If The Lower Court Is Bound By SC Decision When Another SC Bench Refers The Case To A Larger Bench Is Debatable

Name of the Case

Bhagwati Dev Gupta and Anr. v. Star Infratech Pvt. Ltd.

Background

• A petition was filed for the appointment of an arbitrator for arbitrating a dispute between parties, under Section 11(5) of the Arbitration and Conciliation Act.
• The counsel for the respondent raised an objection on arbitrating the dispute stating that there was inadequate stamping.
• He stated that the dispute cannot be referred for arbitration unless the defect has been rectified.
• The counsel for the petitioner stated that the arbitration agreement is sufficiently stamped and even if it was not, the matter could be decided by the arbitrator.

Court’s Observation

• The Court observed that the deficiency or non-payment of stamp duty does not lead to invalidation of the contract according to the referred judgments.
• The Supreme Court had doubted the correctness of a decision cited by the respondent in another case before a bench of the Supreme Court.
• The findings had been referred to a higher strength bench of the Supreme Court.
• The binding nature of the decision is still debatable.

Court Order

• A Supreme Court had doubts regarding the correctness of the decision of another equal strength Supreme Court bench so the matter has been referred to a bench of higher strength, in which case, the lower courts are not bound by the decision of the earlier bench.
• The case was referred to the Delhi International Arbitration Centre after the respondent agreed for arbitration.

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