Arbitration and Conciliation Act, 1996 – ss. 48 and 49 – Foreign award – Enforceability of, when award not stamped – Held: Foreign award not bearing stamp duty under the Stamp Act, would not be rendered unenforceable – Term ‘award’ under Item 12 of Schedule I of the Stamp Act, does not include foreign award, thus, a foreign award not being includible in Schedule I, is not liable for stamp duty – Stamp Act, 1899 – Item 12, Schedule I. Dismissing the appeal, the Court
HELD: 1. The Single Judge of the High Court is correct, and the fact that a foreign award has not borne stamp duty under the Stamp Act, 1899 would not render it unenforceable. [Para 25] [770-A-B]
2.1 It becomes clear that the only “award” that is referred to in the Stamp Act, 1899 is an award that is made in the territory of British India provided that such award is not made pursuant to a reference made by an order of the Court in the course of a suit. It is important to note that there were several princely states in India governed by sovereign rulers which had their own laws. Arbitration laws, if any, in the said princely states, if they were to culminate in awards, would not be “awards” under either the Civil Procedure Code, 1882 or the Arbitration Act, 1899. They would therefore, be foreign awards insofar as British India is concerned. An award made in a princely state, or in a foreign country, if enforced by means of a suit in British India, would not be covered by the expression “award” contained in Item 12 of Schedule I of the Stamp Act, 1899. Only awards which are decisions in writing by an arbitrator or umpire, made in British India, on a reference made otherwise than by an order of the Court in the course of a suit would be included. [Para 10] [759-E-H]
2.2 “Award” under Item 12 of Schedule I of the Stamp Act, 1899 has remained unchanged till date. In 1899, this “award” would refer only to a decision in writing by an arbitrator or umpire in a reference not made by an order of the Court in the course of a suit. This would apply only to such award made at the time in British India, and today, after the amendment of Section 1(2) of the Stamp Act, 1899 by Act 43 of 1955, to awards made in the whole of India except the State of Jammu and Kashmir. This being the case, the expression “award” has never included a foreign award from the very inception till date. Consequently, a foreign award not being includible in Schedule I of the Stamp Act, 1899, is not liable for stamp duty. The Tamil Nadu Amendment of the Stamp Act, 1899 contains the identical definition of “award” as given in Item 12 thereof. The only difference is in the figures contained for stamp duty. [Para 16] [765-C-E]
2.3 The Stamp Act, 1899 is a fiscal statute which must be construed literally. Any ambiguity in the said statute would enure to the benefit of the assessee who has to pay stamp duty. [Para 17][766-B-C]
2.4 There is no doubt whatsoever that if stamp duties are leviable in India on foreign awards, the imposition should not be substantially more onerous than the stamp duty that is imposed on recognition or enforcement of domestic arbitral awards. For the said Article to apply, stamp duty must first be leviable on a foreign award, which, is not the case. Equally, reliance upon the 194th Law Commission of India Report, insofar as stamp duty on domestic awards is concerned, would again have little bearing, given the finding that under the present state of the law, foreign awards are not liable to stamp duty under the Stamp Act, 1899. [Para 23][769-B-C]
2.5 An argument that Section 47 of the Act requires three things and only three things to be produced before the Court for enforcement of a foreign award, and that therefore, stamp duty not being one of the three things required, cannot ever be levied, is an extreme argument. All that Section 47 deals with is production before the Court of proof of the fact that a foreign award is sought to be enforced. In no manner does Section 47 interdict the payment of stamp duty if it is otherwise payable in law. This argument must thus be rejected. Equally, the argument that under Section 48(2)(b), even if stamp duty is payable on a foreign award, it would not be contrary to the public policy of India, must be rejected. The fundamental policy of Indian law, as has been held in Renusagar Power Co. Ltd. v. General Electric Co. makes it clear that if a statute like the Foreign Exchange Regulation Act, 1973 dealing with the economy of the country is concerned, it would certainly come within the expression “fundamental policy of Indian law”. The Stamp Act, 1899, being a fiscal statute levying stamp duty on instruments, is also an Act which deals with the economy of India, and would, on a parity of reasoning, be an Act reflecting the fundamental policy of Indian law. [Para 24] [769-D-G]
Narayan Trading Co. v. Abcom Trading Pvt. Ltd. (2013) 2 MP LJ 252 – approved.
Senior Electric Inspector and Ors. v. Laxminarayan Chopra and Anr. [1962] 3 SCR 146 – distinguished. M. Anasuya Devi and Anr. v. M. Manik Reddy and Ors. (2003) 8 SCC 565 : [2003] 4 Suppl. SCR 853 ; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC
356 – held inapplicable.
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 : [2012] 12 SCR 327 ; Gujrals Co. v. M.A. Morris AIR 1962 P&H 167 ; Naval Gent Maritime Ltd. v. Shivanath Rai Harnarain (I) Ltd. (2009) 163 DLT 391 ; Orient Middle East Lines Ltd., Bombay and Anr. v. Brace Transport Corporation of Monrovia and Ors. AIR 1986 Guj 62 ; Thyssen
Stahlunion GMBH v. Steel Authority of India Ltd. (1999) 9 SCC 334 : [1999] 3 Suppl. SCR 461;
Renusagar Power Co. Ltd. v. General Electric Co. (1994) 1 Suppl. SCC 644 : [1993] 3 Suppl. SCR 22 ; Associate Builders v. Delhi Development Authority (2015) 3 SCC 49 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.