Stamping Objection Cannot Derail Arbitration at Section 16 Stage

Judgment dated 27.5.2026 of the Supreme Court in SLP (Civil) No.27534 of 2025 of M/s Tarini Prasad Mohanty  Vs.  M/s Sunflag Iron and Steel Company Limited

In this case, the Arbitrator rejected section 16 objection to the insufficient stamped agreements.

The agreement and the supplementary agreements were executed for iron sale.  The minor owner said that the contract was in the nature of “conveyance” and therefore, need to be stamped under Article 23 of Schedule I to the Indian Stamp Act, 1899.  Therefore, the arbitral proceedings cannot continue unless these agreements are properly stamped.

The Arbitrator rejected section 16 objection on the ground that the agreements were not conveyance or sale but agreement to sell.  The agreement to sell was properly stamped as per Article 5[c] of Schedule I to the Stamp Act.

This was challenged in writ petition of Articles 226 and 227.

Single Bench had entertained the writ petition, held that the transactions were in the nature of conveyance, upheld the objection and impounded the agreements.

However, the Division Bench allowed the writ appeal.

It was not open for the learned Single Judge in exercise of writ jurisdiction to enter into the merits of the dispute while adjudicating the challenge to an order passed under Section 16 of the A and C Act. It has to be noted that learned Arbitrator is still seized of the arbitration proceedings and the parties are yet to lead evidence therein. Determining the nature of the agreements at such stage would definitely Page 35 of 39 Civil Appeal arising out of SLP (C) No.27534 of 2025 result in prejudice to the parties. We may in this regard refer to the decision in Bhaven Construction th