In SMS Tea Estates, the deed of tenancy was neither stamped nor registered, and it was therefore established that “if a rental deed or other deed is used as a means of recourse against the arbitration agreement, the court should check in advance whether a single objection is made on that behalf or not, whether the document is properly stamped. If it concludes that it is not properly stamped, it should be seized and processed in accordance with the procedure under Section 38 of the Stamp Act. The court cannot react to such a document or to the compromise clause it contains. However, if the deficit tax and penalty are paid in clause 35 or section 40 of the Stamps Act, the document may be taken or admitted on the basis of evidence.” A recent judgment of 4 April 2019 in the case of Gautam Landscapes Private Limited Vs Shailesh Shah and Ors, 2018 SCC OnLine SC 1045, by a full bank of Bombay High Court had decided that a court could act on a document containing an arbitration agreement, while considering an application in accordance with sections 9 or 11 (6) of the 1996 Act, despite the fact that the document was not stamped or insufficiently stamped. (a) a compromise clause that is part of a contract is treated as an agreement independent of the other terms of the contract; and (b) a decision of the Court of Arbitration to cancel the contract does not imply ipso swears that the compromise clause is null.” Section 35 of this act says: “… No act infringing the obligation of stamp may be admitted into evidence by a person authorized by law or with the consent of the party`s authority to obtain evidence or to be followed, recorded or authenticated by such a person or official, unless that instrument is duly marked.” This section also provides that such an instrument may be presented at the same time as a penalty for the payment of taxes to which it is subject to such a measure. Subsequently, the complainant wrote a letter of 28.3.2008 to the respondent, expressing her willingness to acquire the two rebates mentioned for a mutually agreed consideration and to assume also responsibility for the bank. The complainant issued a notice of 5.5.2008 asking the respondent to refer the defendant to arbitration proceedings under Section 35 of the leasing decision. The respondent did not comply with the broadcast rules. According to the applicant, the dispute between the parties concerned the applicant`s claim that the respondent should either sell the rebates to the complainant, or allow the applicant to continue to provide the rebates as a tenant for 30 years, or return the sums she invested in the two rebates and the payments made to the bank. The Indian Supreme Court (Supreme Court) in its recent decision Garware Walls Ropes Ltd. v. Coastal Marine Constructions – Engineering Ltd.
in Civil Appeal No. 3631/2019, by SLP (C) 9213/2018, issued on April 10, 2019, overturned a Bombay High Court decision, Coastal Marine Constructions – Engineering Ltd. v. Garware Walls Ropes Ltd., in Schieds` Petition 24/2017 (HC), and decided that a compromise clause contained in an agreement that is not stamped under the law cannot take effect if and until the agreement is properly sealed, i.e. it is a full stamp duty on such an agreement, as required by law. The Supreme Court also found that when a court must rule on an application to appoint an arbitrator under Section 11 of the (Indian) Arbitration and Conciliation Act, In 1996 (arbitration law), on the basis of a compromise clause contained in a stamped or poorly stamped agreement, the court must first seize the agreement, send it to the competent authorities for payment of stamp duty and penalty (if any), for non-payment of stamp duty at the first execution of the contract and continue with the request only after payment of this stamp tax and penalty.