Deficiently Stamped Arbitration Agreements: The Supreme Court Finally Decides

Introduction

Section 35 of the Indian Stamp Act, 1899 (the "Stamp Act") stipulates that a deficiently stamped agreement is inadmissible in evidence until the deficient stamp duty is paid. The provisions of the Stamp Act are clearly stated and have been understood and routinely applied by Indian courts to general agreements sought to be brought into evidence. Over the past decade, however, Indian courts have handed down a series of conflicting judgments on the issue of the enforceability of a deficiently stamped arbitration agreement.

The issue became even more complicated in April 2023 with a decision of a five-judge bench of the Supreme Court in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited ("NN Global 2"), which held that an deficiently stamped agreement is void, unenforceable and cannot exist in law. NN Global 2 unsettled a long settled legal distinction between admissibility of a document in evidence and its enforceability. The former