Karnataka High Court
J. Chengama Naidu vs The District Registrar And on 21 January, 2025
Author: R Devdas
Bench: R Devdas
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WP No. 243 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
WRIT PETITION NO. 243 OF 2025 (GM-ST/RN)
BETWEEN:
J. CHENGAMA NAIDU
AGED ABOUT 64 YEARS,
S/O. J. RAMA NAIDU,
NO. 287/B, 9TH A MAIN ROAD,
40TH CROSS, 5TH BLOCK,
JAYANAGAR, BANGALORE-560 041
...PETITIONER
(BY SRI. VIVEKANANDA T P., ADVOCATE)
AND:
THE DISTRICT REGISTRAR AND
DEPUTY COMMISSIONER OF STAMPS
JAYANAGAR REGISTRATION DISTRICT,
NO.4, OLD NO. 723/622,
Digitally signed by III FLOOR, 10TH A MAIN ROAD,
DHARMALINGAM IV BLOCK, JAYANAGAR,
Location: HIGH
COURT OF BANGALORE-560 011.
KARNATAKA ...RESPONDENT
(BY SRI.MOHAMMED JAFFAR SHAH., AGA)
THIS W.P.IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER
BEARING NO. DRJ/ADJ/97/2024-25 DTD. 17.12.2024 PASSED
BY THE RESPONDENT AT ANNX-G.DIRECTION TO RESPONDENT
RECEIVE THE STAMP DUTY OF RS. 48,596/- AND MAKE
NECESSARY ENDORSEMENT OF PAYMENT OF STAMP DUTY ON
THE ARBITRAL AWARD DTD. 30.03.2002 SUPPLEMENTED
THROUGH THE ARBITRATION AWARD WITH SUPPLEMENTARY
REASONS DTD. 09.11.2010 AT ANNX-A AND C RESPECTIVELY.
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WP No. 243 of 2025
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE R DEVDAS
ORAL ORDER
The petitioner is aggrieved of the impugned order
dated 17.12.2024 at Annexure-G passed by the
respondent-District Registrar and the Deputy
Commissioner of Stamps, Jayanagar, Bengaluru.
2. There was a dispute between the petitioner and
his employer-Karnataka Health Systems Development
Project (for short, KHSDP) and in that regard the
petitioner approached the Adjudicator as provided in the
Contract Agreement between the parties. The Adjudicator
gave his decision on 07.06.2001 and thereafter, the
matter was taken up before the sole Arbitrator under the
provisions of the Arbitration and Conciliation Act, 1997,
and an arbitral award was passed on 30.03.2002.
Aggrieved by the said award KHSDP filed a petition under
Section 34 of the Act, before the City Civil Court,
Bengaluru in A.S.No.37/2002. The learned Judge in the
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City Civil Court, by order dated 14.01.2004 dismissed the
Arbitration Suit. The petitioner's employer approached this
Court in MFA.No.2537/2004. This Court by order dated
06.07.2010 allowed the appeal in part while setting aside
the award and remanded the matter back to the sole
Arbitrator to supplement the reasons only insofar as the
claim against R.A.Bill Nos.3, 4 and 5, are concerned. The
sole Arbitrator accordingly, passed an award on
09.11.2010. The petitioner's employer once again filed an
application in the very same A.S.No.37/2002 questioning
the supplementary award passed by the sole Arbitrator.
The application was dismissed on 28.10.2017. The
petitioner's employer once again approached this Court in
MFA.No.1334/2018 and the same is pending consideration
before this Court.
3. Learned counsel submits that since no interim
order or relief was granted to the petitioner's employer,
the petitioner now decided to seek execution of the award.
Therefore, the petitioner approached the respondent
seeking to pay the stamp duty on the award in terms of
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the Karnataka Stamp Act, 1957. In this background, the
respondent has passed the impugned order directing the
petitioner to pay stamp duties of Rs.48,592/- along with
ten times penalty in terms of Section 39(B) of the
Karnataka Stamp Act, 1957.
4. Learned Counsel for the petitioner has drawn the
attention of this Court to a recent decision of this Court in
the case of M/S. Kanyakumari Builders Private
Limited Vs. M/S. Spring Borewell Company Ltd., and
others, in W.P.No.45699/2019 dated, 23.11.2024.
Learned Counsel submits that this Court noticed that the
Hon'ble Supreme Court in the case of M. Anasuya Devi
& Ors. Vs. M Manik Reddy & Ors., (2003) 8 SCC 565
has held that the question as to whether the award is
required to be stamped and registered would be relevant
only when the parties would file the award for its
enforcement under Section 36 of the Act. Further, this
Court considered the grievance of the petitioner in the
said case, where when a petition was filed under Section
36 for execution of the award, at the instance of the
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respondents therein, the civil court sought to impound the
award and called upon the petitioner therein to pay
penalty of ten times as directed by the court.
5. This Court noticed various judgments of this
Court, including Sri Dilli Babu Vs. The State of
Karnataka, reported in ILR 2015 KAR. 4336, and
Mr.Shakeel Pasha and Others Vs. M/s. City Max
Hotels (India) Pvt. Ltd. in W.P.No.8352/2022,
clubbed with W.P.12935/2022 dated 28.07.2023 and
the decision of the Hon'ble Apex Court in a SLP
considering the case in Mr.Shakeel Pasha and Others
in Civil Appeal Nos.2139-2140/2024, wherein it was held
that there is no power conferred on the courts to direct
payment of penalty, having regard to Section 33 of the
Act and such powers were conferred only on the
appropriate authorities under the Karnataka Stamp Act to
impose penalty. However, this Court having noticed the
recommendation of the Law Commission that this
problem has arisen in the 1996 Act, in view of the fact
that Section 31(5) requires the Arbitrators to send only
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signed copies of the award to the parties. These
problems did not arise under the 1940 Act, because
Section 14(2) of that Act required the filing of the original
award in the Court and the parties could also apply to the
Court to direct the Arbitrators to file the original award
into Court. The Law Commission therefore opined that
the Madras High Court felt that this is a matter for
legislative amendment and referred the matter to the Law
Commission.
6. After discussing the different solutions, the Law
Commission recommended as a first alternative that
Section 31(1) should be modified in terms of Section
14(2) of the Arbitration Act, 1940. As a second
alternative, it was suggested that Sections 31(1) and
31(5) could be amended to state that the Arbitral Tribunal
shall have to get the award duly stamped and in addition
provide that if the award requires compulsory registration
under Section 17(1)(b) of the Arbitration Act, 1908, to
have it duly registered. It is also recommended that a
provision is necessary that the photocopies of the award
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shall be sent to the parties with an endorsement that the
award is duly stamped and wherever it requires
compulsory registration, it has been so registered. It was
also noticed that the word 'duly stamped' can create some
doubts and it will be difficult for the Court in which the
copy is filed by the parties with such an endorsement, to
find out if the stamp papers on which the original is
engrossed are sufficiently valued according to the law
applicable. It was therefore recommended by the Law
Commission that the new provision must further require
that the Arbitral Tribunal should specify in that
endorsement, the value of the stamp duty paid on the
original award.
7. Having noticed all these anomalies and the fact
that the despite the recommendations made by the Law
Commission, the provisions of the Act, 1996, have not
been amended suitably, this Court therefore held that it is
not surprising that the problem persists and there is no
proper guidance to the court, the lawyers and the litigant
public. Accordingly, this Court held that the executing
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courts dealing with the applications under Section 36 of
the Act, shall not direct payment of penalty in terms of
Section 35 of the Indian Stamp Act, 1899 or under the
Karnataka Stamp Act. This Court allowed the writ petition
modifying the order passed by the Commercial Court
while directing the petitioner herein to pay only deficit
stamp duty. It was also directed that when the award
along with the certificate is forwarded by the Commercial
Court to the concerned Deputy Commissioner/District
Registrar, he/she shall not take any action regarding
payment of penalty.
8. Learned Counsel for the petitioner would
therefore submit that the impugned order may be
quashed and set aside while directing the respondent to
collect the stamp duty only and not penalty.
9. Having regard to the elaborate orders passed by
this Court in the case of M/S. Kanyakumari Builders
Private Limited (supra), this Court is of the considered
opinion that the issue brought before this Court is covered
on all fours in the said decision of this Court. This Court
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has clearly held that the stamp duty on an arbitral award
become payable only when the award is sought to be
executed under Section 36 of the Act.
10. Here, is a case where the petitioner has still not
filed petition under Section 36 of the Act. Therefore, the
question of collecting penalty from the petitioner in
respect of deficit stamp duty would not arise. Moreover,
the petitioner has himself gone before the respondent
seeking permission to pay stamp duty before a petition
under Section 36 could be filed by the petitioner.
11. Consequently, the writ petition is allowed. The
impugned order dated 17.12.2024 at Annexure-G, passed
by the respondent is hereby quashed and set aside. The
respondent is hereby directed to collect the stamp duty
viz., Rs.48,592/- as determined by the respondent in the
impugned order. Learned Counsel for the petitioner
submits that the stamp duty will be paid by the petitioner
within a period of one week from today.
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12. On collection of the stamp duty, necessary
orders engrossing the award with the stamp duty shall be
made by the respondent in accordance with law.
Ordered accordingly.
Sd/-
(R DEVDAS)
JUDGE
rv,DL
CT: JL
