Key points
- An unstamped or under-stamped agreement is inadmissible in evidence, not void. The defect can be cured.
- Courts deciding whether to refer a dispute to arbitration look only at whether an arbitration agreement exists.
- Stamping objections are for the arbitral tribunal, which can impound the document and require duty and penalty.
- In court proceedings, an unstamped contract still cannot be relied on until the duty is paid.
For a few months in 2023, a missing stamp could stop an arbitration before it began. In April 2023 a five-judge bench of the Supreme Court held, by a majority, in N.N. Global Mercantile v. Indo Unique Flame that an arbitration agreement in an unstamped contract could not be acted on, and courts asked to appoint arbitrators began sending contracts to be impounded first. Indian contracts are routinely signed without stamp duty being paid, or paid in full, so the effect was immediate.
On 13 December 2023, a seven-judge bench reversed that position in In re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899.
What the Court held
- Inadmissible is not void. Under the Stamp Act, an instrument that is not duly stamped cannot be admitted in evidence or acted upon until the duty and penalty are paid. That makes it inadmissible, not void or unenforceable. The defect is curable.
- The arbitration agreement survives. Because the agreement is not void, the failure to stamp the main contract does not make the arbitration clause in it non-existent.
- The referral court’s role is narrow. A court asked to refer parties to arbitration (section 8) or to appoint an arbitrator (section 11) examines only whether an arbitration agreement exists on a prima facie basis. It does not impound the document or decide stamping objections.
- Stamping is for the tribunal. The arbitral tribunal has the power to receive evidence, so it can impound an unstamped instrument and require the duty and penalty to be paid before relying on it.
The Court overruled N.N. Global on this point, along with the parts of earlier decisions, including SMS Tea Estates (2011) and Garware Wall Ropes (2019), that had taken the contrary view. In SBI General Insurance v. Krish Spinning (2024), the Supreme Court confirmed that a section 11 court should confine itself to examining the existence of the arbitration agreement and leave the rest to the tribunal.
What did not change
Interplay is about getting to arbitration. It does not abolish stamp duty, and it does not help a party relying on an unstamped document in court.
- The duty is still payable, with a penalty that can reach ten times the deficit under the central Act, and differs under State laws.
- The tribunal will ask for it. A party that wants to rely on the contract will have to pay the duty and penalty at that point, often at the worst moment.
- In a court suit, the unstamped contract remains inadmissible until it is stamped.
What to do with your contracts
- Stamp at signing. E-stamping is available in most States and is quick. The cost is almost always lower than the penalty later.
- Know which State’s law applies. Duty depends on where the document is executed and, in many States, on where it is brought. Contracts signed abroad must generally be stamped within three months of first being received in India.
- Check the clause itself. Most arbitration fights are not about stamps but about the seat, the appointment procedure and the institution. A clause that lets one party alone appoint the arbitrator will not survive.
- Audit old contracts before a dispute, not during one.
Our arbitration practice drafts clauses and runs proceedings, and our Contract Health Check includes questions on stamping and dispute resolution.
Sources
This article is for general information and states the law as at 12 October 2026. It is not legal advice. For advice on your situation, contact the firm. Published by BRB Legal.
