Supreme Court to deliver verdict on validity of unstamped arbitration agreements tomorrow

A seven-judge Constitution Bench of the Supreme Court will on Wednesday deliver its verdict in the case concerning the validity of arbitration agreements embedded in unstamped documents. [In Re: interplay between Indian Stamp Act and Indian Arbitration Act].A Bench of Chief Justice of India (CJI) DY Chandrachud and Justices Sanjay Kishan Kaul, Sanjiv Khanna, BR Gavai, Surya Kant, JB Pardiwala and Manoj Misra had reserved its verdict on October 12..In September, the Supreme Court had referred the issues decided by a five-judge Constitution Bench judgment in NN Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd & Ors to a seven-judge bench for reconsideration.The five-judge Constitution Bench in NN Global had on April 25 held by a 3:2 opinion that unstamped arbitration agreements are not valid in law.Soon after, the Union Law Ministry had constituted an expert committee to recommend reforms to the Arbitration and Conciliation Act and to examine the functioning of arbitration law in the country..The curative petition in the instant case stems from a review petition filed against a Karnataka High Court order, which had been dismissed by the top court in July 2021.The High Court had, in December 2014, considered a lease deed with an arbitration agreement between the instant parties as valid and appointed an arbitrator. In February 2020, a three-judge Supreme Court Bench had set aside the same..The case arose after a charitable trust (respondents) had entered into a lease agreement with the appellants to develop a multi-purpose community hall and office complex, as well as for the renovation of some properties on their land. The agreement, which was for 38 years, was signed in 1996 and contained a clause for a security deposit of ₹55 lakh.In 2008, a suit was filed by the trust against the appellants, pointing out that only ₹25 lakh had been deposited, while a samadhi in the property had been desecrated. Further, the appellants were accused of trying to file a fresh sale deed in connivance with some of the trust's members.The Bengaluru City Civil Court passed an interim order of status quo. Two years after the suit proceedings commenced, the appellants invoked the arbitration clause before the Karnataka High Court in 2013.Notably, after the orders of a single-judge, the Judicial Registrar noted that the document in question was a lease deed and not an agreement to lease. Therefore, the Registrar directed the appellants to pay a deficit stamp duty and penalty of ₹1,01,56,388.However, the High Court subsequently ignored the Registrar's findings and appointed an arbitrator. The Supreme Court in its curative jurisdiction will now consider whether the same was justified.