The Hon'ble Supreme Court of India, in M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Limited¹, has held that a writ petition under Articles 226 and 227 of the Constitution of India (“the Constitution”) ought not to be entertained against an order of an Arbitral Tribunal rejecting an objection under Section 16 of the Arbitration and Conciliation Act, 1996 (“the A&C Act”) as to insufficient stamping of the agreements, since such an objection falls within the Tribunal's domain and the remedy lies under Section 34 read with Section 16(6) of the A&C Act. The Court further held that a writ appeal is maintainable where the writ petition was filed under both Articles and relief was granted by the Single Judge, and that a writ court cannot interpret the contracts between the parties while the arbitration is pending.

BRIEF FACTS
An agreement for sale of iron ore was executed on 12.02.2004 between M/s Tarini Prasad Mohanty (“the mine owner”) and M/s Sunflag Iron and Steel Company Limited (“SISCO”), followed by supplementary agreements. Disputes arose and were referred to a Sole Arbitrator under the arbitration clause in the agreement for sale. SISCO made claims against the mine owner, who filed a counter claim. On 05.02.2024, during the arbitration, the mine owner filed an application under Section 16 of the A&C Act, contending that the agreement for sale and the supplementary agreements were insufficiently stamped because the contract was in the nature of “conveyance” chargeable under Article 23 of Schedule I to the Indian Stamp Act, 1899 (“the Stamp Act”), and that the arbitration could not continue unless the agreements were impounded and duly stamped. SISCO opposed the application, stating that the agreements were duly stamped and that the objection, which was not raised when the counter claim was filed, was belated.

By order dated 30.05.2024, the Arbitrator rejected the objection, holding that the contract was an “agreement to sell” and not a “conveyance”, and that it had been properly stamped under Article 5(c) of Schedule I to the Stamp Act. The mine owner challenged this order by a writ petition under Articles 226 and 227 of the Constitution before the High Court of Orissa (“the High Court”). By judgment dated 25.02.2025, a learned Single Judge held the case to be “exceptional”, concluded that the agreements amounted to conveyance, set aside the Section 16 order and directed that the agreements be impounded so that they could be stamped under Article 23 of Schedule I. In the writ appeal preferred by SISCO under Clause 10 of the Letters Patent, the Division Bench set aside the Single Judge's judgment as being in excess of jurisdiction, observing that an order upholding the Arbitrator's jurisdiction could be challenged under Section 34 of the A&C Act at the conclusion of the arbitration, and that deciding whether the agreements were properly stamped required interpretation of the contract on the basis of evidence. The mine owner appealed to the Supreme Court.

ISSUE
Whether the writ appeal preferred by SISCO was maintainable, in view of the mine owner's contention that the Single Judge had exercised jurisdiction only under Article 227 of the Constitution; whether, in exercise of jurisdiction under Articles 226 and 227, a challenge to an order passed under Section 16 of the A&C Act ought to have been entertained while the Arbitrator remained seized of the arbitration proceedings; and whether the Division Bench was right in interfering with the Single Judge's exercise of jurisdiction and setting aside his order.

DECISION
On the first issue, the Court held that the writ appeal was maintainable. The writ petition, including its cause title, pleadings and prayers, was filed under Articles 226 and 227, and substantive writ reliefs had been sought. The Single Judge entertained the petition without specifying any particular Article and granted relief to the mine owner. Relying on Lokmat Newspapers Pvt. Ltd. v. Shankar Prasad², which in turn applied Umaji Keshao Meshram v. Radhikabai³, and on Jogendrasinhji Vijaysinghji v. State of Gujarat⁴, the Court held that where a party invokes both Articles and the Single Judge exercises jurisdiction without confining it to Article 227, the order cannot be treated as one under Article 227 alone so as to defeat the right of appeal. Having invoked both Articles and succeeded before the Single Judge, the mine owner could not, in fairness, contend otherwise. The Court also noted that maintainability of the writ appeal was not specifically questioned before the Division Bench.

On the second issue, the Court reiterated that once arbitration has commenced, parties must await the award unless a right of appeal is available under Section 37, and that Section 16(6) read with Section 34 of the A&C Act provides the remedy against rejection of a jurisdictional objection. It relied on the Constitution Bench in S.B.P. and Company v. Patel Engineering Ltd.⁵, which disapproved of High Courts correcting every order of an Arbitral Tribunal under Articles 226 and 227; on Deep Industries Ltd. v. Oil and Natural Gas Corporation Limited⁶, where the High Court was faulted for inverting the statutory scheme by re-examining what the arbitrator had decided under Section 16; and on Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Limited⁷, on the A&C Act being a complete code in view of Sections 5 and 34. The Court further relied on In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899⁸, which held that objections relating to stamping fall within the ambit of the Arbitral Tribunal and that non-stamping or inadequate stamping is a curable defect which renders an instrument inadmissible, and not void. The mine owner's apprehension that deferring the stamping objection to Section 34 would be inadequate rested on treating insufficient stamping as a fatal jurisdictional infirmity, a premise that no longer holds good in law.

The Court held that the threshold for exercising jurisdiction under Articles 226 and 227 is higher where the statute provides a remedy and expects minimal judicial interference during the proceedings, as the A&C Act does through Sections 5 and 34. It would have to be shown that the challenge cannot await the final award and that intervention at the interim stage is imperative. The Court clarified that these observations concern the “entertainability” and not the “maintainability” of a writ petition, relying on Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority⁹.

Applying these principles, the Court held that the Single Judge, despite noting that interference is warranted only in cases of exceptional rarity where perversity stares one in the face, proceeded to examine the intention of the parties and determine the true nature of the agreements. Since the Arbitrator was empowered to decide the stamping objection, the jurisdiction to decide could not mean the jurisdiction to decide in a particular manner, and even if the Arbitrator erred on merits, such an error was not one of inherent lack of jurisdiction and did not make the case “exceptional”. The Single Judge also could not enter the merits of the dispute when the arbitration was pending and evidence was yet to be led, as that would prejudice the parties, and interpretation of contracts ought not generally to be undertaken in writ jurisdiction. The Court, therefore, held that the Division Bench was justified in setting aside the Single Judge's order and dismissed the appeal with no order as to costs. The question whether the agreements were in fact “conveyance” or merely agreements for sale was left open, to be raised under Section 34 of the A&C Act if the need arises.

CONCLUSION
The ruling clarifies that an objection as to stamping of an arbitration agreement or the underlying contract is for the Arbitral Tribunal to decide, and that an erroneous decision on it is an error within jurisdiction, to be tested under Section 34 after the award and not through a writ petition during the arbitration. It reinforces that the threshold for interference under Articles 226 and 227 with orders under Section 16 is high, and that writ courts must not interpret contracts or decide the merits while the Tribunal is seized of the matter. It also settles that where a writ petition is filed under both Articles and relief is granted, the aggrieved party can invoke the intra-court appeal, and the petitioner cannot later insist that the petition was under Article 227 alone.

By - Debayan Dutta and Mukul Mahtha