In Re: Interplay Between Arbitration Agreements Under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 v. .

Judgment

SANJIV KHANNA, J.

I respectfully agree with the view expressed by the Hon’ble the Chief Justice of India Dr. D.Y. Chandrachud in his elaborate exposition of the diff erent contours which arise for consideration in the present reference. Complementing the same, I would like to provide additional justifi cations for the fi nal conclusion,viz., unstamped or insuffi ciently stamped instruments inadmissible in evidence in terms of Section 35 of the Indian Stamp Act, 1899¹, are not rendered void and void ab initio; an objection as to the under-stamping or non-stamping of the underlying contract will not have any bearing when the prima facie test, “the existence of arbitration agreement”, is applied by the courts while deciding applications under Sections 8² or 11³ of the Arbitration IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1195 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] and Conciliation Act, 1996⁴; and an objection as to insuffi cient stamping of the underlying agreement can be examined and decided by the arbitral tribunal. Accordingly, the majority decision of the Constitution Bench in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.⁵ should be overruled.

2. The judgment authored by Hon’ble the Chief Justice, under the heading ‘D. Indian Stamp Act, 1899’, gives an overall view of the Stamp Act, and the procedures it prescribes. It also refers to Sections 33, 35and 36 of the Stamp Act, which I would like to elaborate on and elucidate.

3. Sections 33 and 35 of the Stamp Act are reproduced for reference: “33. Examination and impounding of instruments.—(1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public offi ce, except an offi cer of police, before whom any instrument, chargeable, in his

opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in India when such instrument was executed or fi rst executed:

Provided that— (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fi t so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such offi cer as the Court appoints in this behalf.

(3) For the purposes of this section, in cases of doubt,— (a) the State Government may determine what offi ces shall be deemed to be public offi ces; and (b) the State Government may determine who shall be deemed to be persons in charge of public offi ces.”

×× ×× ×× 35.Instruments not duly stamped inadmissible in evidence, etc.— No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public offi cer, unless such instruments is duly stamped:

Provided that— (a) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable or, in the case of an instrument insuffi ciently stamped, of the amount required to make up such duty, IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1197 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] together with a penalty of fi ve rupees, or, when ten times the amount of the proper duty or defi cient portion thereof exceeds fi ve rupees, of a sum equal to ten times such duty or portion;

(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it;

(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;

(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);

(e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Government or where it bears the certifi cate of the Collector as provided by Section 32 or any other provision of this Act.”

4. Section 33 of the Stamp Act is cautiously worded,to not over expand its ambit and scope. The section applies on production of an instrument before a person who by law or consent of the parties has the authority to receive evidence.⁶ It also applies when an instrument is produced before a person in charge of a public offi ce. Production of the instrument must be during the course of performance of functions by such person orpublic offi cer. The proviso states that Section 33 shall not be deemed to require any Magistrate or Judge of a criminal court to examine or impound an instrument if he does not think fi t to do so, except in proceedings under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure, 1973).Police offi cers are not public offi cers under Section 33 of the Stamp Act.

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5. Sub-section (3) to Section 33 states that in case of doubt, the State Government may determine which offi ces shall be deemed to be public offi ces and who shall be deemed to be persons in charge of the public offi ces.

6. Sub-section (2) to Section 33 states that for the purpose of subsection (1), such person or public offi cer shall examine the instrument so chargeable and so produced or coming before him,in order to ascertain whether it is duly stamped as per the law in force in India when the instrument was executed or fi rst executed.

7. Section 35 states that an instrument not duly stamped and chargeable with duty shall not be admitted in evidence by any person having by law or by consent of the parties the authority to receive evidence. The words “for any purpose” mean that the instrument cannot be relied upon for a collateral purpose either. Further, the instrument shall not be acted upon, registered or authenticated by such person or by any public offi cer, unless it is duly stamped. The words ‘acted upon’ are with reference to the acts or the proceedings before such offi cer or public offi cer, as the case may be.

8. Section 35 permits admission of an unstamped or under-stamped instrument after the same instrument is duly stamped. Proviso (a) requires payment of the chargeable duty and penalty, before an insufficiently stamped instrument is admitted in evidence, or is acted upon, registered or authenticated.

9. Section 40(1)(b) of the Stamp Act provides for payment of proper duty if the instrument impounded is not duly stamped. Section 42(1) provides for certifying that proper duty has been paid on the impounded instrument. Sub-section (2) of Section 42 provides that after certifi cation the instrument shall be admissible in evidence, and may be registered, acted upon and authenticated as if it has been duly stamped.

10. Sections 33 and 35donot apply when an instrument is produced or is acted upon by the parties themselves, or by a person who does not have authority by law or by consent of the parties to receive evidence, or a person who is not a public offi cer. Sections 33 does not authorise a police offi cer to examine and impound an instrument, even when insuffi ciently stamped. A Magistrate or a Judge of a criminal court may not examine or impound an instrument coming before him,and can admit an insuffi ciently stamped IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1199 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] instrument in evidence, other than in the proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (Chapter X(D) and Chapter IX of the Code of Criminal Procedure, 1973).Thus, the same instrument may be admissible and acted upon before a criminal court, while being inadmissible before a civil court, public offi cer etc.

11. The negative stipulations in Sections 33 and 35 are specifi c, albeit not so absolute as to make the instrument invalid in law. A “void ab initio” instrument, which is stillborn,has no corporeality in the eyes of law. It cannot confer or give rights, or create obligations. However, an instrument which is “inadmissible” exists in law, albeit cannot be admitted in evidence by such person, or be registered, authenticated or be acted upon by such person or a public offi cer till it is duly stamped. As rightly observed by Hon’ble the Chief Justice, Section 35 deals with admissibility etc. of an instrument and not invalidity.

12. Section 36 of the Stamp Act refers to the situation where the admission of an instrument is not to be questioned, and reads:

“36. Admission of instrument where not to be questioned.—Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.”

Thus, where an instrument has been admitted in evidence, such admission shall not be called in question, except as provided in Section 61, at any stage of the same suit or proceedings on the ground that the instrument is not duly stamped. Consequently, where an instrument has been admitted in evidence, such instrument cannot be impounded as it cannot be called in question at any stage of the same suit or proceeding on the ground of insuffi cient stamping.

13. An instrument which is void ab initio or void, cannot be validated by mere consent or waiver, unless consent or wavier undoes the cause of invalidity. On the other hand, Section 36 of the Stamp Act incorporates the doctrine of waiver, estoppel and implied consent. That apart,after due stamping as per the Stamp Act, the unstamped or insuffi ciently stamped 120 0 SUPREME COURT REPORTS [2023] 15 S.C.R. instrument can be admitted in evidence, or be registered, authenticated or be acted upon by such person or public offi cer.

14. This has long been a recognised position of law, as accepted by this Court in several decisions, which I would like to refer to.

15. In Javer Chand and Others. v. Pukhraj Surana⁷, way back in 1961, a four Judges’ Bench of this Court had examined the interplay between Sections 35 and 36 of the Stamp Act to hold that Section 36 is categorical in terms that when a document has been admitted in evidence, such admission cannot be called in question at any stage of the suit or proceedings on the ground that the instrument had not been duly stamped. The only exception recognised by Section 36 is the class of cases contemplated by Section 61 of the Stamp Act. Section 36 does not admit of any other exception. It does not matter whether the court has wrongly decided to admit the document in evidence. Section 35 is in the nature of a penal provision which has far reaching eff ects. The parties to the litigation have to be circumspect and have to be alert so as to challenge the admissibility of an instrument before it is admitted in evidence.

16. A fi ve Judges’ Bench in The State of Biharv. M/s Karam Chand Thapar and Brothers Ltd.⁸, has held that the instrument that can be validated under Section 35 is only the original, when it is unstamped or insuffi ciently stamped. A copy cannot be validated and acted upon,albeit where multiple copies are prepared and signed and sent to respective parties, each one would be an original instrument.

17. In Jupudi Kesava Raov. Pulavarthi Venkata Subbarao and Others⁹, a two Judges’ Bench of this Court observed that The Indian Evidence Act, 1872 does not purport to deal with admissibility of the documents which are required to be stamped under the provisions of the Stamp Act. Thereafter, it is observed:

“13. The fi rst limb of Section 35 clearly shuts out from evidence any

instrument chargeable with duty unless it is duly stamped. The second

IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1201

THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insuffi ciently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the defi ciency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfi l the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. “Instrument” is defi ned in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act.

14. If Section 35 only deals with original instruments and not copies Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its benefi t. The words “an instrument” in Section 36 must have the same meaning as that in Section 35. The legislature only relented from the strict provisions of Section 35 in cases where the original instrument was admitted in evidence without objection at the initial stage of a suit or proceeding. In other words, although the objection is based on the insuffi ciency of the stamp affi xed to the document, a party who has a right to object to the reception of it must do so when the document is fi rst tendered. Once the time for raising objection to the admission of the documentary evidence is passed, no objection based on the same ground can be raised at a later stage. But this in no way extends the applicability of Section 36 to secondary evidence adduced or sought to be adduced in proof of the contents of a document which is unstamped or insuffi ciently stamped.”

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This judgment also holds that a copy of the instrument cannot be validated. It overruled the dictum that Section 36 will also apply where secondary evidence of an instrument unduly stamped, has been wrongly admitted.

18. In Hameed Joharan (਄ਅਁ਄) and Others v. Abdul Salam (਄ਅਁ਄) by LRs. and Others¹⁰, this Court observed that applicability of the Stamp Act stands restricted to the scheme of the Stamp Act. The Stamp Act being a true fi scal statute in nature, strict construction and not liberal interpretation is required to be eff ected . Section 2(15) includes a decree of partition and Section 35 lays down a bar on unstamped or insuffi cient stamp being admitted in evidence or being acted upon. The law however does not prescribe that the period for fi ling appeal shall remain suspended still stamp paper is furnished and the partition decree is drawn thereon and signed by the judge. The whole purport of the Stamp Act is to make available certain dues and collect revenue, but it does not mean and imply an overriding eff ect on another statute operating in a completely diff erent sphere. Enforceability of a decree cannot be a subject matter of Section 35 of the Stamp Act, neither can the limitation be said to be under suspension. The heading of Section 35 itself denotes the limited sphere of applicability.

19. In Dr. Chiranji Lal (D) by LRs. v. Hari Das (D) by LRs.¹¹, a three Judge Bench of this Court rejected the contention that an unstamped preliminary decree is not enforceable and, therefore, the period of limitation begins to run when the decree is engrossed on the stamp paper. The Stamp Act is a fi scal measure with the object to secure revenue for the State on certain classes of instruments. The Stamp Act is not enacted to arm the litigant with a weapon of technicality to meet the case of his opponent. As there is no rule which prescribes any time for furnishing of stamp paper or to call upon a person to pay stamp duty on a preliminary decree of partition, the proposition that period of limitation would remain suspended till stamp paper is furnished and decree engrossed thereon was rejected.

IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1203 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.]

20. In Hariom Agrawal v. Prakash Chand Malviya¹², a three Judge Bench has referred to Karam Chand Thapar (supra), Jupudi Kesava Rao (supra), to observe:

“10. It is clear from the decisions of this Court and a plain reading of Sections 33, 35 and 2(14) of the Act that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be taken in evidence under Section 35 of the Stamp Act. Sections 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Section 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Stamp Act, 1899.”

21. In Shyamal Kumar Roy v. Sushil Kumar Agarwal¹³, this Court observed that Section 36 is a standalone clause which categorically prohibits the court of law from reopening the matter with regard to the suffi ciency or otherwise of the stamp duty paid on an instrument in the event the same has been admitted in evidence, the only exception being Section 61 providing for reference and revision. Reliance was placed on Javer Chand (supra).

22. Avinash Kumar Chauhanv. Vijay Krishna Mishra¹⁴ expounds the meaning of the words ‘for any purpose’ used in Section 35 of the Stamp Act. These words are to be given natural meaning and eff ect. They would include collateral purpose, as was held in the decision of the Privy Council in Ram Rattanv. Parma Nand¹⁵. Distinction was drawn between non-eff ect of registration of a document in terms of Section 49 of the Registration Act, 1908, which does not bar use of an unregistered document for a collateral purpose. Section 35 is diff erently worded, and when applicable, bars use of insuffi ciently stamped instrument for a collateral purpose.

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23. It is necessary to affi rm this legal position, as we enter into contracts or agreements several times in our interactions with others during the course of the day. Even written documents in the form of invoices, receipts or standard format agreements are often exchanged, and form the terms of the interactions. An unstamped or under-stamped contract or agreement cannot be impounded, except when it is produced for being received in evidence before a person authorised to do so or a public offi cer in terms of Section 33 of the Stamp Act. To hold that insuffi ciently stamped instrument does not exist in law, will cause disarray and disruption.

24. Predictability and certainty are central tenets of law, especially in matters of commercial and routine nature. Adherence to the principle of stare decisis is essential for parties to be able to rely on the law to defi ne their conduct in commercial or ordinary day to day dealings. Transient laws undermine public legitimacy and faith in the mandate of Rule of Law. This Court has previously observed that before reviewing and revising its earlier decision, the Court must satisfy itself whether it is necessary to do so in the interest of public good or for any other compelling reason, and the Court must endeavour to maintain certainty and continuity in the interpretation of the law in the country.¹⁶ On several occasions, this Court has emphasised on certainty and consistency in judicial pronouncements as being the cornerstone of the administration of justice.¹⁷ Consistency in judicial decisions is conducive to reassuring parties of the consequences of the transactions forming part of their daily aff airs.¹⁸

25. An instrument is to be stamped as per Section 33 when it is executed or fi rst executed. The expressions ‘executed’ and ‘execution’ have been defi ned in clause (12) to Section 2 of the Stamp Act to mean ‘signed’ or ‘signature’.¹⁹ It includes attribution of electronic record within the meaning IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1205 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] of Section 11 of the Information Technology Act, 2000²⁰. I shall now analyse the relevance of execution or ‘signature’, with reference to an arbitration agreement as defi ned in Section 7 of the Arbitration Act.

26. Section 7of the Arbitration Act reads:

“7. Arbitration agreement.—(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defi ned legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the

contract.”

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An ‘arbitration agreement’ is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or may arise between them. The disputes may be in respect of a defi ned legal relationship, whether contractual or not. An arbitration agreement has to be in writing.

27. Sub-section (4) to Section 7 specifi es when an arbitration agreement can be said to be in writing. Clause (a) to sub-section (4) states that an arbitration agreement can be a document signed by the parties. According to clause (b) to sub-section (4) to Section 7, an arbitration agreement can be established or inferred from exchange of letters, telex, telegrams or other forms of communication, including communication through electronic means. The provision does not mention the need for ‘execution’ or signatures of the parties.²¹ Similarly, clause (c) to sub-section (4) to Section 7 which refers to exchange of statements of claim and defence, in which the existence of the arbitration agreement is alleged by one party and not denied by the other, does not refer to an instrument which is signed by the parties. Clause (c) incorporates the principle wherein the parties by “consent” agree to the existence of an arbitration agreement, or impliedly agree by not denying its existence when alleged by one party and not denied by the other. An arbitration agreement is defi ned in the widest terms, and may be in the form of a clause in the underlying contract or separate from an underlying agreement. Signifi cantly, even when it is a clause of the underlying agreement, it is treated as a separate agreement, an aspect to which I shall advert.

28. Section 16²² of the Arbitration Act, empowers the arbitral tribunal IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1207 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] to rule on its own jurisdiction. This includes the authority to decide the existence and validity of the arbitration agreement. This has reference to Section 7 of the Arbitration Act, which I have examined. As per Section 16, an arbitration agreement is an agreement independent of the other terms of the contract, even when it is only a clause in the underlying contract. The section specifi cally states that a decision by the arbitral tribunal holding the underlying contract to be null and void, will not lead to ipso jure the invalidity of the arbitration clause. The existence of an arbitration agreement is to be ascertained with reference to the requirements of Section 7 of the Arbitration Act. In a given case the underlying contract may be null and void, but the arbitration clause may exist and be enforceable. Invalidity of an underlying agreement may not,unless relating to its formation, result in invalidity of the arbitration clause in the underlying agreement. Hon’ble the Chief Justice has elaborately explained the negative and positive contours of the doctrine of separability in reference to an arbitration agreement, with which I respectfully agree.

29. In this connection, I may note a decision of the Singapore High Court in the case of BNA v. BNB and Another²³ which holds that a defect in the arbitration agreement does not render it void ab initio unless the defect is so fundamental or irretrievable as to negate the parties’ intent or agreement to arbitrate. This principle is based upon the observations of the Court of Appeal of Singapore in the judgment in Insigma Technology Co Ltd v. Alstom Technology Ltd²⁴.

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30. Jurisprudentially it is important to distinguish the terms and consequences of an agreement void ab initio, and a voidable agreement, and the eff ect of illegality and violation of law on an agreement.

31. As per the Indian Contract Act, 1872²⁵, an agreement not enforceable by law is said to be void, and an agreement enforceable by law is a contract.²⁶ A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.²⁷

32. The requirements of Section 10 of the Contract Act²⁸ are that the contract should be made by parties competent to contract, for lawful consideration and with lawful object. Consent of the parties should be free. The contract should not be expressly declared to be void. Section 2 has to be read with Section 10 and not in isolation, in order to avoid contradiction and to harmoniously apply the two sections.

33. Sections 11²⁹ and 12³⁰ deal with persons entitled to contract. In instances where a person is explicitly declared as incompetent or does not fall within the defi nition of a competent person under the aforesaid provisions, like a minor or a person of unsound mind, a contract entered into by such person would be void. An agreement is also rendered void when both parties are under mistake of fact³¹. As per Section 24, agreements are void if consideration and objects are unlawful in part.³² This section does not have any application to the present issue, and neither are we concerned with Section 25, which relates to agreements without consideration and in IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1209 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] which situation they have to be treated as void³³. Agreements which are in restraint of marriage or in restraint of trade are void.³⁴ Agreements by way of wager are also void.³⁵ Agreements, the meaning of which is not certain, or capable of being made certain, are void.³⁶ Section 28 states that agreements in restraint of legal proceedings are void, but Exception 1 states that a contract by which parties agree for disputes arising between them to be referred to arbitration shall not render the contract illegal.³⁷

34. Sections 13 to 19A relate to consent³⁸, free consent³⁹, coercion⁴⁰, undue infl uence⁴¹, fraud⁴², misrepresentation⁴³, void ability of agreements without free consent⁴⁴, and power to set aside contract induced by undue infl uence⁴⁵. The Contract Act declares contracts aff ected by the preceding provisions to be voidable at the option of the aggrieved party.

35. Under Section 21, a contract is not voidable because it is caused by mistake as to law enforced in India⁴⁶, and a contract where mistake of fact is made by one party is also not voidable as per Section 22⁴⁷.

36. According to Section 23 of the Contract Act, the consideration or object of an agreement is lawful unless it is forbidden by law or is of such nature as to defeat the provisions of law, or is fraudulent. Neither are these provisions applicable in case of unstamped or insuffi ciently stamped instruments, nor is the consideration or object unlawful as it involves or implies injury to a person or property of another. The last clause of Section 23 applies when the consideration or object of an agreement is regarded as 121 0 SUPREME COURT REPORTS [2023] 15 S.C.R. immoral or opposed to public policy. An instrument whether unstamped or insuffi ciently stamped will not fall foul on the ground of consideration or object of the agreement being immoral, neither will it fall foul as opposed to public policy.

37. In B.O.I. Finance Ltd. v. Custodian and Others⁴⁸ this Court after examining the case law on the subject of public policy, observed that in pursuant to an agreement to do an illegal act, a transaction, in part, takes place which would otherwise be valid if there was no such prior agreement, then notwithstanding the illegality of the contract, the completed transaction itself cannot be regarded as invalid.

38. Following this judgment, in Canara Bank and Others v. Standard Chartered Bank⁴⁹, it is held that for the contract to be declared void on the ground of public policy, it must be shown that the object and consideration of the contract was one which was illegal. Where the object and consideration of the contract is not illegal as in the case of sale/ purchase of securities and payment of price, the contract will not be void on the ground of being opposed to public policy. The contention that the performance of contract in violation of law will be void on ground of public policy was rejected. These observations were made in the context of the argument that there was violation of law while carrying out the contract and the arrangement was opposed to public policy.

39. A judgment by Mr. Justice S.S. Nijjar in Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee⁵⁰, has elaborately dealt with the terms ‘void’ and ‘voidable’ and states that they are used loosely and interchangeably with each other, though strictly in law, they are not so. It is also important to draw a distinction between contracts which are void, and those which are void ab initio due to lack of elements of off er or acceptance, which prevents a contract from coming into operation. Thus, a contract by a minor or by a person of unsound mind would be void due to lack of eff ectual off er or acceptance. But once the contract is made, that is to say where parties, whatever their innermost state of mind, have to all IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER 1211 THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN

STAMP ACT 1899 [ SANJIV KHANNA, J.] outward appearances, agreed with suffi cient certainty in the same terms of the subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of contract depends, or for fraud, or on some other equitable ground. Neither party can rely upon its own mistake to say that it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamental, no matter that the other party knew that he was under a mistake.⁵¹

40. The judgment in Vidya Drolia and Others v. Durga Trading Corporation⁵², after referring to Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.⁵³, draws a distinction between contract obtained through fraud, and post contract fraud or cheating. The latter falls outside the scope of Section 17 of the Contract Act. It observes that the fraud may permeate the entire contract and above all the agreement of arbitration, rendering it void. However, it may not be so when the allegations of fraud touch upon the internal aff airs of the parties inter se, having no implication in the public domain.

41. There are also two aspects of the judgment in Vidya Drolia (supra), which need to be noticed. First, I agree to and accept the error made by me in the judgment which observes that Section 11(6A) of the Arbitration Act has ceased to be operative in view of the enforcement of Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019. As rightly observed by Hon’ble the Chief Justice, Section 3 of the Arbitration and Conciliation (Amendment) Act, 2019which relates to the amendment to Section 11 has not been enforced. Secondly, as has been noted in the judgment of Hon’ble the Chief Justice and in Career Institute Educational Society v. Om Shree Thakurji Educational Society⁵⁴, the issue before this Court in Vidya Drolia (supra)was not the validity of an unstamped or under-stamped arbitration agreement. No specifi c opinion was expressed on this question. 121 2 SUPREME COURT REPORTS [2023] 15 S.C.R. The reference to the validity of an unstamped arbitration agreement, as mentioned in Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd.⁵⁵, was only to serve the purpose of drawing a comparison between the ‘existence’ and the ‘validity’ of an arbitration agreement, and not a comment or opinion on the ‘existence’ of unstamped or under-stamped arbitration agreements.

42. For the reasons set out in detail by Hon’ble the Chief Justice and recorded herein, I agree with the conclusions drawn, and referred to above. I also concur with the other fi ndings and ratio in the judgment by Hon’ble the Chief Justice.