The Supreme Court has ruled that High Courts should refrain from interfering with orders passed by Arbitral Tribunals during the pendency of arbitration proceedings, except in extremely rare and exceptional situations.
The bench of Justice J. K. Maheshwari and Justice Atul S. Chandurkar clarified that objections relating to inadequate stamping of agreements do not automatically invalidate arbitral proceedings and can be agitated at the post-award stage under Section 34 of the Arbitration and Conciliation Act, 1996.
The judgment was delivered in M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Ltd. by a Bench comprising Justice J.K. Maheshwari and Justice Atul S. Chandurkar. The dispute arose from an agreement for sale of iron ore executed in 2004 along with subsequent supplementary agreements entered into between the parties. During arbitration proceedings, the appellant raised an objection under Section 16 of the Arbitration and Conciliation Act contending that the agreements had been insufficiently stamped and ought to be impounded before arbitration could continue.
The Arbitral Tribunal examined the objection and rejected it, holding that the agreements constituted merely “agreements to sell” and not “conveyance” instruments requiring higher stamp duty. Accordingly, the tribunal concluded that the agreements had been adequately stamped and arbitration could proceed.
Aggrieved by this determination, the mine owner approached the Orissa High Court under Articles 226 and 227 of the Constitution. The Single Judge entertained the petition, considered the matter as an exceptional case and held that the agreements were insufficiently stamped. The High Court consequently directed impounding of the agreements and ordered corrective procedures for payment of proper stamp duty.
However, the Division Bench of the High Court reversed the Single Judge’s decision. It held that the Single Judge had exceeded the permissible limits of writ jurisdiction and had unnecessarily entered into contractual interpretation during ongoing arbitral proceedings.
Before the Supreme Court, the appellant argued that the writ appeal itself was not maintainable and further contended that inadequate stamping created a jurisdictional defect which justified intervention by the High Court. The respondent argued that any challenge to rejection of a Section 16 objection must await completion of arbitration and be raised under Section 34.
The Supreme Court rejected the appellant’s submissions and emphasized that the Arbitration and Conciliation Act envisages minimal judicial intervention in ongoing arbitral proceedings. The Court reiterated that Section 16 embodies the principle of “competence-competence”, under which the arbitral tribunal has authority to determine questions concerning its own jurisdiction.
The Court relied heavily on earlier precedents including S.B.P. & Co., Deep Industries, Bhaven Construction, and the Constitution Bench ruling in Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act and the Indian Stamp Act. The Court noted that challenges to rejection of Section 16 objections are generally intended to be raised only after an award is made through proceedings under Section 34.
Importantly, the Court rejected the argument that insufficient stamping destroys the validity of an agreement. Referring to the Constitution Bench ruling in Re: Interplay, the Supreme Court observed that inadequate stamping is merely a curable defect and does not render an agreement void or unenforceable. It only affects admissibility of the instrument in evidence until the deficiency is cured.
The Bench also observed that the Single Judge had gone beyond the permissible scope of writ jurisdiction by attempting to determine the true intention of the parties and by interpreting contractual clauses. Such questions, according to the Court, touch upon the merits of the dispute and should be decided by the arbitral tribunal after evidence is led.
The Supreme Court upheld the Division Bench judgment and dismissed the appeal. While refusing interference, the Court clarified that issues concerning stamping of the agreements remain open and may still be raised under Section 34 after the arbitral award is rendered, if required.
Case Details
Case Title: M/S Tarini Prasad Mohanty Versus M/S Sunflag Iron And Steel Company Limited
Citation: JURISHOUR-1428-SC-2026
Case No.: SLP (C) NO.27534 OF 2025
Date: 27/05/2026
