Can arbitration agreement in insufficiently stamped lease deed be invoked? Supreme Court to hear curative petition in open court

The Supreme Court last month issued notice and allowed open-court hearing of a curative petition dealing with the question of whether an arbitration agreement in an insufficiently stamped lease deed can be invoked. [Bhaskar Raju and Brothers and anr vs Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram & other Charities and ors].A bench of Chief Justice of India DY Chandrachud with Justices Sanjay Kishan Kaul, Sanjiv Khanna, BR Gavai and Surya Kant listed the matter for hearing on August 24.The matter arose from a review petition filed against a Karnataka High Court order, which had been dismissed by the top court in July 2021. The High Court had, in December 2014, considered a lease deed with an arbitration agreement between the instant parties as valid and appointed an arbitrator. A three-judge Supreme Court bench, in February 2020, had set aside the same..By way of background, a charitable trust (respondents) had entered into a lease agreement with the appellants to develop a multi-purpose community hall and office complex, as well as for the renovation of some properties on their land.The agreement, which was for 38 years, was signed in 1996 and contained a clause for a security deposit of ₹55 lakh. In 2008, a suit was filed by the trust against the appellants, pointing out that only ₹25 lakhs had been deposited, while a samadhi in the property had been desecrated. Further, the appellants were accused of trying to file a fresh sale deed in connivance with some of the trust's members. The Bengaluru City Civil Court passed an interim order of status quo. Two years after the suit proceedings commenced, the appellants invoked the arbitration clause before the Karnataka High Court in 2013. Notably, after the orders of a single judge, the Judicial Registrar noted that the document in question was a lease deed and not an agreement to lease. Therefore, the Registrar directed the appellants to pay a deficit stamp duty and penalty of ₹1,01,56,388.However, the High Court subsequently ignored the Registrar's findings and appointed an arbitrator..The Supreme Court in its curative jurisdiction will consider whether the same was justified..The matter assumes some significance in view of a recent Constitution Bench judgment.The Supreme Court had, on April 25, held by a 3:2 majority, that unstamped arbitration agreements are not valid in law.The judgment was delivered by a bench of Justices KM Joseph, Ajay Rastogi, Aniruddha Bose, Hrishikesh Roy, and CT Ravikumar.Justice Joseph had penned the majority opinion. joined by Justice Bose. Justice Ravikumar wrote an opinion concurring with the majority view.Justices Rastogi and Roy had dissented, opining that unstamped arbitration agreements are valid at the pre-referral stage.Summing up his dissenting opinion, Justice Rastogi stated that the majority opinion would open the doors for judicial intervention in arbitration cases at the threshold.Notably, Justice Roy had written had also urged for legislative amendments to resolve the issue. "I would appeal to the legislative wing of the State to revisit the Amendments which may be necessary in the Stamp Act,1899 in its application to the Arbitration Act,1996 ... (to) efface the inconsistencies in both ... If we look at the legislative intent of the Arbitration Act,1996 and what our country is hoping to be as the destination of choice for Arbitration. I am of the considered opinion that it would be appropriate to interpret the statutory interplay in a constructive manner without defeating the legislative intent and thwarting the speedy referral to arbitration," stated Justice Roy's dissenting opinion. .Soon after, the Union Law Ministry constituted an expert committee to recommend reforms in the Arbitration and Conciliation Act and examine the functioning of arbitration law in the country.The committee is anticipated to present its recommendations within a period of 30 days, starting from June 14. This action is being implemented to minimise the need for parties to approach the court for judicial intervention in arbitration matters..The curative petition was filed through advocate Debesh Panda..[Read Order]

Can arbitration agreement in insufficiently stamped lease deed be invoked? Supreme Court to hear curative petition in open court

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