Orissa High Court
M/S Hotel Sea Point Pvt. Ltd vs M/S Blueline Resorts Pvt. Ltd on 11 April, 2025
Author: S.K. Panigrahi
Bench: S.K. Panigrahi
Signature Not Verified
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Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK
Date: 15-Apr-2025 16:40:34
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No. 32426 of 2022
(In the matter of an application under Articles 226 and 227 of the
Constitution of India, 1950).
M/S Hotel Sea Point Pvt. Ltd., Puri .... Petitioner (s)
-versus-
M/s Blueline Resorts Pvt. Ltd., .... Opposite Party (s)
Bhubaneswar
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr. Surendra Routray, Adv.
For Opposite Party (s) : Mr. D.P. Nanda, Sr. Adv.
along with
Mr. Avijit Pal, Adv.
CORAM:
DR. JUSTICE S.K. PANIGRAHI
DATE OF HEARING:-14.02.2025
DATE OF JUDGMENT: -11.04.2025
Dr. S.K. Panigrahi, J.
1. This Writ Petition is preferred by the Petitioner against order dated
1.8.2022 passed by the Ld. Sole Arbitrator purporting the same to be an
award wherein the Petitioner was directed to pay a sum of
Rs.4,31,94,711/- along with cost of Rs.15,00,00/- within two months from
the date of the award to the Respondent on the basis of breach of the
Lease Agreement dated 01.05.2012.
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I. FACTUAL MATRIX OF THE CASE:
2. The Petitioner is a company which has taken on lease the land from one,
Mr. Durga Charan Rautray on which the hotel premises are located. The
Opposite Party was desirous of taking the hotel premises on lease and
therefore, Lease Agreement dated 1.5.2012 was entered into between the
Petitioner and the Opposite Party. The Agreement dated 1.5.2012 was
valid for a period of 10 years, further extendable by 10 years which
would commence from 1.5.2012. Accordingly, monthly rental was
provided for in the Agreement dated 1.5.2012 itself which was payable
during the entire duration of the lease period. It is pertinent to mention
here that the Lease Agreement was signed by the parties on a Rs.100
stamp paper, and was not registered.
3. Disputes arose over non-payment of the rent as prescribed in the
Agreement and therefore, the Petitioner approached this Court for
appointment of an Arbitrator u/s 11 of the Arbitration and Conciliation
Act.
4. During the pendency of the Section 11 application, the Opposite Party
filed C.S No. 598/2015 before the Civil Judge at Puri claiming specific
performance and damages with respect to alleged breach of Agreement
dated 1.5.2012.
5. Meanwhile, vide order dated 5.11.2015, this Court was pleased to
appoint the Ld. Sole Arbitrator for adjudication of the dispute between
the parties. Accordingly, the parties appeared before the Ld. Arbitrator
and filed their respective claim and counter claim.
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6. At this juncture, the Petitioner filed an application before the Ld.
Arbitrator praying for impound of the Agreement dated 1.5.2012 and
abeyance of proceedings as the said Agreement was not sufficiently
stamped nor registered as required in law.
7. The Ld. Arbitrator vide order dated 13.4.2017, rejected the prayer of
impounding the Agreement as prayed for by the Petitioner. Aggrieved,
the Petitioner approached this Court in W.P.(C) No. 7893/2017
challenging the refusal order of the Ld. Arbitrator. This Court vide
order dated 8.5.2017 in W.P.(C) No. 7893/2017 was pleased to direct the
Ld. Arbitrator to impound the Agreement in line with the Supreme
Court’s judgment in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P)
Ltd1.
8. In compliance with this Court’s order dated 8.5.2017 in W.P.(C) No.
7893/2017, the Ld. Arbitrator vide order dated 20.7.2017 was pleased to
impound the Agreement. However, the order was passed ex-parte
without hearing the Petitioner and the onus of payment of the deficit
stamp duty was placed on the Petitioner. This was challenged by the
Petitioner before this Court, where it was prayed that the onus be
shifted to the Respondent who was liable to bear the same in terms of
the Agreement.
9. Here, now, the litigation gets even more chequered. The Opposite Party
did not bring the orders of this Court with regards to the impounding
to the attention of this Court and managed to secure an order directing
the Ld. Arbitrator to conclude the arbitration proceedings within 3
1
(2011) 14 SCC 66
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months. This was then challenged by the Petitioner, and the same was
stayed vide this Court’s order dated 11.8.2017.
10.In the meanwhile, it is pertinent to note that the Petitioner had filed C.S.
No. 462/2017 seeking recovery of possession, mesne profits and damages
from the Respondent alleging breach of the Agreement dated 1.5.2012.
11.While the arbitration proceeding had hit a pause, the Parties were
pursuing their respective Civil Suits. Then, the Respondent filed an
application under Section 8 of the A&C Act for reference of the matter
to the arbitrator even though its own Civil Suit was pending on
20.11.2017. Thereafter, the Respondent sought to withdraw its C.S. No.
598/2018 seeking pursuing the arbitration under Order 23 Rule 1 CPC
on 16.2.2018.
12.Pursuant to the order dated 15.1.2018, both the Civil Suits are directed
to be heard analogously by the Ld. Civil Judge, Sr. Div., Puri with the
consent of both Parties. The application under Section 8 of the A&C Act
is rejected by the Ld. Civil Judge, Sr. Div. ,Puri vide its order dated
17.5.2018.
13.Aggrieved, the Opposite Party approached this Court in W.P.(C)
No.13136/2018 challenging the rejection of its application under Section
8 of the A&C Act.
14.On 5.12.2019, the Opposite Party was permitted to withdraw its Civil
Suit upon payment of cost of Rs.500/- to the Petitioner.
15.In all this, the Opposite Party has consistently approached either this
Court or the Ld. District Judge seeking extension of time for passing an
award in favour of the Ld. Sole Arbitrator. These efforts culminated
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finally in the Opposite Party’s application under Section 29A of the
A&C Act in ARBP No.123/2017 which was rejected by the Ld. District
Judge, Puri for suppression of facts and forum hunting vide order dated
27.12.2021.
16.The same was challenged by the Opposite Party in W.P.(C) No.
3203/2022 before this Court. However, this Court deemed it appropriate
to decline to allow the application under Section 29A of the A&C Act, it
appears vide order dated 6.7.2022, this Court directed the Ld. Arbitrator
to continue the arbitration expeditiously.
17.Thereafter, the Ld. Arbitrator passed the impugned order purported to
be an Award on 1.8.2022.
18.Aggrieved by the Impugned Order, the instant Petition has been
preferred. As the facts leading up to the instant Petition have been laid
down, this Court shall endeavour to summarise the contentions of the
Parties and the broad grounds that have been raised to seek the exercise
of this Court’s writ jurisdiction.
II. PETITIONER’S SUBMISSIONS:
19.The Ld. Counsel for the Petitioner Mr. Surendra Routray contends that
there has been a complete failure by the Ld. Sole Arbitrator in rendering
the impugned order as the Lease Agreement on the basis of which the
impugned order was passed, or the arbitration was kickstarted still
remained unstamped and unregistered despite this Court’s direction.
Not to mention that the Ld. Arbitrator had himself impounded the
Agreement for being insufficiently stamped, and without the defect
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being cured, had surprisingly proceeded to pass the Impugned Order.
Insofar as the maintainability of the petition is concerned, it is urged by
him that the provisions of the Act cannot oust the jurisdiction of the
High Courts and under Article 226 and 227. While the said power ought
to be exercised sparingly, the jurisdiction of High Courts can not to be
ousted especially when there is a manifest error by the Arbitral Tribunal
in which case, the High Courts ought to exercise jurisdiction under
20.Ld. Counsel for the Petitioner Mr. Routray referred to the judgments
in Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd.2
and Bhaven Construction through Authorised Signatory Premjibhai K.
Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd.3.
Relying upon the judgment in Deep Industries (supra) his submission
was that in the said case, also, the Supreme Court categorically held that
the jurisdiction of the writ court under Article 227 cannot be ousted.
III. OPPOSITE PARTY’S SUBMISSIONS:
21.On the other hand, Ld. Sr. Counsel Mr. D.P. Nanda appearing for the
Opposite Party, submits that the orders of an Arbitral Tribunal are not
amenable to writ jurisdiction. It is further submitted that if the parties
have entered into an agreement to arbitrate their disputes, the court
must decline to exercise its extraordinary jurisdiction under the
Constitution and leave the parties to avail the remedies under the
2
2019 SCC OnLine SC 1602
3
(2022) 1 SCC 75
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special enactment which in itself is a self-contained code. The object of
minimal judicial intervention under the 1996 Act, will be defeated at the
High Court exercises its jurisdiction under Article 226 or 227 with any
orders of the arbitral tribunal.
IV. ISSUES FOR CONSIDERATION:
22.Having heard the parties and perused the materials available on record,
this Court has identified herein the following issues to be determined:
A. Whether this Court can exercise its writ jurisdiction to interfere with
the Impugned Order passed by the Ld. Sole Arbitrator?
B. Whether this Court ought to interfere with the Impugned Order?
V. ISSUE A: WHETHER THIS COURT CAN EXERCISE ITS’ WRIT
JURISDICTION TO INTERFERE WITH THE IMPUGNED ORDER
PASSED BY THE LD. SOLE ARBITRATOR?
23.In India, the maintainability of writ petitions in respect of arbitration
matters presents a nuanced legal challenge, requiring the balancing of
the extraordinary powers of High Courts under Articles 226 and 227 of
the Constitution of India with the objectives of the Arbitration and
Conciliation Act, 1996 (Arbitration Act). Section 5 of the Arbitration Act
minimises judicial interference in arbitral proceedings, confining
intervention strictly to the circumstances outlined within the statute.
However, courts have frequently grappled with situations where
exercising the writ powers was deemed necessary to preserve the purity
of justice. Over the years, landmark judgments have delineated the
scope of judicial intervention, affirming two fundamental principles: (i)
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the writ jurisdiction of High Courts remains intact despite Section 5 of
the Arbitration Act; and (ii) its exercise must be limited to rare and
exceptional cases, such as those involving a manifest lack of jurisdiction,
bad faith, or violations of natural justice principles.
24.This question assumes greater importance as arbitration continues to
gain prominence as an alternative dispute resolution mechanism in
India. While Arbitral Tribunals are afforded significant autonomy to
adjudicate disputes, judicial scrutiny is sometimes required to prevent
the misuse of arbitration proceedings or a miscarriage of justice. Recent
rulings of the Apex Court have further clarified the contours of this
balance, emphasising that writ petitions should be entertained
sparingly and in line with the objective of the Arbitration Act and its
quest for an efficient and independent dispute resolution.
25.The extraordinary jurisdiction of High Courts in India, enshrined in
Articles 226 and 227 of the Constitution, serves as a foundation for
protecting fundamental rights and administering justice. Article 226
empowers High Courts to issue writs for the enforcement of
fundamental rights, offering a remedy against both legislative and
executive actions. Article 227, on the other hand, confers every High
Court with supervisory powers over all courts and tribunals within the
jurisdiction of such High Court. Together, these articles establish a
robust framework for judicial review, reinforcing the rule of law and
providing a mechanism to check the misuse of power.
26.The Arbitration Act establishes a robust legal framework designed to
facilitate efficient dispute resolution mechanism through arbitration.
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This landmark legislation was crafted to minimise judicial intervention
and enhance party autonomy, thereby aligning Indian arbitration
practices with international norms and expectations. Section 5 of the
Arbitration Act embodies a fundamental principle: courts are expressly
prohibited from interfering in matters governed by the Arbitration Act,
except as explicitly stipulated within its framework. Through this
provision, the legislature aims to preserve the integrity of arbitration as
a preferred dispute resolution mechanism, ensuring that Arbitral
Tribunals operate with the requisite independence to deliver fair and
impartial awards. In addition to defining the limits of judicial oversight,
the Act encompasses provisions that further reinforce the principle of
minimal intervention. It grants arbitrators substantial discretion to
determine procedural issues and the scope of their jurisdiction.
27.In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.4, the Supreme Court
of India characterised the Arbitration Act as a comprehensive and
specialised law designed to facilitate quick and efficient dispute
resolution through arbitration while reducing judicial interference.
28.One of the main objectives of the Arbitration Act is to minimise the
supervisory role of Courts in the arbitral process. Party autonomy and
settlement of disputes by an Arbitral Tribunal are the hallmarks of
arbitration law. Section 5 gives effect to the true intention of the parties
to have their disputes resolved through arbitration in a quick, efficient
and effective manner by minimising judicial interference in the arbitral
4
(2011) 8 SCC 333
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proceedings5. Parliament enacted Section 5 to minimise the supervisory
role of Courts in the arbitral process to the bare minimum, and only to
the extent “so provided” under the Part I of the Arbitration Act. In
doing so, the legislature did not altogether exclude the role of Courts or
judicial authorities in arbitral proceedings, but limited it to
circumstances where the support of judicial authorities is required for
the successful implementation and enforcement of the arbitral process67.
The Arbitration Act in fact, envisages the role of Courts to “support
arbitration process”8 by providing necessary aid and assistance when
required by law in certain situations.
29.Section 5 begins with the expression “notwithstanding anything contained
in any other law for the time being in force.” The non obstante clause is
Parliament’s addition to Article 5 of the Model Law. This is of a wide
amplitude and sets forth the legislative intent of limiting judicial
intervention during the arbitral process. In the context of Section 5, this
means that the provisions contained in Part I of the Arbitration Act
ought to be given full effect and operation irrespective of any other law
for the time being in force. It is now an established proposition of law
that the legislature uses non obstante clauses to remove all obstructions
which might arise out of the provisions of any other law, which stand in
5
Food Corpn. of India v. Indian Council of Arbitration, (2003) 6 SCC 564.
6
Union of India v. Popular Construction Co., (2001) 8 SCC 470
7
P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539
8
Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee,
(2014) 6 SCC 677
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the way of the operation of the legislation which incorporates the non
obstante clause.9
30.In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram10, Sabyasachi
Mukharji, J. explained the purport of non obstante clause in the
following terms :
“67. A clause beginning with the expression
“notwithstanding anything contained in this Act or in
some particular provision in the Act or in some
particular Act or in any law for the time being in force,
or in any contract” is more often than not appended to a
section in the beginning with a view to give the enacting
part of the section in case of conflict an overriding effect
over the provision of the act or the contract mentioned in
the non obstante clause. It is equivalent to saying that in
spite of the provision of the Act or any other Act
mentioned in the non obstante clause or any contract or
document mentioned the enactment following it will have
its full operation or that the provisions embraced in the
non obstante clause would not be an impediment for an
operation of the enactment.”
31.Although a non obstante clause must be allowed to operate with full
vigour, its effect is limited to the extent intended by the legislature.
In ICICI Bank Ltd. v. Sidco Leathers Ltd.11 the Court held that a non
obstante clause must be interpreted by confining it to the legislative
policy. Thus, even if a non obstante clause has wide amplitude, the extent
of its impact has to be measured in view of the legislative intention and
9
State of Bihar v. Bihar Rajya M.S.E.S.K.K. Mahasangh, (2005) 9 SCC 129
10
(1986) 4 SCC 447
11
(2006) 10 SCC 452
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legislative policy. In view of this settled legal position, the issue that
arises for our consideration is the scope of the non obstante clause
contained in Section 5 of the Arbitration Act.
32.Section 5 has two facets — positive and negative. The positive facet
vests judicial authorities with jurisdiction over arbitral proceedings in
matters expressly allowed in or dealt with under Part I of the
Arbitration Act. The flip side to this approach is that judicial authorities
are prohibited from intervening in arbitral proceedings in situations
where the Arbitral Tribunal has been bestowed with exclusive
jurisdiction. This is the negative facet of Section 5. The non obstante
clause limits the extent of judicial intervention in respect of matters
expressly provided under the Arbitration Act. In Bhaven
Construction v. Sardar Sarovar Narmada Nigam Ltd. (supra), the Apex
Court observed that the:
“12. … non obstante clause is provided to uphold the
intention of the legislature as provided in the Preamble to
adopt Uncitral Model Law and Rules, to reduce excessive
judicial interference which is not contemplated under the
Arbitration Act.”
33.The interplay between the legislative framework under the
Arbitration Act and the constitutional powers of the High Courts
under Articles 226 and 227 of the Constitution has been discussed in
several cases. These rulings have not only elucidated the parameters
within which High Courts may exercise their writ powers but have
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also reinforced the fundamental principles underlining the
34. In Union of India v. R. Gandhi, President Madras Bar Association12 the
Supreme Court observed on the question as to what constitutes ‘Courts’
and ‘Tribunals’ as under:
“38. The term ‘Courts’ refers to places where justice is
administered or refers to Judges who exercise judicial
functions. Courts are established by the state for
administration of justice that is for exercise of the judicial
power of the state to maintain and uphold the rights, to
punish wrongs and to adjudicate upon disputes.
Tribunals on the other hand are special alternative
institutional mechanisms, usually brought into existence
by or under a statute to decide disputes arising with
reference to that particular statute, or to determine
controversies arising out of any administrative law.
Courts refer to Civil Courts, Criminal Courts and High
Courts. Tribunals can be either private Tribunals
(Arbitral Tribunals), or Tribunals constituted under the
Constitution (Speaker or the Chairman acting under
Para 6(1) of the Tenth Schedule) or Tribunals authorized
by the Constitution (Administrative Tribunals under
Article 323A and Tribunals for other matters under
Article 323B) or Statutory Tribunals which are created
under a statute (Motor Accident Claims Tribunal, Debt
Recovery Tribunals and consumer fora). Some Tribunals
are manned exclusively by Judicial Officers (Rent
Tribunals, Motor Accidents Claims Tribunal, Labour
Courts and Industrial Tribunals). Other statutory
Tribunals have Judicial and Technical Members
(Administrative Tribunals, TDSAT, Competition12
(2010) 11 SCC 1
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Tribunal, etc).” (emphasis is ours)
35. Similar observations were made by the Supreme Court in Srei
Infrastructure Finance Ltd. v. Tuff Drilling (P) Ltd.13,as under:
“14. Arbitration is a quasi judicial proceeding, equitable
in nature or character which differs from a litigation in a
Court. The power and functions of arbitral tribunal are
statutorily regulated. The tribunals are special
arbitration with institutional mechanism brought into
existence by or under statute to decide dispute arising
with reference to that particular statute or to determine
controversy referred to it. The tribunal may be a
statutory tribunal or tribunal constituted under the
provisions of the Constitution of India. Section 9 of the
Civil Procedure Code vests into the Civil Court
jurisdiction to entertain and determine any civil dispute.
The constitution of tribunals has been with intent and
purpose to take out different categories of litigation into
the special tribunal for speedy and effective determination
of disputes in the interest of the society. Whenever, by a
legislative enactment jurisdiction exercised by ordinary
civil court is transferred or entrusted to tribunals such
tribunals are entrusted with statutory power. The
arbitral tribunals in the statute of 1996 are no different,
they decide the lis between the parties, follows Rules and
procedure conforming to the principle of natural justice,
the adjudication has finality subject to remedy provided
under the 1996 Act. Section 8 of the 1996 Act obliges a
judicial authority in a matter which is a subject of an
agreement to refer the parties to arbitration. The reference
to arbitral tribunal thus can be made by judicial
authority or an arbitrator can be appointed in accordance13
(2018) 11 SCC 470
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1996 Act.” (emphasis is ours)
36.Thus, the Supreme Court has time and again held that arbitral tribunals
are private tribunals unlike those tribunals set up under the statute or
specialized tribunals under the Constitution of India. Thus, a Petition
under Article 227 challenging orders of an Arbitral Tribunal would be
maintainable.
Scope and extent of interference
37.Coming now to the question as to what would be the scope of
interference under Article 226/227 against orders passed by the Arbitral
Tribunals, though, a number of judgments have been cited by both
parties, recent decisions of the Supreme Court and of this Court have
settled the issue.
38.In 2019, a Three Judge Bench of the Supreme Court in a judgement
authored by Justice R.F Nariman in the case of M/S Deep Industries
Ltd. v Oil And Natural Gas Corporation (supra) held that it is possible
to challenge such a dismissal order through a writ at a High Court
under Articles 226 and 227 of the Constitution of India, but the same
laid down some stringent terms to challenge a Section 16 dismissal
order.
39.In Deep Industries (supra) decided on 28th November, 2019, the
Supreme Court considered S.B.P. & Company v. Patel Engineering
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Ltd.14 and Fuerst Day Lawson Limited v. Jindal Exports Limited15 and
observed as under:
“15. Given the aforesaid statutory provision and given
the fact that the 1996 Act repealed three previous
enactments in order that there be speedy disposal of all
matters covered by it, it is clear that the statutory policy
of the Act is that not only are time limits set down for
disposal of the arbitral proceedings themselves but time
limits have also been set down for Section 34 references to
be decided. Equally, in Union of India v. Varindera
Const. Ltd., dated 17.09.2018, disposing of SLP (C) No.
23155/2013, this Court has imposed the self-same
limitation on first appeals Under Section 37 so that there
be a timely resolution of all matters which are covered by
arbitration awards.
16. Most significant of all is the non-obstante Clause
contained in Section 5 which states that notwithstanding
anything contained in any other law, in matters that
arise under Part I of the Arbitration Act, no judicial
authority shall intervene except where so provided in this
Part. Section 37 grants a constricted right of first appeal
against certain judgments and orders and no others.
Further, the statutory mandate also provides for one bite
at the cherry, and interdicts a second appeal being filed
(See Section 37(2) of the Act).
17. This being the case, there is no doubt whatsoever that
if petitions were to be filed Under Articles 226/227 of the
Constitution against orders passed in appeals Under
Section 37, the entire arbitral process would be derailed
and would not come to fruition for many years. At the
same time, we cannot forget that Article 227 is a14
(2005) 8 SCC 618
15
(2011) 8 SCC 333
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non-obstante Clause of Section 5 of the Act. In these
circumstances, what is important to note is that though
petitions can be filed Under Article 227 against
judgments allowing or dismissing first appeals Under
Section 37 of the Act, yet the High Court would be
extremely circumspect in interfering with the same,
taking into account the statutory policy as adumbrated
by us herein above so that interference is restricted to
orders that are passed which are patently lacking in
inherent jurisdiction.” (emphasis is ours)
40.It is, therefore, prudent for a Judge not to exercise discretion to allow
judicial interference beyond the procedure established under the
enactment. This power needs to be exercised in exceptional rarity,
wherein one party is left remediless under the statute or a clear ‘bad
faith’ shown by one of the parties or in case which allowed to go
unchecked would result in a situation of patent illegality being
perpetuated. This high standard set by the Apex Court is in terms of the
legislative intention to make the arbitration fair and efficient.
41. In this context, a reference may be made to Deep Industries (supra)
wherein interplay of Section 5 of the Arbitration Act and Article 227 of
the Constitution was analyzed very succinctly:
“15. Most significant of all is the nonobstante clause
contained in Section 5 which states that notwithstanding
anything contained in any other law, in matters that
arise under Part I of the Arbitration Act, no judicial
authority shall intervene except where so provided in this
Part. Section 37 grants a constricted right of first appeal
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(See Section 37(2) of the Act)
16. This being the case, there is no doubt whatsoever that
if petitions were to be filed under Articles 226/227 of the
Constitution against orders passed in appeals under
Section 37, the entire arbitral process would be derailed
and would not come to fruition for many years. At the
same time, we cannot forget that Article 227 is a
constitutional provision which remains untouched by the
non-obstante clause of Section 5 of the Act. In these
circumstances, what is important to note is that though
petitions can be filed under Article 227 against
judgments allowing or dismissing first appeals under
Section 37 of the Act, yet the High Court would be
extremely circumspect in interfering with the same,
taking into account the statutory policy as
adumbrated by us herein above so that interference
is restricted to orders that are passed which are
patently lacking in inherent jurisdiction.”
42.Furthermore, the Apex Court in Estralla Rubber v. Dass Estate (P)
Ltd.16, has observed that:
“6. The scope and ambit of exercise of power and
jurisdiction by a High Court under Article 227 of the
Constitution of India is examined and explained in a
number of decisions of this Court. The exercise of power
under this article involves a duty on the High Court to
keep inferior courts and tribunals within the bounds of
their authority and to see that they do the duty expected
or required of them in a legal manner. The High Court is
not vested with any unlimited prerogative to correct all
kinds of hardship or wrong decisions made within the
limits of the jurisdiction of the subordinate courts or16
(2001) 8 SCC 97
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orders of the courts or tribunals is restricted to cases of
serious dereliction of duty and flagrant violation of
fundamental principles of law or justice, where if the
High Court does not interfere, a grave injustice remains
uncorrected. It is also well settled that the High Court
while acting under this article cannot exercise its power
as an appellate court or substitute its own judgment in
place of that of the subordinate court to correct an error,
which is not apparent on the face of the record. The High
Court can set aside or ignore the findings of facts of an
inferior court or tribunal, if there is no evidence at all to
justify or the finding is so perverse, that no reasonable
person can possibly come to such a conclusion, which the
court or tribunal has come to.
7. This Court in Ahmedabad Mfg. & Calico Ptg. Co.
Ltd. v. Ram Tahel Ramnand [(1972) 1 SCC 898 : AIR
1972 SC 1598] in AIR para 12 has stated that the power
under Article 227 of the Constitution is intended to be
used sparingly and only in appropriate cases, for the
purpose of keeping the subordinate courts and tribunals
within the bounds of their authority and, not for
correcting mere errors. Reference also has been made in
this regard to the case Waryam Singh v. Amarnath [AIR
1954 SC 215 : 1954 SCR 565] . This Court in Bathutmal
Raichand Oswal v. Laxmibai R. Tarte [(1975) 1 SCC 858
: AIR 1975 SC 1297] has observed that the power of
superintendence under Article 227 cannot be invoked to
correct an error of fact which only a superior court can do
in exercise of its statutory power as a court of appeal and
that the High Court in exercising its jurisdiction under
Article 227 cannot convert itself into a court of appeal
when the legislature has not conferred a right of appeal.
Judged by these pronounced principles, the High Court
clearly exceeded its jurisdiction under Article 227 in
passing the impugned order.”
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43.A perusal of the above-mentioned decisions, shows that the following
principles are well settled, in respect of the scope of interference under
Article 226/227 in challenges to orders by an arbitral tribunal including
orders passed under Section 16 of the Act:
(i) An arbitral tribunal is a tribunal against which a petition
under Article 226/227 would be maintainable;
(ii) The non-obstante clause in section 5 of the Act does not
apply in respect of exercise of powers under Article 227 which
is a Constitutional provision;
(iii) For interference under Article 226/227, there have to be
‘exceptional circumstances’;
(iv) Though interference is permissible, unless and until the
order is so perverse that it is patently lacking in inherent
jurisdiction, the writ court would not interfere;
(v) Interference is permissible only if the order is completely
perverse i.e., that the perversity must stare in the face;
(vi) High Courts ought to discourage litigation which
necessarily interfere with the arbitral process;
(vii) Excessive judicial interference in the arbitral process is not
encouraged;
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(viii) It is prudent not to exercise jurisdiction under Article
226/227;
(ix) The power should be exercised in ‘exceptional rarity’ or if
there is ‘bad faith’ which is shown;
(x) Efficiency of the arbitral process ought not to be allowed to
diminish and hence interdicting the arbitral process should be
completely avoided.
44.The Supreme Court, while acknowledging that the hierarchy in our
legal framework mandates that a legislative enactment cannot curtail a
Constitutional right and has observed that it is settled law that when a
statutory forum is created by law for redressal of grievances, a Writ
Petition would not ‘ordinarily’ be entertained ignoring the statutory
dispensation. This power needs to be exercised in exceptional rarity,
wherein the illegality or perversity in the order of the Ld. Sole
Arbitrator stares one in the face.
45.Furthermore, it is also well settled that availability of an alternative
remedy does not prohibit the High Courts from entertaining a writ
petition in an appropriate case. The High Courts may entertain a writ
petition, notwithstanding the availability of an alternative remedy,
particularly (i) where the writ petition seeks enforcement of a
fundamental right, (ii) where there is failure of principles of natural
justice, (iii) where the impugned orders or proceedings are wholly
without jurisdiction or (iv) the vires of an act is under challenge.
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46.This Court concludes that the High Court “can” exercise its powers
under writ jurisdiction in spite of Section 5 of the A&C Act, but whether
it “ought” to exercise in this present case remains to be seen.
VI. ISSUE B: WHETHER THIS COURT OUGHT TO INTERFERE WITH
THE IMPUGNED ORDER?
47.The majority judgment of the Apex Court in N.N. Global (2)17 summed
up its holding in the following terms:
“109. … An agreement which is unstamped or
insufficiently stamped is not enforceable, as long as it
remains in the said condition. Such an instrument would
be void as being not enforceable [see Section 2(g) of the
Contract Act].”
The above observation conflates the distinction between enforceability
and admissibility.
48.Section 35 of the Stamp Act is unambiguous. It stipulates, “No
instrument chargeable with duty shall be admitted in evidence…” The
term “admitted in evidence” refers to the admissibility of the
instrument. Sub-section (2) of Section 42, too, states that an instrument
in respect of which stamp duty is paid and which is endorsed as such
will be “admissible in evidence”. The effect of not paying duty or
paying an inadequate amount renders an instrument inadmissible and
not void. Non-stamping or improper stamping does not result in the
instrument becoming invalid. The Stamp Act does not render such an
instrument void. The non-payment of stamp duty is accurately
characterised as a curable defect. The Stamp Act itself provides for the
17
N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2023) 7 SCC 1
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manner in which the defect may be cured and sets out a detailed
procedure for it. It bears mentioning that there is no procedure by
which a void agreement can be “cured”.
49.In N.N. Global (2) (supra), the Apex Court has held that the failure to
stamp an arbitration agreement is not a “curable defect”. Relying on the
provisions of the Contract Act as well as Section 11(6-A) of the
Arbitration Act, it has held that an unstamped arbitration agreement is
void. The relevant paragraphs of the judgment of the majority are
extracted below :
“103. … It may not be apposite to merely describe an
unstamped arbitration agreement as a “curable defect”.
As long it remains an unstamped instrument, it cannot
be taken notice of for any purpose, as contemplated in
Section 35 of the Stamp Act. It remains unenforceable. …
It is “not enforceable in law”. In the said sense, it also
cannot exist in law. It would be void. Our view in this
regard that voidness is conflated to unenforceability
receives fortification from Section 2(j) of the Contract Act
which renders a contract which ceases to be enforceable
void.”
50.However, the above observation of the Apex Court in N.N. Global
(2) was held to be incorrect by the Apex Court in Interplay Between
Arbitration Agreements under Arbitration, 1996 & Stamp Act, 1899, In
re (supra).
51.The Stamp Act is a fiscal legislation which is intended to raise revenue
for the Government. It is a mandatory statute. In Hindustan Steel
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Ltd. v. Dilip Construction Co.18, Supreme Court dealt with the import
of Sections 35, 36 and 42 of the Stamp Act very succinctly. One of the
parties relied on the difference in the phraseology between Sections 35
and 36 to argue that an instrument which was insufficiently stamped or
not stamped could be admitted in evidence upon the payment of duty
and a penalty (if any) but that it could not be acted upon, once
admitted. It was argued that Section 35 operates as a bar in two
respects, namely, the admission of an instrument into evidence as well
as acting upon that instrument. It was argued that Section 36, in
contrast to Section 35, removed the bar in one respect alone — the
admissibility of the instrument into evidence. The Supreme Court
rejected this argument and has held that the provisions of the Stamp
Act clearly provide that an instrument could be admitted into evidence
as well as it can be acted upon once the appropriate duty has been paid
and the instrument is endorse. The Apex Court held that:
“6. … The argument ignores the true import of Section
36. By that section an instrument once admitted in
evidence shall not be called in question at any stage of the
same suit or proceeding on the ground that it has not
been duly stamped. Section 36 does not prohibit a
challenge against an instrument that it shall not be acted
upon because it is not duly stamped, but on that account
there is no bar against an instrument not duly stamped
being acted upon after payment of the stamp duty and
penalty according to the procedure prescribed by the Act.
The doubt, if any, is removed by the terms of Section
42(2) which enact, in terms unmistakable, that every18
(1969) 1 SCC 597
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shall be admissible in evidence and may be acted upon as
if it has been duly stamped.”
52.In so holding, the Supreme Court made a significant observation about
the purpose of the Stamp Act and the manner in which it is to be
interpreted by courts when it observed that the Stamp Act is a fiscal
measure enacted to secure revenue for the State on certain classes of
instruments. It is not enacted to arm a litigant with a weapon of
technicality to meet the case of his opponent. The stringent provisions
of the Act are conceived in the interest of the revenue once that object is
secured according to law, the party staking his claim on the instrument
will not be defeated on the ground of the initial defect in the instrument.
53.The Stamp Act is a legislation which is enacted in the interest of the
revenue. The statute must be interpreted with due regard to its purpose.
54.Now this Court refers to the Agreement in question. The Agreement as
produced before us is signed by the Parties on Rs.100 stamp paper.
Clause 19 of the Agreement reads as follows:
“19. Registration and Payment of Stamp Duty – The
Lessee shall have the present lease duly registered at its
own cost and pay the stamp duty applicable for the same.
It shall be open to the Lessor to pay the stamp duty or the
deficiency of the same and recover the same from the
Lessee.”
It is very apparent that the Parties were aware that their Lease
Agreement was insufficiently stamped and that stamp duty would be
payable on the same. In fact, the Parties had also gone so far in order to
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ascribe who would bear the cost of the same, the answer to which is –
the present Opposite Party.
55.The Petitioner filed an application before the Ld. Arbitrator praying for
impound of the Agreement dated 1.5.2012 and abeyance of proceedings
as the said Agreement was not sufficiently stamped nor registered as
required in law. The Ld. Arbitrator vide order dated 13.4.2017, rejected
the prayer of impounding the Agreement as prayed for by the
Petitioner. Aggrieved, the Petitioner approached this Court in W.P.(C)
No. 7893/2017 challenging the refusal order of the Ld. Arbitrator. This
Court vide order dated 8.5.2017 in W.P.(C) No. 7893/2017 was pleased
to direct the Ld. Arbitrator to impound the Agreement in line with the
Apex Court’s judgment in SMS Tea Estates (P) Ltd. v. Chandmari Tea
Co. (P) Ltd19.
56.In compliance with this Court’s order dated 8.5.2017 in W.P.(C) No.
7893/2017, the Ld. Arbitrator vide order dated 20.7.2017 was pleased to
impound the Agreement. However, the order was passed ex-parte
without hearing the Petitioner and the onus of payment of the deficit
stamp duty was placed on the Petitioner which is in direct
contravention of the terms of the Agreement itself.
57.In any case, the Ld. Arbitrator itself held that “since it is found that the
said lease deed in serial number 1 is compulsory, registerable requiring stamp
duty and has not been properly stamped nor registered, the said lease deed is
liable to be impounded”. Without any Court’s order altering this status,
19
(2011) 14 SCC 66
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how could the Ld. Arbitrator proceed to deliver an ‘award’ when the
status of the Agreement was impounded.
58.It shocks the conscience of this Court, that this material fact was not
brought to the conscious attention of this Court in W.P.(C) No. 3203 of
2022. Suppression or concealment of material facts is not advocacy. It is
a jugglery, manipulation, manoeuvring or misrepresentation, which has
no place in equitable and prerogative jurisdiction. If the Parties do not
disclose all the material facts fairly and truly but state them in a
distorted manner and mislead the court to obtain relief, the same
tantamounts to an egregious abuse of process of this Court.
59.This Court is not a laboratory where parties come to experiment. Where
the litigants will mix one document with one fact and wait with bated
breath praying that the Court does not ask too many questions. This
Court generally will never suspect things to be amiss, because this court
would like to believe that “satya” & “dharma” are a society’s guiding
principles, but it is also equally true that time is changing. Apart from
doing justice to the parties, Courts will have to remain on guard that
justice is being done to this Court by those present before us.
60.Casting such disappointment aside, it is pertinent to note that in view of
the law enunciated by the 7 Judge Bench of the Supreme Court in
Interplay Between Arbitration Agreements under Arbitration, 1996 &
Stamp Act, 1899, In re20, the Ld. Sole Arbitrator did not have jurisdiction
to pass any award till the time the “existence and validity” of the Lease
20
(2024) 6 SCC 1
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Agreement has been revived by the payment of appropriate stamp
duty. This Court and the Ld. Sole Arbitrator is bound by the law
declared by the Supreme Court.
61.Given this Court’s conclusion in Issue A and the reasons discussed
above, this Court believes that the present matter comes within the
meaning of “exceptional” and writ jurisdiction ought to be exercised in
the face of such patent illegality, which necessitates interference.
VII. CONCLUSION:
62.Therefore, in light of the discussion above, keeping the settled
principles of law in mind and for the reasons given above, this Court is
of the considered view that the impugned order merits interference.
63.The Impugned Order/Award is set aside. The Arbitral Tribunal having
impounded the instrument, which is not duly stamped as per the
provisions of the Indian Stamp Act, 1899, shall forward it to the
Collector, if the same has not already been done. The Collector then,
shall, direct the collection of the appropriate stamp duty and levy
penalty. In this regard, it is clarified that the stamp duty and any
penalty thereupon shall be borne by the Parties in the manner
stipulated in the Agreement. Upon payment, the Collector shall endorse
that the proper stamp duty has been paid under Section 42 of the Indian
Stamp Act, 1899. This endorsed instrument shall be returned to the Ld.
Sole Arbitrator, after which the proceedings shall be conducted and
concluded expeditiously. Till such time, the arbitration proceedings
shall remain in abeyance.
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64. Ordered accordingly. No order as to costs.
(Dr. S.K. Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 11th April, 2025/
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