Search Your Queries Related To Trilegal

Stamp Of Invalidity Or Separate But Equal? The Indian Supreme Court Says: If Unstamped, Agreement Cannot Be Acted Upon

25 May 2023

Bank thumb image
By: Shalaka Patil (Partner), and Paulomi Mehta (Senior Associate)

This piece was originally published on the Kluwer Arbitration Blog.

In an India-seated arbitration, if your contract is unstamped or insufficiently stamped, the Supreme Court of India has now confirmed in its authoritative judgement passed on April 25, 2023, in N N Global Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. (“NN Global”) that this would be a valid ground to disallow acting upon the arbitration agreement until such defect is cured. In the judgment passed by a 3 to 2 majority, the dissenting minority view held that the stamping and impounding need not be done at the threshold stage and that non-stamping of the substantive contract would not render the arbitration agreement non-existent in law. In India, the Indian Stamp Act, 1899 (“Stamp Act”) requires all agreements or instruments to be stamped or paid up with stamp duty. As a fiscal law, it ensures the government is not deprived of revenue. Under the Stamp Act, a contract which is not stamped or insufficiently stamped is invalid and cannot be relied on for evidence by a party.

NN Global has far-reaching ramifications on all India-seated arbitrations where Stamp Act applies, whether domestic or international.

The decision in NN Global was rendered after a three-judge bench, in its 2021 judgment, made a reference to a larger bench to authoritatively settle the question- whether an arbitration clause contained in an unstamped agreement would be rendered invalid. An analysis of the prior 2021 three-judge bench judgement was presented in a blog post here.

This post explores how the determination of the validity of the arbitration agreement is likely to have an impact on litigation strategy, the appointment of arbitrators and how parties will weigh commercially- putting off payment of stamp duty against making upfront payment and opting for arbitration.

Download PDF to read more

Trending News

Disclaimer

Under the rules of the Bar Council of India, Trilegal is prohibited from soliciting work or advertising in any form or manner. By accessing this website, www.trilegal.com, you acknowledge that:

  • You are seeking information about Trilegal of your own accord and there has been no form of solicitation, advertisement or inducement by Trilegal or its members.
  • This website should not be construed as providing legal advice for any purpose.
  • All information, content, and materials available on this website are for general informational purposes only.
  • Any information obtained or material downloaded from this website is completely at the user’s volition, and any transmission, receipt or use of this website is not intended to, and will not, create any lawyer-client relationship.
  • Information on this website may not constitute the most up-to-date legal or other information. Trilegal is not liable for the consequences of any action taken by any person based on any material or information available on this website, or for any inaccuracy in or exclusion of any information or interpretation thereof.
  • Readers of this website or recipients of content or information available on this website should not act based on any or all such content or information, and should always seek advice of competent legal counsel licensed to practice in the appropriate jurisdiction.
  • Third party links contained on this website re-directing users to such third-party websites should neither be construed as legal reference / legal advice, nor considered as referrals to, endorsements of, or affiliations with, any such third party website operators.
  • The communication platform provided on this website should not be used for exchange of any confidential, business or politically sensitive information.
  • The contents of this website are the intellectual property of Trilegal.

We prioritize your privacy. Before proceeding, we encourage you to read our privacy policy, which outlines the below, and terms of use to understand how we handle your data:

  • The types of information we collect and why we collect them.
  • How we use your information to provide a personalized experience.
  • The measures we take to ensure the security of your data.
  • Your rights and choices in managing your personal information.
  • How we may share information with trusted partners for specific purpose.

For more information, please read our terms of use and our privacy policy.

Up arrow