Bombay High Court
Vijay Sharma vs Vivek Makhija on 9 May, 2025
2025:BHC-OS:8224 1-ARBAP-123-2024.doc copy.docx
Digitally
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
signed by
PURTI
PURTI PRASAD
PRASAD PARAB
PARAB Date:
ORDINARY ORIGINAL CIVIL JURISDICTION
2025.05.22
15:34:01
+0530
ARBITRATION APPLICATION NO. 123 OF 2024
Vijay Sharma ...Applicant
Versus
Vivek Makhija and Anr. ...Respondents
Mr. Karl Tamboly a/w Mr. Dinesh Tiwari and Mr. Anish Sharma i/b Dinesh
D. Tiwari and Associates for the Applicant.
Dr. Abhinav Chandrachud for the Respondents.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : MAY 9, 2025
Oral Judgment :
1. This Application has been filed under Section 11 of the
Arbitration and Conciliation Act, 1996 (“the Act”).
2. This matter was heard at length on a few occasions to consider
the the resistance to proceeding to arbitration under the arbitration
agreement whose existence is not in dispute.
3. The primary objection presented by the Respondents primarily is
based on the premise that the issues involved in this Application under
Section 11 have already been adjudicated in the past by an order dated
January 31, 2022 (“2022 Order”) passed by the Learned Single Judge of this
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Court, with a direction that the instrument in question ought to be stamped.
It was submitted that the 2022 Order is a final adjudication on merits and
this is the second round of litigation under Section 11 on the same issues, by
seeking reference of the very same disputes to arbitration, but without
complying with the adjudication on merits as made in the 2022 Order.
4. The second objection is on the premise that the Applicant had all
along been aware about the stamp duty payable on the instrument in
question having been adjudicated, and that the Applicant had suppressed
the same from the Court. Consequently, the submission of the Respondents
is that the Applicant should be non-suited on the premise of having come to
Court with unclean hands, and that the Application must be rejected.
5. Having heard Mr. Karl Tamboly, Learned Counsel on behalf of
the Applicant and Dr. Abhinav Chandrachud, Learned Counsel on behalf of
the Respondents, and upon perusal of the record with their assistance, in
my opinion, the Application deserves to be allowed since the objections of
the Respondents are not worthy of necessitating dismissal of the
Application.
6. It is seen that the 2022 Order, essentially leaned on the then
prevailing legal position in connection with inadequacy of stamping of the
instrument containing the arbitration agreement. The law has been
differently declared now by a seven-judge bench of the Supreme Court. The
Supreme Court has explicitly declared that it is not for the Section 11 Court
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to get involved in the adequacy of stamp duty and has declared that issues
relating to alleged inadequacy of stamp duty and its implications for the
adjudication of the disputes involved, must be taken up before the Arbitral
Tribunal. It is in this context that the Respondents submit that a different
declaration of the law would not lead to closed and adjudicated matters
being revisited by a fresh application. Therefore, the Respondents contend
that the 2022 Order constitutes a final adjudication on merits.
7. Having heard the Learned Counsel for the parties at length and
having examined the notes tendered by them, in my opinion, the 2022
Order cannot be regarded as an “adjudication on merits”. All that the 2022
Order does is to permit the Applicant to have the accurate quantum of
stamp duty adjudicated with liberty to come back to Court. This is not an
adjudication on merits but the grant of liberty to have the stamp duty
adjudicated and paid in line with the then applicable law governing stamp
duty. Pursuant to the 2022 Order, it is common ground that the Applicant
filed an application with the stamp authorities.
8. On January 23, 2025 when the matter came up before me, the
Respondents’ submission was that the Applicant had not had the
instrument adjudicated at all (in the teeth of the 2022 Order) and that the
Applicant had simply filed a fresh application under Section 11 of the Act.
The Respondents had contended that the Respondents had sought
information under the Right to Information Act, 2005 (“RTI Act“) from the
stamp authorities as to whether the Applicant had indeed filed an
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application for adjudication of stamp duty. The result of that query had
indicated that the Applicant had not filed any application at all.
9. In this context, the Applicant was directed to file an affidavit
confirming that he had indeed moved the stamp authorities for
adjudication of stamp duty. Although I was prima facie of the view that
issue of stamp duty was no longer a matter of concern for the Section 11
Court and that it would be appropriate to refer the matter to the Arbitral
Tribunal to deal with the issue of inadequacy of stamp duty, in view of the
2022 Order, the Applicant was directed the confirm the precise factual
position of the activity carried out after the 2022 Order.
10. This led to an affidavit dated February 1, 2025 being filed by the
Applicant. It transpires from such affidavit that the Applicant had indeed
applied for adjudication of stamp duty after the 2022 Order granted liberty
to the Applicant to do so. Since the direction by which the matter was
disposed of by the 2022 Order was one granting liberty to apply to the
stamp duty authorities and since that liberty has been availed of and a
request for adjudication had indeed been made, it would not be proper to
contend that there was no change in circumstances in the filing of the
current Application.
11. That apart, apart from the grant of liberty to have the stamp duty
assessed, the 2022 Order was not an “adjudication on merits” on any point
of law or mixed question of fact and law. The 2022 Order permitted an
application to be made for adjudication of stamp duty and that permission
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was availed of. The 2022 Order also granted liberty to file a fresh
application under Section 11 of the Act after the stamp duty was assessed.
Meanwhile, the very law requiring the Section 11 Court to concern itself
with the issue of stamp duty has undergone a change. The Applicant has
complied with the 2022 Order by applying to the stamp authorities for
assessment of stamp duty. Therefore, having acted in accordance with the
2022 Order, and ow factoring in the newly declared law, in my opinion, this
Application has been validly filed. In my opinion, there is no relevance left
for the purported “adjudication” made in the 2022 Order.
12. Since the Applicant has indeed applied to the stamp authorities,
it would follow that the responses under the RTI Act given to the
Respondents by the stamp duty authorities was inaccurate. It is now the
case of the Respondents, based on the additional affidavit filed by the
Applicant, that the Applicant had all along been aware that they had applied
and that their application had been adjudicated but this development of
events had not been disclosed in this Section 11 Application. Therefore, the
Respondents contend, the Applicant has suppressed material information
while filing this Application and has therefore not come to court with clean
hands. The Respondents refer to a voucher raised by the stamp authorities
quantifying the amount of stamp duty as adjudicated and payable, which is
now annexed to the Applicant’s additional affidavit. The objection is
essentially that without paying the stamp duty as adjudicated, which is an
outcome flowing from the 2022 Order, the Applicant has essentially sought
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to not pay stamp duty and yet has filed this Application, which warrants
dismissal of this Section 11 Application, invoking the principles laid down in
S.P. Chengalvaraya Naidu1 case.
13. The Applicant submits that he was of the bona fide view that
such adjudication had not taken place. It was upon being forced to file an
affidavit that he examined the records afresh and has annexed everything
found in the matter. Learned Counsel has communicated the receipt of
instructions to apologize for error in not being more diligent to disclose this
development upfront when this Section 11 Application was filed. The
Section 11 Application had in fact stated that adjudication of stamp duty is
awaited, which is what is assailed by the Respondents as an untruthful
statement in view of the information contained in the additional affidavit.
14. Mr. Tamboly is at pains to underline the fact that the Applicant
had nothing to gain by not disclosing the fact of stamp duty having been
adjudicated. The Section 11 Application contending that stamp duty
assessment was awaited was a bona fide belief and can at worst be put to
lack of diligence, he would submit. On examination of the record, all that
has been available has been annexed to the additional affidavit.
15. The Applicant’s conduct in filing this Application without
examining the record is clearly not appreciated. However, in the facts and
circumstances of the case, I am not of the opinion that this is a matter
where the Applicant can be said to have approached the Court with unclean
1
S.P. Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1
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hands. The alleged suppression of stamp duty having been adjudicated
would have been of no benefit to the Applicant since once referred to
arbitration, the Arbitral Tribunal would have asked the Applicant to explain
the factual position on applying for adjudication of stamp duty.
16. In these circumstances, one could say that the approach of the
Applicant was not diligent or was even lackadaisical but I am not convinced
that it can be pitched any higher as sought to be done by the Respondents,
in alleging deliberate suppression necessitating rejection of the Section 11
Application. The objections of the Respondent represent a strong
resistance to referral to arbitration but within the scope of jurisdiction of
this Court, no useful purpose would be served by keeping this Application
pending any further on the docket of this Court. Therefore, the Application
is finally disposed of in the following terms :-
A] Ms. Gulnar Mistry, Learned Advocate, is hereby
appointed as the Sole Arbitrator to adjudicate upon the
disputes and differences between the parties;
Address : 101, 1st Floor, 1 Infinity
(Formerly known as Ramnimi Fort),
Cawasji Patel Street, Mumbai – 400 001.
E mail : [email protected]
B] A copy of this Order will be communicated to the
Learned Sole Arbitrator by the Advocates for the Applicant
within a period of one week from the date on which this order
is uploaded on the website of this Court. The Applicant shall
provide the contact and communication particulars of the
parties to the Arbitral Tribunal along with a copy of this Order;
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1-ARBAP-123-2024.doc copy.docxC] The Learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the Advocates for the Applicant
so as to enable them to file the same in the Registry of this
Court. The Registry of this Court shall retain the said
Statement on the file of this Application and a copy of the same
shall be furnished by the Advocates for the Applicant to the
Respondents;
D] The parties shall appear before the Learned Sole
Arbitrator on such date and at such place as indicated, to
obtain appropriate directions with regard to conduct of the
arbitration including fixing a schedule for pleadings,
examination of witnesses, if any, schedule of hearings etc. At
such meeting, the parties shall provide a valid and functional
email address along with mobile and landline numbers of the
respective Advocates of the parties to the Arbitral Tribunal.
Communications to such email addresses shall constitute valid
service of correspondence in connection with the arbitration;
E] All arbitral costs and fees of the Arbitral Tribunal shall
be borne by the parties equally in the first instance, and shall
be subject to any final Award that may be passed by the
Tribunal in relation to costs.
17. Needless to say, nothing contained in this order is an expression
of an opinion on merits of the matter or the relative strength of the parties.
All issues on merits are expressly kept open to be agitated before the
arbitral tribunal appointed hereby.
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18. All actions required to be taken pursuant to this order shall be
taken upon receipt of a downloaded copy as available on this Court’s
website.
[ SOMASEKHAR SUNDARESAN, J.]
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