Delhi High Court
Mohini Electricals. Ltd vs Delhi Jal Board on 22 January, 2021
Via Video Conferencing
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on:- 23.12.2020
Date of Decision:- 22.01.2021
+ OMP (ENF.) (COMM.) 2/2020
MOHINI ELECTRICALS. LTD ..... Decree Holder
Through Ms. Anusuya Salwan, Adv.
versus
DELHI JAL BOARD ..... Judgement Debtor
Through Mr. Sanjay Jain, Senior Advocate
with Ms. Sangeeta Bharti ASC for DJB with Mr.
Ashish Kumar, Ms. Anubha Dhulia, Mr.
Ameezuddin Raja. Mr. Padmesh Mishra, Advs.
CORAM:
HON'BLE MS. JUSTICE REKHA PALLI
REKHA PALLI, J
E.A. 896/2020 (by JD for enlargement of time to comply with order
dated 15.07.2020
1. The present application under Section 148 read with Section 151 of
the Code of Civil Procedure, 1908 has been filed by the Delhi Jal
Board(DJB)/judgment debtor (JD) purportedly seeking extension of time for
deposit of the awarded amount, as directed by this Court vide its order dated
15.07.2020. However, the applicant is, in essence, seeking to have the award
impounded and have it sent to the concerned Collector for determining the
additional stamp duty and penalty applicable thereon. A consequential
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prayer sought is for keeping in abeyance the directions issued on 15.07.2020
for deposit of the awarded amount, till such time the additional stamp duty
and penalty leviable are determined by the Collector and paid by the DH.
2. The captioned petition was preferred by the Decree Holder (DH) on
09.01.2020 seeking enforcement of the award passed by the learned sole
Arbitrator on 02.09.2019 whereunder its claim for a sum of INR
38,00,97,929/- along with interest @ 12% p.a. w.e.f. 03.09.2018 has been
allowed. The DH has also sought attachment of the JD's bank account as
also its movable and immovable assets, in order to preserve its interest to the
extent of the awarded amount.
3. Since the enforcement petition was accompanied only by a xerox
copy of the award, as against the original award which was required to be
filed therewith, the DH filed an application under Section 151 of the Code of
Civil Procedure, 1908 seeking exemption from filing the original award.
This application being Ex.Appl.(OS) No.21/2020, was allowed by the Court
on the very first date, i.e., 10.01.2020 when notice was issued in the petition.
Notably, at the time of accepting notice, learned counsel for the JD did not
object to the exemption being granted but sought a deferment of the hearing
till the JD's challenge to the award under Section 34 of the Arbitration and
Conciliation Act (hereinafter referred to as 'the Arbitration Act') was heard.
Since the Court was informed that the Section 34 petition was likely to be
listed for hearing within 10 days, the Court adjourned this petition to
21.01.2020 and later, to 18.03.2020, at the request of the JD.
4. However, by 18.03.2020, regular functioning of the Court stood
suspended on account of the COVID-19 pandemic which prevented the
matter from being taken up over the next few months. The petition was then
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taken up on 15.07.2020 an application filed by DH, being IA No.627/2020,
seeking a direction to the JD to release the awarded amount with interest in
its favour. On this day, the JD again prayed for an adjournment on the
ground of pendency of its Section 34 petition, but the Court rejected this
request in the light of the fact that the award had not been stayed and,
instead, directed the JD to deposit the awarded amount along with interest in
Court.
5. Aggrieved by this direction to deposit the awarded amount, the JD
preferred a special leave petition before the Supreme Court being SLP(C)
10071/2020 wherein one of its main plank of challenge, as seen from the
synopsis and the grounds, was that the arbitral award was inexecutable for
being insufficiently stamped and needed to be impounded before any
directions for deposit could be given. The relevant extract of the synopsis
reads as under:-
"It is submitted that the impugned order is unsustainable for the
following reasons:-
(a)That the Arbitral Award is inexecutable in the present form as
it suffers from several infirmities, inter alia on the ground of being
improperly stamped.
(b)That under the scheme of the Arbitration Act read with the
Indian Stamp Act, 1889 an award is capable of being executed
only upon being adequately stamped
(c)Because Section 33 of the Indian Stamp Act, 1889 casts an
imperative upon the Court to impound an insufficiently stamped
document I instrument; which the Hon'ble High Court has wholly
ignored and has instead taken steps to secure the enforcement of
such inexecutable award"
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6. To be specific, grounds 'D' and 'E' of the JD's special leave petition
read as under:
"D. Because the interim order passed in an interlocutory
application, grants relief that the Respondent is not entitled to in the
main enforcement proceedings. The award in question is
insufficiently stamped, and is thus ineligible for enforcement at this
juncture, therefore there arises no question of depositing monies
towards securing such enforcement.
E. Because the Hon'ble High Court, when seized of an improperly
stamped document was under an imperative to impound the same,
under the operation of Section 33 of the Indian Stamp Act, 1899; the
Hon'ble Court instead of impounding the said document, took steps
to ensure the enforcement of such improperly stamped document.
7. This SLP, however, came to be rejected in limine by the Supreme
Court on 31.08.2020. It is thereafter that the JD filed the present application
on 02.09.2020 seeking deferment of the directions for deposit on the very
same grounds as raised in the SLP by reiterating that the award, being
insufficiently stamped, was not executable.
8. Upon notice being issued in the application, the DH filed its reply
opposing the same by inter alia claiming that the original award filed before
the Court was properly stamped for a sum of INR 3,80,100/-, being 0.1% of
the award amount, as required under Article 12 of Schedule 1A of the Stamp
(Delhi Amendments) Act, 2001. The reply was accompanied by a copy of
the stamp paper for INR 3,80,100/-, bearing the endorsement from the
learned Arbitrator on 07.02.2020. The DH, while seeking dismissal of the
application, also claimed that once the JD's ground of inadequate stamping
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of the award had been rejected by the Supreme Court in the SLP, the JD was
estopped from taking these grounds before this Court in its application.
9. Mr.Sanjay Jain, the learned ASG appearing on behalf of the JD
vehemently urged for the application to be allowed and for the award to be
impounded and sent to the Collector for determining the stamp duty payable
and penalty leviable thereon. While conceding the factum of dismissal of the
JD's SLP raising grounds similar to those in this application, he contended
that since the dismissal was in limine, it could not be said that the order
dated 15.07.2020 directing deposit of the awarded amount had merged with
the order passed by the Supreme Court. Thus, notwithstanding the order
passed in the SLP or the fact that this ground was also raised before the
Supreme Court, it was still open for this Court to consider the JD's
contention that direction for deposit, as contained in the order dated
15.07.2020, was required to be deferred till the award was adequately
stamped. In support of this contention, he placed reliance on the
observations of the Supreme Court in paragraph 44 of its decision in
Kunhayammed & Ors. Vs. state of Kerala & Anr., (2000) 6 SCC 359 which
reads as under:
"44. To sum up, our conclusions are:
(i) Where an appeal or revision is provided against an order passed
by a court, tribunal or any other authority before superior forum and
such superior forum modifies, reverses or affirms the decision put in
issue before it, the decision by the subordinate forum merges in the
decision by the superior forum and it is the latter which subsists,
remains operative and is capable of enforcement in the eye of law.
(ii) The jurisdiction conferred by Article 136 of the Constitution is
divisible into two stages. The first stage is upto the disposal of prayer
for special leave to file an appeal. The second stage commences if and
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when the leave to appeal is granted and the special leave petition is
converted into an appeal.
(iii) The doctrine of merger is not a doctrine of universal or unlimited
application. It will depend on the nature of jurisdiction exercised by
the superior forum and the content or subject-matter of challenge laid
or capable of being laid shall be determinative of the applicability of
merger. The superior jurisdiction should be capable of reversing,
modifying or affirming the order put in issue before it. Under Article
136 of the Constitution the Supreme Court may reverse, modify or
affirm the judgment-decree or order appealed against while
exercising its appellate jurisdiction and not while exercising the
discretionary jurisdiction disposing of petition for special leave to
appeal. The doctrine of merger can therefore be applied to the former
and not to the latter.
(iv) An order refusing special leave to appeal may be a non-speaking
order or a speaking one. In either case it does not attract the doctrine
of merger. An order refusing special leave to appeal does not stand
substituted in place of the order under challenge. All that it means is
that the Court was not inclined to exercise its discretion so as to allow
the appeal being filed.
(v) If the order refusing leave to appeal is a speaking order, i.e., gives
reasons for refusing the grant of leave, then the order has two
implications. Firstly, the statement of law contained in the order is a
declaration of law by the Supreme Court within the meaning of Article
141 of the Constitution. Secondly, other than the declaration of law,
whatever is stated in the order are the findings recorded by the
Supreme Court which would bind the parties thereto and also the
court, tribunal or authority in any proceedings subsequent thereto by
way of judicial discipline, the Supreme Court being the Apex Court of
the country. But, this does not amount to saying that the order of the
court, tribunal or authority below has stood merged in the order of the
Supreme Court rejecting the special leave petition or that the order of
the Supreme Court is the only order binding as res judicata in
subsequent proceedings between the parties.
(vi) Once leave to appeal has been granted and appellate jurisdiction
of Supreme Court has been invoked the order passed in appeal would
attract the doctrine of merger; the order may be of reversal,
modification or merely affirmation.
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(vii) On an appeal having been preferred or a petition seeking leave to
appeal having been converted into an appeal before the Supreme
Court the jurisdiction of High Court to entertain a review petition is
lost thereafter as provided by sub-rule (1) of Rule 1 of Order 47 CPC.
10. Mr.Jain further contended that in the light of the admitted position
that when the award was initially filed before this Court on 09.01.2020 it
was on a stamp paper of Rs.100/-, it was evident that the award was
insufficiently stamped when it was placed before the Court and ought to
have been impounded then. By drawing my attention to a copy of the award
annexed along with this execution petition, he contended that use of the
word 'shall' in Section 33(1) of the Indian Stamp Act, 1899 showed that
anytime an insufficiently stamped instrument is produced before a judicial
authority, the authority is duty bound to impound the same and send it to the
concerned Collector for determining the duty payable and penalty leviable
thereon. In this case, the judicial authority was this Court and the instrument
in question was the award. He submitted that unless the Collector duly
assesses the stamp duty payable on the award, no cognizance can be taken of
the same; he relied on Section 35 of the Indian Stamp Act, 1899 in support
of this ground. He contended that, thus, there was absolutely no discretion
with this Court on the question of impounding the insufficiently stamped
award considering it is a statutory duty of the Court to do so. For this
purpose, he placed reliance on the decisions in Govt. of A.P. Vs. Lakshmi
Devi, (2008) 4 SCC 720; Garware Wall Ropes Ltd. Vs. Coastal Marine
Constructions & Engineering Ltd. (2019) 9 SCC 209 and M/S SMS Tea
Estates P.Ltd Vs. M/S Chandmari Tea Co. P. Ltd., 2011 14 SCC 66.
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11. Mr. Jain then contended that merely because the DH sought to amend
its earlier breach of statutory requirements in initial filing by inserting a
stamp paper to the award for the requisite amount at a later stage, that could
not be said to have cured or erased the initial defect in the unstamped and
inexecutable award. Once the award was already placed before the Court in
such a condition, any subsequent action of filing the stamp paper for the
requisite amount would amount to tampering with the award and could not
be permitted. Thus, he submitted that when the insufficiently stamped nature
of the award at the initial stage was an admitted position, the law must be
permitted to take its due course in order for the award to be impounded and
sent to the concerned Collector.
12. Mr. Jain finally submitted that even if there were any truth to DH's
plea that the learned arbitrator had fixed the requisite stamp duty on the
award on 07.02.2020, the fact remained that his own directions in the award
required the parties to affix the stamp duty within 30 days, which period
expired on 02.10.2019. Thus, his act of fixing the stamp duty on 07.02.2020
was not only past the deadline he set, but it also took place once he had
signed the award and become functus officio, neither of which are
permissible in law. By placing reliance on the decisions in Rikhabdass Vs.
Ballabhdas & Ors. AIR 1962 SC 551 and Ashok Tubes Vs. Steel Industries
of India (1998) 1 Mh. L.J. 700 he contended that after signing the award and
giving copies thereof to the parties, the learned arbitrator became functus
officio and could, therefore, neither re-write the award nor permit affixation
of stamp duty thereon after the expiry of the 30-day period that he himself
had prescribed. He, therefore, prayed that the application be allowed and the
award be impounded and sent to the Collector for determination of the
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stamp duty payable and penalty leviable thereon. He also prayed that until
such determination was made and the requisite duty and penalty stood paid,
any directions for deposit of the awarded amount be deferred.
13. Opposing the application, Ms.Anusuya Salwan who appeared for the
DH, submitted that the entire premise of this application was misplaced and
erroneous. By drawing my attention to a copy of the duly stamped award
dated 07.02.2020, she submitted that when the original award was filed
before the Court on 22.02.2020, it was already duly stamped as per Article
12 of Schedule 1A of the Stamp (Delhi Amendments) Act, 2001. She further
submitted that the JD's application was seeking to impound a document
which was actually a xerox copy of the award, not the original award itself;
for which reason the DH had already sought exemption from this Court
under Ex.Appl.(OS) No.21/2020 and the same was granted on 10.01.2020
with no objection from the JD. She submitted that the original award was, in
fact, filed before the Court for the very first time only on 22.02.2020, and
that too pursuant to the directions passed in the JD's Section 34 petition, on
which date it stood properly stamped. She thus contended that once the
original award as filed before the Court was properly stamped, there was no
question of the same being impounded and sent to the Collector. While not
disputing the position that Sections 33 and 35 of the Indian Stamp Act, 1899
made it mandatory for the Court or any judicial authority before whom an
insufficiently stamped instrument is produced to impound the same and send
it to the concerned Collector, she contended that this requirement was
applicable only to original award and not a xerox copy of the same. By
placing reliance on the decisions in Hari Om Aggarwal vs. Prakash, (2007)
8 SCC 514, Ashok Kamal Capital Builders vs. State & Anr., 2009 162 DLT
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396, Dr.Chiranji Lal vs. Hari Das (2005) 10 SCC 746, she contended that
the provisions of the Indian Stamp Act, 1899 envisaged only the
impounding of an original instrument as set out in Section 2(14) thereof and
there was neither any provision nor any power with the Court to impound a
xeroxed document.
14. Ms.Salwan further contended that even though there could be no
dispute with the proposition that an arbitrator becomes functus officio after
writing the award, the act of permitting stamp duty to be paid on the award
after the period of 30 days set out in the award could not at all be treated as
an act of re-writing the award or changing the terms thereof, as was sought
to be contended by the learned ASG. She submitted that Section 31 of the
Arbitration Act which lays down the forms and contents of the award does
not at all prescribe that the award must be duly stamped in order to be valid.
She further submitted that once under the Arbitration Act does not prescribe
any time limit for paying the stamp duty on the award, the direction by the
learned Arbitrator in the instant award requiring the parties to pay stamp
duty within a period of 30 days was beyond his jurisdiction and was,
therefore, superfluous. Thus, notwithstanding this direction, merely because
the stamp duty was not paid within 30 days but was instead allowed to be
paid after 5 months by him, it could not be said that the learned Arbitrator
had re-written the award in any manner or passed any direction after
becoming functus officio. In any event, the act of affixing stamp duty is a
fiscal requirement aimed for the purpose of securing revenue for the state
and, therefore, once the original award placed before the Court on
22.02.2020 was properly stamped, the interest of the revenue stood secured.
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15. Without prejudice to her aforesaid submissions, Ms.Salwan further
submitted that in any event, in the present case, even though notice of the
execution petition was issued on 10.01.2020, by which time neither the
original award had been placed before the Court nor had the requisite stamp
duty been paid, the fact remained that the first effective order in these
enforcement proceedings was passed by this Court only on 15.07.2020 on
which date, the award was properly stamped even as per the JD. She
contended that in fact the JD having unsuccessfully taken these very grounds
in its SLP before the Supreme Court, was now merely trying to delay the
proceedings to deprive the DH of its rightful dues. She therefore, prayed
that the application be dismissed with exemplary costs.
16. Having heard the learned counsel for the parties and perused the
record, I find that there is no denial by the JD to the fact that the original
award was tendered in evidence for the first time on 22.02.2020 and that too
upon being requisitioned by the Court dealing with OMP(COMM) 22/2020,
by which date, the award was duly stamped. It is also undisputed that the
present petition was filed only on the basis of a copy of the award and the
DH's application for exemption from filing original award was duly allowed
by this Court on 10.01.2020 and that too without the JD raising any
objection to the DH's prayer for exemption. Undoubtedly, the copy of the
award as filed before this Court on 09.01.2020 was inadequately stamped,
the fact however is that it was only a copy.
17. Before dealing with the rival submissions, it may be appropriate to
dive into a short analysis of the provisions of the Indian Stamp Act, 1899
which form the crux of the JD's case in this application. To begin with,
Section 33 of the Indian Stamp Act reads as under:-
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33. Examination and impounding of instruments.--
(1) Every person having by law or consent of parties, authority to
receive evidence, and every person in charge of a public office,
except an officer of police, before whom any instrument, chargeable,
in his opinion, with duty, is produced or comes in the performance of
his functions, shall, if it appears to him that such instrument is not
duly stamped, impound the same.
(2) For that purpose every such person shall examine every
instrument so chargeable and so produced or coming before him, in
order to ascertain whether it is stamped with a stamp of the value
and description required by the law in force in [India] when such
instrument was executed or first executed:
Provided that--
xxx
(b) in the case of a Judge of a High Court, the duty of examining and
impounding any instrument under this section may be delegated to
such officer as the Court appoints in this behalf.
18. It may also be apposite to note Sections 35 and 38 of the Indian Stamp
Act which reads as under:
35. Instruments not duly stamped inadmissible in evidence, etc.--
No instrument chargeable with duty shall be admitted in evidence for
any purpose by any person having by law or consent of parties
authority to recive evidence, or shall be acted upon, registered or
authenticated by any such person or by any public officer, unless
such instrument is duly stamped:
Provided that--
(a) any such instrument [shall], be admitted in evidence on
payment of the duty with which the same is chargeable, or, in
the case of an instrument insufficiently stamped, of the amount
required to make up such duty, together with a penalty of five
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rupees, or, when ten times the amount of the proper duty or
deficient portion thereof exceeds five rupees, of a sum equal to
ten times such duty or portion;
xxx
(e) nothing herein contained shall prevent the admission of any
instrument in any Court when such instrument has been
executed by or on behalf of [the [Government]] or where it
bears the certificate of the Collector as provided by section 32
or any other provision of this Act.
Section 38 of the Indian Stamp Act
38. Instruments impounded, how dealt with.--
(1) Where the person impounding an instrument under section 33
has by law or consent of parties authority to receive evidence and
admits such instrument in evidence upon payment of a penalty as
provided by section 35 or of duty as provided by section 37, he
shall send to the Collector an authenticated copy of such
instrument, together with a certificate in writing, stating the amount
of duty and penalty levied in respect thereof, and shall send such
amount to the Collector, or to such person as he may appoint in this
behalf.
(2) In every other case, the person so impounding an instrument
shall send it in original to the Collector.
19. The plain language of these provisions show, as rightly contended by
the JD, that whenever an instrument is tendered before the Court, it is the
duty of the Court to examine whether the same invites payment of duty and,
if it does, see if it has been duly stamped. Section 35(a) is unambiguous and
states that if an instrument produced before the Court is found to be not duly
stamped, the same can neither be admitted in evidence nor can it can be
acted upon, irrespective of its purpose. In case the instrument is not stamped
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as required, the Court must impound the same and has absolutely no
discretion in this regard. The JD is therefore correct to contend that in case
an instrument is found to be inadmissible for not being stamped, the only
way the defect can be cured is by impounding the instrument under Section
33, and then sending it to the Collector as per Section 38 of the Act
whereafter it is for the Collector to assess the stamp duty applicable as also
the penalty leviable for the initial lapse in paying the requisite duty.
20. An award passed at the conclusion of arbitration is an 'instrument'
within the meaning Section 2(14) of the Indian Stamp Act read with Entry
12 of Schedule 1 thereof and, therefore, Sections 33 to 38 of that Act would
necessarily be applicable to an arbitral award when it is sought to be
enforced. In fact, this procedural necessity of duly stamping an award has
also been extended by the Court to one of the most preliminary stages of an
arbitration proceeding, viz. arbitration clauses sought to be invoked and
contained within agreements which are statutorily required to be stamped. In
M/s SMS Tea Estates P.Ltd vs M/S Chandmari Tea Co. P. Ltd., 2011 4
SCC 66, relied upon by the respondent/applicant, the Supreme Court held
that an arbitration clause seated within an agreement which is not duly
stamped was unenforceable unless it was impounded. Reference in this
regard may be made to the observations in paragraph 22 of the decision in
SMS Tea Estates which read as under:-
22. We may therefore sum up the procedure to be adopted where
the arbitration clause is contained in a document which is not
registered (but compulsorily registerable) and which is not duly
stamped:
22.1. The court should, before admitting any document into
evidence or acting upon such document, examine whether the
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instrument/document is duly stamped and whether it is an
instrument which is compulsorily registerable.
22.2. If the document is found to be not duly stamped, Section 35 of
the Stamp Act bars the said document being acted upon.
Consequently, even the arbitration clause therein cannot be acted
upon. The court should then proceed to impound the document
under Section 33 of the Stamp Act and follow the procedure under
Sections 35 and 38 of the Stamp Act.
22.3. If the document is found to be duly stamped, or if the deficit
stamp duty and penalty is paid, either before the court or before the
Collector (as contemplated in Section 35 or 40 Section of the Stamp
Act), and the defect with reference to deficit stamp is cured, the
court may treat the document as duly stamped.
22.4. Once the document is found to be duly stamped, the court
shall proceed to consider whether the document is compulsorily
registerable. If the document is found to be not compulsorily
registerable, the court can act upon the arbitration agreement,
without any impediment.
22.5. If the document is not registered, but is compulsorily
registerable, having regard to Section 16(1)(a) of the Act, the court
can delink the arbitration agreement from the main document, as
an agreement independent of the other terms of the document, even
if the document itself cannot in any way affect the property or
cannot be received as evidence of any transaction affecting such
property. The only exception is where the respondent in the
application demonstrates that the arbitration agreement is also void
and unenforceable, as pointed out in para 15 above. If the
respondent raises any objection that the arbitration agreement was
invalid, the court will consider the said objection before proceeding
to appoint an arbitrator.
22.6. Where the document is compulsorily registerable, but is not
registered, but the arbitration agreement is valid and separable,
what is required to be borne in mind is that the arbitrator appointed
in such a matter cannot rely upon the unregistered instrument
except for two purposes, that is (a) as evidence of contract in a
claim for specific performance, and (b) as evidence of any
collateral transaction which does not require registration.
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21. In fact, as held in Garware Wall Ropes Ltd. Vs. Coastal Marine
Constructions & Engg. Ltd., (2019) 9 SCC 209, this position has remained
unchanged even after the introduction of Section 11(6A) of the 2015
amendment to the Act. Therefore, not only while dealing with an application
made under Section 11, the Court must impound the agreement to ensure
that the stamp duty and penalty, if any, is paid before the agreement is acted
upon.
22. Turning to the facts of the present case, the DH is seeking
enforcement of an award by way of the captioned petition which was filed
before this Court on 09.01.2020 along with a xerox of the original award. A
perusal of the xerox copy shows that the award was not stamped adequately
on the date when the DH approached this Court. However, by the time the
original award was filed before the Court on 22.02.2020, it was adequately
stamped. This position is not disputed by any of the parties.
23. Mr. Jain had, therefore, contended that once it is admitted that the DH
had approached the Court by filing an inadequately stamped copy of the
award, it was incumbent upon the Court to impound the same and send it to
the Collector for a proper assessment of the stamp duty and penalty thereon.
On the other hand, the DH's primary argument was that, notwithstanding the
admitted position that there is such a statutory duty cast on the Court under
Section 33 of the Indian Stamp Act to impound an insufficiently stamped
instrument, the fact remains that the document filed before this Court was
only a xerox, it was not an 'instrument' under Section 2(14) of the Indian
Stamp Act. It had been contended that there is no duty cast or power vested
on this Court to impound the xerox; the statutory duty of the Court as set
down in Section 33 of the Indian Stamp Act would only be applicable in
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respect of the original instrument. In the light of these opposing stands, the
question which needs to be determined is whether this Court had any duty
or, in fact, power to impound the xerox copy of the instrument filed before it
under Section 33 of the Indian Stamp Act. In this regard, reference may be
made to the paragraphs 6 and 8 of the decision of the Supreme Court in Hari
Om Aggarwal Vs. Prakash, (2007) 8 SCC 514 wherein the apex court, after
considering the effect of Sections 33 and 35 of the Indian Stamp Act,
summed up the position rather succinctly by observing as under:
"6. It is an admitted fact that the photostat copy which is sought to
be produced as secondary evidence does not show that on the
original agreement proper stamp duty was paid. The photostat copy
of the agreement shows that the original agreement carried only a
notarial stamp of Rs 4. Thus the original instrument bears the stamp
of sufficient amount but of improper description. From the facts of the
case, the issue which requires consideration is: Whether the court
can impound the photocopy of the instrument (document) of improper
description exercising its power under the provisions of the Stamp
Act, 1899? For answering this question, Sections 33 and 35 of the Act
might render some help. Relevant extracts of the sections are:
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8. The instrument as per definition under Section 2(14) has a
reference to the original instrument. In State of Bihar v. Karam
Chand Thapar & Bros. Ltd. [AIR 1962 SC 110] this Court in para 6
of the judgment held as under: (AIR p. 113)
"6. It is next contended that as the copy of the award in court was
unstamped, no decree could have been passed thereon. The facts are
that the arbitrator sent to each of the parties a copy of the award
signed by him and a third copy also signed by him was sent to the
court. The copy of the award which was sent to the Government
would appear to have been insufficiently stamped. If that had been
produced in court, it could have been validated on payment of the
deficiency and penalty under Section 35 of the Indian Stamp Act,
1899. But the Government has failed to produce the same. The copy
of the award which was sent to the respondents is said to have been
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seized by the police along with other papers and is not now available.
When the third copy was received in court, the respondents paid the
requisite stamp duty under Section 35 of the Stamp Act and had it
validated. Now the contention of the appellant is that the instrument
actually before the court is, what it purports to be, 'a certified copy',
and that under Section 35 of the Stamp Act there can be validation
only of the original, when it is unstamped or insufficiently stamped,
that the document in court which is a copy cannot be validated and
'acted upon' and that in consequence no decree could be passed
thereon. The law is no doubt well settled that the copy of an
instrument cannot be validated. That was held in Rajah of
Bobbili v. Inuganti China Sitarasami Garu [(1898-99) 26 IA 262]
where it was observed:
'The provisions of this section (Section 35) which allow a document
to be admitted in evidence on payment of penalty, have no application
when the original document, which was unstamped or was
insufficiently stamped, has not been produced; and, accordingly,
secondary evidence of its contents cannot be given. To hold otherwise
would be to add to the Act a provision which it does not contain.
Payment of penalty will not render secondary evidence admissible,
for under the stamp law penalty is leviable only on an unstamped or
insufficiently stamped document actually produced in court and that
law does not provide for the levy of any penalty on lost
documents."(emphasis supplied)
24. The ratio of this decision was followed by this Court in Ashok Kamal
(supra) as well wherein, after taking note of the decision in State of
Bihar v. Karamchand Thapar and Bros. Ltd., AIR 1962 SC 110, an order
impounding and directing payment of stamp duty on a xerox copy of an
instrument was held to be unsustainable.
25. The express language employed in Section 2(14) of the Indian Stamp
Act, 1899 and the ratio of decisions rendered on this aspect show that,
undoubtedly, a xerox copy of an instrument cannot possibly be considered
an 'instrument' liable to be impounded under Section 33 of the Indian Stamp
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Act. In the instant case had the DH, at the time of the initial filing on
09.01.2020, presented the original award before this Court on an
insufficient stamp paper, it would most definitely have attracted application
of Sections 33 and 35 of the Indian Stamp Act. In that case, the Court would
have had no other option but to impound the award and send it to the
concerned Collector. However, the fact that the award filed before the Court
on 09.01.2020 was only a xerox copy and not an original of the instrument,
has to be read in conjunction with the admitted position that when the
original award was finally filed before the Court on 22.02.2020 it was
properly stamped.
26. That being said, if the Court were to accept the JD's prayer for
impounding of the xerox copy of the award, it would not only fly in the teeth
of Section 2(14) of the Indian Stamp Act, 1899 which does not recognize a
xerox copy of an instrument as an 'instrument', but would create an
anomalous validation of xerox copies of documents as 'instruments' under
the Indian Stamp Act through the act of impounding. Thus, I find merit in
the contention of the DH, when there is absolutely no applicability of
Section 33 of the Indian Stamp Act to a xerox copy of the instrument, no
question of impounding the same arises. Consequently, when the document
filed before this Court on 09.01.2020 as the award was a xerox copy thereof,
not an instrument, it cannot be impounded notwithstanding the fact that it
was inadequately stamped on that date. I, therefore, have no hesitation in
rejecting the JD's plea that the copy of the award filed before this Court
along with the enforcement petition, ought to be impounded and sent to the
Collector.
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27. Notwithstanding this statutory position which makes the prayer for
impounding unsustainable, there is another reason as to why the JD's prayer
in this regard deserves to be rejected. The record shows that when the
captioned enforcement petition was listed for the first time on 10.01.2020
and notice was being issued, the DH's application seeking exemption from
filing original copy of the award was also taken up. On this date, the learned
counsel for the JD was present in Court and had even given its no objection
to the exemption application being allowed. It was open, on that day, for the
JD to object to the enforcement petition on the ground that no cognizance
could be taken of the award appended to it for it was a xerox copy or to
contend that the same was insufficiently stamped, but it is an admitted
position that no such plea was taken by the JD on that date. The JD having
permitted this opportunity to slip out of its hand, cannot pivot from its
acquiescence eight months later to contend that the award should be
impounded now, especially when the adequately stamped award stood filed
by 22.02.2020. In fact, the JD did not raise such a plea even when the
petition was being heard on 15.07.2020 culminating in directions being
issued to the JD to deposit the award amount in Court; in my view, rightly
so. In any event, the original award had been adequately stamped on
07.02.2020 and filed in Court in the JD's Section 34 petition by 22.02.2020.
much prior to 15.07.2020; which meant that nothing would have turned on
this objection even if it were raised at that time.
28. When faced with the fact that the award was adequately stamped on
07.02.2020, the JD had then contended that the learned arbitrator's act of
permitting payment of the stamp duty for the award on 07.02.2020 was in
itself invalid since it occurred (i) after the period of 30 days he had granted
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to the DH to affix requisite stamp duty to the award on 02.09.2019, and (ii)
when he had become functus officio after signing the award on 02.09.2019,
i.e., at a time when he could neither alter the award nor wield any further
direction-making powers as an arbitrator. Thus, according to the JD,
permitting an act which was contrary to the directions given under the award
was not valid merely because the learned arbitrator had approved the same.
Per contra, the DH had submitted that since the Arbitration Act (i) does not
set down any time period within which the stamp duty must be affixed to the
award and (ii) does not cast any duty on the arbitral tribunal to fix a time for
stamp duty payment or to ensure due payment thereof, there was no
statutory bar upon permitting payment of the stamp duty on the award on
07.02.2020, notwithstanding the fact that the same took place after the
expiry of the 30 day-period granted under the Award.
29. To determine the question as to whether the arbitrator was indeed
precluded, under the award, from permitting payment of stamp duty after the
expiry of the 30-day period granted, it is necessary to examine the
parameters of an arbitral tribunal's powers and duties under the Act. In this
regard, it may be apposite to note relevant extracts of Sections 31, 35 and
36(i) of the Arbitration Act which deal with this aspect and read as under:
31. Form and contents of arbitral award.--
(1) An arbitral award shall be made in writing and shall be signed by
the members of the arbitral tribunal.
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(4) The arbitral award shall state its date and the place of arbitration
as determined in accordance with section 20 and the award shall be
deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered
to each party.
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(8) Unless otherwise agreed by the parties,--
(a) the costs of an arbitration shall be fixed by the arbitral tribunal;
(b) the arbitral tribunal shall specify--
(i) the party entitled to costs,
(ii) the party who shall pay the costs,
(iii) the amount of costs or method of determining that amount, and
(iv) the manner in which the costs shall be paid. Explanation.--For
the purpose of clause (a), "costs" means reasonable costs relating
to--
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the
arbitration, and
(iv) any other expenses incurred in connection with the arbitral
proceedings and the arbitral award.
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35. Finality of arbitral awards. - Subject to this Part an arbitral award
shall be final and binding on the parties and persons claiming under
them respectively.
36. Enforcement - (1) Where the time for making an application to
set aside the arbitral award under section 34 has expired, then,
subject to the provisions of sub-section (2), such award shall be
enforced in accordance with the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), in the same manner as if it were a
decree of the Court.
30. The extracted provisions hereinabove show that the sole duty cast on
the arbitral tribunal at the time of passing the award is to ensure that a signed
copy of the award is delivered to each party, but there is no obligation on the
tribunal to ensure that the requisite stamp duty payable thereon stands paid
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at the time of passing of the award. Section 36 of the Arbitration Act dealing
with enforcement of the award also proceeds to clarify that a domestic
arbitral award shall be treated as a decree of the Court and, subject to the
outcome of any challenge thereupon under Section 34 of the Arbitration Act,
it can be simply enforced as a decree of the Court in accordance with the
provisions of the Code of Civil Procedure, 1908 without any statutory
requirement of making it a Rule of Court, unlike Section 17 of the Indian
Arbitration Act, 1940. A combined reading of these provisions shows that
let alone the arbitral Tribunal, there is no need even for the parties to file the
award in Court and certainly no duty on their part to do so, unless they
intend to initiate proceedings under Sections 34 or 36 of the Act.
31. Interestingly, I find that the Arbitration Act does not even create a
legal obligation on the parties in arbitration to pay stamp duty on an award.
It is only when they begin taking steps to enforce the award that the parties
are obligated to ensure that the instrument has been duly stamped, at which
point the Court shall be guided by the provisions of Sections 33, 35 and 38
of the Indian Stamp Act, 1899. This position was reiterated by the Supreme
Court in M Anusuya Devi & Anr. V. M.Manik Reddy 2003 Supp 4 SCR
853 when it held that the question whether an award is stamped or not is
only relevant for enforcement proceedings, and not during the Section 34
proceedings because an arbitral award cannot be set aside on the ground of
inadequate stamping. Thus, the Arbitration Act envisages that the payment
of requisite stamp duty on an award shall only be required when a party is
seeking to get the same enforced under Section 36.
32. Once the question whether proper stamp duty was paid on the award
is precluded from being a valid ground to challenge the same under Section
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34, it is hard to imagine that the legislature intended to include the power to
make substantive directions on the subject fall in the core jurisdiction of an
arbitral tribunal. In other words, the issue of stamping of the award is not the
concern of the arbitral tribunal at all and has to be examined only when a
party approaches the Court for enforcement of the award.
33. That being said, it is not necessarily true that every time a party
decides to enforce an award, it needs to ensure that the same is duly
stamped. For instance, a situation may arise in which both parties in
arbitration mutually decide to accept the award, thereby dispensing with the
formality of instituting an enforcement petition. In such cases, there would
be absolutely no occasion for any of the parties to pay the stamp duty.
34. That being said, when it comes to the question of paying stamp duty
on an arbitral award, I am inclined to accept the legal position advanced by
Ms. Salwan on behalf of the DH that the learned arbitrator did not have any
statutory power to direct that the stamp duty must be paid within a specific
period. Therefore, the direction of the learned arbitrator granting 30 days'
time for payment of stamp duty on the award was a direction issued in
excess of its powers under the Act. As a result, a direction like this which
was void could neither have created an obligation on the part of the DH nor
can be used to call into question an act which was perfectly sustainable in
the eyes of law, i.e. payment of the stamp duty in February 2020. Thus, I
have no hesitation in rejecting the JD's contention that the payment of stamp
duty applicable upon the award, on 07.02.2020 was illegal or improper in
any manner.
35. Before concluding, I may also take a moment to note my thoughts in
respect of the DH's contention that once the JD had unsuccessfully raised
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the very grounds sought to be raised in the instant application in its special
leave petition before the Supreme Court, this application was barred by res
judicata and deserved to be dismissed on that ground alone. In rebuttal, the
JD had, by relying on the decision in Kunhyammed (supra), contended that
since its SLP was dismissed in limine, the doctrine of merger was not
applicable in this case which left it open for this Court to consider the issues
raised in the application. However, I felt that it was not necessary to delve
into this preliminary objection raised by the DH since I found that the issues
raised in this application contained an important question of law which
called for the consideration of this Court.
36. Accordingly, for the aforesaid reasons, I find no merit in the instant
application which is dismissed with no order as to costs. The JD is however
granted two weeks' further time to deposit the awarded amount along with
upto date interest accrued thereon, in terms of the directions of this Court
passed on 15.07.2020.
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37. List the enforcement petition before the Roster Bench on 12.02.2021.
REKHA PALLI, J
JANUARY 22, 2021
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Signed By:GARIMA MADAN
Signing Date:23.01.2021
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