Position Of Unstamped Arbitration Agreement In India.

Arbitration, one of the most reliable modes of resolution to the disputes. This form of Alternate Dispute Resolution has gained immense prestige and eminence that a large number of people instead of waiting for courts to resolve the matters prefer arbitration.

In India all the agreements be it arbitration or any other are governed under The Stamps Act of 1899[1]. The position of unstamped arbitration agreement has been in deep conflict over the years. Recently, supreme court overruled the five-judge bench decision of NN Global Mercantile Private Limited v. Indo Unique Flame Limited[2] . 

Now court in a seven-judge bench has clearly stated that any instrument will be admissible in court only if it is stamped. There is no place for any unstamped or unduly stamped document. Now even though the judgement was very much clear in what it stated but as the court always gives chance to both the parties, it stated even though unstamped agreements will not be admissible but the agreement cannot be declared void.

However, the position of unstamped arbitration agreements has been subject to continuous changes yet supreme court recently brought out a balanced mechanism which is not grievous. It has provided the parties with a chance to timely stamp their agreements and ensure smooth functioning of one of the most favourable dispute resolution mechanisms in India.

Reference:

[1] Ghosh, S. N., ‘Not worth the paper it’s written on’: Stamp paper documents and the life of law in India. Contributions to Indian Sociology, 53(1), 19-45. (2019) https://doi.org/10.1177/0069966718810566

[2] NN Global Mercantile Private Limited v. Indo Unique Flame Limited, 2021 SCC OnLine SC 13

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