The Hon’ble Supreme Court on 14th February 2020, in the matter of M/S Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram & Other Charities & Ors. v. M/S Bhaskar Raju & Brothers & Ors. observed that when an arbitration agreement is relied upon, the Court is required to consider at the outset, whether the document is properly stamped or not. If not, it cannot be acted upon unless the deficit duty and penalty is paid.
The Hon’ble Supreme Court observed that:
When a lease deed or any other instrument is relied upon as containing the arbitration agreement, the Court is required to consider at the outset, whether the document is properly stamped or not. (Para 20)
Even when an objection in that behalf is not raised, it is the duty of the Court to consider the issue. (Para 20)
If the Court comes to the conclusion, that the instrument is not properly stamped, it should be impounded and dealt with, in the manner specified in Section 38 of the Stamp Act, 1899. (Para 20)
The Court cannot act upon such a document or the arbitration clause therein. However, if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, 1899, the document can be acted upon or admitted in evidence. (Para 20)
-Adv. Tushar Kaushik