The Supreme Court on Tuesday referred to a seven-judge bench the correctness of an April 25 judgment by a five-judge bench which ruled that an unstamped arbitration agreement had no legal validity and hence the terms of the said agreement cannot be enforced in law.

A five-judge bench headed by Chief Justice of India D.Y. Chandrachud on Tuesday said it was referring the judgment to the seven-judge bench for appropriate pronouncement to end “uncertainty” given large number of arbitrators facing legal problems in adjudicating arbitration-related disputes.

“Having regard to the larger ramifications and consequences of the view of the majority in the matter relating to N.N. Global Mercantile Private Limited vs Indo Unique Flame Ltd and Others... we are of the considered view that the proceedings should be placed before a seven-judge bench to examine the correctness of the view of the five-judge bench,” the bench said.

The bench passed the directions on the grounds that it was getting complaints that a large number of arbitrators across the country were being flooded with applications for reopening the earlier arbitration agreements based on the April 25 judgment that unstamped arbitration agreements cannot be enforced.

The April 25-judgment was passed with a 3:2 majority by a bench comprising Justice K. M. Joseph, Justice Ajay Rastogi (both since retired), Justice Aniruddha Bose, Justice Hrishikesh Roy and Justice C.T. Ravi Kumar.

Senior advocate Arvind Datar appearing for one of the parties to the dispute said the April 25 judgment was creating widespread confusion and was unsustainable in law hence it ought to be reconsidered.

The matter was earlier referred to a five-judge bench which had pronounced the verdict following differing opinions rendered by two different three-judge benches on the issue.