The Supreme Court of India has held that High Courts exercising extraordinary writ jurisdiction under Articles 226 and 227 of the Constitution should not interdict ongoing arbitral proceedings by entertaining challenges to an arbitrator’s order rejecting an objection under Section 16 of the Arbitration and Conciliation Act, 1996, except in cases of patent lack of inherent jurisdiction. A bench comprising Justice J. K. Maheshwari and Justice Atul S. Chandurkar dismissed an appeal against a High Court Division Bench verdict that had set aside a Single Judge’s order. The Single Judge had earlier interfered with an arbitrator’s order regarding the sufficiency of stamp duty on agreements and directed the impounding of the documents. The apex court clarified that objections regarding inadequate stamping represent a curable defect and fall within the sole competence of the Arbitral Tribunal, with judicial review available only at the post-award stage under Section 34 of the Act.
Background of the Case
The dispute arose out of an agreement for the sale of iron ore executed on February 12, 2004, between the appellant, M/s Tarini Prasad Mohanty (the mine owner), and the respondent, M/s Sunflag Iron and Steel Company Limited (SISCO). The parties subsequently entered into supplementary agreements. During their contractual engagement, disputes arose, and in accordance with the arbitration clause contained in the agreement, the matter was referred to a Sole Arbitrator.
SISCO, as the claimant, filed various claims against the mine owner, who in turn filed a counter-claim against SISCO. On February 5, 2024, during the arbitration proceedings, the mine owner filed an application under Section 16 of the Arbitration and Conciliation Act, 1996 (the A and C Act). The mine owner contended that the agreement for sale and subsequent supplementary agreements were insufficiently stamped. According to the mine owner, the contract between the parties was in the nature of a “conveyance” and was required to be stamped in accordance with Article 23 of Schedule I to the Indian Stamp Act, 1899. They argued that the arbitration proceedings could not proceed unless the agreements were impounded and properly stamped.
SISCO opposed the application, asserting that the agreements were duly stamped and that the objection had not been raised when the counter-claim was filed, indicating it was raised belatedly.
By an order dated May 30, 2024, the learned Arbitrator turned down the objection. The Arbitrator held that the transaction between the parties was “an agreement to sell” and not a “conveyance” or sale. Since the agreement was properly stamped under Article 5(c) of Schedule I to the Stamp Act, the objection was rejected.
Aggrieved by the Arbitrator’s order, the mine owner filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Orissa.
A learned Single Judge of the High Court entertained the writ petition and, by a judgment dated February 25, 2025, allowed it. The Single Judge held that unless proper stamp duty was paid, the Arbitrator lacked jurisdiction to arbitrate the disputes. He set aside the order passed under Section 16 of the A and C Act and directed the Arbitral Tribunal to impound the agreements to enable them to be duly stamped in accordance with Article 23, Schedule I(b) to the Stamp Act.
SISCO challenged this decision in a writ appeal under Clause 10 of the Letters Patent Act, 1992. The Division Bench of the High Court allowed the writ appeal and set aside the judgment of the Single Judge, holding it to be in excess of jurisdiction. The mine owner then appealed to the Supreme Court.
Arguments of the Parties
For the Appellant (the Mine Owner)
Senior Advocate Mr. Shashank Garg presented the following submissions on behalf of the appellant:
- Writ Appeal was Non-Maintainable: The writ petition, although referencing Articles 226 and 227 of the Constitution, was in fact an invocation of supervisory jurisdiction under Article 227 alone. Consequently, the Letters Patent writ appeal preferred by SISCO was not maintainable.
- Writ Petition was Maintainable: High Courts can interfere with an order passed under Section 16 of the A and C Act under Article 227 in exceptional cases of perversity. Since the Single Judge found the Arbitrator’s order “grossly erroneous and perverse,” the invocation of supervisory jurisdiction was fully justified.
- Agreements Constituted “Conveyance”: A holistic reading of the February 12, 2004 agreement and the supplementary agreements, alongside Section 2(10) of the Stamp Act and Section 4(4) of the Sale of Goods Act, 1930, demonstrated that the transaction was a sale, making it a “conveyance.”
- Failure to Impound Constituted Jurisdictional Error: The Arbitrator erred by not considering the entire material, including eighty-nine purchase orders, to determine the true nature of the transaction. Without proper stamping, the Arbitrator lacked jurisdiction.
- Interest of Revenue: Insufficient stamping results in loss to the public exchequer. For an instrument to be admitted in evidence, it must be correctly stamped. Furthermore, the scope for interference under Section 34 of the A and C Act is too limited to address such fundamental defects.
For the Respondent (SISCO)
Senior Advocates Mr. Gopal Subramanium, Mr. N.K. Mody, and Ms. Malvika Trivedi argued on behalf of the respondent:
- Writ Appeal was Maintainable: The mine owner’s writ petition invoked both Articles 226 and 227 of the Constitution, seeking substantive reliefs in the nature of writs and directions to the Collector. Therefore, treating the petition as one under Article 226 made the writ appeal fully maintainable.
- No Scope for Writ Interference: The Arbitrator did not lack inherent jurisdiction. According to the settled law, any issue concerning the stamping of a document falls within the sole domain of the Arbitral Tribunal. An erroneous decision under Section 16 must await a challenge under Section 34 of the A and C Act at the conclusion of the proceedings.
- Agreements were Agreements to Sell: The transactions involved the future sale of iron ore that was neither ascertained nor in a deliverable state, and did not constitute “conveyance.”
The Court’s Analysis and Reasoning
The Supreme Court framed two key issues for consideration:
- Whether a challenge to an order passed under Section 16 of the A and C Act ought to have been entertained in writ jurisdiction under Articles 226 and 227 while the Arbitrator was seized of the proceedings?
- Whether the Division Bench was right in setting aside the Single Judge’s order?
On the Maintainability of the Writ Appeal
The Court first addressed the appellant’s objection to the maintainability of the writ appeal. It noted that the mine owner had explicitly invoked both Articles 226 and 227 in the pleadings and prayers of the writ petition.
Relying on the precedent set in Lokmat Newspapers Pvt. Ltd. v. Shankar Prasad (1999), which applied the principles of the landmark case Umaji Keshao Meshram v. Radhikabai (1986), the Court reiterated that where facts justify a party in applying under both Articles 226 and 227, the application should be treated as one under Article 226 to preserve the valuable right of appeal.
The Court further cited Sh. Jogendrasinhji Vijaysinghji v. State of Gujarat (2015), confirming that: “orders from tribunals cannot always be regarded for all purposes to be under Article 227 of the Constitution. Whether the learned Single Judge has exercised the jurisdiction under Article 226 or under Article 227 or both, needless to emphasise, would depend upon various aspects that have been emphasised in the aforestated authorities of this Court.”
Since the Single Judge did not specify which Article was being exercised, and the mine owner invoked both, the Court held that the Division Bench was correct in entertaining the writ appeal.
Scope of Judicial Interference in Arbitral Proceedings
The Supreme Court emphasized that the Arbitration and Conciliation Act is a complete code designed to minimize judicial intervention prior to the culmination of arbitral proceedings. Under Section 16, the Arbitral Tribunal is empowered to rule on its own jurisdiction, and Section 16(6) mandates that any rejection of a jurisdictional challenge can only be questioned when the final award is challenged under Section 34.
The Court referred to the Constitution Bench decision in M/s S.B.P. and Company v. M/s Patel Engineering Ltd. (2005), which held: “The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.”
Similarly, in M/s Deep Industries Ltd. v. Oil and Natural Gas Corporation Limited (2019), the court reinforced that: “The drill of Section 16 of the Act is that where a Section 16 application is dismissed, no appeal is provided and the challenge to the Section 16 application being dismissed must await the passing of a final award at which stage it may be raised under Section 34.”
The Court also highlighted Bhaven Construction v. Executive Engineer (2021) to establish that the Arbitrator must deal with the issue of jurisdiction first, and contract interpretation should generally not be undertaken in writ jurisdiction.
Non-Stamping as a Curable Defect
Addressing the mine owner’s argument that the stamping issue goes to the root of the Arbitrator’s jurisdiction and cannot await the Section 34 stage, the Court relied on the definitive Constitution Bench ruling in Re: Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act, 1996 and The Indian Stamp Act, 1899 (2023).
The Constitution Bench concluded that: “Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable” and that “Any objections in relation to the stamping of the agreement fall within the ambit of the Arbitral Tribunal”.
Quoting paragraph 48 of the Re: Interplay judgment, the Court observed: “The effect of not paying duty or paying an inadequate amount renders an instrument inadmissible and not void. Non-stamping or improper stamping does not result in the instrument becoming invalid. The Stamp Act does not render such an instrument void. The non-payment of stamp duty is accurately characterised as a curable defect. The Stamp Act itself provides for the manner in which the defect may be cured and sets out a detailed procedure for it. It bears mentioning that there is no procedure by which a void agreement can be ‘cured’.”
The apex court noted that because the Arbitrator had the lawful jurisdiction to decide the objection, any alleged error on the merits did not constitute an “inherent lack of jurisdiction” justifying the Single Judge’s intervention.
“Maintainability” versus “Entertainability” of Writ Petitions
The Court clarified the distinction between these two concepts by quoting M/s Godrej Sara Lee Ltd. v. The Excise and Taxation Officer-cum-Assessing Authority (2023): “entertainability” and “maintainability” of a writ petition are distinct concepts. The fine but real distinction between the two ought not to be lost sight of. The objection as to “maintainability” goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of “entertainability” is entirely within the realm of discretion of the high courts, writ remedy being discretionary.”
The Court explained that while a writ petition challenging a Section 16 order might be maintainable, High Courts should refuse to “entertain” them due to the high statutory threshold of minimal interference and the availability of an alternative remedy under Section 34.
The Decision
The Supreme Court held that the learned Single Judge was not justified in entering the merits of the contractual dispute and interpreting the agreements while exercising writ jurisdiction. Since the arbitration proceedings were still pending and parties were yet to lead evidence, determining the nature of the agreements at that stage would cause prejudice.
Concluding the judgment, the Court held: “the learned Single Judge was not justified in exercising writ jurisdiction under Articles 226 and 227 of the Constitution for examining and thereafter setting aside the order passed by the learned Arbitrator under Section 16 of the A and C Act. Consequently, the Division Bench was justified in entertaining the writ appeal and setting aside the order passed by the learned Single Judge after finding the same to be in excess of jurisdiction.”
The Supreme Court dismissed the Civil Appeal with no order as to costs. It clarified that the substantive issue regarding the stamping of the February 12, 2004 agreement and subsequent agreements remains open to be raised by the aggrieved party under Section 34 of the A and C Act, if the need arises.
Case Title: M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Limited
Case No.: Civil Appeal arising out of SLP (C) No. 27534 of 2025
Bench: Justice J. K. Maheshwari and Justice Atul S. Chandurkar
Date: May 27, 2026
