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Are unstamped arbitration agreements enforceable in law? SC to reconsider the ‘NN Global’ verdict

The supreme court on Tuesday decided to reconsider the validity of the decision in NN Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd & Ors pronounced by a five-judge bench and referred the issue to the larger bench comprising seven judges.

The five-judge bench comprising Justice K.M. Joseph, Justice Ajay Rastogi, Justice Aniruddha Bose, Justice Hrishikesh Roy and Justice C.T. Ravikumar on April 25, by a 3:2 majority, held that the unstamped arbitration agreements are not enforceable by law. The concerns regarding the decision were raised through a curative petition filed before the court.

As per the bar and bench report, Senior Advocate Arvind Datar appearing for the petitioner argued that according to the court ruling, no applications under section 9 of the Arbitration and Conciliation Act for interim measures could be moved. Senior Advocate Shyam Divan appearing for the respondent, raised concerns regarding limited jurisdiction courts in matters of curative pleas and therefore challenged its maintainability. Divan also urged the bench to not reopen the factual issues in the matter and not to consider the legal issue in the present reference.

To this, the court remarked that “It is too important an issue” and therefore it is important to adjudicate on the correctness of the NN Global judgement. The court also contended, “Arbitrators across the country are facing the situation where they are being told – ‘see the agreement is unstamped and now open the case…’ So this uncertainty has to end.”

Thus, the court ordered, “Having regard to the larger ramifications and the view of the majority in NN Global, we are of the considered view that the proceedings should be placed before a seven-judge bench. The proceedings shall be listed for hearing on 11 October 2023.”

The court appointed Mr Debesh Panda and Ms Pritha Srikumar as the nodal counsels in this case. All compilations were directed to be filed on or before October 6, 2023. 

Case title: Bhaskar Raju and Brothers and Anr v. Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram & other Charities and Ors

Written by Shagun Behal

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