Matters Still Pending At Pre-Appointment Stage Cannot Be Left Hanging Until Larger Bench Settles Issue: SC Reiterates

The Supreme Court has reiterated that matters which are still pending at a pre-appointment stage, cannot be left hanging until the larger Bench settled the issue.

The bench of Chief Justice UU Lalit and Justice Bela M Trivedi was dealing with arbitration petitions seeking appointment of a sole arbitrator to adjudicate upon the disputes arising out of the three agreements executed between the parties.

Senior Advocate Amit Sibal appeared for the petitioner whereas Senior Advocate Jayant Mehta appeared for the respondent.

The bone of contention raised by the counsel for the respondent is that out of the three agreements only one agreement was stamped and the other two were not stamped as required under the Maharashtra Stamp Act, 1958 (hereinafter referred as the "Stamp Act").

On the other hand, counsel for the appellant submitted that the insufficient payment or non-payment of stamp duty is a curable defect and there is no legal impediment to the enforceability of the arbitration agreement, pending payment of stamp duty on the substantive contract.

The Court noted that the execution of three agreements, between the petitioner and the respondent has not been disputed. The Court further noted that the respondent proposed to amicably resolve the disputes through Mediation, and also suggested in the alternative to consolidate the disputes under the three agreements to be heard by a sole arbitrator in one single arbitration.

The Court observed that "Since the arbitration agreements contained in all the three agreements were not disputed by the respondent, and since the respondent itself had proposed to consolidate the disputes under the said agreements and to refer them to a sole arbitrator in one single arbitration, the court is of the opinion that now it does not lie in the mouth of the respondent to say that the petitions seeking appointment of a sole arbitrator should not be entertained, as the matter with regard to the determination of requisite stamp duty under the Maharashtra Stamp Duty Act on the two agreements is pending before the Collector."

The Court reiterated that there is no legal impediment to the enforceability of the arbitration agreement pending payment of stamp duty on the substantive contract.

The Court noted that this issue is pending under consideration by the Constitution Bench, nonetheless matters which are still pending at a pre-appointment stage, cannot be left hanging until the larger Bench settled the issue.

Therefore the Court appointed Suresh C. Gupte, former Judge, High Court of Bombay as a sole arbitrator to adjudicate upon the disputes arising out of the said three agreements treating it as one single arbitration.

Accordingly the petitions were allowed.

Cause Title- Weatherford Oil Tool Middle East Limited v. Baker Hughes Singapore PTE & Ors.

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