A constitution bench of the Supreme Court of India (“Larger Bench“), in its recent decision in N.N. Global Mercantile Private Limited v Indo Unique Flame Ltd and Other1, by a 3:2 majority, ruled that an unstamped instrument, which is exigible to stamp duty, containing an arbitration clause, cannot be said to be a contract enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 (“Contract Act“) and is therefore not enforceable under Section 2(g) of the Contract Act.
It was further held that the provisions of Sections 33 and the bar under Section 35 of the Stamp Act 1899 (“Stamp Act“), applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Stamp Act, would render the arbitration agreement contained in such an instrument as being non-existent in law, unless the instrument is validated under the Stamp Act.
Please click here to read the full article by Ananya Kumar and Shriya Luke, published in Mondaq.
Ananya focuses on Corporate & Commercial Litigation and Dispute Resolution; with a particular focus on Construction & Engineering, Oil & Gas, Infrastructure and Roads’ Project contracts.