HC expounds Arbitral Award Not Invalidated Solely by Insufficiently Stamped Agreement, Read Judgment

Recently, the Delhi High Court addressed the issue of the admissibility of an agreement with an arbitration clause that lacked proper sealing. The court clarified that once the arbitrator has accepted the agreement and based an award on it, the award cannot be set aside solely on the grounds of insufficient or improper sealing. The court cited the Supreme Court's decision in M/s NN Global Mercantile Pvt. Ltd. v. M/s Indo Unique Flame Ltd. & Ors., affirming the principle.

Brief Facts: 

The case, brought before Justice Navin Chawla's bench, involved a dispute between ARG Outlier Media Private Limited and HT Media Limited arising from a 'barter agreement' that contained an arbitration clause. ARG Outlier challenged the arbitral award favouring HT Media under Section 34 of the Arbitration and Conciliation Act.

Contentions of the Parties: 

The petitioner claimed that the agreement was improperly stamped as it was signed in Mumbai, making it subject to stamp duty under the Maharashtra Stamp Act rather than the Indian Stamp Act applicable in Delhi. However, the arbitrator dismissed the challenge, stating that the agreement was properly sealed, and ARG Outlier was responsible for paying the required stamp duty as per the Maharashtra Stamp Act.

Observations by the Court: 

Justice Chawla emphasized that the court's jurisdiction under Section 34 of the Arbitration and Conciliation Act is limited and cannot be used as an appellate court against the arbitral award. Even a contravention of a statute unrelated to public policy cannot be a ground for setting aside an arbitral award.

The court also observed that ARG Outlier had not raised the issue of improper sealing earlier in the proceedings. The petitioner had not brought up the matter in response to the legal notice or the Section 11 petition filed by HT Media seeking an arbitrator's appointment. Moreover, ARG Outlier had not raised the issue during the final arguments before the arbitrator.

Citing the decision in Javer Chand & Ors. vs Pukhraj Surana, the court reiterated that once a document is admitted as evidence, the matter is closed for the parties, and courts cannot revisit the issue. Therefore, the court held that ARG Outlier's failure to raise the issue at an earlier stage prevented them from challenging the award on the grounds of improper sealing.

Addressing the applicability of Section 61 of the Indian Stamp Act, the court clarified that it could only impound the document and refer it to the Stamp Collector for determining the appropriate stamp duty and penalty. However, this action does not affect the validity or enforcement of the arbitral award.

The decision of the Court: 

Based on these considerations, the court concluded that ARG Outlier cannot challenge the award on the grounds of improper sealing, as the arbitrator had provided an opportunity to raise the issue but it was not availed by the petitioner. Hence, the court upheld the validity of the arbitral award.

Case Name: ARG Outlier Media Private Limited vs. HT Media Limited

Coram: Hon’ble Mr. Justice Navin Chawla

Case No.: O.M.P. (COMM) 161/2023 & IA 8019/2023

Advocates of the Petitioners: Mr. Sandeep Sethi, Sr. Adv., Ms. Malvika Trivedi, Sr. Adv., Mr. Bani Dikshit, Mr. Uddhav Khanna, Ms. Diya Dutta, Ms. Sujal Gupta, Mr. Shailendra Slaria, Ms. Shreya Sethi, Mr. Vikram Singh Dalal & Ms. Tanvi Tewari, Advs.

Advocates of the Respondent: Mr. Ashok Kumar Singh, Sr. Adv., Mr. Sonal Kr. Singh, Mr. Shivang Singh, Mr. Obhirup Ghosh, Ms. Meghna Butolia, Mr. Gagan Kr. Sharma, Mr. Kunal Nema and Ms. Saloni Singh, Advs.

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