Unstamped Arbitration Agreements And The Doctrine Of Separability

Unstamped Arbitration Agreements: The Existing Law

In the past, the Supreme Court has examined what would transpire in the event an arbitration agreement was not duly stamped. The Supreme Court, in the case of M/S Sms Tea Estates P.Ltd v. M/S Chandmari Tea Co. P.Ltd¹ (“SMS Tea Estate Decision”), when examining an application under Section 11 of the Arbitration and Conciliation Act, 1996 (“Act”) held that, a court before admitting any contract into evidence or acting upon the contract, needs to examine whether the contract has been duly stamped. If the contract is found to be not duly stamped, as a result of Section 35 of the Indian Stamp Act, 1899 (hereinafter referred to as the “Stamp Act”), the court cannot act upon the contract that has been submitted by a Party as evidence. It was held that the court can only treat the contract as duly stamped only when the deficit stamp duty and penalty is paid, either before the court or before the Collector as per