Summary
In a hotel-management dispute, the respondent resisted appointment of an arbitrator on stamping grounds. Stamp duty had been paid, although its classification and adequacy remained disputed. The Court held that these debatable questions, including the effect of the respondent’s contractual warranty, should not prevent reference at the limited appointment stage. It appointed a sole arbitrator and directed the parties to notify SIAC, leaving the stamp issues for later determination.
Issues
- Whether disputed adequacy and classification of stamp duty should prevent appointment under Section 11 on these facts.
- Whether the agreement and warranty raised issues requiring later adjudication rather than summary refusal.
Provisions considered
- Sections 11(6), 11(6A) and 11(12)(a), Arbitration and Conciliation Act, 1996The pre-appointment examination was prima facie and limited; disputed sufficiency of duty already paid did not justify refusing appointment in this case. (¶¶ 18, 22-29)
Held
- The appointment court’s limited prima facie examination should ordinarily leave debatable validity and arbitrability questions to the arbitral process, with summary refusal confined to clear cases. Pending larger-Bench consideration of stamping questions was not a reason to leave all pre-appointment proceedings suspended. (¶ 18-22)
- The respondent’s warranty to ensure the agreement’s enforceability raised debatable questions concerning reliance and estoppel. These were left for later adjudication rather than conclusively resolved against either party. (¶ 23-24)
- Payment of stamp duty had taken place. Determining whether the hotel-management agreement had been correctly classified and adequately stamped required examining its nature, and was deferred. The Court distinguished complete non-stamping and did not finally settle the broader controversy referred in N.N. Global. (¶ 25-26)
- The matter was referred under the contractual arbitration clause. Justice A.V. Chandrashekara, former Karnataka High Court judge, was appointed sole arbitrator; the parties were directed to convey the order to SIAC for proceedings under its rules. The petition was allowed. (¶ 27-29)
Result
Petition allowed; sole arbitrator appointed and parties directed to notify SIAC. Disputed stamp sufficiency, classification and warranty-related objections left for later adjudication.