Madhya Pradesh High Court
Magma Fincorp Limited vs Omshanker on 16 March, 2020
Equivalent citations: AIRONLINE 2020 MP 205
Author: Subodh Abhyankar
Bench: Subodh Abhyankar
1
HIGH COURT OF MADHYA PRADESH:JABALPUR
SINGLE BENCH: Hon'ble Mr. Justice Subodh Abhyankar
MISC. PETITION NO.5942 OF 2019
Magma Fincorp Limited.
Vs.
Omshanker & another.
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Shri S.K.Rao, learned senior counsel with Shri Vineet
Pandey, Advocate for the petitioner.
Shri Aatma Ram Bain, learned counsel for the
respondents.
Shri Akshay Pawar, learned Panel Lawyer for the State.
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ORDER
(Passed on the 16th day of March, 2020) This petition has been filed by the petitioner Magma Fincorp Limited under Article 227 of the Constitution of India against the order dated 18.9.2019 (Annexure P-1) passed in Arbitration Execution Case No.42/2015 by the 4th Additional District Judge, Chhindwara, whereby the learned Judge of the Executing Court, in an execution proceedings initiated under Section 36 of the Arbitration and Conciliation Act, 1996 (for short "AC Act") has directed the petitioner to pay the deficit stamp duty on the award of Rs.3,75,573/-, which was passed on 19.11.2013 in Calcutta. 2
2. Shorn of unnecessary details, the facts of the case are that the petitioner-company is duly registered under the Companies Act, 1956 having its registered head office at Calcutta. The case of the petitioner is that certain loans in the nature of higher purchase agreement were advanced to the respondents and on account of non- payment of the same, arbitration clause contained in the agreement was invoked by the petitioner-company and pursuant to which the Arbitrator passed the final award on 19.11.2013 directing the respondents to pay a sum of Rs.3,75,573/- with interest @ 3% per month as provided in the agreement. Although the aforesaid award was passed in Calcutta, but as the respondents are the residents of District Chhindwara, M.P., the execution proceedings under Section 36 of the AC Act were filed in the Court of 4th Additional District Judge, Chhindwara. In the aforesaid proceedings, the impugned order dated 18.9.2019 has been passed and the petitioner-company has been directed to pay the deficit stamp duty on the award.
3. Learned counsel for the petitioner has submitted that as per the Madhya Pradesh Arbitration Rules, 1997, on an execution application filed under 3 Section 36 of the AC Act, only a fixed court fees of Rs.200/- is required to be paid, hence no further stamp duty can be directed to be paid on the award. It is further submitted that after the award was passed under Section 34 of the AC Act and as per the provisions of Indian Stamp (Bengal Amendment) Act, 1935 the maximum stamp duty of Rs.100/- as provided under Article 12 of the said Act has already been paid and hence it was put up for its execution before the concerned Court at Chhindwara where the assets of the respondents are located. It is further submitted that the issue regarding the transfer of the decree from one Court to another Court has already been resolved by the Hon'ble Apex Court in the case of Sundaram Finance Limited Vs. Abdul Samad and others, reported in AIR 2018 SC 965 in which it is held that there is no need to obtain the transfer of the decree from the Court having jurisdiction over the arbitral proceedings and that the same can be straightway filed before the executing Court where the assets of the respondents are located. Thus, it is submitted that since the aforesaid issue has already been settled by the Supreme Court in Sundaram Finance Limited (supra) there was no occasion for the learned 4 Judge of the Executing Court to pass the impugned order and direct the petitioner to pay the deficit stamp duty in accordance with Indian Stamp (Madhya Pradesh Amendment) Act, 2014.
4. In support of his contention learned counsel for the petitioner has also relied upon the decision of the Kerala High Court in the case of M/s Maharashtra Apex Corporation Ltd. Vs. Balaji G and Another reported in 2011(4) Kerala Series 451. It is submitted that in the aforesaid case also, in an identical situation, the Kerala High Court has held that an Executing Court, in a proceeding under Section 36 of the AC Act cannot insist upon payment of deficit stamp duty which is also a requirement under the Kerala Stamp Act and hence in the present case also the balance stamp duty as provided under the Indian Stamp (M.P. Amendment) Act, 2014 (hereinafter as 'the Stamp Act of 2014') cannot be claimed and the order directing the petitioner to pay the deficit stamp duty cannot be sustained. Thus, it is submitted that the petition be allowed and the impugned order be set aside.
5. On the other hand learned counsel for the respondents has submitted that no case for interference 5 is made out because as per Article 12 of the Indian Stamp (M.P. Amendment) Act, 2014 which provides that on an award passed by an arbitrator or umpire, the stamp duty @ 2% of the award amount or market value of the property to which the award relates, whichever is higher is applicable and thus, the learned Judge of the trial Court has rightly held that the petitioner is entitled to pay the deficit stamp duty on the award. So far as the judgment of the Kerala High Court is concerned, it is submitted that the same is not binding on this Court.
6. Heard the learned counsel for the parties and perused the record.
7. On due consideration, this Court is of the considered opinion that the petition is liable to be dismissed for the reason that the provisions of the Stamp Act of 2014 are mandatory in nature and cannot be given a go by even in respect of an arbitral award for the reason that a specific provision has been made in the Stamp Act of 2014 itself for stamping the award. At this juncture, it would be apt to refer to some of the provisions of the Stamp Act of 2014 which read as under:-
S.2 Defenitions.6
2(6) "Chargeable" means, as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act, and applied to any other instrument, chargeable under the law in force in India when such instrument was executed or, where several persons executed that instrument at different times, first executed:
2(14) "Instrument" includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded;
S.3. Instruments chargeable with duty.-- Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore respectively, that is to say--
(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899;
(b) every bill of exchange payable otherwise than on demand or promissory note drawn or made out of on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and (c) every instrument (other than a bill of exchange, or promissory note) mentioned in that Schedule, which, not having been previously executed by any person;
is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India:
[Provided that, except as otherwise expressly provided in this Act, and notwithstanding anything contained in clause (a), clause (b) or clause (c) of this section or in Schedule I, the 7 amount indicated in Schedule I-A to this Act shall [x x x] be the duty chargeable on the instruments mentioned in clauses (aa) and (bb) of this proviso, as the proper duty thereof, respectively.-
(aa) every instrument, mentioned in Schedule I-A as chargeable with duty under that Schedule, which not having been previously executed by any person, is executed in Madhya Pradesh on or after the commencement of the Central Provinces and Berar Indian Stamp (Amendment) Act, 1939; and (bb) every instrument mentioned in Schedule I-A as chargeable with duty under that schedule, which not having been previously executed by any person, is executed out of Madhya Pradesh on or after the commencement of the Central Provinces and Berar Indian Stamp (Amendment) Act 1939, and relates to any property situated, or to any matter or thing done or to be done, in Madhya Pradesh and is received in [Madhya Pradesh :
Provided [further] that no duty shall be chargeable in respect of-
(1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument;
(2) any instrument for the sale, transfer or other disposition, either absolutely, or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act 1894, or under Act 19 of 1838, or the Indian Registration of Ships Act, 1841, as amended by subsequent Acts.8
[(3) any instrument executed, by, or, on behalf of, or, in favour of, the Developer, or Unit or in connection with the carrying out of purposes of the Special Economic Zone.
Explanation.- For the purposes of this clause, the expressions "Developer", "Special Economic Zone" and "Unit" shall have meanings respectively assigned to them in clause (g), (za) and (zc) of section 2 of the Special Economic Zones Act, 2005.] S.48-A. Validity of certificate or endorsement in respect of instrument for which higher rate of duty is payable in Madhya Pradesh.- Notwithstanding anything contained in this Act, no certificate or endorsement under this Act in respect of any instrument chargeable in Madhya Pradesh with a higher rate of duty under this Act, as amended by the Central Provinces and Berar Indian Stamp (Amendment) Act, 1939, shall be received in evidence or be in any way valid in respect of the payment of duty on such instrument or in respect of the chargeability of such instrument with duty unless the duty chargeable under this Act, as amended by the Central Provinces and Berar Indian Stamp (Amendment) Act, 1939, has been paid on such instrument.
SCHEDULE-IA.
(Stamp duty on instruments) (See Section 3)
12. Award, that Two percent of the is to say, any award amount or decision in market value of the writing by an property to which arbitrator or the award relates, umpire, on a whichever is higher.
reference made
otherwise than
by an order of
the Court in the
9
course of a suit,
being an award
made as a result
of a written
agreement to
submit present
or future
differences to
arbitration and
not being an
award directing
a partition.
(emphasis supplied)
Similarly, Section 36 of the Arbitration and Conciliation Act, 1996 reads as under:-
"[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.
(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub-
section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the 10 operation of such award for reasons to be recorded in writing:
Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).]"
8. Admittedly, the petitioner has not challenged Article 12 of the Schedule IA appended to the Stamp Act of 2014, which provides for stamping of an arbitral award which is chargeable as an instrument. A perusal of the aforesaid legal provisions clearly reveals that merely because Section 36 of the AC Act provides that an 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, it would not obviate the applicability of the Stamp Act of 2014 which provides that an 'award' is an instrument chargeable with stamp duty as per Section 3 of the said Act.
9. So far as the decision rendered by the Kerala High Court in the case of M/s Maharashtra Apex Corporation Ltd. (supra) is concerned, firstly the said decision is not binding on this Court being a judgment rendered by the Coordinate Bench of the different High 11 Court and secondly, it has no persuasive value as well. Although an objection was raised before the Kerala High Court that under Section 19 of the Kerala Stamp Act when an instrument is executed outside Kerala State and received for use in Kerala, the Additional Stamp duty, if any, is payable as has been held in the case of Chochin Shipyard Ltd. Vs. Hattigudur, but the learned Judge of the High Court has distinguished the aforesaid decision on the ground that the principles laid down in the above decision do not apply to the facts of the present case, as in that case the award was passed under the provisions of the Arbitration Act, 1940, whereas the award in this case was passed under the AC Act and was being executed under its Section 36 which provides that the award itself is executable as if it were a decree and there is no requirement of producing it before any Court to pass a decree so as to execute the same and thus, while relying upon another decision in the case of Ramaswamy Vs. Principal Subordinate Judge [1997 (2) KLT 393] it was held that the award is not liable to be stamped.
10. In the considered opinion of this Court the aforesaid decision does not lay down the correct proposition of law, as the provisions of the Stamp Act of 12 2014 cannot be circumvented and are binding in respect of instruments chargeable with stamp duty in the State of Madhya Pradesh notwithstanding that they are executed outside the Madhya Pradesh as has been clearly provided by Section 48A of the Stamp Act, 2014. It is true that the aforesaid decision of the Kerala High Court has been referred to and is affirmed by the Supreme Court in the case of Sundaram Finance Limited (supra) in which it is held that there is no need to obtain the transfer of the decree from the Court having jurisdiction over the arbitral proceedings and it is held that an arbitral award can be straightway filed before the executing Court where the assets of the respondents are located. On careful analysis of the aforesaid decision, this Court finds that the issue before the Supreme Court was whether the arbitral award can be directly executed outside the State in which it has been passed without following the provisions of Order 21 Rule 6 of CPC, which is applicable when a Court desires that its decree be executed through another Court, and thus, there was no occasion for the Supreme Court to dwell upon the applicability of the stamp duty of a State's Stamp Act on an arbitral award as this issue was not even raised by any of the parties before 13 the Court. Thus, the decision in the case of Sundaram Finance Limited (supra) has no applicability to the facts of the case on hand.
11. If the contention of the learned counsel for the petitioner is accepted that the arbitral award is not liable to be stamped, then it would lead to an anomalous situation and render the provisions of the Stamp Act otiose, which does not appear to be the intention of the legislature, as in the Stamp Act reference to the award passed by the Arbitrator has been specifically made in Article 12 of Schedule 1A of the Stamp Act, 2014. Thus, this Court has no hesitation to hold that it cannot be said that the Stamp Act is not applicable on an award passed by the Arbitrator.
12. So far as the contention of Shri Rao, learned senior counsel for the petitioner that since the petitioner has already paid the requisite court fees as provided under the MP Arbitration Rules, hence the stamp duty is not liable to be paid is concerned, the same also has no merit as in fact the petitioner is confusing payment of court fees for execution purposes with the stamp duty chargeable on the arbitral award which cannot be accepted and is liable to be rejected at the threshold. 14
13. As a result, petition being devoid of merits is hereby dismissed.
14. A perusal of the impugned order also reveals that the learned judge has directed the petitioner to pay the stamp duty as provided in the decisions rendered in the case of Bridge Stone India Pvt. Ltd. Vs. State of MP, reported in I.L.R. [2014] M.P. 2307 and in the case of M.P. Power Generation Co. Pvt. Ltd. Vs. Ansaldo Energia SPS (WP No.16506)/2015) decided on 21.3.2016 but, in the considered opinion of this Court, such casual direction is not sufficient and in fact it was for the learned Judge of the Executing Court only to pass the appropriate orders in accordance with the provisions of the Stamp Act, 2014 and as has been provided in the case of Peteti Subba Rao vs. Anumala S. Narendra, (2002)10 SCC 427 and after the award is properly stamped, the learned Judge is requested to proceed further in the matter in accordance with law.
15. With the aforesaid observations the petition stands disposed of. No cost.
(Subodh Abhyankar) Digitally signed by MANJOOR AHMED Judge Date: 2020.03.17 10:32:56 +05'30' 16/03/2020 Ansari 15