In a significant verdict with far reaching implications, the supreme court said that non-stamping or insufficient stamping of an agreement is a curable defect. The supreme court, unanimously held that this defect does not make a document invalid.
hief Justice of India D Y Chandrachud led seven-judge Constitution bench overruled an earlier verdict which by majority of 3:2 had held that unstamped or insufficient agreements, having arbitration clauses, are not enforceable. The supreme court, while ruling in the case titled M/s N N Global Mercantile Pvt Ltd vs M/s Indo Unique Flame Ltd And Ors, ruled that the arbitration clause in an unstamped or insufficiently stamped agreement between parties is enforceable.
The CJI authoring the judgement himself held that an arbitration agreement or its certified copy is not rendered void or unenforceable because it is unstamped or insufficiently stamped. It however, makes it indmissible in evidence. Other judges on the bench were Justices Sanjay Kishan Kaul, B R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, said “insufficiency of stamping. The bench said that objection in connection with the stamping of the agreement falls within the ambit of the arbitral tribunal.
The verdict was in the context of resolving an issue which dealt with three statutes – the Arbitration and Conciliation Act 1996, the Indian Stamp Act 1899, and the Indian Contract Act 1872. The Stamp Act imposes duty on “instruments”. An instrument which is unstamped or insufficiently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions.
The seventh judge on the bench, Justice Sanjiv Khanna delivered a separate and concurring judgment.
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