Unstamped Arbitration Agreement – Impounded by Bombay HC and sent for stamping to the Authority

Unstamped Arbitration Agreement – Impounded by the Bombay HC & Sent to Authority for stamping.

Judgment dated 28.7.2023 of the High Court of Bombay

CGHL and Nirma Ltd had executed charter / fixture notes dated 12.5.2021 duly with the applicant for shipment of Soda Ash cargo by the applicant from Porbander Port to Chittogong in Bangladesh.

Clause 18 of the Fixture Note provided for arbitration in India, English Law to apply.   However, it was not stamped.

There was delay of 17 days for berthing of cargo for which the appellant raised detention lay time invoice dated 29.6.2021 for Rs.68,40,160/- for GHCL and Rs.75,23,888/- for Nirma Ltd.

This was disputed by the respondents.

After invoking the arbitration clause, the applicant filed arbitration petitions for appointment of arbitrator.

Number of contentions were raised for and against the appointment of Arbitrator including lack of jurisdiction, clause 18 does not constitute valid arbitration agreement.

HELD, admittedly it is seen that the Arbitration Agreement in the Fixture Note is unstamped in both the matters and following the decision of the Constitution Bench in N.N.Global Mercantile Pvt Ltd case that an unstamped instrument without required stamp duty is not legally enforceable.  In view of this, it was directed to impound two Fixture Notes and to be sent to the Competent Authority for stamping.  It shall be open to the applicant to deposit the insufficient stamp duty in accordance with law and thereafter, approach the High Court for its enforcement.

Arbitration Application (L) No.23497 of 2022 – Alliance Import and Export Vs. GHCL Ltd against Nirma Ltd in connected matter.