SC ruling on insufficient stamp duty not making an agreement void or unenforceable

Dec 14, 2023

A seven-judge bench of the Supreme Court has overruled the judgement of a five-judge bench rendered in April this year in N.N.Global Mercantile Pvt. Ltd. v M/s. Indo Unique Flame Ltd. And Ors., in which a 3:2 majority held that arbitration agreements on which stamp duty has not been paid are unenforceable.  

In so doing, the seven-judge bench has correctly held that insufficiency of stamping does not make an agreement void or unenforceable but only makes it inadmissible in evidence.  This is a curable defect under the Indian Stamp Act.

This is an accurate interpretation of the law and a very timely ruling.  Nevertheless, contracting parties should diligently pay stamp duty on agreements, however small the amounts.

Neerav Merchant has over 22 years of experience in dispute resolution, arbitration, litigation, enforcement of foreign judgments and awards, asset recovery, technology and telecommunication, intellectual property, employment, anti-corruption, and real property matters.

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