Delhi High Court: C. Hari Shankar, J. observed that,
The question of whether, once a bench of the Supreme Court has doubted the correctness of an earlier bench of co-equal strength, and referred the issue to a larger bench, Courts lower in hierarchy should continue to follow the earlier decision, appears to be debatable.
Instant petition was filed under Section 11 (5) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator to arbitrate on the dispute between the parties.
Parties having failed to arrive at any agreement regarding the arbitrator to arbitrate on the disputes, the petitioner has approached this Court under Section 11(5) of the 1996 Act.
Respondent’s Counsel raised objection regarding the reference of the disputes to arbitration is that the agreement between the parties is inadequately stamped.
He relied on the decision of Supreme Court in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379, to contend that, till this defect is rectified, the Court cannot refer the dispute to arbitration.
Petitioner’s counsel submitted that the arbitration agreement was sufficiently stamped and that, even if it were not, this aspect could be decided by the Arbitrator.
After copiously reproducing from the decision of N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379, the Court pointed that in fact, the decision in NN Global defeats submission of the respondent. After this, the respondent sought to rely on the earlier decision of coequal strength in Vidya Drolia. Notably, the decision of Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 on this aspect was doubted by the later judgment of coequal strength in NN Global.
Analysis, Law and Decision
High Court remarked that,
“…question of whether, once a bench of the Supreme Court has doubted the correctness of an earlier bench of co-equal strength, and referred the issue to a larger bench, Courts lower in hierarchy should continue to follow the earlier decision, appears to be debatable.”
Bench referred the parties to Delhi International Arbitration Centre which would appoint a suitable arbitrator to arbitrate thereon. Arbitration would take place under the aegis of the DIAC and would abide by its rules and regulations.
Lastly, the Court held that all issues of fact and law, including the aspect of non-stamping of the agreement between the parties and, if so, the consequences thereof on arbitrability of the dispute, are left open for agitation before the learned Arbitrator. [Bhagwati Devi Gupta v. Star Infratech (P) Ltd., 2021 SCC OnLine Del 3995, decided on 11-08-2021]
Advocates before the Court:
For the Petitioners: Shalabh Singhal, Advocate
For the Respondent: Rakesh Saini, Advocate
