Court Can't Appoint Arbitrator, If The Agreement Containing Arbitration Clause Is Inadequately Stamped

The Hon'ble Supreme Court presided by a division bench of J. R.F. Nariman and J. Vineet Saran in Garware Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd.¹ examined the effect of an arbitration clause contained in an insufficiently stamped contract and held that such arbitration clause has no existence until the contract is duly stamped. The Court was considering an application under Section 11 (6) the Arbitration and Conciliation Act, 1996 ("Arbitration Act") for appointment of arbitrator.

In this case, the Court examined the validity of its earlier judgment² that if the agreement is insufficiently stamped, then the provisions of the Indian Stamp Act 1899 ("Stamp Act") require the Judge to impound the agreement and ensure that stamp duty and penalty (if any) are paid before proceeding with the Section 11 application. The question before the Court was whether this judgment is still valid, in the light of Section 11(6A), which has been introduced by way