InYogesh Kumar Sikka v. Monika (2019) the P & H High Court held as under: Copy of a Deed Cannot be Impounded; it cannot be Validated by Impounding. Under Section 33 of the Stamp Act, every person which has the authority to receive evidence (by law or consent of parties), is duty bound to impound an instrument upon forming an opinion that it is not duly stamped. After the procedure for stamping of the instrument is followed and the duty and the penalty are paid, the instrument would come to be visited with the endorsement under Section 42(2). Under the scheme of the Arbitration Act, an applicant under Section 11 is only required to produce a certified copy of the arbitration agreement. Unstamping Multiple Documents. It seeks to analyse the impact of the Intercontinental judgment on matters that are at a pre-appointment stage pending a conclusive pronouncement on this issue by a five-judge bench of the SCI. Mr. Gourab Banerji, Sr. Adv. (2) of Sec.31 of the Act deals with the power of the Collector to collect materials, in order to determine the stamp duty, if any, chargeable on the instrument produced before him. *The article has been published with kind permission of Eastern Book Company. Copyright 2006 - 2023 Law Business Research. Khaitan & Co MEMBER FIRM OF India February 22 2022 By way of a recent decision pronounced on 25 January 20221, the Hon'ble Supreme Court of India (" SCI ") has attempted to provide much-needed. On the issue of enforceability of an arbitration clause contained in an unstamped or insufficiently stamped agreement, the SCI held that it is not permissible for a court hearing a petition under section 11 of the A&C Act to determine the sufficiency of stamp duty payable on any agreement and the question was one to be decided at a later stage. An unstamped document can be acted upon after payment of stamp duty and penalty. Law on Insufficiently Stamped Documents . In the case of a banking company incorporated outside India balance-sheet and profit and loss 1. The Curious Case Of An Unstamped Agreement: Reference To - Mondaq An unstamped instrument cannot be a contract and is not enforceable. He would like to thank Ms Gulnar Mistry for her comments on earlier drafts of this paper. There is no scope for the inclusion of the copy of the document for the purposes of the Indian Stamp Act. 33, 35 and 38 of the Indian Stamp Actand the Court has to decide the question of admissibility. 36 of the (Indian) Stamp Act, Karnataka High Court pointed out in Nanda Behera v. Akhsaya Kumar Behera, 2017AIR (CC) 1893, relying on Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655, and Yellapu Uma Maheswari v. Buddha Jagadheeswara Rao, (2015) 16 SCC 787, as under: InOmprakash v.Laxminarayan, (2014) 1 SCC 618, the Apex Court observed as under: The Apex Court upheld the observation of the MP High Court in Writ Petition No. Keep a step ahead of your key competitors and benchmark against them. insufficiently+stamped+document | Indian Case Law - CaseMine WHPL objected on the ground that IHG had failed to pay proper stamp duty as set out in law. Become your target audiences go-to resource for todays hottest topics. What followed was a period of uncertainty concerning the fate of arbitration clauses contained in unstamped or insufficiently stamped agreements during the period of the referral of this issue to a constitution bench of five judges of the SCI. The bench has also clarified that if any unstamped document is produced as evidence before an arbitral tribunal, the same must be impounded and sent for stamping. The three judge bench while passing the judgment has set a new position of law, which is in contrast to the earlier SC judgments in the matters of SMS Tea Estates vs Chandmari Tea Company Pvt. This duty is to be performed by the Judge irrespective of the fact whether any objection to its marking is raised or not. The reasoning is straightforward a Section 11 application requires a final determination for which a document has to be admitted into evidence, while an application for interim relief is decided before the stage of evidence. In a given case, if there is an absolute unregistered sale deed and the parties say that the same is not required to be registered thenwe dont think that the Court would be entitled to admit the document because simply the parties say so. The Court went further and held that non-payment or deficiency of stamp duty is a curable defect. The Courts are bound to consider Sections 33 and 35 of the Stamp Act while appointing an arbitrator under Section 11 of the Arbitration Act, as Section 11(6A) cannot authorise the Court to overlook the provisions of Stamp Act. In this case. However, any insufficiency in relation to payment of stamp duty is not to be looked into while the court is exercising their jurisdiction under section 11 of the A&C Act and the limited scope of the provision only allows them to prima facie examine the existence of an arbitration agreement. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. Also Read: Time-Limit For Adjudication of Unstamped Documents, beforeCollector, Unstamped or Insufficiently Stamped Pro-note. THE STAMP ACT IMPOSES AN EVIDENTIARY BAR. The SCI observed that courts had very limited jurisdiction under section 11(6) of the A&C Act, which was limited to examining issues relating to the existence of the arbitration agreement. There are a number of State legislations as well as an Act of the Indian Legislature i.e. Section 2(h) of the Contract Act provides that an agreement which is enforceable in law is a contract. Review your content's performance and reach. In the writ petition, the Bombay High Court held that NN Globals application under Section 8 of the Act was maintainable. However, NCLT being an insolvency court is obligated to look only to the fact that the debt is due, the NCLAT said while relying on Supreme Court rulings. The question of admissibility will have to be decided by reading the document and deciding its nature and classification. 2 See the arguments of the Respondents in IL & FS Financial Services Ltd. v. SKIL Infrastructure Ltd., 2020 SCC OnLine Bom 4862 at paras 53 and 54; G.T. What then of comments in Garware Wall Ropes1 that an unstamped arbitration clause does not exist? Invoking Arbitration Agreements In Unstamped Documents - A Case Comment The Supreme Court considered the provisions of the Arbitration Act, the Stamp Act, and the Contract Act to conclude that an unstamped arbitration agreement is unenforceable, for the following reasons: b) Provisions of Stamp Act and Contract Act: The present judgment has finally put to rest the long-standing issue of enforceability of an unstamped agreement and the arbitration clause contained therein. Ltd. disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident or any
(8) IMZ Corporate Pvt Ltd v MSD Telematics Pvt Ltd 2021 SCC online Del 3016, Bhagwati Devi Gupta v Star Infratech Private Limited 2021 SCC online Del 3995, Tejswi Impex Pvt Ltd v R-Tech Promoters Pvt Ltd 2021 SCC online Del 3870. The result was that an equitable trust of the . From the aforesaid statutory provisions and the decisions, it is clear that a duty is cast upon every judge to examine every document, which is produced or comes before him in the performance of his functions. This doctrine goes further to establish the legislative policy of minimum judicial interference in an issue arising in relation to an arbitration agreement, especially in the pre-reference stage. The SCI, in the case of NN Global, placed heavy reliance on the United Nations Commission on International Trade Law Model Law and the doctrine of severability. The bench has clarified that the defect relating to the unstamped agreement must be cured before the same is admitted as evidence before the arbitral tribunal, but until such time, the courts may pass directions under Sections 8, 9 or 11 of the Act, if such directions are sought. Do I need to respond to unsigned and unstamped documents? One of the issues which fell for consideration before the Bombay High Court was the unenforceability of the sub-contract on account of being unstamped and unregistered. There may be instances where duty and penalty payable may be very high and the party may not choose to rely upon such insufficiently stamped document in order to avoid stamp duty and penalty. . 16United India Insurance Co. Ltd. v. Hyundai Engg. SECONDARY+EVIDENCE+OF+UNSTAMPED+DOCUMENT | Indian Case Law - CaseMine whether it was lost or whether it was destroyed or even if it was the allegation of the party seeking to prove its contents by alleging that the document was suppressed by his opponent., 8. Review your content's performance and reach. Hence, there is a need for diligence on the part of the Court having regard to the statutory obligation under Section 33 of the Karnataka Stamp Act. If you would like to learn how Lexology can drive your content marketing strategy forward, please email [emailprotected]. Accordingly, this three-judge bench has referred the matter for final adjudication to a five judge constitutional bench of the apex court. 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Sec. Ltd., (2005) 8 SCC 618. However, as a practice, arbitration clauses are usually contained in the substantive agreement which is the subject matter of the arbitration clause. The views expressed are not the personal views of EBC Publishing Pvt. However, the non-stamping of any document is a curable defect, which can be rectified by following the procedure laid down by law. Ltd. v. Garware Wall Ropes Ltd., 2018 SCC OnLine Bom 541. In Omprakash v. Laxminarayan, (2014) 1 SCC 618, the Apex Court observed as under: In all of the above cases, the arbitration agreement, or the substantive agreement containing the arbitration agreement, is to be produced before the judicial authority, who shall pass relevant orders once the existence of the arbitration agreement has been established. The SC has held that arbitration agreements contained in unstamped agreements are valid, existent and enforceable in law even prior to the curing of any defects in stamping the agreements. It is mandated under the Act that arbitration agreements in India have to be in writing, and an arbitration agreement could even be entered into via email or any other form of communication. What you need to know about the non-registration and insufficient stamp With all humility at our command we overrule the judgment in the matter of Laxminarayan (supra).. A similar duty is levied in a number of other countries, such as the United Kingdom, the United States of America, and Singapore, albeit with modifications in the nomenclature and application of the duty. An unstamped arbitration clause in an agreement that was compulsorily registrable or chargeable to stamp duty could not be the basis for the appointment of an arbitrator. The impounding of an instrument while appointing an arbitrator is to be done by the arbitrator appointed by the court, and not the court. Privy Councilin Ram Rattan v. Parma Nath,AIR 1946 PC 51, held that section 35 of the Stamp Actprohibitedtheunstamped (or inadequately stamped) documentfrom being looked ateven for any collateral purpose, as it enacts that no instrument chargeable with duty shall be admitted in evidence for any purpose. In Lothamasu Sambasiva Rao v. Thadwarthi Balakotiah, AIR 1973 AP 342, and several other decisions it was held thatSection 35was only a bar to the admissibility of an unstamped or insufficiently stamped document; and that when it had been admitted in evidence it could not have been, afterwards, withdrawn. APPLICABILITY OF THE N. N. GLOBAL JUDGMENT. We do not find any merit in the argument advanced. If proper stamp duty Paid no Requirement of Adjudication. However, the SCI finally concluded that since the Indian Stamp Act, 1899 does not contain any such exception, an unstamped/insufficiently stamped document cannot be the basis for invocation of arbitration. Keep a step ahead of your key competitors and benchmark against them. Only thereafter, the document becomes enforceable, and it can be acted upon. However, the Supreme Court in the present case revisited the law on the issue of validity, existence and enforceability of an arbitration agreement in an unstamped document and overruled two major judgments i.e. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded. In case a certified copy of an original agreement, which is insufficiently stamped, is presented, the Court cannot impound the same under Section 33 of the Stamp Act, however, it can also not act upon it under Section 35 of the Stamp Act. Copyright 2006 - 2023 Law Business Research. These proscriptions are all similar to Section 35 of the Stamp Act, which provides that: (a) any such instrument shall, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion; (b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it; (d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a criminal court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898); (e) nothing herein contained shall prevent the admission of any instrument in any court when such instrument has been executed by or on behalf of the Government or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.