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Unstamped and Unregistered arbitral clauses, enforceable in the eyes of law: Amicus Curiae 

Last Updated on January 25, 2023 by Administrator

Written By – Shianjany Pradhan

A 3-judge reference was made as to whether the unstamped and unregistered arbitration clause in a contract will be valid and enforceable. For the same, amicus curiae, Mr, Gourab Banerji was appointed, by a five-judge bench. The hearing on the said matter commenced on 17th January. 

Considering the issue of the unstamped and unregistered arbitration agreement under section 11 of the arbitration and conciliation act, the apex court was of the view that, the view laid down in the judgments of M/s tea estates pvt ltd v. M/s chandmari tea co pvt ltd, that the nonpayment of the stamp duty would render the clause as void, was held to be unfavorable for the arbitration agreement bearers.

Later, the issue as to whether the court can u/s 11(6) of the Arbitration and Conciliation act, decide the admissibility of the same, to which the amicus had previously said that though the court is exercising its jurisdiction under Section 11(6), it should restrict itself to deciding whether the agreement existed in the first place or not. 

He also said that unstamped agreements are valid and the issue of their admissibility should be left with the adjudicator. Though Justice Bose was of the view that the court can be an adjudicator u/s 11(6), it was informed by the amicus that the court’s jurisdiction is subjected to only the examination of the existence of the arbitration agreement. If the issue of admissibility will be adjudicated by the court, it will amount to “deciding” and the authority for the same is limited only to the arbitral tribunals. 

The court enquired about its role in the whole issue, does it not have the check the eligibility of the arbitrator and arbitral agreement, to which the amicus replied that if done, it would reduce the scope of the arbitration act and the whole motive of the arbitration act would fail.

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