M/S. N.N. GLOBAL MERCANTILE PRIVATE LIMITED VERSUS M/S. INDO UNIQUE FLAME LTD. & ORS
(Supreme Court of India – CIVIL APPEAL NO(S). 3802-3803 OF 2020)
Whether the Arbitration Agreement can be treated as a separate contract, and even if the main
contract is not stamped ?
In above case, SC observed that the underlying principle behind treating the Arbitration Agreement
as a separate agreement is to create a mechanism, which survives the contract so that disputes,
falling within the Arbitration Agreement, are resolved. However, proceeding on the basis that an
Arbitration Agreement contained as a clause in the main contract, is a separate agreement and it can
exist independently even in context of s.33 and s.35 of Stamp Act will be fallacious.
Observing as above, SC held that :- “An instrument, which is exigible to stamp duty, may contain an
Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in
law within the meaning of Section 2(h) of the Contract Act and is not enforceable under Section 2(g)
of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a
contract and not enforceable in law, cannot, therefore, exist in law.”
Thus for a party to enforce arbitration in terms of the agreement, as a prerequisite, it must be
stamped and sufficiently stamped, without which the process of impounding and payment of stamp
duty and penalty will have to be followed first.
Also can you add the following in the end of the Article : -“Author of this article: Adv. Ravish Bhatt, Solicitor, Senior Courts of England and Wales, ADIT, Chartered Institute of Taxation
Connect with Mr. Bhatt on Linkedin: www.linkedin.com/in/ravish-bhatt
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