Madras High Court
M/S. Wilson & Company Private Limited ... vs K.S. Lokavinayagam And Another on 22 January, 1991
Equivalent citations: AIR1992MAD100, AIR 1992 MADRAS 100, 1992 (2) ARBI LR 124, (1991) 2 MAD LW 65, (1992) 2 ARBILR 124
ORDER
1. O. P. No. 268 of 1983 (filed on 21st October, 1980) was filed Under Sections 16, 30 and 33 of the Arbitration Act 1940 (hereinafter referred to as "the Act") to set aside the award dated 31-10-1976 made by the arbitrator in the disputes between the petitioner/M/s. Wilson & Company Private Limited and the Food Corporation of India and for costs of the petition.
2. O. P. No. 536 of 1987 was filed in this Court on 16-6-1977, represented on 3-8-1983, numbered and admitted on 18-11-1987, under Sections 14(2) and 17 of the Act to file the Award into this Court and to pass a decree in terms of the award.
3. The short facts of the case are these :--The petitioner/M/s. Wilson & Company Private Limited is engaged in the business of undertaking and executing construction work was one of the tenderers for the work of constructing godowns for storage of food grains at Arakonam having storage capacity of 25,000 tonnes, called for by the 2nd respondent/ Food Corporation of India. The petitioner's tender was accepted by the second respondent. An agreement in writing dated 21-4-1972 was entered into between the parties in respect of the work to be executed by the petitioner. Though the formal contract in writing was entered into on 21-4-1972, the petitioner was required to start the work immediately on acceptance of its tender in and by the letter of the second respondent dated 14-12-1971. Though the second respondent wanted the petitioner to commence the work by its letter dated 14-12-1971, the work could be actually commenced only on 1-1-1972. Second respondent subsequently issued revised instructions in March, 1972 to follow a different lay-out, as a result even foundation work already executed had to be covered up. As a result of this inordinate delay of over six months in even finalising the alignment and lay-out the entire planning of the petitioner for completing the work within the contract period of 12 months was completely upset. There was also a steep rise in the prices of materials as a result of cyclone in December, 1972, power-cut in January, 1973 and due to the cement control order, brought into force towards end of 1972, and beginning of 1973 which also led to chronic shortage of cement. As a result of these developments the work had to be further delayed. According to the petitioner, all these impediments to the execution of the work arose because of the initial delay on the part of the second respondent in failing to finalise the lay-out and alignment of the work and also in calling upon the petitioner to stop the work in January, 1972 while the contract itself had to be completed within 12 months. The petitioner had to incur heavy additional expenditure by reason of escalation of prices during the period of delay. The petitioner completed the entire work and handed over the last of the godowns to the second respondent in or about 5-3-1974. Even during the execution of the work the petitioner had brought to the notice of the second respondent, the additional cost incurred by the petitioner for executing the work by reason of the delay occasioned by the default on the part of the second respondent, and called upon the second respondent to revise the rates of the work. The second respondent however was not agreeable to revise the contract rates, with the result, that disputes arose between the parties with regard to the claim of the petitioner. As the contract provided for reference to arbitration of such disputes the petitioner invoked the arbitration clause in the contract, and the first respondent was appointed the sole arbitrator to decide the dispute. The arbitrator entered upon the reference as sole arbitrator in or about June 1974 and the petitioner submitted its detailed statement of claim and supporting data to the arbitrator on 8-7-1974. The second respondent filed its counter statement on 23-11-1974. Thereafter both parties submitted documentary evidence to the arbitrator and the petitioner also examined one witness in or about March, 1976. Time for making the Award was also extended by this Court and ultimately the arbitrator by letter dated 5-11-1976 informed the petitioner that he has made and pronounced the award on 30-10-1976. The petitioner thereupon requested the arbitrator to file the award and all the documents submitted to him in the arbitration proceedings to this Court under Section 14(1) of the Act, so that the petitioner could take further steps in regard to the said award. As called upon by the first respondent, the petitioner also paid a sum of Rs. 400/- as expenses for such filing the award into Court. Inasmuch as the petitioner has been put on notice by the counsel for the first respondent in their letter dated 23-9-1980 regarding the presentation of the award in this Court, the petitioner has been advised to file the present petition under Sections 16, 30 and 33 of the Arbitration Act for setting aside the award or in any event for remitting the same for fresh consideration.
4. According to the petitioner the award in question is vitiated by errors of law apparent on the face of the award and that the arbitrator had also failed to decide the disputes referred to him with the result that the award is incomplete and does not operate as final adjudication of the rights and obligations of the parties in regard to the matters referred to him. Being aggrieved by the said award, the petitioner has filed the present petition on the following grounds :--
(a) The impugned award stated to have been made pronounced by the first respondent on 30-10-1976 not having been duly stamped at or before execution as required by the provisions of the Indian Stamp Act is a nullity and liable to be set aside by this Court as being otherwise invalid.
(b) The first respondent arbitrator having become functus officio on making the award, such award cannot be validated by an action of or on behalf of the first respondent subsequent thereto and the award as filed in this Court is therefore invalid and no judgment or decree can be passed in terms thereof.
The award is liable to be set aside.
(c) The Award is contradictory, incomplete and ex facie erroneous.
(d) The findings of the arbitrator on the various claims submitted to him are vitiated by the application on erroneous legal principles.
(e) The arbitrator by ignoring the admitted facts and failing to consider the relevant documentary evidence, has misconducted the proceedings and thereby vitiated the award made by him.
(f) The arbitrator has failed to advert to the material documents.
(g) The findings of the arbitrator on various claims are vague, uncertain and cannot be sustained.
(h) The arbitrator having found that the petitioner is entitled to payment from the second respondent of a sum of Rs. 17,978.18 ought to have awarded the same unconditionally to the petitioner.
(i) The action of the arbitrator in delegating the determination, to the departmental officers of the second respondent is an erroneous decision, and constitutes a failure to decide the disputes specifically referred to him, rendering the award liable to be set aside.
5. The original petition was resisted by the second respondent / Food Corporation of India by their counter statement. According to the second respondent, the petitioner had defaulted in completing the work in accordance with the terms and conditions of the contract. There was no justification for the revision of the contract rate as stated by the petitioner. The statement that the award is inconsistent, vague and incomplete, was denied. According to the second respondent, they are not the material grounds for setting aside the award. The award contained certain directions to hand over the bore-well, site-shed and open well to the respondent which are included in the arbitration proceedings, which is binding on the petitioner. There is no substance in the averment in clause (n) regarding the payment of Rs. 17,978.18. There has not been any material proof to allege that the award was insufficiently stamped rendering the award invalid. At any rate there is no legal material for the petitioner to ask for setting aside the award on this ground.
6. Though it was also raised in the counter statement that the O. P. No. 268 of 1983 is barred by limitation and not maintainable, no argument was advanced on that ground.
7. I have heard the elaborate arguments of Mr. T. K. Seshadri on behalf of the petitioner and Mr. Srinivasamurthy, on behalf of the second respondent/ Food Corporation of India and Mr. R. G. Rajan, on behalf of the first respondent/arbitrator.
8. Before proceeding further to deal with the points raised by both sides, it is useful to refer the award passed by the arbitrator. The arbitrator on a consideration of the entire documents, vouchers etc., has held thus :
"The entire documents, vouchers and the view points expressed by the F.C.I, and Messrs. Wilson & Co. have been very carefully gone into in detail taking a complete picture of the entire case from the start to finish. Considering all the circumstances expressed by both parties, I have come to" the following conclusions and hereby my award in this case as follows."
It is seen from the Award that the arbitrator has afforded sufficient opportunity to both parties and called upon both parties to file their representation with all records relevant on the subject. The arbitrator says in his award as follows :
"The documents produced by the F.C.I. and Messrs. Wilson & Co. had been studied carefully and the clauses of the agreement gone into in detail."
The arbitrator had several sittings. The first session of the personal enquiry had been taken up on 20-1-1976 and files relating to issue of notices on various occasions pointing out the delay and levying penal recoveries etc. Besides documents in support of hiring of godowns to store paddy prior to the date of completion if any and also payment made in this connection were called for. The second sitting for the production of documents and clarifications was on 2-2-1976. The petitioner filed copies of correspondence relating to procurement of cement, steel, escalation, claim etc. The 4th and 5th sittings were held on 26-2-1976 and 8-3-1976 respectively. The 6th sitting was held on 23-3-1976. The 8th sitting was fixed on the 7th July for letting in evidence. No evidence was let in by the Food Corporation of India and it was agreed by both parties that there need be no further letting in evidence on either side. The next sitting was held on 16-7-1976 and the petitioner through their legal adviser had summed up their claims and view points with the necessary legal supporting. The final sitting was held on the 24th July, 1976 and the Legal Adviser for the Food Corporation of India had presented his legal points backed by the legal citations. After considering the entire documents, vouchers and the view points expressed by the Food Corporation of India and the petitioner have been very carefully gone into in detail and after carefully assessing the merits and rival claims in detail the arbitrator has passed the impugned award rejecting the claims of the contractor for escalation in cost of all materials, escalation in cost of labour, the claims of additional expenses for the execution of the work in the form of supervision, security, machinery charges etc., and the claim of the contractor for the overheads of the Company. The arbitrator has however admitted the claim of the contractor of Rs. 17,978.18 for extra expenses incurred due to the reorientation of godowns from the commencement of work subject to the condition that the bore-well, site shed and open well arc handed over to the Corporation as per the description specified in the column. The claim of the contractor for the additional expenses incurred for use of additional quantily of cement to meet the requirements of departmental engineers at site, was admitted to the extent that the contractors are able to produce authenticated statement of the departmental officers for the use of additional quantity of cement on the works. The arbitrator has completely rejected the counter claim of the Food Corporation of India as damages.
9. As already mentioned, the award of the arbitrator is elaborate and detailed one. It is well settled that in the absence of mistake of law or of fact apparent on the face of the record the award of the arbitrator is not open for challenge by any party. I do not find any error apparent on the face of the record warranting interference with the award of the arbitrator in question. It is well settled that when the parties choose their own arbitrator to be the judge in dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon law or on facts. Therefore, when arbitrator commits a mistake either in law or in fact in determining the matters referred to him, where such mistake does not appear on the face of the award and the documents appended to or incorporated so as to form part of it, the award will neither be remitted nor-set aside, which is prayed in the present O. P. filed by M/s. Wilson & Company Private Limited. Under the law, the arbitrator is made the final arbiter of the dispute between the parties. The award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. In this context it is also useful to refer the decision cited by the learned counsel for the petitioner reported in Chinnasamy v. Superintending Engineer, (1989) 2 Mad LJ 415 : (AIR 1990 Madras 347), Nainar Sundaram and Bellie, JJ. have held that it is not the function of the court to scrutinise the award on merits as if it is sitting in appeal on the verdict of the arbitrator. Applying the above ruling and the rulings in plethora of decisions of the highest court of the land and the highest court of the State it is not possible to interfere with the award of the arbitrator. In my considered opinion, it does not suffer from any error apparent on the face of the record. I have no jurisdiction to deal with judicially with the merits of the case determined by the arbitrator. It is not my function to scrutinise the award on merits as if 1 am sitting in appeal on the verdict of the arbitrator. There is no scope for me to invoke the aid of Section 30 of the Act for setting aside the award in question as I see no cause to interfere with the award or any of the matters referred to arbitration for reconsideration, or to set aside the award, a definite and a positive result must foilow, and that is set out by the statute in Section 17. Under these circumstances, I have no other option except to pronounce judgment according to the award which shall be followed by a decree. However subject to my verdict on the question raised by the learned counsel for the petitioner in regard to the validity of the award being unstamped.
10. Mr. T.K. Seshadri, learned counsel for the petitioner/ contractor submits that the award filed by the arbitrator in this court was not duly stamped and non-stamping of the award will vitiate the award. According to the learned counsel it is a misconduct on the part of the arbitrator in not stamping the award and filing the same into Court, the arbitrator has to pass the award in accordance with the law. Since the award which creates rights in favour or against the parties, it is an instrument under the Indian Stamp Act, 1899 (hereinafter referred to as "the said Act"). He further submits that the award has to be stamped at the time of signing of the award in accordance with the provisions of the said Act and if the award is not stamped it is otherwise invalid under Section 30(c) of the said Act. The arbitrator has become functus officio on his filing the award into Court. Hence the only ground which is available is to set aside the award or in the alternative to remit the same for reconsiderlion under Section 16 of the Act. Before dealing with the points raised by the learned counsel for the petitioner as stated by him it is relevant at this juncture to refer some of the provisions of the Indian Stamp Act, 1899.
11. According to the learned counsel for the petitioner the award made and pronounced by the arbitrator on 30-10-1976 not having been duly stamped at or before execution as required by the provisions of Indian Stamp Act is a nullity and liable to be set aside by this Court as being otherwise invalid. Though it was contended that the award is contradictory, incomplete and ex facie erroneous, the learned counsel for the petitioner is not in a position to point out any discrepancy or illegality in the award passed.
The arbitrator also considered all the documentary evidences placed before him by both parties. Hence I am unable to hold that the arbitrator has misconducted himself and the proceedings as alleged by the learned counsel for the petitioner. Hence in my view the award of the arbitrator is not vitialed. As stated supra it is useful to refer certain provisions of the Indian Stamp Act.
12. Section 2(11) of the said Act defines the words "duly stamped" -- "Duly stamped", as applied to an instrument which bears an adhesive or impressed stamp. "Duly stampted" would mean stamped with the value and description of stamp required by the law in force when the instrument was executed or first executed.
Section 2(14) of the said Act defines the word "Instrument". The expression instrument is used in the said Act in more senses than one. The term 'instrument' as defined under Section 2(14) covers every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded, it cannot include those documents by which no right or liability has been created etc. Section 3 of the said Act is the charging section. It is evident from S. 3 of the said Act that every instrument mentioned in the schedule is chargeable with duty of the amount indicated therein. Section 3 is subject to certain exemptions. If the instruments in question can be said to be covered by any of articles in the schedule then they shall be chargeable to duty. As to what will be the proper duty to be charged will be another matter, but so far as chargeability is concerned there can be no doubt if once it is found that the instrument is of the nature dealt with in the schedule.
12A. It is not disputed that an award given by the arbitrator is an instrument as defined under Section 2(14) of the said Act. The term execution has been further defined in Section 2(12) of the said Act which means "signed" and "signature". Thus, for the purpose of stamp duty, the award in the present case is an instrument executed by the arbitratory.
13. Section 10 deals with how the duties on any instrument which is chargeable shall be paid. Section 17 of the said Act relates to the same class of instrument as referred to in Section 3(a) of the said Act. It embraces all instrument chargeable with duty in India except those executed out of India, which are provided for in Ss. 18 and 19 of the said Act and which are on different footing of time of stamping. Sections 17 and 52 of the said Act read together indicate that the executant of such document is the person against whom the Collector should proceed under Ss. 40 and 42 of the said Act for collecting the stamp duty and penalty. It is significant to note that the proviso to Section 62 of the said Act makes a mention also about the penalty levied under Section 40 and makes a provision for it deduction from the fine. Section 31 of the said Act provides no time limit for an application to the Collector by adjudication as to the proper stamp duty payable in respect of an instrument. There is nothing in the section to prevent a person from resorting to the Collector for an adjudication as to the proper stamp even after the expiry of one month from the date of its execution. Section 32 of the said Act provides for issuance of a certificate by the Collector. When an instrument brought to the Collector under Section 31, who determines the duty payable under Section 31 and shall certify by endorsement on such instrument that the duty with which it is chargeable has been paid. When such instrument is not chargeable with duty, the Collector shall certify in manner aforesaid that such instrument is not so chargeable Any instrument upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be, and if chargeable with duty, shall be receivable in evidence or otherwise, and may be acted upon and registered as if it had been originally duly stamped. The power of the Collector under the Stamp Act as the original authority to express an opinion as to the quantity of stamp duty payable on an instru-ment is a statutory power duly vested in him and such power has to be exercised by him when he is called upon to do so. If the instrument is unstamped, the only possible way he can act under Sections 31 and 32 is by determining the stamp duty payable on the instrument and consequently expressing an opinion on the subject by stating that the instrument would fall under one or other of the Articles of the Stamp Act. Section 33 of Chapter IV contains the preventive provisions, the main object of which is to secure the proper scrutiny of instruments liable to stamp-duty when produced by their posses-.sors, and the effective working of the criminal penalty clauses as a deterrent to wilful evasions. The opening words of S. 33 are evidently only intended to cover the cases of persons, such as arbitrators, local commissioners, etc., who are authorised to receive evidence but are not public officers. Where the High Court has not delegated its power of examining and impounding any instrument under this section to any officer of the court having regard to Section 33(2) and Proviso (b) to Section 33(2), the High Court is entitled to see if it is properly stamped. Section 35 of the said Act deals with the admissibility of instruments in evidence for the purposes of the stamp law. All instruments, except those specified in Clause (a), may be rectified, if not duly stamped, by payment of the proper duty and penalty. The effect of the section is to make such an unstamped document inadmissible in evidence, and unable to be acted upon by persons having authority to receive evidence or by any public officer. It does not affect the validity of the document. The word 'instrument' used in this section includes every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded. The award which is an 'instrument' within the meaning of the Stamp Act was required to be stamped. Being unstamped the award could not be received in evidence by the Court, nor could it be acted upon. But the court was competent to impound it and to send it to the Collector with a certificate in writing stating the amount of duty and penalty levied thereon. On the instrument so received the Collector may adjudge whether it is duly stamped and he may require penalty to be paid thereon, if in his view it has not been duly stamped. If the duty and penally are paid, the Collector will certify by endorsement on the instrument that the proper duty and penalty have been paid. Section 38 of the said Act prescribes the procedure to be followed by persons other than Collectors after impounding an instrument which is not duly stamped. Section 62 provides for the punishment of certain offences against the stamp-law arising out of the execution or employment of instruments which are not duly stamped.
14. Learned counsel for the petitioner invited my attention to the following decisions in support of his above contentions :
1) In Rikhabdass v. Ballabhdas, the Supreme Court held as follows :
"Under Section 16 an award can be remitted to the arbitrators only for reconsideration. When it is remitted for re-writing it on a stamped paper, it is not remitted for reconsideration. Reconsideration by the arbitrator necessarily imports fresh consideration of matters already considered by them. It follows that the reconsideration can only be as to the merits of the award. They reconsider nothing when they re-write the award on a stamped paper. Wanl of stamp being a defect dehors the award is not covered by S. 16(1)(c). An order of the court remitting an award to the arbitrator for re-submission after duly stamping it and registering it cannot, therefore be based on S. 16(1)(c)."
"Such an order cannot be supported by Ss. 14(1), 13(d) or 15 of the Arbitration Act or by S. 151, Civil P.C. The award had been already made and the arbitrator had become functus officio. Section 151 of the Code cannot give the court power to direct the arbitrator to make a fresh award; that would be against well-established principles of the law of arbitration."
The above decision was a case of unstamped award. An objection was taken to a judgment being passed on such an award. On such objection, the trial court passed an order remitting the award to the arbitrator for re-submitting to the court on a duly stamped paper and after getting it registered. The High Court was moved in revision. The learned single Judge took the view that the award required to be stamped. But he felt that it could not be remitted to the arbitrator under S. 16 of the Arbitration Act which is the only provision under which an award can be remitted to an arbitrator. Learned Judge not satisfied with the correctness of an earlier decision reported in Ramkumar v. Kushal-chand, AIR 1928 Nag 166 referred the matter for decision by a larger bench of the High Court, One of the questions referred to was whether the Court has powers under Section 16(c) of the Act to remit an award to the arbitrator or umpire to get it stamped and or registered. The matter was heard by a Division Bench. It was agreed by both parties before the Bench that the award requires to be stamped. The Bench answered the question as to whether the award could be remitted under Section 16(c) of the Act to the arbitrator to get it stamped, in the affirmative. They held that a want of stamp would be an illegality apparent on the face of the award and therefore the case would fall under S. 16(1)(c) of the Act. They also held, following the case of Lakhmichand v. Kalloolal 1956 Nag LJ 504, that the copying of the award on a stamped paper was purely ministerial, and making of an award did not deprive the arbitrator of the authority to copy an award on the requisite stamp paper. Aggrieved party appealed to the Supreme Court. The only question that was argued at the bar was whether the answer of the Division Bench to the third question viz., whether the award could be remitted under Section 16(1)(c) of the Arbitration Act to the arbitrator to get it stamped.
15. The Supreme Court held that the Division Bench of the High Court was clearly in error. According to them an award can be remitted under Section 16 of the Act to the arbitrators only for reconsideration and when it is remitted for re-writing on a stamp paper it is not remitted for reconsideration. It necessarily imports fresh consideration of matters already considered by them. The Supreme Court said that they reconsidered nothing when they re-write the award on a stamp-paper. Thus, the Supreme Court was called upon to decide whether an order could be made remitting the award to the arbitrator with a direction to re-write it on a stamp paper and re-submit it to the court. That is the only point the Supreme Court has decided in the said case. In the instant case the grievance of the petitioner was that the award was not duly stamped at all at or before execution as required by the Provisions of the Indian Stamp Act which is a nullity and is liable to be set aside by this Court. The points raised in this case was not before the Supreme Court in Rikhabdass's case (cited supra). Hence in my opinion the said judgment is not applicable to the facts of this case and is distinguishable.
2) In Venkataratnam v. Chelamayya, (FB) the Andhra I'radesh High Court held as follows :
"Original unstamped award filed along with copy of award written on stamp -- Held, although original award could not be regarded as having been duly stamped in circumstance of the case, stamp on copy might be treated as intended to serve as payment of stamp duty and penalty so as to enable original award to be admitted in evidence."
In the said case it was argued for the respondent that the award was not duly stamped, and was not therefore admissible in evidence in view of Section 35 of the Indian Stamp Act. However, the arbitrators engrossed a copy of the award on a stamp of Rs. 2865/- on 6-3-1956. But it was contended that the stamped document was only a copy of the award and the original award was made and pronounced on 10-11-1955. Hence under Section 17 of the Stamp Act, all instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution. The question was whether this stamped copy will satisfy the requirements of Section 35 of the Stampt Act. The Full Bench of the Andhra Pradesh High Court held that that the arbitrator filed an unstamped original award along with mere copy of the award as a single document. Hence the intention obviously was that the stamp affixed to the copy of the award should be treated as a stamp in respect of the original award itself. Ultimately the Court was directed to receive the award in evidence and deal with under the provisions of the Arbitration Act in the light of the observations made in the said judgment. In my opinion the above judgment is also not applicable to the facts of this case.
3) In H. S. Ltd. v. M/s. Dilip Construction, AIR 1969 SC 1238, the Supreme Court held as under (at p. 1240 of AIR) :
"The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponents. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initiall defect in the instrument."
It is true that an instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer. Section 35 provides that the admissibility of an instrument once admitted in evidence shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. Relying upon the difference in the phraseology between Ss. 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because S. 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being acted upon, and the Legislature has by Section 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument. The Supreme Court said that under Section 36, an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 35 does not prohibit a challenge against an instrument tht it shall not be acted upon because it is not only duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The Supreme Court while rejecting the appeal held that the Stamp Act is not enacated to arm a litigant with a weapon of technicality to meet the case of his opponents. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in. the instrument. Section 35 of the Stamp Act operates as a bar to an unstamped intrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, sub-s. (1) of Section 42 provides for certifying that an instrument is duly stamped and sub-section (2) of Section 42 enacts the consequences resulting from such certification. In my opinion, applying the above ratio laid down by the Supreme Court this Court is competent to impound the document. Such an order should be passed by this Court in the interest of both parties and to secure revenue for the State and to prevent the petitioner to use the weapon of technicality to meet the case of his opponent. I say that the provisions of the Act are conceived in the interest of the revenue. Hence in my opinion, Mr. Srinivasarnurthy, learned counsel for the 2nd respondent, is right in requesting this court to cure the defect by invoking the provision under Section 33 of the Stamp Act. The Collector is entitled to scrutinise the document and to collect the necessary ,uty and penalty leviable in this case. In my opinion, as rightly contended by the learned counsel for the Food Corporation of. India, the infirmity pointed out can be cured as it does not go to the root of the matter. Thus, the judgment cited by the learned counsel for the petitioner reported in H.S. Ltd. case (AIR 1969 SC 1238) (cited supra) will not be of any assistance to the petitioner. It is very useful at this juncture to refer to the decision by a Division Bench of our High Court reported in Subramaniam Chattiar v. Rev. Divisional Officer Deva-kattal AIR 1956 Mad 454 held as follows (at p. 457 of AIR):
"There is absolutely no doubt that an unstamped or defectively stamped document is not void and that it is effective from the date of its execution, though it is incapable of being made use of, as evidence, until it is stamped properly. As Lindley L.J. has remarked -- "Powell v. London and Provincial Bank" (1893) 2 Ch 555".
"No case that I knew of can be cited to show that an erroneous stamp would invalidate the deed."
16. Learned counsel for the Food Corporation of India, submits that certain unstamped arbitration award contravenes Art. 12 of the Stamp Act but that will only be defective and not invalid within the meaning of Section 30 of the Arbitration Act. In support of his contention, the learned counsel drew my attention to a decision reported in Pradip Trading Co. v. State of Bihar . In the said case the award of the arbitrator was assailed on various grounds. One of the grounds was that the award not being on stamped paper was void and the Court below erred in directing it to be made a rule of the Court. In support of the argument on the question of invalidity of the award on account of its not being on stamped paper, reliance was placed on Art. 12, Schedule I, of the Stamp Act. Admittedly, the award in the said case was not on a stamped paper and as such there is a defect in the award inasmuch as it is in contravention of the aforesaid Art. 12 of the Stamp Act. The questions for consideration were (i) what was the effect of the said defect and (ii) whether there is any mode for rectifying the same. The counsel for the appellant had urged that in the absence of stamp, the award is invalid in law and as such it is liable to be set aside in view of Section 30(c) of the Act which empowers a court to set aside an award if it is 'otherwise invalid'. The Division Bench held that only because of the award is not on a stamp paper it will not be invalid within the meaning of Section 30 of the Act. According to the learned Judges, it is merely a defect in the award. A reference was also made to the judgment of the Supreme Court reported in Rikhabdass v. Baltabhadas . The Supreme Court in turn referred to a case reported in Nani Bala Saha v. Ram Gopal Saha AIR 1945 Cal 19 : ILR (1945) I Cal 454 saying want of stamp being a defect dehors the award or the decision of the arbitrator. They further said tht it was open to the parties to take such steps as were available to them at law for curing the defect arisen from the award being on unstamped paper. Learned counsel for the appellant in the said case has also prayed for the remittal of the matter to the arbitrator under S. 16 of the Act as it was on a unstamped paper and for that purpose the learned counsel for the appellant placed reliance on the power o.f the Court under Section 16(1)(c) of the Act under which the Court can remit the award to the arbitrator where an objection to the legality of the award was apparent on the face of it. Following the Supreme Court judgment reported in Rikhabdass's case (cited supra), the Division Bench of the Patna High Court rejected the said contention, stating that there is no substance in the submission of the counsel for the appellant. The Division Bench said that in view of the Section 35 of the Stamp Act, the Award in question could not have been admitted in evidence as it was chargeable with duty in view of the Art. 12 of the Stamp Act. Section 33 of the Stamp Act prescribes the procedure of impounding an instrument which is chargeable with duty when it is filed before any authority including a Court and by that procedure the defect of want of stamp can be cured and rectified. The Bench also said "It cannot be said that Section 35 of the Stamp Act itself is a permanent bar on the power of the court to make such an award rule of the Court even if the defect regarding the stamp is cured by the procedure under the Stamp Act."
17. In my opinion the above judgment is directly applicable to the facts and circumstances of the case on hand. Thus on the facts and circumstances of the case on hand the defect in the award can be cured by impounding the document and after the defect is removed it can be brought on record and made a rule of the court for the aforesaid reasons. No case has been made out for holding that the award being invalid in law and has to be set aside. O.P. No. 268 of 1983 filed by the petitioner M/s. Wilson & Company Private Ltd. is accordingly fails and is dismissed. O.P. 536/87 is ordered. The office is directed to adopt the procedure of impounding the award as prescribed in Section 33 of the Stamp Act. However, the award is made as a rule of court subject to the above direction. In the circumstance there will be no order as to costs.
18. Order accordingly.