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SMS Tea Estates Pvt Ltd vs Chandmari Tea Co Pvt Ltd

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Appellant: SMS Tea Estates Pvt. Ltd.

Respondent: Chandmari Tea Co. Pvt. Ltd.

Case: Civil Appeal No 5820 of 2011 arising out of SLP [C] No.24484/2010

Court: Civil Appellate Jurisdiction, Supreme Court of India

Questions that arose in the case

  • (i) Whether an arbitration agreement contained in an unregistered (but compulsorily registrable) instrument is valid and enforceable?
    • Result: An arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.
  • (ii) Whether an arbitration agreement in an unregistered instrument which is not duly stamped, is valid and enforceable?
    • Result: Where the document is compulsorily registrable, but is not registered, but the arbitration agreement is valid and separable, what is required to be borne in mind is that the Arbitrator appointed in such a matter cannot rely upon the unregistered instrument except for two purposes, that is (a) as evidence of contract in a claim for specific performance and (b) as evidence of any collateral transaction which does not require registration.
  • (iii) Whether there is an arbitration agreement between the appellant and respondent and whether an Arbitrator should be appointed?
    • Result: An Arbitrator can no doubt be appointed in regard to any disputes relating to the lease deed. But as noticed above, as the lease deed was not registered, the Arbitrator can not rely upon the lease deed or any term thereof and the lease deed cannot affect the immovable property which is the subject matter of the lease nor be received as evidence of any transaction affecting such property. Therefore, the Arbitrator will not be able to entertain any claim for enforcement of the lease.

Conclusion

The appeal was allowed, the order of the High Court is set aside and the matter is remitted to the learned Chief Justice of Guwahati High Court to first decide the issue of stamp duty, and if the document is duly stamped, then appoint an arbitrator in accordance with law.

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