The Delhi High Court held that the scope of Section 11(6) of the Arbitration and Conciliation Act, 1996 is limited to examining whether there is a valid arbitration clause between the parties. Objections such as non-stamping or non-registration of the arbitration agreement are to be raised before the arbitrator.
The above ratio was delivered by the Delhi High Court in the matter of Damont Developers Pvt. Ltd. Through its Authorised Signatory Vs. Brys Hotels Pvt. Ltd. ARB.P. 837/2018 decided on 07th March, 2019.
The petitioner approached the High Court seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 in terms of the arbitration agreement between the parties is contained in Clause 10 (e) of the MOU executed between the parties.
However, it was contended by the respondent that Clause 10 (e) of the MOU does not constitute a valid arbitration agreement as it is a compulsorily registerable document but is neither registered nor requisite stamp duty has been paid thereon and therefore, the document is liable to be impounded by this Court and cannot be acted upon till the requisite stamp duty is paid thereon.
The Delhi high Court appreciated the import of Section 11(6A) of the Arbitration and Conciliation Act and observed that it requires the Court to confine itself to the existence of an arbitration agreement.
The High Court relied on the judgment of SMS Tea Estates Private Ltd. vs. Chandmari Tea Company Private Ltd. (2011) 14 SCC 66, wherein the Supreme Court held that an arbitration agreement does not require registration under the Registration Act and therefore, an arbitration agreement contained in an unregistered but compulsorily registerable document, can be acted upon and enforced. The High Court further relied on the judgment of Sandeep Soni v. Sanjay Roy 2018 SCC OnLine Del 11169 and held that the objections of insufficiently stamped document cannot impede the appointment of an arbitrator and it is for the arbitrator to consider the objections and exercise the powers under Section 33 and other attendant provisions of the Stamp Act.
In the facts of the present case, the Court held that there is a valid arbitration agreement between the parties contained in Clause 10(e) of the MOU and the petitioner had validly invoked the arbitration clause. The Court further held that under Section 11(6A) of the Arbitration and Conciliation Act, this Court has to confine only to the existence of an arbitration agreement and all other objections including the objection as to insufficient stamping have to be considered by the arbitrator.