Delhi High Court: Review of Section 11 Arbitration Petition is Precluded under Order XLVII Rule 1 of the Code of Civil Procedure, 1908

Delhi High Court: Review of Section 11 Arbitration Petition is Precluded under Order XLVII Rule 1 of the Code of Civil Procedure, 1908

The Delhi High Court has ruled that a review of the Court’s order allowing the petition under Section 11 of the Arbitration and Conciliation Act, 1996 cannot be sought, where any question of law on which the judgment of the Court is based, has been reversed or modified by a subsequent decision of a superior Court in any other case under Order XLVII Rule 1 of the Code of Civil Procedure, 1908 (CPC).

Moreover, the single judge Justice Sachin Datta observed that a review of the Court’s order allowing the petition under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act), cannot be sought on the basis of the subsequent decision of the Supreme Court in N.N. Global Mercantile (P) Ltd. vs. Indo Unique Flame Ltd., (2023).

In the present case, the respondent, Zesty Foods, sought a review of the High Court’s order dated 20 March, 2023 where it had appointed a Sole Arbitrator, on the ground that the agreement executed between the parties containing the arbitration clause was not duly/sufficiently stamped.

The respondent, alleged that the agreement containing the arbitration clause executed between it and the petitioner, Ambience Developers and Infrastructure Pvt Ltd, was unstamped. It contended that after the judgment of the Supreme Court in N.N. Global Mercantile (2023), the agreement was invalid in law and could not be acted upon, and therefore, it was liable to be impounded by the Court.

It thus, sought a review on the basis of the subsequent decision of the Apex Court in N.N. Global Mercantile (2023).

At the outset, the Court held that the contention of the respondent that the agreement was unstamped, was factually incorrect after noting that stamp duty of Rs. 100 had been paid on the agreement.

Moreover, the judge noted that the order dated 20 March, 2023 which allowed the Section 11 petition, was a consent order which specifically reserved the right of the respondent to raise preliminary objections with regard to the arbitrability/jurisdiction before the Arbitrator. The same included objections on account of insufficiency of stamp duty, and/or with respect to non-registration of the agreement.

The Court elucidated that N.N. Global (2023) itself contemplates that in certain situations, the issue as to whether the stamping is insufficient, may be left to the arbitrator to determine, who would then take recourse to Section 33 of the Indian Stamp Act, 1899. Section 33 of the Indian Stamp Act deals with the examination and impounding of instruments which are not duly stamped.

While remarking that the High Court’s order was consistent with the earlier judgment of the Supreme Court in Intercontinental Hotels Group (India) (P) Ltd. vs. Ltd., (2022), the Court further ruled that even otherwise, a review was precluded in terms of the explanation to Order XLVII Rule 1 of the CPC.

The explanation to Order XLVII Rule 1 CPC provides that where any question of law on which the judgment of the Court is based, has been reversed or modified by a subsequent decision of a superior Court in any other case, the same shall not be a ground for review of such judgment.

The Court observed, “In the present case, the arbitrator having already been appointed, the applicant is not in any manner constrained from taking appropriate plea/s regarding alleged insufficiency of stamping, before the arbitrator.”

Lastly, the Court referred to the decision passed in Beghar Foundation vs. Justice K.S. Puttaswamy (Retired) & Ors., (2021), wherein it was observed by the Supreme Court that a change in law or a subsequent decision/ judgement of a Coordinate or larger Bench, does not afford a ground for review.

Accordingly, the review petition was dismissed.