Arbitration In IndiaUncategorizedUnstamped Agreement – Unveiled Part 2

The Constitution bench of the Supreme Court in 𝐍.𝐍. 𝐆𝐥𝐨𝐛𝐚𝐥 has 𝐟𝐢𝐧𝐚𝐥𝐥𝐲 𝐦𝐚𝐝𝐞 𝐞𝐯𝐞𝐫𝐲𝐨𝐧𝐞 𝐫𝐞𝐚𝐥𝐢𝐳𝐞 𝐭𝐡𝐚𝐭 𝐞𝐧𝐟𝐨𝐫𝐜𝐞𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐨𝐟 𝐭𝐡𝐞 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭 𝐡𝐚𝐬 𝐭𝐨 𝐛𝐞 𝐨𝐧𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐭𝐨𝐩 𝐦𝐨𝐬𝐭 𝐩𝐫𝐢𝐨𝐫𝐢𝐭𝐲 in a business transaction.

Of late, the legal fraternity have had been revisiting their 𝐚𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭𝐬 𝐬𝐨 𝐚𝐬 𝐭𝐨 𝐞𝐧𝐬𝐮𝐫𝐞 𝐭𝐡𝐚𝐭 𝐭𝐡𝐞 𝐚𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭𝐬 𝐚𝐫𝐞 𝐝𝐮𝐥𝐲 𝐬𝐭𝐚𝐦𝐩𝐞𝐝 𝐭𝐨 𝐦𝐚𝐤𝐞 𝐭𝐡𝐞𝐦 𝐯𝐚𝐥𝐢𝐝 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐟𝐢𝐫𝐬𝐭 𝐩𝐥𝐚𝐜𝐞.

In the given backdrop and in the continuing series, the following much-sought queries are dealt as under;

1. 𝐖𝐡𝐞𝐭𝐡𝐞𝐫 𝐚𝐧 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐩𝐞𝐧𝐝𝐢𝐧𝐠 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐚𝐩𝐩𝐨𝐢𝐧𝐭𝐦𝐞𝐧𝐭 𝐨𝐟 𝐚𝐧 𝐚𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐨𝐫 𝐜𝐚𝐧 𝐟𝐚𝐜𝐞 𝐭𝐡𝐞 𝐡𝐞𝐚𝐭 𝐨𝐟 𝐭𝐡𝐢𝐬 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧?

Yes, since every document has got to pass the trite requirement of enforceability and validity and an agreement is not an exception.

This in turn attracts the applicability of appropriate stamp duty in terms of Section 35 read with Section 33 of the Indian Stamp Act, 1899 (“Stamp Act”) while dealing with an application under Section 11 (6) read with Section 11 (6A) of the Arbitration and Conciliation Act,1996 (“Act”).

2. 𝐖𝐡𝐞𝐭𝐡𝐞𝐫 𝐢𝐧 𝐚𝐧 𝐨𝐧𝐠𝐨𝐢𝐧𝐠 𝐚𝐫𝐛𝐢𝐭𝐫𝐚𝐥 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐢𝐧𝐠, 𝐭𝐡𝐞 𝐮𝐧𝐬𝐭𝐚𝐦𝐩𝐞𝐝 𝐚𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭 𝐜𝐚𝐧 𝐛𝐞 𝐚 𝐜𝐨𝐧𝐜𝐞𝐫𝐧?

Yes, since the issue even if not been ​raised by the concerned party or even ​dealt with by the Court during an appointment of the arbitrator, can still be dealt with by the arbitrator as the validity of a document as evidence, ​can still be a valid legal ground in an arbitral proceeding as well.

Further, the unenforceability of a contract makes it fall under the ambit of Sections 2(j) and 2(g) of the Contract Act, 1872 to be finally called void under the eyes of the law.

Therefore, there is no waiver from passing the litmus test of Section 35 of the Stamp Act, even if an arbitral proceeding has been initiated.

Authored by

Anandaday Misshra | Founder & Managing Partner