Whether an arbitration agreement contained in an unstamped agreement can be acted upon?
3. N.N. Global Mercantile Pvt. Ltd v. Indo Unique Flame Ltd
The Supreme Court ruled that an unstamped instrument without the required stamp duty is not legally enforceable. If such an instrument with an arbitration clause is presented in a Section 11 petition under the A&C Act, the Court must seize it. Only after impounding the instrument, ensuring payment of stamp duty, and obtaining the endorsement under Section 42 of the Stamp Act can the Court proceed with the petition. Without proper stamping, the arbitration agreement within the unstamped instrument has no legal validity.
Referring to Sections 2(h) and 2(g) of the Contract Act and Sections 33 and 35 of the Stamp Act, the Court concluded that an unstamped agreement lacks legal enforceability and cannot be used as evidence in court or before a public authority. Until properly stamped in accordance with the Stamp Act, an agreement without the necessary stamp or insufficient stamping is considered void and non-existent in legal terms.
Source: Barandbench
