# 2023 INSC 1066

- **Citation:** 2023 INSC 1066
- **Court:** Supreme Court of India
- **Decided:** 2023-12-13
- **Case number:** Civil Appeal No. 1599 of 2020
- **Bench:** Dr. Dhananjaya Y Chandrachud
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2023-insc-1066-36806
- **Pages:** 132

## Headnote

Issue for consideration: The issue at hand arose in the context of
three statutes; the Arbitration and Conciliation Act 1996, the Indian Stamp
Act, 1899, and the Indian Contract Act, 1872. The Stamp Act imposes duty
on "instruments". Arbitration agreements are often embedded in underlying
instruments or substantive contracts. The primary issue for consideration was
whether such arbitration agreements would be non-existent, unenforceable,
or invalid if the underlying contract is not stamped. The challenge before
the Supreme Court was to harmonize the provisions of the Arbitration and
Conciliation Act, 1996 and the Stamp Act, 1899.
Arbitration and Conciliation Act 1996 - ss.8 and 11 - Arbitration
agreements embedded in underlying instruments or substantive
contracts - Whether such arbitration agreements would be non-existent,
unenforceable, or invalid if the underlying contract is not stamped -
Interplay between Arbitration Agreements under the Arbitration and
Conciliation Act, 1996 and the Indian Stamp Act, 1899 - Unstamped or
insuffi ciently stamped instruments - If admissible in evidence - Nonstamping or inadequate stamping - If curable.
Ed. Note. Hon'ble Dr Dhananjaya Y Chandrachud, CJI pronounced the judgment on behalf
of himself, Hon'ble Mr Justice Sanjay Kishan Kaul, Hon'ble Mr Justice B R Gavai, Hon'ble
Mr Justice Surya Kant, Hon'ble Mr Justice J B Pardiwala and Hon'ble Mr Justice Manoj
Misra. Hon'ble Mr Justice Sanjiv Khanna pronounced a separate but concurring judgment.
1082
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay
Kishan Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra,
JJ.): Agreements which are not stamped or are inadequately stamped are
inadmissible in evidence u/s.35 of the Stamp Act - Such agreements are
not rendered void or void ab initio or unenforceable - Non-stamping or
inadequate stamping is a curable defect - The Stamp Act itself provides for
the manner in which the defect may be cured and sets out a detailed procedure
for it - An objection as to stamping does not fall for determination u/ss.8 or
11 of the Arbitration Act - The concerned court must examine whether the
arbitration agreement prima facie exists - Any objections in relation to the
stamping of the agreement fall within the ambit of the arbitral tribunal. [Paras
48 and 224] - Held (per Sanjiv Khanna, J.) (Concurring): Unstamped
or insuffi ciently stamped instruments inadmissible in evidence in terms of
s.35 of the Indian Stamp Act, 1899, are not rendered void and void ab initio
- An objection as to the under-stamping or non-stamping of the underlying
contract will not have any bearing when the prima facie test, "the existence of
arbitration agreement", is applied by the courts while deciding applications
under Sections 8 or 11 of the Arbitration and Conciliation Act, 1996 - An
objection as to insuffi cient stamping of the underlying agreement can be
examined and decided by the arbitral tribunal. [Para 1]
Evidence - Admissibility of documents - Diff erence between
inadmissibility and voidness - Contract Act, 1872 - s.2(g).
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
The admissibility of an instrument in evidence is distinct from its validity
or enforceability in law - An agreement can be void without its nature as
a void agreement having an impact on whether it may be introduced in
evidence - Similarly, an agreement can be valid but inadmissible in evidence
- When an agreement is void, one is speaking of its enforceability in a court
of law - When it is inadmissible, one is referring to whether the court may
consider or rely upon it while adjudicating the case - This is the essence
of the diff erence between voidness and admissibility. [Paras 44, 45 and 46]
Indian Stamp Act, 1899 - Purpose of.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Par

## Text

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[2023] 15 S.C.R. 1081 : 2023 INSC 1066
1081
CASE DETAILS
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS
UNDER THE ARBITRATION AND CONCILIATION ACT 1996
AND THE INDIAN STAMP ACT 1899
(Curative Petition (C) No. 44 of 2023)
In
(Review Petition (C) No. 704 of 2021 )
In
(Civil Appeal No. 1599 of 2020)
DECEMBER 13, 2023
[DR. DHANANJAYA Y CHANDRACHUD, CJI,
SANJAY KISHAN KAUL, SANJIV KHANNA,
B R GAVAI, SURYA KANT, J B PARDIWALA AND
MANOJ MISRA, JJ.]
HEADNOTES
Issue for consideration: The issue at hand arose in the context of
three statutes; the Arbitration and Conciliation Act 1996, the Indian Stamp
Act, 1899, and the Indian Contract Act, 1872. The Stamp Act imposes duty
on "instruments". Arbitration agreements are often embedded in underlying
instruments or substantive contracts. The primary issue for consideration was
whether such arbitration agreements would be non-existent, unenforceable,
or invalid if the underlying contract is not stamped. The challenge before
the Supreme Court was to harmonize the provisions of the Arbitration and
Conciliation Act, 1996 and the Stamp Act, 1899.
Arbitration and Conciliation Act 1996 - ss.8 and 11 - Arbitration
agreements embedded in underlying instruments or substantive
contracts - Whether such arbitration agreements would be non-existent,
unenforceable, or invalid if the underlying contract is not stamped -
Interplay between Arbitration Agreements under the Arbitration and
Conciliation Act, 1996 and the Indian Stamp Act, 1899 - Unstamped or
insuffi ciently stamped instruments - If admissible in evidence - Nonstamping or inadequate stamping - If curable.
Ed. Note. Hon'ble Dr Dhananjaya Y Chandrachud, CJI pronounced the judgment on behalf
of himself, Hon'ble Mr Justice Sanjay Kishan Kaul, Hon'ble Mr Justice B R Gavai, Hon'ble
Mr Justice Surya Kant, Hon'ble Mr Justice J B Pardiwala and Hon'ble Mr Justice Manoj
Misra. Hon'ble Mr Justice Sanjiv Khanna pronounced a separate but concurring judgment.
1082
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay
Kishan Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra,
JJ.): Agreements which are not stamped or are inadequately stamped are
inadmissible in evidence u/s.35 of the Stamp Act - Such agreements are
not rendered void or void ab initio or unenforceable - Non-stamping or
inadequate stamping is a curable defect - The Stamp Act itself provides for
the manner in which the defect may be cured and sets out a detailed procedure
for it - An objection as to stamping does not fall for determination u/ss.8 or
11 of the Arbitration Act - The concerned court must examine whether the
arbitration agreement prima facie exists - Any objections in relation to the
stamping of the agreement fall within the ambit of the arbitral tribunal. [Paras
48 and 224] - Held (per Sanjiv Khanna, J.) (Concurring): Unstamped
or insuffi ciently stamped instruments inadmissible in evidence in terms of
s.35 of the Indian Stamp Act, 1899, are not rendered void and void ab initio
- An objection as to the under-stamping or non-stamping of the underlying
contract will not have any bearing when the prima facie test, "the existence of
arbitration agreement", is applied by the courts while deciding applications
under Sections 8 or 11 of the Arbitration and Conciliation Act, 1996 - An
objection as to insuffi cient stamping of the underlying agreement can be
examined and decided by the arbitral tribunal. [Para 1]
Evidence - Admissibility of documents - Diff erence between
inadmissibility and voidness - Contract Act, 1872 - s.2(g).
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
The admissibility of an instrument in evidence is distinct from its validity
or enforceability in law - An agreement can be void without its nature as
a void agreement having an impact on whether it may be introduced in
evidence - Similarly, an agreement can be valid but inadmissible in evidence
- When an agreement is void, one is speaking of its enforceability in a court
of law - When it is inadmissible, one is referring to whether the court may
consider or rely upon it while adjudicating the case - This is the essence
of the diff erence between voidness and admissibility. [Paras 44, 45 and 46]
Indian Stamp Act, 1899 - Purpose of.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
1083
The Stamp Act is a fi scal legislation which is intended to raise revenue for
the government - It is a mandatory statute. [Para 58]
Arbitration - Principle of arbitral autonomy - Doctrines /
Principles.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
The principle of arbitral autonomy is an integral element of the ever-evolving
domain of arbitration law - Arbitral autonomy means that the parties to
an arbitration agreement can exercise their contractual freedom to bestow
the arbitral tribunal with the authority to decide disputes that may arise
between them - The basis of arbitral autonomy is to give eff ect to the true
intention of parties to distance themselves from the "risk of domestic judicial
parochialism. [Para 66]
Doctrines / Principles - Principle of judicial interference in
arbitration proceedings - Scope of non-obstante clause contained in
s.5 of the Arbitration and Conciliation Act 1996 - Legislative intention.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
The principle of judicial non-interference in arbitral proceedings serves
to proscribe judicial interference in arbitral proceedings, which would
undermine the objective of the parties in agreeing to arbitrate their disputes,
their desire for less formal and more fl exible procedures, and their desire
for neutral and expert arbitral procedures - The principle of judicial
non-interference in arbitral proceedings respects the autonomy of the
parties to determine the arbitral procedures - This principle has also been
incorporated in international instruments - s.5 of the Arbitration Act is of
aid in interpreting the extent of judicial interference under ss.8 and 11 of
the Arbitration Act - s.5 contains a general rule of judicial non-interference
- Therefore, every provision of the Arbitration Act ought to be construed in
view of s.5 to give true eff ect to the legislative intention of minimal judicial
intervention. [Paras 69 and 82]
Arbitration and Conciliation Act, 1996 - Is a self-contained code
- Provisions of other statutes cannot interfere with the working of the
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
1084
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Arbitration Act, unless specifi ed otherwise. [Para 85 in judgment of Dr.
D.Y. Chandrachud, CJI]
Arbitration - Arbitration agreement - Is the foundation of
arbitration as it records the consent of the parties to submit their
disputes to arbitration. [Para 88 in judgment of Dr. D.Y. Chandrachud,
CJI]
Arbitration - Arbitration agreement - Separability of the
arbitration agreement from the underlying contract in which it is
contained.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.):
An arbitration agreement is juridically independent from the underlying
contract in which it is contained - The concept of separability refl ects the
presumptive intention of the parties to distinguish the underlying contract,
which captures the substantive rights and obligations of the parties, from
an arbitration agreement which provides a procedural framework to resolve
the disputes arising out of the underlying contract - This presumption has
various consequences in theory and practice, the most important being
that an arbitration agreement survives the invalidity or termination of the
underlying contract - The separability presumption gives eff ect to the
doctrine of competence-competence. [Paras 90 and 112]
Doctrines / Principles - Doctrine of competence-competence -
Comparative analysis - Arbitration and Conciliation Act 1996 - s.16.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay
Kishan Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra,
JJ.): The doctrine of kompetenz-kompetenz (also known as competence
competence), as originally developed in Germany, was traditionally
understood to imply that arbitrators are empowered to make a fi nal ruling
on their own jurisdiction, with no subsequent judicial review of the decision
by any court - However, many jurisdictions allow an arbitral tribunal to
render a decision on its jurisdiction, subject to substantive judicial review
- The UK position is that although the arbitral tribunal is empowered to
consider whether it has jurisdiction, its determination is subject to the
1085
examination of the courts - The courts in the United States have considered
the principle of competence-competence to be intertwined with the
separability presumption - The Singapore High Court has given full eff ect
to the doctrine of competence-competence since the arbitral tribunal gets
the fi rst priority to determine issues even with respect to the very existence
of the arbitration agreement, while the jurisdiction of the courts is limited
to a prima facie determination - s.16 of the Arbitration Act recognizes the
doctrine of competence-competence in Indian arbitration law. [Paras 115,
117, 118, 119, 120]
Doctrines / Principles - Doctrine of competence-competence
-Positive and negative aspects of the doctrine - Negative competencecompetence - Discussed.
Held (per Dr. D.Y. Chandrachud, CJI) (for himself, Sanjay Kishan
Kaul, B.R Gavai, Surya Kant, J B Pardiwala and Manoj Misra, JJ.): The
international arbitration law as well as domestic law prioritize the arbitral
tribunal by permitting them to initially decide challenges to their authority
instead of the courts - The policy consideration behind this approach is
twofold: fi rst, to recognize the mutual intention of the parties of choosing
the arbitrator to resolve all their disputes about the substantive rights and
obligations arising out of contract; and second, to prevent parties from
initiating parallel proceedings before courts and delaying the arbitral process
- This is the positive aspect of the doctrine of competence-competence -
The negative aspect, in contrast, speaks to the national courts - It instructs
the courts to limit their interference at the referral stage by deferring to the
jurisdiction of the arbitral tribunal in issues pertaining to the existence and
validity of an arbitration agreement - Allowing arbitral tribunals to fi rst
rule on their own jurisdiction and later allowing the courts to determine if
the tribunal exercised its powers properly safeguards both the power and
authority of the arbitral tribunal as well as the courts - The negative aspect
of the doctrine has been expressly recognized by Indian courts - Considering
both the positive and negative facets, the principle can be defi ned as a rule
whereby arbitrators must have the fi rst opportunity to hear challenges relating
to their jurisdiction, which is subject to subsequent review by courts. [Paras
129, 130]
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
1086
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Arbitration and Conciliation Act, 1996 - Arbitration Act is a
legislation enacted to inter alia consolidate the law relating to arbitration
in India - It will have primacy over the Stamp Act and the Contract
Act in relation to arbitration agreements. [Para 166 in judgment of Dr.
D.Y. Chandrachud, CJI]
Interpretation of Statutes - Harmonious construction - Provisions
contained in two statutes must be, if possible, interpreted in a
harmonious manner to give full eff ect to both the statutes - In providing
a harmonious interpretation, the Court has to be cognizant of the
fact that it does not defeat the purpose of the statutes or render them
ineff ective. [Para 165 in judgment of Dr. D.Y. Chandrachud, CJI]
Interpretation of Statutes - Non-obstante clause - Held: Although
a non-obstante clause must be allowed to operate with full vigour, its
eff ect is limited to the extent intended by the legislature. [Para 77 in
judgment of Dr. D.Y. Chandrachud, CJI]
Words and Phrases - "admissible". [Para 44 in judgment of Dr.
D.Y. Chandrachud, CJI]
Words and Phrases - Word "shall" - In ss.33 and 35 of the
Stamp Act - Meaning and eff ect of. [Para 189 in judgment of Dr. D.Y.
Chandrachud, CJI]
LIST OF CITATIONS AND OTHER REFERENCES
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(2020) 2 SCC 455 - relied on.
Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1 : [2020]
11 SCR 1001 - clarifi ed.
1087
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SCR 915; Subal Paul v. Malina Paul, (2003) 10 SCC 361: [2003] 1 SCR
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
1088
SUPREME COURT REPORTS
[2023] 15 S.C.R.
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1089
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during the Eighteenth Century' (1993) 36(1) The Historical Journal 137,
139; Earl Wolaver, 'The Historical Background of Commercial Arbitration'
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
1090
SUPREME COURT REPORTS
[2023] 15 S.C.R.
(1934) 83 University of Pennsylvania Law Review 132, 142; Julian D
M Lew, 'Achieving the Dream: Autonomous Arbitration' (2006) 22(2)
Arbitration International 179, 183 and P Ramanatha Aiyar's The Law
Lexicon - referred to.
In the judgment of Sanjiv Khanna, J.
N N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. (2023) 7
SCC 1 - overruled.
Vidya Drolia and Others v. Durga Trading Corporation (2021) 2 SCC
1: [2020] 11 SCR 1001 - clarifi ed.
Javer Chand and Others. v. Pukhraj Surana AIR 1961 SC 1655: [1962]
2 SCR 333; State of Bihar v. M/s Karam Chand Thapar and Brothers Ltd.
AIR 1962 SC 110: [1962] 1 SCR 827; Jupudi Kesava Rao v. Pulavarthi
Venkata Subbarao and Others (1971) 1 SCC 545: [1971] 3 SCR 590;
Hameed Joharan (Dead) and Others v. Abdul Salam (Dead) by LRs. and
Others (2001) 7 SCC 573: [2001] 1 Suppl. SCR 469; Dr. Chiranji Lal
(D) by LRs. v. Hari Das (D) by LRs. (2005) 10 SCC 746: [2005] 1 Suppl.
SCR 359; Hariom Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514:
[2007] 10 SCR 772; Shyamal Kumar Roy v. Sushil Kumar Agarwal (2006)
11 SCC 331: [2006] 8 Suppl. SCR 47; Avinash Kumar Chauhan v. Vijay
Krishna Mishra (2009) 2 SCC 532: [2008] 17 SCR 944; Keshav Mills Co.
Ltd. v. Commissioner of Income Tax, Bombay North, Ahmedabad, AIR
1965 SC 1636: [1965] 2 SCR 908; Government of Andhra Pradesh and
Others v. A.P. Jaiswal and Others, (2001) 1 SCC 748; Total Environment
Building Systems Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes
and Others, 2022 SCC OnLine SC 953; Union of India and Another v.
Raghubir Singh (Dead) by LRs. etc., (1989) 2 SCC 754: [1989] 3 SCR
316; Caravel Shipping Services (P) Ltd. v. Premier Sea Foods Exim (P)
Ltd. (2019) 11 SCC 461: [2018] 14 SCR 289; Govind Rubber Ltd. v. Louis
Dreyfus Commodities Asia Pvt. Ltd. (2015) 13 SCC 477: [2014] 12 SCR
488; B.O.I. FinanceLtd. v. Custodian and Others (1997) 10 SCC 488: [1997]
3 SCR 51; Canara Bank and Others v. Standard Chartered Bank (2002)
10 SCC 697; Swiss Timing Ltd. v. Commonwealth Games 2010 Organising
Committee (2014) 6 SCC 677: [2014] 6 SCR 514; Avitel Post Studioz Ltd.
v. HSBC PI Holdings (Mauritius) Ltd. (2021) 4 SCC 713: [2020] 10 SCR
791; Career Institute Educational Society v. Om Shree Thakurji Educational
Society 2023 SCC OnLine SC 586 and Garware Wall Ropes Ltd. v. Coastal
1091
Marine Constructions & Engg. Ltd. (2019) 9 SCC 209: [2019] 5 SCR 579
- referred to.
Ram Rattan v. Parma Nand AIR 1946 PC 51- referred to.
BNA v. BNB and Another [2019] SGHC 142 and Insigma Technology
Co Ltd v. Alstom Technology Ltd [2009] SGCA 24 - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
INHERENT/CIVIL ORIGINAL JURISDICTION: Curative Petition
(C) No. 44 of 2023 in Review Petition (C) No.704 of 2021 in Civil Appeal
No. 1599 of 2020.
From the Judgment and Order dated 20.07.2021 in RP (C) No.704 of
2021 and dated 14.02.2020 in CA No.1599 of 2020 of the Supreme Court
of India.
With
Arbitration Petition No. 25 of 2023.
Appearances:
Arvind P Datar, Nikhil Sakhardande, Jayant Mehta, Sr. Advs., Debesh
Panda, Ms. Amrita Panda, Naman Maheshwari, Ms. Snehal Maheshwari,
Rameshwar Totala, Rahul Totala, Udbhav Gady, Ashish Venugopal,
Ms. Sonali Mathur, Siddharth Sijoria, Garv Malhotra, Eshan A Chaturvedi,
Arijit Sanyal, Ms. Arundhati Kale, Omar Ahmad, Pratyush Miglani, Pranav
Mago, Kanishk Aggrawal, Sri Aditya Kumar, Sooraj Sharma, Ms. Payal
Chawla, Ms. Hina Shaheen, Ms. Yamini Daga, Shubhra Swami Paranjpe,
Raghav Bhatia, Soayib Qureshi, Advs. for the Petitioners.
Shyam Divan, Nikhil Nayyar, Sr. Advs., Ms. Pritha Srikumar Iyer,
Sulabh Rewari, Divyanshu Rai, Rongon Choudhary, Ms. Mansvini
Jain, Atharv Gupta, Ravi Raghunath, Ms. Aakashi Lodha, Dhanaram
Ramachandran, Advs. for the Respondents.
Gourab Banerji, Sr. Adv., T S Sundaram, Subhro Prokas Mukherjee,
Venkata Supreeth, Mohit Pandey, Rakesh Talukdar, Shashank Garg, Shivank
Dideli, (Amicus in NN Global)
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
1092
SUPREME COURT REPORTS
[2023] 15 S.C.R.
Darius J Khambata, Nakul Dewan, Ms. Malvika Trivedi, K Ramakanth
Reddy, Arvind Verma, Prashanto Chandra Sen, Sr. Advs., Vijayendra
Pratap Singh, Abhijnan Jha, Ms. Shreya Choudhary, Ankitesh Ojha,
Tushar Hathiramani, Ms. Shreenandini Mukhopadhyay, Ms. Vidhi Shah,
Pradhuman Gohil, Mrs. Taruna Singh Gohil, Ms. Ranu Purohit, Alapati
Sahithya Krishna, Rushabh N Kapadia, Ms. Nidhi Mittal, Neil Chatterjee,
Ms. Nooreen Sarna, Ms. Tansi Fotedar, Soumil Jhanwar, Satyender Saharan,
Rohan Naik, Sathvik Chandrashekar, Rahul Arya, Premlal Krishnan, Vivek
Singh, Ms. Bani Dixit, Madhav Bhatia, Shailendra Slaria, Yogesh Sharma,
Mukesh Sharma, Ms. Sujal, Himanshu Kapoor, Alok Tripathi, Shivam
Singh, Ms. Mugdha Pande, Jaideep Khanna, Sahil Bhatia, Suyash Vyas,
Ms. Shaswati Parhi, Nishant Singh, Abir Phukan, Kuriakose Varghese, V
Shyamohan, Ms. Eshita Baruah, Vedant Goel, Arjun Chopra for M/s Kmnp
Law, Kartik Seth, Siddharth Seth, Mrs. Shriya Gilhotra, Prashanth Dixit,
Arushi Singh Rathore, Saurav Chaturvedi, Ankit Gupta, Mahesh Bhati for
M/s Chambers of Kartik Seth, Dr Vivek Sharma, Sameer Rohtagi, Ms.
Simran Brar, Ms. Apoorva Neral, Ms. Sanya Dua, Swastik Dalai, M/s.
Karanjawala & Co, Rahul G Tanwani, Anantha Narayana MG, Shubhendu
Anand, Ayush Anand, Sudipto Sircar, Aditya Shekhar, VC Shukla, Mrs
Sindoora Vnl, Ms. Aditi Tripathi, Ms. Vidhi Thakar, Aman Shukla, Prastut
Dalvi, Alabhya Dhamija, Manan Shanghai, Siddharth Relan, Ms. Charu
Ambwani, Ms. Komal Agarwal, Ms. Kavya Vijay, Ashutosh Srivastava,
Umesh Chandra Srivastava, Ms. Manisha Ambwani, Rajul Srivastav, Ms.
Roohe Hina Dua, Harshit Khanduja, Randeep Sachdeva, Arun Pandit, Ms.
Dhanakshi Gandhi, Sahib Kochhar, Pratham Mehrotra, Ms. Shreya Arora,
Tejas Karia, Ms. Shruti Sabharwal, Ms. Vrinda Pareek, Dr. Rishab Gupta,
Sanyat Lodha for Shardul S Shroff , George Pothan Poothicote, Ms. Jyoti
Singh, Ms. Somya Yadava, Ms. Khyati Jain, Gauhar Mirza, Ms. Hiral Gupta,
Ms. Sukanya Singh, Ms. Nilakshi Srivastava, Abhinav Chahar, Rohit Rahar,
Kunal Vajani, Shubhang Tandon, Guneet Sidhu, Ms. Manisha Singh, Ashu
Pathak, Siddhant Buxy, Ms. Priyanka Vora, Debanshu Khettry, Varun K
Chopra, Mehul Sharma, Abhishek Kandwal for M/s VKC Law Offi ces, PV
Amarnadha Prasad, Ms. Vijayshree Pattnaik, Debesh Panda, Ms. Diya Kapur,
Raghav Kumar, Aditya Ladha, Ms. Gahena Gambani, Ms. Liz Mathew,
Ankur Kashyap, Ajith S Ranganathan, Rohit Rajershi, Abhay Singh, Aman
Bajaj, Advs. for the Intervenors.
1093
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
DR. DHANANJAYA Y CHANDRACHUD, CJI
A. Reference .................................................................................. 5*
B. Submissions ............................................................................ 12*
C. Maintainability ....................................................................... 18*
D. The Indian Stamp Act 1899 ................................................... 22*

i. Overview .............................................................................. 22*

ii. The consequences of the failure to stamp an instrument 27*

a. The procedure under the Stamp Act .......................... 27*

b. The diff erence between inadmissibility and voidness ...32*

c. Section 35 of the Stamp Act renders a document

 inadmissible and not void ...........................................34*

iii. The purpose of the Stamp Act .......................................... 38*
E. The Arbitration and Conciliation Act 1996........................... 40*

i. Arbitral autonomy ............................................................. 42*

ii. Principle of minimum judicial interference ................... 45*

iii. The Arbitration Act is a self-contained code ................. 52*

iv. Principles of modern arbitration .................................... 54*
F. The law on the arbitration agreement ................................... 55*

i. Separability of the arbitration agreement .......................... 56*

d. United Kingdom ................................................................. 58*

e. United States of America .................................................... 61*

f. Singapore ............................................................................. 62*
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899
* Ed Note: Pagination is as per the original judgment.
1094
SUPREME COURT REPORTS
[2023] 15 S.C.R.

g. International Conventions ................................................... 62*

h. India .................................................................................... 64*
G. The doctrine of competence-competence .............................. 70*

i. Comparative analysis ........................................................ 71*

ii. India ................................................................................... 73*

iii. Negative competence-competence .................................. 79*
H. Judicial interference under the Arbitration Act ................... 81*
I. Harmonious construction of the Arbitration Act, the Stamp Act,

and the Contract Act ...............................................................97*

i. The Arbitration Act will have primacy with respect to

 arbitration agreements .....................................................101*

a.
The Arbitration Act is a special law and the Indian Contract

Act and the Stamp Act are general laws ........................101*

b.
Section 5 of the Arbitration Act .................................... 104*

c.
Parliament was aware of the Stamp Act when it enacted the

Arbitration Act ...............................................................106*
ii. Harmonious construction of the three statutes under

consideration ........................................................................106*

a.
The eff ect of the competence-competence doctrine ..... 106*

b.
The eff ect of the word "shall" in Sections 33 and 35 of the

Stamp Act ....................................................................... 111*

c.
The object of the Stamp Act is preserved .....................113*

d.
The interpretation of the law must give eff ect to the purpose

of the Arbitration Act in addition to the Stamp Act ......114*
1095
J. SMS Tea Estates and Garware Wall Ropes were wrongly

decided ...................................................................................115*

i. SMS Tea Estates ................................................................115*

ii. Garware Wall Ropes........................................................119*
K. The Appointment of Arbitrators by the Chief Justice of India

Scheme, 1996 ........................................................................124*
L. Vidya Drolia does not deal with the issue of stamping ....... 126*
M. Conclusions .......................................................................... 129*
A*. Reference
1. This Court has been called upon to resolve an issue which arose in
the context of three statutes - the Arbitration and Conciliation Act 19961,
the Indian Stamp Act 18992, and the Indian Contract Act 1872.3 The Stamp
Act imposes duty on "instruments". An instrument which is unstamped or
insuffi ciently stamped is inadmissible in evidence and cannot be acted upon
in terms of its provisions. Arbitration agreements are often embedded in
underlying instruments or substantive contracts. When an application is made
for the appointment of an arbitrator, an objection is raised on the ground
that the arbitration agreement is inadmissible because it is in an instrument
which is unstamped or inadequately stamped. The primary issue that arises is
whether such arbitration agreements would be non-existent, unenforceable,
or invalid if the underlying contract is not stamped. A brief description of
the context in which this question arises follows.
2. In N N Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.,4
(hereinafter referred to as "N N Global 1") a Bench of three Judges of
this Court was called upon in a Special Leave Petition to determine the
enforceability of an arbitration agreement contained in an unstamped
work order. The Bench, speaking through Justice Indu Malhotra, held that
*
Ed. Note: PART A
 1
"Arbitration Act"
2
"Stamp Act"
3
"Contract Act"
4
(2021) 4 SCC 379
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ]
1096
SUPREME COURT REPORTS
[2023] 15 S.C.R.
an arbitration agreement, being separate and distinct from the underlying
commercial contract, would not be rendered invalid, unenforceable, or
non-existent. The Court held that the non-payment of stamp-duty would not
invalidate even the underlying contract because it is a curable defect. In the
process, this Court adopted a view at variance with SMS Tea Estates (P)
Ltd. v. Chandmari Tea Co. (P) Ltd5 and Garware Wall Ropes Ltd. v.
Coastal Marine Constructions & Engg. Ltd.6 In SMS Tea Estates (supra),
a two-Judge Bench of this Court held that an arbitration agreement in an
unstamped contract could not be acted upon. A two-Judge Bench of this
Court in Garware Wall Ropes (supra) relied on SMS Tea Estates (supra)
to hold that an arbitration agreement in an unstamped commercial contract
would not "exist" as a matter of law and could not be acted upon until the
underlying contract was duly stamped:
"22. When an arbitration clause is contained "in a contract", it
is signifi cant that the agreement only becomes a contract if it is
enforceable by law. We have seen how, under the Stamp Act, an
agreement does not become a contract, namely, that it is not enforceable
in law, unless it is duly stamped. Therefore, even a plain reading of
Section 11(6-A), when read with Section 7(2) of the 1996 Act and
Section 2(h) of the Contract Act, would make it clear that an arbitration
clause in an agreement would not exist when it is not enforceable by
law. This is also an indicator that SMS Tea Estates [SMS Tea Estates
(P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4
SCC (Civ) 777] has, in no manner, been touched by the amendment
of Section 11(6-A).
[...]
29. This judgment in Hyundai Engg. case [United India Insurance Co.
Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17 SCC 607
: (2019) 2 SCC (Civ) 530] is important in that what was specifi cally
under consideration was an arbitration clause which would get
activated only if an insurer admits or accepts liability. Since on facts it
was found that the insurer repudiated the claim, though an arbitration
5
(2011) 14 SCC 66
6
(2019) 9 SCC 209
1097
clause did "exist", so to speak, in the policy, it would not exist in law,
as was held in that judgment, when one important fact is introduced,
namely, that the insurer has not admitted or accepted liability. Likewise,
in the facts of the present case, it is clear that the arbitration clause that
is contained in the sub-contract would not "exist" as a matter of law
until the sub-contract is duly stamped, as has been held by us above.
The argument that Section 11(6-A) deals with "existence", as opposed
to Section 8, Section 16 and Section 45, which deal with "validity" of
an arbitration agreement is answered by this Court's understanding
of the expression "existence" in Hyundai Engg. case [United India
Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018)
17 SCC 607 : (2019) 2 SCC (Civ) 530], as followed by us."
Thereafter, a three-Judge Bench of this Court in Vidya Drolia v.
Durga Trading Corporation,7 cited paragraph 29 of Garware Wall Ropes
(supra) (extracted above) with approval for the proposition that an arbitration
agreement exists only when it is valid and legal:
"146. We now proceed to examine the question, whether the word
"existence" in Section 11 merely refers to contract formation
(whether there is an arbitration agreement) and excludes the question
of enforcement (validity) and therefore the latter falls outside the
jurisdiction of the court at the referral stage. On jurisprudentially
and textualism it is possible to diff erentiate between existence of an
arbitration agreement and validity of an arbitration agreement. Such
interpretation can draw support from the plain meaning of the word
"existence". However, it is equally possible, jurisprudentially and on
contextualism, to hold that an agreement has no existence if it is not
enforceable and not binding. Existence of an arbitration agreement
presupposes a valid agreement which would be enforced by the court
by relegating the parties to arbitration. Legalistic and plain meaning
interpretation would be contrary to the contextual background
including the definition clause and would result in unpalatable
consequences. A reasonable and just interpretation of "existence"
requires understanding the context, the purpose and the relevant legal
7
(2021) 2 SCC 1
IN RE: INTERPLAY BETWEEN ARBITRATION AGREEMENTS UNDER
THE ARBITRATION AND CONCILIATION ACT 1996 AND THE INDIAN
STAMP ACT 1899 [DR. DHANANJAYA Y CHANDRACHUD, CJI ]
1098
SUPREME COURT REPORTS
[2023] 15 S.C.R.
norms applicable for a binding and enforceable arbitration agreement.
An agreement evidenced in writing has no meaning unless the parties
can be compelled to adhere and abide by the terms. A party cannot
sue and claim rights based on an unenforceable document. Thus, there
are good reasons to hold that an arbitration agreement exists only
when it is valid and legal. A void and unenforceable understanding is
no agreement to do anything. Existence of an arbitration agreement
means an arbitration agreement that meets and satisfi es the statutory
requirements of both the Arbitration Act and the Contract Act and
when it is enforceable in law.
147. We would proceed to elaborate and give further reasons:
147.1. (i) In Garware Wall Ropes Ltd. [Garware Wall Ropes Ltd. v.
Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : (2019)
4 SCC (Civ) 324] , this Court had examined the question of stamp duty
in an underlying contract with an arbitration clause and in the context
had drawn a distinction between the fi rst and second part of Section
7(2) of the Arbitration Act, albeit the observations made and quoted
above with reference to "existence" and "validity" of the arbitration
agreement being apposite and extremely important, we would repeat
the same by reproducing para 29 thereof : (SCC p.