(1.) This Court has been called upon to resolve an issue which arose in the context of three statutes - the Arbitration and Conciliation Act, 1996[1], the Indian Stamp Act, 1899[2], and the Indian Contract Act, 1872[3]. The Stamp Act imposes duty on "instruments". An instrument which is unstamped or insufficiently stamped is inadmissible in evidence and cannot be acted upon in terms of its provisions. Arbitration agreements are often embedded in underlying instruments or substantive contracts. When an application is made for the appointment of an arbitrator, an objection is raised on the ground that the arbitration agreement is inadmissible because it is in an instrument which is unstamped or inadequately stamped. The primary issue that arises is whether such arbitration agreements would be non-existent, unenforceable, or invalid if the underlying contract is not stamped. A brief description of the context in which this question arises follows.
(2.) In N N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379 (hereinafter referred to as "N N Global 1") a Bench of three Judges of this Court was called upon in a Special Leave Petition to determine the enforceability of an arbitration agreement contained in an unstamped work order. The Bench, speaking through Justice Indu Malhotra, held that an arbitration agreement, being separate and distinct from the underlying commercial contract, would not be rendered invalid, unenforceable, or non-existent. The Court held that the non-payment of stamp-duty would not invalidate even the underlying contract because it is a curable defect. In the process, this Court adopted a view at variance with SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 and Garware Wall Ropes Ltd. v. Coastal Marine Constructions and Engg. Ltd., (2019) 9 SCC 209 In SMS Tea Estates (supra), a two-Judge Bench of this Court held that an arbitration agreement in an unstamped contract could not be acted upon. A two-Judge Bench of this Court in Garware Wall Ropes (supra) relied on SMS Tea Estates (supra) to hold that an arbitration agreement in an unstamped commercial contract would not "exist" as a matter of law and could not be acted upon until the underlying contract was duly stamped:
(3.) N N Global 1 (supra) noted the decision of the co-ordinate Bench in Vidya Drolia (supra) and doubted the correctness of the view adopted in paragraphs 22 and 29 of Garware Wall Ropes (supra) and in paragraphs 146 and 147 of Vidya Drolia (supra) (extracted above). It referred the following issue to a Bench of five Judges:
ABOUT US "REGENT COMPUTRONICS PVT. LTD." is a Company incorporated in 1991 under the provisions of the Companies Act, 1956. Since its inception to 1995, the Company was busy in carrying out the activities related to various Banks' Job Work..
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