Arbitration In IndiaUnstamped Agreement – Unveiled Part 3

In 𝐍.𝐍. 𝐆𝐥𝐨𝐛𝐚𝐥, the Constitutional bench of the Supreme Court, in para 109, approved the procedure for dealing with unstamped documents or documents having deficit stamp duty as laid down by Supreme Court in 𝐒𝐌𝐒 𝐓𝐞𝐚 𝐄𝐬𝐭𝐚𝐭𝐞s.

In SMS Tea Estates, the Supreme Court went on to deal with the 𝐩𝐫𝐨𝐜𝐞𝐝𝐮𝐫𝐞 𝐰𝐡𝐞𝐫𝐞 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭 𝐢𝐬 𝐟𝐨𝐮𝐧𝐝 𝐭𝐨 𝐛𝐞 𝐧𝐨𝐭 𝐝𝐮𝐥𝐲 𝐬𝐭𝐚𝐦𝐩𝐞𝐝 𝐨𝐫 𝐰𝐢𝐭𝐡 𝐝𝐞𝐟𝐢𝐜𝐢𝐭 𝐬𝐭𝐚𝐦𝐩 as below;

“(ii) If the document is found to be not duly stamped, Section 35 of Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under Section 33 of the Stamp Act and follow the procedure under Sections 35 and 38 of the Stamp Act.

(iii) If the document is found to be duly stamped, or if the deficit stamp duty and the penalty are paid, either before the Court or before the Collector (as contemplated in Section 35 or 40 of the Stamp Act), and the defect with reference to deficit stamp is cured, the court may treat the document as duly stamped.”

Recently, in the matter of 𝐔𝐧𝐨 𝐌𝐢𝐧𝐝𝐚 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐕𝐬 𝐃𝐞𝐩𝐮𝐭𝐲 𝐂𝐨𝐦𝐦𝐢𝐬𝐬𝐢𝐨𝐧𝐞𝐫 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 𝐃𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭, 𝐃𝐞𝐥𝐡𝐢 𝐇𝐢𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 had dealt with unstamped documents and directed for a time bound adjudication of stamp duty as below;

“….it is opined that reasonable time ought to be fixed in order to enable the parties to have some certainty as to the stamp duty payable. Accordingly, 𝐢𝐭 𝐢𝐬 𝐝𝐢𝐫𝐞𝐜𝐭𝐞𝐝 𝐭𝐡𝐚𝐭 𝐭𝐡𝐞 𝐂𝐨𝐥𝐥𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝐒𝐭𝐚𝐦𝐩𝐬 𝐬𝐡𝐚𝐥𝐥 𝐮𝐬𝐮𝐚𝐥𝐥𝐲 𝐚𝐝𝐣𝐮𝐝𝐢𝐜𝐚𝐭𝐞 𝐭𝐡𝐞 𝐬𝐭𝐚𝐦𝐩 𝐝𝐮𝐭𝐲 𝐩𝐚𝐲𝐚𝐛𝐥𝐞 𝐚𝐧𝐝 𝐜𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐞 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐭𝐨 𝐩𝐚𝐫𝐭𝐢𝐞𝐬 𝐰𝐢𝐭𝐡𝐢𝐧 𝟑𝟎 𝐝𝐚𝐲𝐬. However, if the same involves any complexity/ extraordinary circumstances, the adjudication of stamp duty can be extended for a maximum period of three months from the date of application.”

Hence, 𝐭𝐡𝐞 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐨𝐟 𝐃𝐞𝐥𝐡𝐢 𝐇𝐢𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐛𝐞𝐧𝐜𝐡𝐦𝐚𝐫𝐤 𝐟𝐨𝐫 𝐝𝐞𝐜𝐢𝐝𝐢𝐧𝐠 𝐬𝐮𝐜𝐡 𝐢𝐬𝐬𝐮𝐞𝐬 𝐢𝐧 𝐚 𝐭𝐢𝐦𝐞 𝐛𝐨𝐮𝐧𝐝 𝐦𝐚𝐧𝐧𝐞𝐫 𝐚𝐧𝐝 𝐜𝐚𝐧 𝐚𝐥𝐬𝐨 𝐜𝐨𝐧𝐭𝐚𝐢𝐧 𝐭𝐡𝐞 𝐜𝐨𝐧𝐜𝐞𝐫𝐧𝐬 𝐨𝐟 𝐥𝐞𝐠𝐚𝐥 𝐟𝐫𝐚𝐭𝐞𝐫𝐧𝐢𝐭𝐲 𝐭𝐡𝐚𝐭 𝐝𝐮𝐞 𝐭𝐨 𝐍𝐍 𝐆𝐥𝐨𝐛𝐚𝐥, 𝐭𝐡𝐞𝐫𝐞 𝐬𝐡𝐚𝐥𝐥 𝐛𝐞 𝐝𝐞𝐥𝐚𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐚𝐩𝐩𝐨𝐢𝐧𝐭𝐦𝐞𝐧𝐭 𝐨𝐟 𝐚𝐧 𝐚𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐨𝐫 under Section 11(6) of the Arbitration and Conciliation Act,1996.

Authored by

Anandaday Misshra | Founder & Managing Partner