November 14, 2025

Introduction

On 13 December 2023, a seven-judge bench of the Supreme Court delivered a significant ruling in In Re: Interplay between Arbitration Agreements under the Arbitration And Conciliation Act, 1996 and the Indian Stamp Act, 1899. The court addressed the long debated question of whether an unstamped or inadequately stamped agreement can be relied upon in arbitration related proceedings.

The Bench clarified that while such an instrument cannot be admitted in evidence until stamp duty is paid, the defect is not fatal it can be cured, and the agreement does not become void or unenforceable merely because of insufficient stamping.

With this decision, the Supreme Court overturned the earlier five-judge ruling in N.N. Global 2 and settled the position that objections relating to under-stamping or non-stamping should not delay or derail proceedings under Section 8 or Section 11 of the The Arbitration And Conciliation Act, 1996. Courts, at this stage, are only required to see whether an arbitration agreement exists, without conducting a detailed inquiry into stamp duty issues.

Admissibility of an unstamped agreement

Section 35 of the Indian Stamp Act, 1899 makes it clear that a document which is not stamped, or not stamped correctly, cannot be used as evidence in court. This is the basic rule, supported by Section 36 and Section 37. There is an important layer to this rule. Over the years, courts have pointed out that Section 35 of the Indian Stamp Act, 1899 does not sit comfortably with Section 49 of the Registration Act, 1908, and this overlap has led to several disputes.

The proviso to Section 49 allows a different approach in certain situations. In cases dealing with specific performance of a contract, a document relating to immovable property even if it should have been registered and was not can still be looked at for limited purposes. Courts can rely on such a document to understand collateral matters that do not require registration, and they are not restricted to only a line or signature; any relevant portion may be referred to.

Once the document is properly stamped and the penalty is paid, however, these concerns fall away. After curing the defect, the document becomes fully admissible, and stamping is no longer an obstacle.

View of High Courts on unstamped arbitration agreements

Delhi High Court

ARG Outlier Media Pvt. Ltd. vs. HT Media Ltd. (2023)

In the case ARG Outlier Media Pvt. Ltd. vs. HT Media Ltd. (2023), Delhi High Court held that once an arbitrator has relied on an agreement and delivered an award, the agreement cannot later be challenged on the ground that it was not properly stamped. The court noted that the party challenging the award never raised any objection about stamp duty during the arbitration neither at the stage of evidence nor when the arbitrator was considering the validity of the agreement.

Therefore, the party could not raise this issue for the first time under Section 34. In short, if stamping was never questioned before the arbitrator, it cannot become a ground to set aside the award afterward.

Green Edge Infrastructure Pvt. Ltd. vs. Magic Eye Developers Pvt. Ltd. (2024)

In Green Edge Infrastructure Pvt. Ltd. vs. Magic Eye Developers Pvt. Ltd. (2024), after the Supreme Court’s ruling in the curative petition on the interplay between the Arbitration Act and the Stamp Act, the Delhi High Court directed that questions about the existence or validity of the arbitration agreement should be addressed by the arbitral tribunal itself. The court invoked the principle of kompetenz-kompetenz, meaning that the tribunal is the proper authority to examine its own jurisdiction.

The court also clarified that when Section 11(6A) speaks of “examining” the arbitration agreement, it does not require a detailed or time-consuming inquiry at the pre-appointment stage. The court should only make a prima facie check, leaving deeper issues such as stamping and validity for the tribunal to decide.

Bombay High Court

L&T Finance Ltd. vs. Diamond Projects Ltd. (2019)

In L&T Finance Ltd. vs. Diamond Projects Ltd. (2019), Bombay High Court clarified that the Constitution Bench judgment in N.N. Global does not prevent courts from granting interim relief under Section 9 even when the underlying agreement or the arbitration clause is unstamped or inadequately stamped. The court explained that unlike Section 11 (appointment of arbitrator) or Section 8 (reference to arbitration), under Section 9 the court does not have to rule on whether the arbitration agreement is valid or properly stamped.

Instead, the court only needs to apply the standard three-part test for interim measures:

Whether there is a prima facie case,
Whether the balance of convenience favours the applicant, and
Whether denying relief would cause irreparable harm.

Thus, insufficient stamping does not stop the court from granting urgent interim protection.

Supreme Court ruling on unstamped arbitration agreements

India has seen a long line of conflicting judgments from the Supreme Court and various High Courts on whether an arbitration agreement needs to be stamped, and what happens if it is not. The issue has travelled through multiple landmark cases, each taking a slightly different view.

SMS Tea Estates (P) Ltd. vs. Chandmari Tea Co. (P) Ltd. (2011)

In this case, the Supreme Court held that if a contract containing an arbitration clause is not stamped, the arbitration clause itself cannot be acted upon. Relying on Section 35 of the Stamp Act, the court said that an unstamped instrument is inadmissible and the court cannot appoint an arbitrator based on such a document.

The court directed the Gauhati High Court to first determine whether the document was properly stamped before considering the Section 11 application. The ruling made it clear that unless the required stamp duty and penalty are paid, the arbitration clause is treated as invalid and unenforceable. This judgment laid down that courts must impound unstamped agreements and send them for stamp duty assessment before proceeding further.

Garware Wall Ropes Ltd. vs. Coastal Marine Constructions & Engg. Ltd. (2019)

In this case, the Supreme Court reaffirmed the logic of the SMS Tea Estates case. It held that an arbitration clause in an unstamped agreement is unenforceable because the underlying contract itself is not enforceable under Section 2(g) of the Contract Act. The court again stressed that stamping is a mandatory requirement, and courts must impound the document and ensure proper stamping before hearing a Section 11 application.

Vidya Drolia vs. Durga Trading Corporation (2020)

In the Vidya Drolia case, the Supreme Court endorsed the reasoning in Garware. It held that the “existence” and “validity” of an arbitration agreement are interconnected. If the underlying agreement does not meet mandatory legal requirements like stamping, the arbitration clause cannot survive. Because earlier and later benches had taken differing views, the Court referred the issue to a larger five-judge Constitution Bench for clarity.

N.N. Global Mercantile (P) Ltd. vs. Indo Unique Flame Ltd. (2021)

A three-judge bench in this case took a very different approach. It held that an arbitration agreement is separate from the main contract and is not itself subject to stamp duty. Applying the doctrine of severability, the court ruled that even if the main contract is unstamped, the arbitration agreement can still be acted upon.

The court allowed the appointment of arbitrators under Section 11 even where the underlying contract was unstamped, subject to payment of stamp duty later. This judgment effectively departed from SMS Tea Estates, Garware, and Vidya Drolia, creating a direct conflict. As a result, the matter was referred to a five-judge Constitution Bench for reconsideration.

N.N. Global Mercantile (P) Ltd. vs. Indo Unique Flame Ltd. (2021) (Constitution Bench)

The Constitution Bench finally settled the issue. It examined whether an arbitration agreement embedded in an unstamped contract is invalid and whether non-payment of stamp duty renders the arbitration clause void. The Bench clarified that an unstamped or insufficiently stamped agreement is inadmissible in evidence, but the defect is curable. Therefore, non-payment of stamp duty does not automatically make the arbitration agreement void.

This judgment marked a decisive shift from earlier positions and overruled the conflicting views in SMS Tea Estates, Garware, and Vidya Drolia. It restored consistency to the law by holding that stamping issues should not derail Section 8 or Section 11 proceedings.

Conclusion

The Supreme Court’s 2023 Constitution Bench has finally settled the confusion around unstamped arbitration agreements. The Court has made it clear that lack of stamping does not make an arbitration clause invalid, it only affects whether the document can be used as evidence, and this defect can be fixed by paying the stamp duty. Courts can no longer hold up Section 8 or Section 11 matters just because the agreement is unstamped.

Most High Courts have followed this line and now avoid detailed scrutiny at the referral stage, leaving stamping issues to be dealt with later by the tribunal. Overall, the law now supports arbitration by ensuring minor procedural lapses do not disrupt what the parties intended.

Frequently asked questions (FAQs)

What is the legal validity of an arbitration agreement?

A proper arbitration agreement should clearly state that the arbitrator’s decision will be final and binding on both sides. It should not allow either party to challenge the award in any way that goes against what the Arbitration Act provides.

Does an arbitration clause work even if the rest of the contract is disputed?

Yes. The arbitration clause stands on its own. Even if the parties argue about the main contract, the matter can still go to arbitration as long as the clause clearly shows both sides agreed to resolve disputes that way.

Validity of an Unstamped Arbitration Agreement