{"id":299891,"date":"2023-08-23T16:00:33","date_gmt":"2023-08-23T10:30:33","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=299891"},"modified":"2023-08-30T15:23:07","modified_gmt":"2023-08-30T09:53:07","slug":"delhi-high-court-discusses-modalities-unstamped-arbitration-agreement","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2023\/08\/23\/delhi-high-court-discusses-modalities-unstamped-arbitration-agreement\/","title":{"rendered":"‘Certified copy’ of the original arbitration agreement suffice if duly stamped, declaration made and uncontroverted for the purpose of S. 11 Arbitration Act"},"content":{"rendered":"
\n

Delhi High Court<\/span>: The petitions were filed arising from arbitration agreements being unstamped and\/or have been incorporated in an instrument\/agreement which is unstamped the light of the Constitution Bench judgment in the case of N.N. Global Mercantile (P) Ltd.<\/i> v. Indo Unique Flame Ltd<\/i>, (2023) 7 SCC 1<\/a> wherein it was held that an arbitration agreement, which is unstamped, does not exist and an unstamped contract, containing an arbitration agreement, would not exist as it has no existence in law. Sachin Datta, J., dealt with the aspect of mandatory impounding of unstamped\/insufficiently stamped arbitration agreement, in proceedings under section 11<\/a> of Arbitration and Conciliation Act, 1996<\/a> Act and the procedure to be followed after impounding.<\/p>\n

In the present case, it is to be examined as to how the statutory mandate under Section 11(13)<\/a> of Arbitration and Conciliation Act, 1996<\/a> which aims at expeditious disposal of petitions under Section 11 of the Act, is harmonized with the obligation imposed vide the judgment of N. N. Global (supra)<\/i> i.e. to act in tune with the statutory dictate of the Indian Stamp Act, 1899<\/a> (‘Stamp Act').<\/p>\n

The issues under consideration were as follows:<\/p>\n

(i) Whether it is incumbent on the petitioner, in a petition filed under Section 11<\/a> of the Arbitration and Conciliation Act, 1996<\/a>, to file the original of the duly stamped arbitration agreement\/contract or whether it would suffice for a ‘true copy’ thereof to be filed?<\/p>\n

(ii) Whether in terms of proviso (b) to Section 33(2)<\/a> read with proviso (a) to Section 35<\/a>, Section 38<\/a> and Section 42<\/a> of the Indian Stamp Act, 1899<\/a>, is it permissible for the petitioner to pay the deficient stamp duty together with penalty in these proceedings or whether it is incumbent\/mandatory to send the concerned agreement\/contract to the Collector for adjudication as to the proper stamp and penalty payable thereon?<\/p>\n

(iii) Whether the adjudication by the Collector under Section 40 of the Indian Stamp Act can be made time bound?<\/p>\n

(iv) Whether the stamping of the arbitration agreement\/contract must conform to the local laws\/stamping rate(s) prescribed at the place where the arbitration agreement\/contract was executed and\/or whether the same are required to conform to the relevant prescription at the place where the petition under Section 11<\/a> of the Arbitration and Conciliation Act, 1996<\/a> has been filed?<\/p>\n

The Court noted that in view of N.N. Global(supra), the statutory mandate of Section 33 of Stamp Act, is to impound agreements that are unstamped or insufficiently stamped. The Court is obliged to do so while entertaining a petition under Section 11 of the Act, the function being performed by the Court is akin to “receiving evidence”.<\/p>\n

On the aspect of whether it is mandatory to file the original agreement with the petition under section 11,<\/span> the Court further noted that it is incumbent for a petitioner who files a petition under Section 11 of the Act, based on <\/span>an unstamped\/ insufficiently stamped arbitration agreement, to file the original instrument as executed. However, where the arbitration agreement is duly stamped, filing of the original instrument can be obviated provided the true copy or certified copy thereof clearly indicates that it has been duly and properly stamped and it is also accompanied by a clear and cogent statement to that effect in the petition filed under Section 11 of Arbitration Act.<\/p>\n

On the aspect of the procedure post impounding of the unstamped instrument\/ agreement as mandated under Section 33 of the Stamp Act<\/span>, the Court observed that it is open for the court to either send the impounded agreement\/ instrument to the concerned Collector of Stamps, who shall then adopt the procedure under Section 40 of the Stamp Act and require the payment of proper stamp duty together with a penalty as contemplated therein. Once such duty or penalty has been paid, the Collector shall certify by endorsement thereon that the proper duty (together with penalty, if any) has been levied in respect thereof. Under Section 42 of the Stamp Act, every instrument\/ agreement so endorsed shall be admissible in evidence, and it would be open for this Court to act on the basis thereof in proceedings under Section 11 of the Act or to take recourse to Section 35 of the Stamp Act and enable deposit of the requisite stamp duty along with penalty as contemplated under proviso (a) to Section 35 of the Stamp Act and thereafter, take further steps [as amplified hereinbelow] as contemplated under other sections of the Stamp Act, eventually culminating in the concerned instrument being admitted in evidence\/acted upon for the purpose of proceedings under Section 11 of the Act.<\/p>\n

Thus, in appropriate cases, particularly where the quantum of stamp duty payable is not in dispute, it may be apposite for the Court to take recourse to the latter of the two options set out hereinabove, to enable deposit of the requisite stamp duty in Court and thereafter to act based on the instrument containing the arbitration agreement. After payment of stamp duty together with penalty as contemplated under Section 35 (a) of the Stamp Act, an authenticated copy of such duly endorsed instrument, together with the certificate in writing, stating the amount of duty levied in respect thereof, and such amount shall be sent to the Collector or to any person authorized by the Collector in this behalf as per Section 38(1) of the Stamp Act. It shall be open to the Collector in the exercise of jurisdiction under Section 39 of the Stamp Act to refund any portion of the penalty which has been paid\/levied in respect of such agreement\/ instrument. Where recourse is taken by the Court to Section 35 of the Stamp Act, Section 40 thereof will not come into play since the same is applicable only where the impounded instrument is sent to the Collector for adjudication as to the stamp and penalty payable thereon.<\/p>\n

On the aspect of whether time bound directions can be given to the collector of stamps concerned<\/span>, the Court noted that in cases where the Court deems it expedient to not take recourse to Section 35 of the Stamp Act and instead send the original of the impounded instrument to the concerned Collector, it shall be open for the Court to issue time-bound directions to the concerned Collector to perform the adjudicatory functions in terms of the relevant provisions of the Stamp Act in order to ensure that the statutory mandate under Section 11(13) of the Act is not defeated.<\/p>\n

The matter is next listed for 01-09-2023.<\/p>\n

[Splendor Landbase Limited v Aparna Ashram Society, 2023 SCC OnLine Del 5148<\/a>, decided on 22-08-2023<\/span>]<\/p>\n\n

Advocates who appeared in this case :<\/p>\n

Mr. Gaurav Puri, Mr. Sarthak Gupta and Mr. Saksham Thareja, Advocates for petitioner<\/p>\n

Mr. Sanjay Kumar, Mr. Tarandeep Singh, Mr. Karandeep Singh, Mr. Amit Singh and Ms. Pragya Bhushan, Advs. for R-1 and 2.<\/p>\n

Mr. Jatin Sehgal, Mr. Viren Bansal, Mr. Adhirath Singh and Mr. Avik Sarkar, Advs. for R-3 to 6.<\/p>\n

Buy Arbitration and Conciliation Act, 1996   HERE<\/a><\/h3>\n

\"arbitration<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The case relates as to how the statutory mandate under Section 11(13) of Arbitration and Conciliation Act, 1996 which aims at expeditious disposal of petitions under Section 11 of the Act, is harmonized with the obligation imposed vide the judgment N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd, (2023) 7 SCC 1, to act in tune with the statutory dictate of the Indian Stamp Act, 1899.<\/p>\n","protected":false},"author":67516,"featured_media":293503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[10111,60491,2543,14511,5951],"class_list":["post-299891","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-arbitration-agreement","tag-collector-for-stamps","tag-Delhi_High_Court","tag-stamp-act","tag-stamp-duty"],"yoast_head":"\nDelhi HC discusses modalities for unstamped arbitration agreement| SCC Blog<\/title>\n<meta name=\"description\" content=\"Delhi High Court discusses modalities relating to unstamped or insufficiently stamped arbitration agreements.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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Here’s why 2 out of 5 Judges of Supreme Court ruled unstamped arbitration agreements are valid at pre-referral stage","author":"Apoorva","date":"April 27, 2023","format":false,"excerpt":"The practice of dissent in judicial decision-making process plays a critical role in revealing constitutional commitment to deliberative democracy. Allowing judges to express differing views and engage in a dialogue about the law and its interpretation can potentially lead to a more nuanced and refined understanding of the law, as\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"validity of unstamped arbitration agreement","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/validity-of-unstamped-arbitration-agreement-1.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/validity-of-unstamped-arbitration-agreement-1.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/validity-of-unstamped-arbitration-agreement-1.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/04\/validity-of-unstamped-arbitration-agreement-1.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":249317,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/06\/09\/unstamped-contract\/","url_meta":{"origin":299891,"position":2},"title":"\u00ad\u00ad\u00ad\u00adEnforceability of an Arbitration Agreement Embedded in an Unstamped Contract N.N. 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