Unstamped Arbitration Agreements Are Not Void; Stamp Objections Go to the Arbitral Tribunal: Seven-Judge Bench

In N N Global 1 a three-Judge Bench held that an arbitration agreement in an unstamped work order could be acted on, and referred the question (Chandrachud CJI, paras 2-3). A Constitution Bench in N N Global 2 held by 3:2 that an unstamped arbitration agreement is not enforceable (Chandrachud CJI, paras 4-6). A curative petition in Bhaskar Raju and a Section 11 petition in Seka Dobric were then listed before seven Judges (Chandrachud CJI, paras 7-8). The reference was answered without going into the facts (Chandrachud CJI, para 28).

The Stamp Act is a fiscal measure to raise revenue, not a weapon of technicality for a litigant (Chandrachud CJI, paras 59-60). Arbitral autonomy and minimum judicial interference underlie the Arbitration Act, a self-contained code (Chandrachud CJI, paras 66-67, 85). Under the doctrine of competence-competence the arbitral tribunal decides its own jurisdiction, so courts examine only the prima facie existence of an arbitration agreement (Chandrachud CJI, paras 115, 185). Stamp objections need a detailed inquiry that cannot be made on a prima facie basis (Chandrachud CJI, para 185). Section 11(6A) legislatively altered the basis of SMS Tea Estates (Chandrachud CJI, para 203). As a special law, the Arbitration Act has primacy over the Stamp Act and the Contract Act for arbitration agreements, and Section 5 excludes court intervention (Chandrachud CJI, paras 166-167, 175). The tribunal stays bound by the Stamp Act, including impounding (Chandrachud CJI, para 194). SMS Tea Estates and Garware Wall Ropes were wrongly decided, and Vidya Drolia did not deal with stamping (Chandrachud CJI, paras 213, 218, 223). Khanna J. agreed and added further reasons (Khanna J., para 42).