No extra stamp duty is payable on a Gujarat arbitral award merely because enforcement is sought in Delhi, rules Delhi HC

The Decree Holder sought enforcement under Section 36 of the Arbitration and Conciliation Act, 1996 of an arbitral award dated 13 April 2023, as corrected on 15 April 2023.

The award was signed at Ahmedabad, Gujarat, and stamped under the Gujarat Stamp Act, 1958.

The Judgment Debtor objected that the award attracted differential stamp duty under the Indian Stamp Act, 1899, as applicable in Delhi, and that payment of the differential amount was late.

The Decree Holder had deposited an amount calculated at Delhi rates, although it disputed any obligation to do so.

The award’s interest component had been set aside in Section 34 proceedings, and an appeal under Section 37 was pending; the remaining amount payable was Rs. 3,78,22,968.

1. Whether an arbitral award executed and stamped in Gujarat attracts additional or differential stamp duty merely because enforcement is sought in Delhi.

2. Whether the alleged late payment of differential stamp duty rendered the award insufficiently stamped or prevented its enforcement.

3. Whether the Decree Holder could withdraw the amount remaining payable under the award while the Section 37 appeal was pending.

Under Sections 2(12) and 17 of the Indian Stamp Act, 1899, “execution” of an instrument means signing it, and an instrument executed in India must be stamped before or at the time of execution.

Sections 33, 35 and 38 require a court to address an insufficiently stamped instrument in accordance with the Act when the issue arises at enforcement; the sufficiency of stamping is relevant at that stage, but enforcement is not itself a chargeable event.

Under New Central Jute Mills Co. Ltd. v. State of W.B., a second State may impose differential duty where its applicable legislation creates a further charge upon receipt of an instrument with the required territorial or transactional nexus.

Genus Power and Infrastructures Ltd. v. Supreme Advertising Pvt. Ltd. clarified that statutory “execution” is not synonymous with enforcement, while M/s URC Construction (P) Ltd. v. Airports Authority of India addressed the enforcement-stage duty to examine stamping and the statutory procedure for insufficiently stamped instruments.

The award was assessed under Article 13 of Schedule I to the Gujarat Stamp Act, 1958.

The Court distinguished the event that makes an instrument chargeable—here, signing the award in Gujarat—from the later stage at which a court may examine whether it is sufficiently stamped. Although stamp sufficiency may be considered during enforcement, that does not create a fresh liability when enforcement is brought in another State.

New Central Jute Mills did not support the Judgment Debtor absent a Delhi statutory provision imposing additional duty upon receipt or enforcement of an out-of-State instrument. No such provision under the Indian Stamp Act as applicable in Delhi was identified; the Court therefore declined to imply a fiscal liability.

Since no differential duty was legally payable, the objection based on the alleged delay in paying it did not defeat enforcement. The Court found the award sufficiently stamped under Gujarat law.

As to disbursement, it made withdrawal conditional on an undertaking and indemnity bond because the Section 37 appeal remained pending.

It disposed of the enforcement petition, permitting the Decree Holder to withdraw Rs. 3,78,22,968 upon furnishing the required undertaking and indemnity bond to the satisfaction of the Registrar General; the parties retained liberty to seek revival after the Section 37 appeal was decided.

The Judgment Debtor’s application for refund of the excess amount deposited was allowed, with the Registry directed to refund it in accordance with applicable rules and procedure.