Stamp Duty On Arbitration Agreement

Shortly after the Bombay High Court`s decision at Gautam Landscapes, the Supreme Court considered whether courts could appoint an arbitrator under section 11 of the Act if the underlying agreement containing the arbitration clause was insufficiently stamped (Garware Wall Ropes v Coastal Marine Constructions). (2) In the Garware case, the Supreme Court examined the issue extensively in the context of the new section 11(6A) of the Act. After a thorough review and analysis of the applicable provisions and previous decisions of the Supreme Court and some high courts, the Supreme Court decided that courts could not appoint an arbitrator on the basis of an arbitration clause if the agreement containing such a clause was not sufficiently stamped. The tribunal concluded that such an arbitration clause did not exist legally. Stamp duty is a kind of mandatory tax under Indian law that must be paid for any document or instrument relating to rights or obligations. It is necessary to be paid to the government or jurisdictional authority in which the document or act is performed. The calculation of stamp duty depends on the nature of the document and varies from state to state. It shall be subject to the provisions of either of the legislation on the central stamp and of national legislation. . . . .