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Delhi District Court

Ajit Dhanda (Proprietor) vs . on 24 December, 2022

                 THE COURT OF DISTRICT JUDGE
                    (COMMERCIAL COURT-01),
              SOUTH-EAST, SAKET COURTS, NEW DELHI

                  Presiding Officer: Sh. RAJEEV BANSAL

Ex. (Comm) No. 41/22
In the matter of

Ajit Dhanda (Proprietor)
M/s Reviere Fabricators &
Trading Co.
Having Address at :
263, Industrial Area,
Ludhiana, Punjab                                                   ........ DH

                            Vs.

M/s CL Educate Ltd.
(Formerly Career Launcher India Ltd.)
Having Office Address At:
A-45, First Floor,
Mohan Co-Operative
Industrial Estate,
New Delhi-110044.                                                  ......... JD



Date of institution                                                :     29.04.2022
Date on which argument was concluded                               :     08.12.2022
Date of pronouncement of the order                                 :     24.12.2022




Ex. No. 41/2022              Ajit Dhanda vs. M/s CL Educate Ltd.                Page 1 of 5
                                 JUDGMENT

1. This is an Execution Petition for execution of Arbitral Award dated 01.07.2021, whereby an amount of Rs. 34,48,226/­ has been awarded in favour of the DH and against the JD.

2. A certified true copy of the Award has been filed. However, a perusal of the Award shows that no stamp duty has been paid on the said Award.

3. On 07.12.2022, this Court made an observation that the Arbitral Award is not stamped and hence, prima­facie the Execution Petition would not be maintainable since no stamp duty was paid. Learned counsel for DH sought an adjournment to address the arguments with regard to the maintainability of the Execution Petition.

4. On the adjourned date, she argued that the JD had challenged the Award u/s 34 of the Arbitration and Conciliation Act before the competent Court at Ludhiana, but there is no stay operating against the execution of the Award dated 01.07.2021 and hence the Award may be executed. She has argued that the insufficiently stamped award may not be impounded and she may be given an opportunity to make good the deficiency. Reliance has been placed on a judgment passed by the Hon'ble Madhya Pradesh High Court in the case of Union of India v. Gala Construction, decided on 08.04.2015.

5. I have heard learned counsel for the DH and have perused the records of the case.

6. There is no denial to the fact that the Arbitral Award dated 01.07.2021 which is sought to be executed by way of this Execution Petition, is not stamped at all. The Award is required to be stamped @ 0.1 % at the time of execution in accordance with Article 12 of Schedule 1A of Stamp (Delhi Amendment) Act, 2001. That having not being done by the DH at the time of filing of the Execution Petition, the Petition would not be maintainable and is liable to be dismissed.

7. However, this is not end of the matter. Section 33 and 35 of the Stamp Act cast a duty on the Court to impound the instrument which is insufficiently stamped. Section 38 (2) of the Indian Stamp Act provides for the procedure to deal with the impounded instruments, which inter­alia provides that an instrument so impounded shall be sent to the Collector in original.

8. Learned counsel has placed reliance on a judgment of the Madhya Pradesh High Court Union of India v. Gala Construction (supra) to show that in accordance with the recommendation of the 194th report of the Law Commission of India, the Award may not be impounded.

9. However, I am not persuaded by this argument. Our own High Court on 22.01.2021 in Mohini Electricals Ltd. v. Delhi Jal Board reported in 2021 SCC Online Delhi 3506 held that in para nos. 19 and 31 as under :­ "19. ........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 be acted upon, irrespective of its purpose. In case the instrument is not stamped as required, the Court must impound the same.......... 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.

..................

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 Suppp 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.

10. In view of the clear enunciation of law propounded in case of Mohini Electricals Ltd. v. Delhi Jal Board (supra), this Court is duty bound to impound the unstamped Arbitral Award dated 01.07.2021 and to send the same to the Collector of Stamp u/s 38 of the Indian Stamp Act 1899 for further necessary action. Ordered accordingly that the Arbitral Award be sent to the Collector of Stamp, Delhi for taking action in accordance with law.

11. The Execution Petition is dismissed.

File be consigned to Record Room.

Announced in Open Court on 24.12.2022 (RAJEEV BANSAL) District Judge (Commercial Court-01) South East/Saket Courts, New Delhi Ex. No. 41/2022 Ajit Dhanda vs. M/s CL Educate Ltd. Page 5 of 5