N HE Atter F Pecial Eave Etition Lshaymaa Echnologies Rivate Imited Epresented BY HE

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094A

IN THE

SUPREME COURT OF INDICA

AT DINPANAH

IN THE MATTER OF

SPECIAL LEAVE PETITION XXXX/2021

ALSHAYMAA TECHNOLOGIES PRIVATE LIMITED (REPRESENTED BY THE CEO)


………………………………………………………….………………………......APPELLANT

V.

SHU YAO SEAFOOD PRIVATE LIMITED (REPRESENTED BY THE CEO)


….............................................................................................................................RESPONDENT

[UNDER ARTICLE 136 OF THE CONSTITUTION OF INDICA READ WITH ORDER XXI OF THE
SUPREME COURT RULES, 2013]

ON BEHALF OF THE APPELLANTS


TABLE OF CONTENTS

INDEX OF AUTHORITIES iii

STATEMENT OF JURISDICTION v

STATEMENT OF FACTS vi

ISSUES RAISED vii

SUMMARY OF ARGUMENTS viii

ARGUMENTS ADVANCED 1

I. The statutory bar in Section 35 of the Indican Stamp Act renders an arbitration
agreement in an unstamped instrument unenforceable..........................................................1

a. An arbitration agreement contained in an unenforceable contract is also


unenforceable......................................................................................................................1

b. The provisions of Section 16(1) of the Act do not prevent the invalidity of the
arbitration agreement..........................................................................................................1

II. Issue (I) falls within the scope of inquiry required to be carried out by a court under
Section 11(6A) of the Arbitration and Conciliation Act........................................................2

a. The validity of an arbitration agreement is essential for its existence........................2

b. The scope of the term “existence” in the Section is wider than its literal meaning....3

III. A petition under Article 227 of the Constitution against an order passed by an
arbitral tribunal is not maintainable........................................................................................4

a. The Test for Sanctity of Arbitral Process is not satisfied............................................4

b. The arbitral award not being pronounced at the time of the petition being moved
prevents the petition from being maintainable...................................................................5

PRAYER FOR RELIEF 6

ii
INDEX OF AUTHORITIES

Cases

Amazon.Com NV Investment Holdings LLC v. Future Retail Ltd. (2022) 1 SCC 209............4
Black Diamond Trackparts Pvt. Ltd. v. Black Diamon Motors Pvt. Ltd. 2022 SCC OnLine
Del 545...................................................................................................................................4
Commissioner of Income Tax v. T V Sundaram Iyyengar 1975 101 ITR 764 SC....................3
Garware Wall Ropers Ltd. vs Coastal Marine Constructions Civil Appeal No. 3631/2019. 1, 2
Helford v. Bailey: (1849) 18 L. J. Q. B. 109..............................................................................3
Indian Oil Corporation Limited v. NCC Limited Civil Appeal No. 341/2022..........................3
Jaikishan Dass Mull vs. Luchhiminarain Kanoria & Co. (1974) 2 SCC 521............................1
Keshavji Ravji & Co. v. Commissioner of Income Tax 1990 SCC (2) 231..............................3
M/s Deep Industries Ltd. v. Oil and Natural Gas Corporation and Anr. Civil Appeal No.
9106/2019...............................................................................................................................4
Sardar Sarovar Narmada Nigam v. Bhaven Construction, Vadodara 2005 SCC OnLine Guj
239..........................................................................................................................................4
SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618....................................................................4
Steel Authority of India Ltd. v. Indian Council of Arbitration 2013 SCC OnLine Del 4490....5
T. Jeganatha v. Madras High Court Arbitration Centre 2018 SCC OnLine Mad 9692.............5
Unitech Limited v. Telangana State Industrial Infrastructure Corporation (TSIIC), 2021 SCC
OnLine SC 99.........................................................................................................................4
Vidya Drolia vs Durga Trading Corporation Civil Appeal No. 2402/2019...........................2, 3

Statutes

Article 227, Constitution of Indica, 1950...................................................................................4


Section 16(1)(a), Arbitration and Conciliation Act, 1996..........................................................1
Section 17, Arbitration and Conciliation Act, 1996...................................................................5
Section 2(g), Indican Contract Act, 1872...................................................................................2
Section 2(h), Indican Contract Act, 1872...................................................................................1
Section 35, Indican Stamp Act, 1899.....................................................................................1, 2
Section 5, Arbitration and Conciliation Act, 1996.....................................................................5
Section 7(2), Arbitration and Conciliation Act, 1996................................................................1

iii
Proposition

Proposition at Paragraph 11...................................................................................................1, 2


Proposition at Paragraph 12...................................................................................................1, 2
Proposition at Paragraph 22.......................................................................................................4
Proposition at Paragraph 24.......................................................................................................4

iv
STATEMENT OF JURISDICTION
The appellants most humbly submit that this Honourable Supreme Court of Indica at
Dinpanah, Indica has the jurisdiction to hear and adjudicate upon the matters of under Article
136 of the Constitution of Indica, 1950 read with Order XXI of the Supreme Court Rules,
2013.

All of which is urged in detail in the written submission and submitted most respectfully.

v
STATEMENT OF FACTS
Alshaymaa Technologies Private Limited [“ATPL”/“the Appellants”] and Shu Yao
Seafoods Private Limited [“SYSPL”/”the Respondents”] are the locally established
subsidiaries of Alshaymaa Foods Group and Shu Yao Seafoods Inc. respectively. They
entered into a Shareholders Agreement to control their relationship as shareholders of their
joint venture company, Bonechi Foods.

ATPL declared its decision to exit the joint venture in January 2021, and SYSPL agreed to
purchase their shares by exercising their Right of First Refusal (“ROFR”). For the purchase
of these shares, the parties entered into a Share Purchase Agreement (“SPA”) on January 17,
2021. The transfer of shares took longer than expected, and on 20 th March, 2021, SYSPL
issued a letter accusing ATPL of non-cooperation, among other things. ATPL responded by
accusing SYSPL of stretching timelines to extend the period of ROFR. Moreover, both
parties placed the obligation of paying the stamp duty on the SPA on each other.

SYSPL, on April 12, 2021, invoked arbitration under Clause 24 of the SPA, alleging a breach
by ATPL. As a response to ATPL’s refusal to appoint an arbitrator, SYSPL filed two
applications in the High Court of Dinpanah to stop ATPL from offering its shares to a third
party before the conclusion of the arbitration processes, and also appoint ATPL’s nominee
arbitrator.

The Dinpanah High Court found in favour of SYSPL and held that, on a prima facie basis,
the arbitration clause in the SPA, was not rendered unenforceable despite the SPA being
inadequately stamped. They also appointed ATPL’s nominee arbitrator.

ATPL appealed to the Supreme Court of Indica through a Special Leave Petition. When its
petition came up for hearing before the Supreme Court, ATPL requested the Tribunal to
delay the arbitral proceedings until the decision of its pending petition before the Supreme
Court of Indica. The Tribunal accepted ATPL’s request and postponed the arbitral
proceedings until the Supreme Court rendered its decision.

SYSPL approached the Dinpanah High Court under Article 227 of the Constitution of Indica.
The High Court rejected SYSPL’s petition on the ground that such a petition against an
arbitral tribunal’s order was not maintainable. SYSPL filed a Special Leave Petition before
the Supreme Court of Indica against the High Court’s ruling.

vi
Hence, the present matter before this Court.

ISSUES RAISED
I. Whether the statutory bar contained in Section 35 of the Indican Stamp Act,
1899 renders the arbitration agreement contained in an unstamped contract
unenforceable?
II. Whether issue (I) falls within the scope of inquiry required to be carried out by a
court under Section 11(6A) of the Act?
III. Whether a petition under Article 227 of the Constitution against an order passed
by an arbitral tribunal is maintainable?

vii
SUMMARY OF ARGUMENTS

1. The statutory bar in Section 35 of the Indican Stamp Act renders an arbitration
agreement in an unstamped instrument unenforceable.

An arbitration agreement contained in an unenforceable contract is also unenforceable.


Additionally, the protections of Section 16(1) do not apply in this case. Therefore, the
aforementioned statutory bar renders the SPA unenforceable.

2. Issue (I) falls within the scope of inquiry required to be carried out by a court
under Section 11(6A) of the Arbitration and Conciliation Act.

The validity of an arbitration agreement is essential to its existence. Moreover, the scope of
“existence” in the Section goes beyond its literal meaning. Therefore, a court can examine
Issue (I) within the scope of inquiry under Section 11(6A).

3. A petition under Article 227 of the Constitution of Indica against an order


passed by an arbitral tribunal is not maintainable.

High Courts are conferred supervisory powers over all tribunals within their jurisdiction by
Article 227 of the Indican Constitution. This power is subject to certain conditions, which are
not fulfilled in this case. Petitions under Article 277 are not maintainable prior to the
pronouncement of an arbitral award. The Respondents moved their petition before such an
award. Therefore, the petition was not maintainable.

viii
ix
ARGUMENTS ADVANCED

I. The statutory bar in Section 35 of the Indican Stamp Act renders an arbitration
agreement in an unstamped instrument unenforceable.
The arbitration agreement in the SPA is unenforceable. This is because an arbitration
agreement contained in an unenforceable contract is also unenforceable (a.). Moreover, the
provisions of Section 16(1) of the Act do not prevent the invalidity of the arbitration
agreement (b.).

a. An arbitration agreement contained in an unenforceable contract is also


unenforceable.
An arbitration agreement must either be contained in a contract or in a separate agreement. 1
An agreement enforceable by law is a contract. 2 As a corollary, an agreement that is not
enforceable by law is not a contract. A contract that is not stamped is unenforceable. 3 As a
result, an arbitration agreement that is contained in an unstamped contract would not be
enforceable. Through judicial interpretation, it can be observed that if a contract is void and
illegal, the arbitration clause must perish with the contract itself. 4 Moreover, it has been held
that the arbitration clause that is contained in a sub-contract would not “exist” as a matter of
law until the sub-contract is duly stamped.5

In this case, the stamp duty on the Share Purchase Agreement [hereinafter “SPA”] was not
paid.6 This rendered the SPA unenforceable. As a result of its unenforceability, the SPA
ceased to be a contract for the purposes of Section 7(2) of the Act. Consequently, the
arbitration clause in the SPA would also be unenforceable.

b. The provisions of Section 16(1) of the Act do not prevent the invalidity of
the arbitration agreement.
While it would appear that the Act ensures the separability of the arbitration agreement and
the contract that it is contained in,7 it is important to consider the usage of “contract” in the
same sense as it is used in Section 7 of the Act. In this context, as established above, the

1
Section 7(2), Arbitration and Conciliation Act, 1996 [hereinafter “the Act”].
2
Section 2(h), Indican Contract Act, 1872.
3
Section 35, Indican Stamp Act, 1899.
4
Jaikishan Dass Mull vs. Luchhiminarain Kanoria & Co. (1974) 2 SCC 521.
5
Garware Wall Ropers Ltd. vs Coastal Marine Constructions Civil Appeal No. 3631/2019.
6
Proposition at Paragraph 11; Proposition at Paragraph 12.
7
Section 16(1)(a), Arbitration and Conciliation Act, 1996.

1
phrase “contract” refers to a contract that existed in the eyes of the law at some point.
However, a contract that has not been stamped cannot be acted upon. 8 If a contract has not
been enforceable at any point in time, it is essentially non-existent in the eyes of the law. 9
Section 16 of the Act does not contemplate such a situation.

In the absence of the assistance of this provision, reliance must be placed on Section 35 of the
Indican Stamp Act. As stated previously, no instrument, which has to be mandatorily stamped
and remains unstamped, can be acted upon. By extension, the arbitration clause of the
agreement also cannot be acted upon.

In this case, the SPA was not stamped.10 Consequently, the SPA could not be acted upon. In
accordance with the principles stated above, this would mean that the SPA was not
enforceable at any point. Consequently, the SPA was not a contract within the context of
Section 7 of the Act. This vitiates the applicability of the arbitration clause, while not falling
under the purview of Section 16(1) of the Act.

In light of the above arguments, it is submitted that the statutory bar in Section 35 of the
Indican Stamp Act renders an arbitration agreement in an unstamped instrument
unenforceable. Consequently, it is also submitted that the arbitration agreement in Clause
24.6 would not be enforceable.

II. Issue (I) falls within the scope of inquiry required to be carried out by a court
under Section 11(6A) of the Arbitration and Conciliation Act.
Although Section 11(6A) of the Act appears to confine the extent of Court interventions to
examining the existence of an arbitration agreement, its true scope is wider. The validity of
an arbitration agreement is essential for its existence (a.). In arguendo, the scope of the term
“existence” in the Section is wider than its literal meaning (b.).

a. The validity of an arbitration agreement is essential for its existence.


The notion of “existence” contemplated in the Section refers to existence in the eyes of the
law, and not literal existence.11 An arbitration agreement does not exist in the eyes of the law
if it does not satisfy mandatory legal requirements, and an invalid agreement is not an
agreement.12 Consequently, to examine whether an arbitration agreement exists, one must
also examine whether the arbitration agreement is valid. As a result, the question of validity
8
Section 35, Indican Stamp Act, 1899.
9
Section 2(g), Indican Contract Act, 1872.
10
Proposition at Paragraph 11; Proposition at Paragraph 12.
11
Supra note 5.
12
Vidya Drolia vs Durga Trading Corporation Civil Appeal No. 2402/2019.

2
goes to the root of the existence of the arbitration agreement as a whole. As the validity of an
arbitration agreement is essential for its existence, Issue (I) falls within the scope of inquiry
required to be carried out by a court under the Section.

b. The scope of the term “existence” in the Section is wider than its literal
meaning.
Establishing the mere existence of an arbitration agreement would not require more than a
simple reading of the document it is contained in. Following the textual meaning of the
Section would result in the conclusion that Section 11(6A) allows for the institution of
judicial proceedings to simply read a document. This is an absurd conclusion, and violates the
well-established principle of de minimis non curat lex.13 When following the literal meaning
of a statute leads to an absurd conclusion, interpretation must be resorted to.14

Therefore, “existence”, as contemplated in Section 11(6A) of the Act, has to have a different
meaning. In fact, it has been interpreted to have a significantly larger scope than its textual
meaning. The question of arbitrability of the issues has been determined to come within its
ambit,15 the question of what disputes the arbitration clause would govern, 16 as well as the
question of validity.17 Even if the validity of an arbitration agreement was not essential for its
existence, judicial interpretation has made it clear that “existence” in the Section must be
understood in a wider context than its ostensible meaning. Due to the close relationship
between the terms “existence” and “validity”, 18 the scope of the former’s usage in the Section
can be expanded to examine the validity of an arbitration agreement as well.

In light of the arguments stated above, it is humbly submitted that Issue (I) falls within the
scope of Section 11(6A) of the Act.

13
Helford v. Bailey: (1849) 18 L. J. Q. B. 109.
14
Keshavji Ravji & Co. v. Commissioner of Income Tax 1990 SCC (2) 231; Commissioner of Income Tax v. T
V Sundaram Iyyengar 1975 101 ITR 764 SC.
15
Indian Oil Corporation Limited v. NCC Limited Civil Appeal No. 341/2022.
16
Brightstar Telecommunications India Ltd. v. Iworld Digital Solutions Private Ltd. Arbitration Petition No.
662/2017
17
Supra note 12.
18
Supra note 12.

3
III. A petition under Article 227 of the Constitution against an order passed by an
arbitral tribunal is not maintainable.
High Courts are empowered to exercise supervisory jurisdiction, as well as issue orders, over
all courts and tribunals within their territorial jurisdiction. 19 However, as decided by the High
Court on 29th November, 2021,20 it will not apply in the present case as it does not satisfy the
Test for Sanctity of Arbitral Process [a.]. In arguendo, the arbitral award not being
pronounced at the time of the petition being moved prevents the petition from being
maintainable [b.].

a. The Test for Sanctity of Arbitral Process is not satisfied.

While High Courts are empowered to exercise supervisory jurisdiction over “tribunals”, this
power is to be exercised with extreme circumspection in the context of the Act. 21 The Test for
Sanctity of Arbitral Process necessitates that the case should be exceptional in nature, and
there must not be a patent lack of jurisdiction. 22 The present case does not rise to the level of
an exceptional case [i.] and there is no patent lack of jurisdiction [ii.].

i. The present case does not rise to the level of an exceptional case.
Judicial interference with the arbitral process can only be justified in an exceptional case,
such as when one party is left without a remedy. 23 Further, there is a requirement of gross
injustice in the impugned order, which is so shocking to the court’s conscience, or the
conclusions were so absurd or opposed to justice that it becomes absolutely necessary in the
interest of justice for the traditional legal system to interfere. 24 In this case, there is a
complete and total absence of anything rising to that level of unjustness. The only order
which was passed by the arbitral tribunal was regarding a suspension of proceedings until this
Honourable Court renders its decision.25

ii. There is no patent lack of jurisdiction.


The interference of the traditional legal system should be restricted to orders that patently
lack inherent jurisdiction.26 In this case, the arbitral tribunal had the jurisdiction to pass the

19
Article 227, Constitution of Indica, 1950.
20
Proposition at Paragraph 24.
21
Unitech Limited v. Telangana State Industrial Infrastructure Corporation (TSIIC), 2021 SCC OnLine SC 99,
SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618.
22
Sardar Sarovar Narmada Nigam v. Bhaven Construction, Vadodara 2005 SCC OnLine Guj 239; Amazon.Com
NV Investment Holdings LLC v. Future Retail Ltd. (2022) 1 SCC 209.
23
Supra note 22.
24
Black Diamond Trackparts Pvt. Ltd. v. Black Diamon Motors Pvt. Ltd. 2022 SCC OnLine Del 545.
25
Proposition at Paragraph 22.
26
M/s Deep Industries Ltd. v. Oil and Natural Gas Corporation and Anr. Civil Appeal No. 9106/2019.

4
order that caused the Respondent’s petition, under the Arbitration and Conciliation Act of
1996.27 As stated by the Court, this is a self-contained legislation and all remedies shall be
derived from its own provisions.28

b. The arbitral award not being pronounced at the time of the petition being
moved prevents the petition from being maintainable.
Once the arbitration process has commenced in the arbitral tribunal, the supervisory
jurisdiction of the High Courts cannot apply until the arbitral award has been pronounced. 29
In this case, SYSPL approached the High Court before the pronouncement of an arbitral
award. As such, the High Court did not have the jurisdiction to examine such a petition.

As this case does not satisfy the Test for Sanctity of Arbitral Process, and the arbitral award
had not been pronounced, the petition under Article 277 was not maintainable.

27
Section 17, Arbitration and Conciliation Act, 1996.
28
Section 5, Arbitration and Conciliation Act, 1996.
29
Steel Authority of India Ltd. v. Indian Council of Arbitration 2013 SCC OnLine Del 4490; T. Jeganatha v.
Madras High Court Arbitration Centre 2018 SCC OnLine Mad 9692.

5
PRAYER FOR RELIEF
In the light of facts stated, issues raised, authorities cited and arguments advanced, it is most
humbly and respectfully prayed that this Honourable Court may be pleased to:

1. Pass a decree stating that the arbitration agreement is unenforceable; and


2. Pass a decree stating that the scope of Section 11(6A) of the Act includes Issue (I);
and
3. Pass a decree stating that petitions under Article 227 against orders by arbitral
tribunals are not maintainable; and
4. Confer other remedies that this Honourable Court deems fit for the ends of equity,
justice and good conscience.
All of which is most humbly and respectfully, submitted.

DATE 094A

3rd February 2023 (Counsel for the Appellant)

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