In Brief
A Constitution Bench addressed whether unstamped or insufficiently stamped arbitration agreements can be enforced under the Arbitration Act, 1996 despite the statutory bar in Section 35 of the Stamp Act, 1899. The majority held that an arbitration agreement contained in an unstamped instrument is non-existent in law and cannot be acted upon. Courts exercising powers under Section 11 must impound such instruments and direct payment of stamp duty before appointing arbitrators. The Court affirmed that the Stamp Act's mandatory provisions apply to all authorities receiving evidence, and non-stamping is not merely a curable defect that can be deferred to the arbitrator. Only after validation through payment of duty and penalty under Section 42 can such agreements be enforced.
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