JALDI

Jaldi-Vidhi

In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899

Case details and hearing information from the Constitution Bench Pendency Portal.

603

Message
show

In Re Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act 1996 And The Indian Stamp Act 1899

This case will decide whether unstamped arbitration agreements are valid and enforceable.

Petitioners Arguments
An arbitration agreement embedded in an unstamped or insufficiently stamped contract should still be considered valid and enforceable. The separability principle treats the arbitration agreement as distinct from the underlying contract. This means that even if the main contract is unstamped, the arbitration clause remains valid. The defect of non-stamping is curable under the Indian Stamp Act, and therefore, should not render the arbitration agreement void or unenforceable.
Responders Arguments
An unstamped or insufficiently stamped instrument is inadmissible in evidence under Section 35 of the Indian Stamp Act, 1899. Such agreements should be considered void ab initio (from the beginning) because they do not comply with the legal requirements of stamp duty.
Last Listed On
2023-12-13
Start Date
2023-09-26
End Date
2023-12-13
Card Stage Date
2023-12-13
Review Petition No
Curative Pet(C) No. 44 of 2023
Case Status
Archive
Bench Status
Constituted
Subject Matter
Arbitration
Comment
NA
Disposal Time
2 months,18 days

7 Judge Bench

Judgment delivered

Consider As Stage Of Pendency
false

Date of institution of case

Date of reference to 7 Judge Bench

Judgement pronounced

In 2015, Indo Unique Flame Ltd. (Indo Unique) entered into a sub-contract with NN Global Mercantile Pvt. Ltd. (NN Global). Clause 9 of this sub-contract provided for a security deposit and Clause 10 was an arbitration clause. As per Clause 9, NN Global furnished the bank guarantee in favour of Indo Unique. In 2017, when Indo Unique invoked the bank guarantee, NN Global refused to pay. The dispute was brought before the Commercial Court, which dismissed Indo Unique’s application to refer the dispute to arbitration. Indo Unique then filed a Writ Petition before the Bombay High Court, seeking the reference of the dispute to an arbitral tribunal. NN Global argued that the arbitration agreement was not stamped and therefore invalid. The High Court held the arbitration agreement to be valid. In 2020, NN Global filed a Special Leave Petition against the High Court’s judgment. A three-judge bench of the Supreme Court referred the question of the validity of an unstamped arbitration agreement to a five-judge bench. On 25-04-2023 , the five-judge bench held an unstamped arbitration agreement to be invalid. On 26-09-2023, while hearing a curative petition, a five-judge bench referred the decision in the NN Global case to a seven-judge bench for reconsideration, having regard to the wider ramifications of the majority decision.

W hether an unstamped arbitration agreement is valid and capable of being enforced?

Section 35 of the Indian Stamp Act, 1899

Section 3 of the Indian Stamp Act, 1899

Section 11 (6A) of the Arbitration and Conciliation Act, 1996

The five-judge bench doubted the correctness of the decision in NN Global Mercantile Private Limited v. Indo Unique Flame Limited , considering the larger ramifications and consequences of the view of the majority, and referred the matter to a seven-judge bench for reconsideration.

NN Global Mercantile Private Limited v. Indo Unique Flame Limited

The dust finally settles on the stamping paranoia in Indian Arbitration

The dust finally settles on the stamping paranoia in Indian Arbitration
Source Of Info
Bar and Bench
Date Of Fr
2024-02-10

An Unstamped Arbitration Agreement; In Re: Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act, 1996 And The Indian Stamp Act, 1899

An Unstamped Arbitration Agreement; In Re: Interplay Between Arbitration Agreements Under The Arbitration And Conciliation Act, 1996 And The Indian Stamp Act, 1899
Source Of Info
Mondaq
Date Of Fr
2024-02-23

Stamp Act, 1899 and Arbitration and Conciliation Act, 1996 – Yeh Rishta Kya Kehlata Hai?

Stamp Act, 1899 and Arbitration and Conciliation Act, 1996 – Yeh Rishta Kya Kehlata Hai?
Source Of Info
SCC Times
Date Of Fr
2024-01-04