Brief Facts
An agreement for sale of iron ore was executed on 12.02.2004 between M/s Tarini Prasad Mohanty (the mine owner/appellant) and M/s Sunflag Iron and Steel Company Limited (SISCO/respondent). Supplementary agreements were also entered into subsequently. Disputes arose between the parties, and in accordance with the arbitration clause, the matter was referred to a Sole Arbitrator.
During the pendency of arbitration proceedings, the mine owner filed an application under Section 16 of the Arbitration and Conciliation Act, 1996 on 05.02.2024 contending that the agreement for sale and supplementary agreements were insufficiently stamped. According to the mine owner, the contract was in the nature of ‘conveyance’ under Article 23 of Schedule I to the Indian Stamp Act, 1899, and unless the agreements were impounded and properly stamped, the arbitration could not continue.
The learned Arbitrator, by order dated 30.05.2024, rejected the objection and held that the agreement was “an agreement to sell” and not “conveyance” or sale, and had been properly stamped under Article 5(c) of Schedule I to the Stamp Act.
Issues
(a) Whether the writ appeal preferred by SISCO against the Single Judge’s order was maintainable?
(b) Whether the Division Bench was justified in setting aside the Single Judge’s order that had interfered with the Section 16 order of the Arbitral Tribunal?
Arguments on Behalf of the Appellant (Mine Owner)
The following arguments were made:
- The writ petition was essentially under Article 227 alone, and therefore the writ appeal was not maintainable under the Letters Patent.
- In exceptional cases involving perversity, a Section 16 order can be challenged in writ jurisdiction, and the Single Judge rightly found the Arbitrator’s order to be “grossly erroneous and perverse.”
- The agreement dated 12.02.2004 and supplementary agreements constituted ‘conveyance’ under Section 2(10) of the Stamp Act, not merely an agreement to sell.
- The Arbitral Tribunal’s failure to impound the insufficiently stamped agreements amounted to a jurisdictional error.
- Relegating the stamping objection to the post-award stage under Section 34 would compel the mine owner to endure prolonged and expensive proceedings for what is a mandatory fiscal objection going to the root of the agreement.
Reliance was placed on Umaji Keshao Meshram v. Radhikabai (1986 INSC 41), State of Uttaranchal v. M/s Khurana Brothers (2010 INSC 746), and Re: Interplay Between Arbitration Agreements Under the A&C Act, 1996 and the Indian Stamp Act, 1899 (2023 INSC 1066).
Arguments on Behalf of the Respondent (SISCO)
For the Respondent, the following arguments were made:
- The writ petition was filed under both Articles 226 and 227 with substantive reliefs prayed for; hence, the writ appeal was maintainable.
- The Constitution Bench in Re: Interplay having held that the issue of stamping falls within the ambit of the Arbitral Tribunal, there was no complete lack of inherent jurisdiction warranting writ interference.
- The agreements, on a proper reading, envisaged future sale of iron ore where goods were neither ascertained nor in a deliverable state — they did not amount to ‘conveyance.’
- The interpretation of the agreements touched the merits, which were yet to be considered by the Arbitrator on evidence, and the Court should not undertake that exercise at this stage.
- The remedy under Section 34 of the A&C Act at the conclusion of proceedings was adequate.
Judgment
On Maintainability of the Writ Appeal:
The Supreme Court held that the writ appeal was maintainable. The mine owner having invoked jurisdiction under both Articles 226 and 227, and the Single Judge having exercised jurisdiction without specifying any particular Article, it could not be said that the jurisdiction exercised was only under Article 227.
Relying on Lokmat Newspapers Pvt. Ltd. v. Shankar Prasad (1999 INSC 279) and Sh Jogendrasinhji Vijaysinghji v. State of Gujarat(2015 INSC 485), the Court observed that maintainability of a Letters Patent Appeal depends upon the pleadings, nature of the order, and the directions issued. If the order is passed in a composite manner, the Division Bench has jurisdiction to entertain the appeal.
The mine owner, having himself invoked both Articles and having succeeded before the Single Judge, could not now contend that the petition was only under Article 227 to defeat the appeal.
On Interference with the Section 16 Order:
The Supreme Court upheld the Division Bench’s decision and held that the Single Judge was not justified in exercising writ jurisdiction to examine and set aside the Arbitrator’s order under Section 16. The key findings were:
- Minimal Judicial Interference is the Statutory Scheme: The Court reiterated the principle from M/s S.B.P. and Company v. M/s Patel Engineering Ltd. (2005 INSC 526), Deep Industries Ltd. v. ONGC (2019 INSC 1299), and Bhaven Construction v. Executive Engineer (2021 INSC 9) that where a Section 16 application is dismissed, no appeal is provided and the challenge must await the final award, to be raised under Section 34.
- Stamping Objection Falls Within the Ambit of the Arbitral Tribunal: Applying the Constitution Bench decision in Re: Interplay (2023 INSC 1066), the Court held that non-stamping or inadequate stamping is merely a curable defect and does not render an agreement void. Any objection regarding stamping squarely falls within the Arbitral Tribunal’s jurisdiction.
- No Inherent Lack of Jurisdiction: The Arbitrator was empowered to decide the stamping objection. Jurisdiction to decide cannot mean jurisdiction to decide only in a particular manner. Even if the Arbitrator erred on merits, it would not amount to a case of patent lack of inherent jurisdiction justifying writ interference.
- Writ Court Cannot Enter into Merits: The Single Judge embarked upon interpreting the agreements to determine their true nature — an exercise that touched the merits of the dispute while the Arbitrator was still seized of the proceedings and evidence was yet to be led. This was impermissible.
- Inadequacy of Section 34 Remedy – Rejected: The argument that the mine owner would be compelled to endure expensive arbitral proceedings was rejected. The premise that non-stamping is a fatal jurisdictional infirmity no longer holds good after Re: Interplay. The agreement survives non-stamping, the defect is curable, and Section 16(6) read with Section 34 adequately addresses the contingency.
The Court left open the question whether the agreement was in fact ‘conveyance’ or merely an agreement to sell, observing that this required interpretation of the contract on evidence and could be raised under Section 34 at the appropriate stage.
The Civil Appeal was dismissed with no order as to costs.
AMLEGALS Remarks
A foray to the Writ Court from a dismissed Section 16 application can only be made if the order is so perverse that a patent lack of inherent jurisdiction stares one in the face, it requires no argument whatsoever.
Post Re: Interplay (2023 INSC 1066), non-stamping or inadequate stamping is a curable defect and does not go to the root of the Arbitral Tribunal’s jurisdiction. The issue of stamping falls within the Tribunal’s ambit. The Writ Court ought not to embark upon interpretation of contracts while arbitral proceedings are pending, especially when evidence is yet to be led.
Where a writ petition invokes both Articles 226 and 227, and the Single Judge passes an order in a composite manner, the Letters Patent Appeal is maintainable before the Division Bench. The threshold for exercising writ jurisdiction against orders in ongoing arbitral proceedings is significantly higher given the twin statutory safeguards under the A&C Act i.e., Section 5 (minimal judicial interference) and Section 34 (post-award remedy).
Case – M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Limited
Citation – SLP (C) No. 27534 of 2025
Date – 27.05.2026
Court – Supreme Court of India
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