Deficiently Stamped Arbitration Agreements

Deficiently Stamped Arbitration Agreements: The Supreme Court Finally Decides

In April 2023, a five-judge bench of the Supreme Court issued a decision in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited (“NN Global 2”) which held that a deficiently stamped agreement is void, unenforceable and cannot exist in law. Further, the Supreme Court in NN Global 2 held that such an agreement must be impounded by a court called upon to appoint an arbitrator.
NN Global 2 was met with criticism as it would lead to inordinate delays in the appointment of arbitrators and the commencement of arbitration proceedings, if stamping of agreements was made a pre-condition to these actions. It also impacted the manner in which legal practitioners summarized their due diligence findings of deficiently stamped agreements.
On December 13, 2023, a seven-judge bench of the Supreme Court revisited NN Global 2 in Re Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899. This decision overruled NN Global 2, and provided much-needed clarity on the issue of admissibility and the enforceability of deficiently stamped agreements.
This note discusses the key findings of the decision of the seven-judge bench of the Supreme Court.