgment.

These will be, his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the

existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated

Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the

need arises but the order appointing the arbitrator could only be that of the Chief Justice or the designated Judge.

(v) Designation of a District Judge as the authority underSection 11(6) of the Act by the Chief Justice of the High Court is not warranted on the

scheme of the Act.

(vi) Once the matter reaches the Arbitral Tribunal or the solearbitrator, the High Court would not interfere with orders passed by the arbitrator or the

Arbitral Tribunal during the course of the arbitration proceedings and the parties could approach the Court only in terms of Section 37 of the Act or in

terms of Section 34 of the Act.

(vii) Since an order passed by the Chief Justice of the HighCourt or by the designated Judge of that Court is a judicial order, an appeal will lie against

that order only under Article 136 of the Constitution of India to the Supreme Court.

(viii) There can be no appeal against an order of the ChiefJustice of India or a Judge of the Supreme Court designated by him while entertaining an

application under Section 11(6) of the Act.

(ix) In a case where an Arbitral Tribunal has been constitutedby the parties without having recourse to Section 11(6) of the Act, the Arbitral Tribunal

will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act.

(x) Since all were guided by the decision of this Court inKonkan Ral. Corpn. Ltd. v. Rani Construction (P) Ltd. and orders under Section 11(6) of

the Act have been made based on the position adopted in that decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made,

are to be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from this date, the position as adopted in this

judgment will govern even pending applications under Section 11(6) of the Act.

(xi) Where District Judges had been designated by the ChiefJustice of the High Court under Section 11(6) of the Act, the appointment orders thus far

made by them will be treated as valid; but applications if any pending before them as on this date will stand transferred, to be dealt with by the Chief

Justice of the High Court concerned or a Judge of that Court designated by the Chief Justice.

(xii) The decision in Konkan Rly. Corpn. Ltd. .v. Rani Construction (P) Ltd. is overruledâ€​.

In Dowell Leasing (supra), the Division Bench of this Court considered the judgment of the Hon'ble Supreme Court in SBP & Co. and held that

the judgment does not take a view that no writ can go to an Arbitral Tribunal or that Arbitral Tribunal is not a person to whom writ cannot be

issued. It also held that in a case where the proceedings are terminated and no remedy is available to a party under the provisions of the Arbitration

Act, it would be open to that party to undertake the extraordinary jurisdiction of this Court. The observations of the Division Bench in this regard

appear in paragraphs 10 and 11 of the judgment, which are reproduced as below :

“10. It would be clear from a reading of the paragraph as also the directions, the Hon'ble Supreme Court has held that the High Courts ought not to

invoke its extraÂoridnary jurisdiction under Article 226 and 227 in respect of orders passed in pending arbitral proceedings. This is more so in respect

of proceedings in respect of which a remedy is available under the Act. The judgment has not taken a view that no writ can go to an Arbitral Tribunal

or that Arbitral Tribunal is not a person to whom a writ cannot be issued.

A learned Single Judge (Rebello, J.) in Anuptech Equipments Pvt. Ltd., (supra) after considering the various provisions of the Act, 1996 has held

that the writ jurisdiction can be invoked in the matter of termination of proceedings and if there be no remedy available to a party under the Act of

1996. In (Vimal Madhukar Wasnik (Dr.) Nagpur v. Sole Arbitrator),2006 (1) Bom. C.R. 419, the Division Bench again to which one of us (Rebello,

J.), was a party, reiterated the view that in a case where the proceedings are terminated and no remedy is available to a party under the provisions of

the Act, 1996, it will be open to the party aggrieved to invoke the extraÂordinary jurisdiction of this Court. If we consider para 45 in the judgment of

Patel Engineering Ltd., (supra); the language used is 'an order passed by an Arbitral Tribunal during arbitration'. The judgment has not taken a view,

that where proceedings are terminated, no petition would lieâ€​.

It would be clear from the law discussed above that once the dispute goes to the Arbitrator, it would not be open to the High Court to interfere

with the order passed by the Arbitrator during the course of arbitration proceedings. However, if the order passed by the Arbitrator is of such a nature

that it terminates the proceedings and no remedy is available under the provisions of the Arbitration act, such an order could be challenged by the

aggrieved party by invoking the extraordinary jurisdiction of this Court. Following this law only that the learned single Judge of this Court in the case

of M/s Sanwal Coal Carriers (supra) quashed and set aside an order styled as interim report by the Arbitrator insofar as it related to an issue by

which the rights of the parties to challenge the correctness or otherwise of the system of coqal delivery, weighment and preparation of bill were

finally decided.

Now, we would have to examine the legality or correctness of the impugned order in the light of the law referred to in previous paragraphs. The

impugned order rests on two grounds. First is that as the objection regarding the insufficiency of the stamp duty was not raised by the petitioners

at the time when the arbitration agreement was acted upon, and when raised later was abandoned during a course of time,  the petitioners

would be estopped from raising the plea in further proceedings. The second ground is that the original arbitration agreement having not been filed on

record of the proceedings, no occasion arose for the learned Arbitrator to examine the same and/or impound it.

About the first ground, I am in respectful disagreement with the learned Arbitrator.

Under Section 33 of the Maharashtra Stamp Act, a duty has been cast upon every person having by law or consent of parties authority to receive

the evidence to examine any instrument, chargeable with duty and form an opinion about it being duly stamped or not and in the latter case, to

impound the stamp as well and deal with it as per the procedure prescribed in Chapter IV of the Stamp Act. This duty is mandatory in nature

as held by the Hon'ble Supreme Court in the cases of SMS Tea Estate  and P. Laxmidevi (supra). The duty is imposed on every person having

authority to receive evidence and that would include, in the present case, not only a Small Causes Court where an application under Section 8 was

filed by the petitioners for the first time but also this Court where an appeal under Section 37 (1) of the Arbitration Act was filed by the

petitioners. A duty to be performed by such person or the authority is, as found earlier, mandatory in nature. It is also independent of any act

performed or to be performed or any objection taken or to be taken by any of the parties to the dispute. Whether any objection is taken or not and if

taken, whether it is abandoned or not, the duty remains unaffected. The reason is that it is in the nature of an absolute obligation imposed on the

person having authority to receive the evidence and not a privilege conferred upon a party to raise in its discretion such an objection. In SMS Tea

Estate (supra), Hon'ble Supreme Court in the context of an objection about insufficiency of stamp duty paid upon the lease deed, observed in

paragraph 21, that when a lease deed or any instrument is relied upon as containing an arbitration agreement, the court should consider at the

outset whether an objection in that behalf is raised or not, whether the document is duly stamped or not. In the case of P. Laxmi Devi (supra),

the Hon'ble Supreme Court in paragraph 16 held that the word “shall†used in Section 33 (1) does not mean “mayâ€, but “shallâ€. It

clarifies in other words, it is mandatory to impound a document produced before the person having authority to receive evidence.

All this discussion enables me to hold that the first ground of rejection of the objection by the learned Arbitrator is clearly contrary to the mandate

of Section 33 of the Stamp Act and receives no support from the law settled by the Hon'ble Apex Court and hence, not sustainable in the eye of

law.Â

There is another reason why I would say, the ground so taken by the learned Arbitrator was not available and the reason is borne out of the facts

and circumstances of the case. When an application under Section 8 was filed by the petitioners in a pending summary suit, no objection as regards

insufficiency of stamp duty paid on the agreement was taken. Same was the position in the arbitration appeal being Arbitration Appeal No. 18 of 2015

filed by the petitioners challenging the order of the trial Court rejecting Section 8 application. The position did not change when an application under

Section 11 of the Arbitration Act was filed by the respondent following the judgment of this Court in Arbitration Appeal No. 18 of 2015. That

application was Misc. Civil Application No. 582 of 2016. The application was decided on the basis of agreement between the parties and was

disposed of by an order passed on 25.7.2016. It resulted into appointing a former Hon'ble Judge of this Court as an Arbitrator to resolve the dispute

between the parties. Later on, a situation arose, the details being not relevant are avoided here, which required substituting the Arbitrator so

appointed by this Court on 25.7.2016 by another Arbitrator and, therefore, one more application under Section 11 being CAO No. 1148 of 2017 was

filed by the respondent. It was at this juncture that an objection in the context of Section 33 of the Stamp Act was raised in the reply filed by the

petitioners. But, ultimately, the application was allowed as there was an agreement reached between the parties as regards the substitute

Arbitrator to be appointed in place of the previous Arbitrator. So, the application was disposed of on 20th November 2017, however, subject to the

objections raised in the reply. It was specifically noted by this Court in the order dated 20th November 2017 that all objections raised in reply were

kept open to be agitated before and decided in accordance with law by the learned Arbitrator. This was also accepted by the parties.

The reservation of the rights so made by this Court which had attained finality by its acceptance by the parties, as rightly submitted by learned

Senior Advocate for the petitioners, was no less than a delegation of the duty of the Court under Section 33 of the Stamp Act to an officer appointed

in that regard by the High Court. This was in pursuance of the proviso (b) to Section 33 of the Stamp Act. After this, the ground of not raising of

the objection at the first available opportunity or the desertion of the plea was not available to the learned Arbitrator to reject the objection taken by

the petitioner and that is why I would humbly say, this is the additional reason for me to be not in agreement with the learned Arbitrator on this

count.

The second ground taken by the learned Arbitrator to reject the objection is nevertheless most significant and to my mind, it decides the fate of the

objection taken as to the maintainability of the petition. The original arbitration agreement till the date of passing of the impugned order had not been

filed on record and no one would disagree that for exercise of a duty under Section 33 of the Stamp Act, the examination of the original agreement is

necessary. However, that was not possible for the learned Arbitrator in the absence of the original agreement being there on record. The

learned Arbitrator, therefore, reasoned that as the original agreement was not till then filed on record, there was no occasion for him to examine it

and/or impound it. Thus, he concluded that even on this count, the application under Section 33 of the Stamp Act filed by the petitioners was wholly

tenable. I cannot agree more with the learned Arbitrator. The result is that there is no order passed by the learned Arbitrator finally deciding the

issue of sufficiency of the stamp duty or otherwise and the issue is still capable of being revived at the opportune time or occasion, that is, when the

original agreement is placed on record. If there is no final adjudication on the issue, the only conclusion that can be drawn is that there is no order

available as of now which can be considered for its possible scrutiny under the extraordinary writ jurisdiction of this Court and the writ petition is not

maintainable and it deserves to be dismissed on the ground that it is not maintainable in its present form.Â

There is also a point raised by Shri S. P. Dharmadhikari that the impugned order is not the order passed under PartÂI of the Arbitration Act and

is, therefore, out of the scope of Section 5 limiting the judicial intervention only to the orders passed under this part of the Act. It is not possible to

render any adjudication on this point as I have found that there is no final order passed by the learned Arbitrator in the matter. This point would

have to be adjudicated upon at the appropriate time when the occasion to do so arises.

In the result, I find that this writ petition is not maintainable in its present form. Writ Petition stands dismissed. Needless to say, the petitioners

shall have the liberty to seek adjudication on the issue involved in the matter as and when original agreement is produced before the learned

Arbitrator. Rule is discharged. No costs.