Welcome to the official blog of the Law Offices of Kr. Vivek Tanwar Advocate and Associates, where we are dedicated to providing litigation support services for matters related to the Arbitration and Conciliation  Act. In today’s blog post, we aim to shed light on the prevailing issues surrounding enforceability of the unstamped Arbitration Agreement , Join us as we explore this critical subject and empower you with the knowledge to protect your rights and safety.

In a recent landmark  judgment a seven-judge Constitution Bench of the Supreme Court on Wednesday held that while unstamped arbitration agreements are inadmissible, they are not rendered void ab initio (void from the beginning) on account of the fact that they are unstamped and hence enforceable .


The case arose after a charitable trust (respondents) had entered into a lease agreement with the appellants to develop a multi-purpose community hall and office complex, as well as for the renovation of some properties on their land. The agreement, which was for 38 years, was signed in 1996 and contained a clause for a security deposit of ₹55 lakh.

In 2008, a suit was filed by the trust against the appellants, pointing out that only ₹25 lakh had been deposited, while a samadhi  in the property had been desecrated. Further, the appellants were accused of trying to file a fresh sale deed in connivance with some of the trust’s members.

The Bengaluru City Civil Court passed an interim order of status quo. Two years after the suit proceedings commenced, the appellants invoked the arbitration clause before the Karnataka High Court in 2013.

Notably, after the orders of a single-judge, the Judicial Registrar noted that the document in question was a lease deed and not an agreement to lease. Therefore, the Registrar directed the appellants to pay a deficit stamp duty and penalty of ₹1,01,56,388.

However, the High Court subsequently ignored the Registrar’s findings and appointed an arbitrator. In 2020, the Supreme Court set aside the High Court’s order.

A curative petition was filed in the matter following the dismissal of a review petition by the Supreme Court in July 2021 on the ground of delay.

Court’s Legal Interpretation

Effect of not paying duty renders an instrument inadmissible and not void and non-payment of stamp duty is curable, the Court held overruling its 5-judge bench decision in NN Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd & Ors case.

The Court ruled that the aspect of whether the arbitration agreement has been stamped or not, is for the arbitral tribunal to decide and not courts. To arrive at this principle, the Court relied on the doctrine of competence-competence which concerns the tribunal’s power to rule on its jurisdiction.

“Parties to arbitration agreement conferred jurisdiction on arbitral tribunal, When parties pen their signatures to arbitration agreement they are regarded to independently sign the arbitration agreement. In process the separability provision gives rise to doctrine of competence. The negative aspect of doctrine of competence is that it limits courts interference at referral stage and arbitral tribunal given a chance to rule on their own jurisdiction,” the Court said.

The unanimous ruling was passed by a Bench of Chief Justice of India (CJI) DY Chandrachud and Justices Sanjay Kishan Kaul, Sanjiv Khanna, BR Gavai, Surya Kant, JB Pardiwala and Manoj Misra.

Six judges on the bench including the CJI delivered the lead judgment, whereas Justice Khanna authored a separate but concurring opinion.

The conclusions in lead judgment were summarised by CJI Chandrachud as follows:

– Agreement not stamped are inadmissible under Stamp Act but they are not rendered void ab initio;

– Aspect of stamping does not fall for determination under Sections 8 or 11 of Arbitration Act;

– Stamping or not falls for determination by arbitral tribunal.

“The corollary of doctrine of competence is that court may only see if an arbitration agreement exists. Whether stamp duty is paid or not would need detail merit of evidence etc. Interpretation accorded to Stamp Act does not allow law to be flouted and it ensures that Arbitration Act does not detract from Stamp Act,” the Court said.

The verdict by the seven-judge Constitution Bench of the Supreme Court came in a case concerning the validity of arbitration agreements embedded in unstamped documents. 

In September, the Supreme Court had referred a five-judge Constitution Bench judgment on the issue in NN Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd & Ors to a seven-judge bench for reconsideration.

The five-judge Constitution Bench in NN Global had on April 25held by a 3:2 opinion that unstamped arbitration agreements are not valid in law.

Written by Adv Rohit Yadav

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