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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NC: 2025:KHC:2358
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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NC: 2025:KHC:2358
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 -3- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -4- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -5- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -6- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -7- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -8- NC: 2025:KHC:2358 WP No. 243 of 2025 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 -9- NC: 2025:KHC:2358 WP No. 243 of 2025 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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NC: 2025:KHC:2358 WP No. 243 of 2025
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