Arbitration and Conciliation Act, 1996 – ss. 11(6), 11(12)(a)
& 16 – Appointment of Arbitrator – Karnataka Stamp Act – Stamp
Duty on Arbitration Agreement – Respondent, an Indian Company
engaged in hospitality sector, entered into a Hotel Management
Agreement (HMA) with Petitioners – HMA mandated that for the
renovation undertaken by the petitioners, respondent was
contractually bound to pay the fee to the petitioner as incentive
fees – As per the petitioner, respondent failed to pay the requisite
fee – Respondent via mail on 12.10.2018 terminated the HMA stating
that the Hotel was rebranded – Petitioner invoked the arbitration
clause provided under HMA – Aggrieved by the respondent’s denial
to appoint a suitable arbitrator, the petitioner have filed petition
for appointment of sole arbitrator – Respondent contended that the
Arbitration Agreement was an unstamped document and the
petitioners have not paid stamp duty under the Karnataka Stamp
Act – Held: Usually, issues of arbitrability/validity are matters to be
adjudicated upon by arbitrators – This Court, until the larger Bench
decides on the interplay between Sections 11(6) and 16, should
ensure that arbitrations are carried on, unless the issue before the
Court patently indicates existence of deadwood – The issues whether
the respondent is estopped from raising the contention of
unenforceability of the HMA or the issue whether the HMA is
insufficiently or incorrectly stamped, can be finally decided at a
later stage – The petitioners, have themselves attempted to self-adjudicate the required stamp duty and have paid, a stamp duty of
Rs 2,200/-, describing the HMA as a “bond” and further purchased
11 e-stamps for Rs. 200/- each, describing the HMA as an
‘agreement’ under article 5(j) – From the above it is clear, that stamp duty has been paid, whether it be insufficient or appropriate is a
question that maybe answered at a later stage.