Arbitration Clause In An Unstamped Contract : Issue Of Enforceability

Let me start with the statutory regime pertaining to an arbitration clause in an unstamped contract. The Bombay High Court had taken the view that in view of the amendment, the decision of the Supreme Court in SMS Tea Estate would not be applicable in the changed circumstances and appointed an Arbitrator in a petition filed under Section 11, overruling the objection that the arbitration clause could not be enforced or acted upon since the same was contained in a contract which was not duly stamped. The Supreme Court in Garware Wall Ropes Ltd. 9 SCC 209 considered the 2015 amendment by which sub-Section 6A was inserted to Section 11 of A&C Act, 1996. The view taken by the Full Bench has partly been overruled by the decision of the Supreme Court in Garware Wall Ropes Ltd. v/s Coastal Marine Construction and Engineering Ltd. only in so far as the view rendered by the Full Bench qua Section 11 is concerned and its opinion that an arbitration clause contained in a contract which is unstamped or not adequately stamped is nevertheless a separate and independent agreement by itself. The impact of the view taken by the Supreme Court in the above decisions on the exercise of power by the court under Section 9 is yet to be settled by the Supreme Court as the same was not subject matter in issue before the Supreme Court in the decisions in SMS Tea Estates as well as Garware Wall Ropes Ltd. As previously noticed, the view of the Full Bench of Bombay High Court is that the arbitration clause in a contract is a separate agreement and can be acted upon by the court for the purpose of passing an interim order in a petition or application filed under Section 9 and that the issue of insufficiency of the stamp duty, if any can be raised by the other party at the stage when the instrument containing arbitration agreement is tendered in evidence before the Arbitral tribunal.