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An agreement between the petitioner and the respondent, stamped in Andhra Pradesh, had an arbitration clause. Based on this, the petitioner made an application for appointment of arbitrator in Maharashtra in the High Court of Bombay.
The respondent argued that the agreement should to be stamped again in Maharashtra under the Maharashtra Stamp Act, 1958 (“MSA”), and, as held by the Supreme Court in Garware Wall Ropes Limited v. Coastal Marine Constructions, (2019) 9 SCC 209, in absence of stamping, the court cannot act upon the arbitration agreement.
The provision of the MSA in question stipulates that an instrument executed outside but when received in Maharashtra is chargeable with duty if it relates “to any matter or thing done or to be done in Maharashtra” [Section 3 (a) (b)].
Interpreting this provision, the petitioner disputed the premise that the agreement was chargeable to stamp duty in Maharashtra at all. It argued that Section 3 (a) (b) of MSA must be restricted to mean only the contract works that were required to be done by the contractor and cannot include arbitration. Further, arbitration is a dispute redressal mechanism, when there arises a dispute about a thing “done or to be done”.
Rejecting the petitioner’s submissions G.S. Patel, J. held: –
The court also then observed that ordinarily (following Garware) it would have impounded the document and send it to the Collector of Stamps for adjudication. But the petitioner undertook to submit the document, or a copy of it, for adjudication and proceed further. In view of the adjudication, the petition was kept pending.