T.P.S. Chawla, J.
(1) At varies times, the union of India entered into three contracts with the Delton Catle Company for the purchase of certain goods to be manufactured by the company. Each of the contracts contained an arbitration clause. Disputes arose under all three of them and were refered to aroitration. The refereness were made to one and the same arbitraror. In the course of the arbitration proceedings the parties arrived at an amicabSc settlement in respect of all the dispute. It is conceded that the result of that settlement was in favor the Union of India. One term of the settlement was that :
THEstamp duly of the award will be borne by the Government on 17 July 1973 the arbitrator made a compose and disposing of all the disputes referred to him in accordance with the settlement between the parties. At the end of the award he ai: 'THEstamp duty charges payable in respect of this award shall be borne by the Union of India'
(2) Soon afterwards, the present application was moved in this Court by the Union of India for having the award filed and made a rule of the Court. Neither of the parties has objected to the award. When the award came before me for being made a rule 1 noticed that no stamp duty had been paid on it. Counsel for the Union of India contended that the award was exempt from payment of stamp duty by virtue of the first proviso to section 3 of the Indian Stamp Act 1899. As I was not satisfied that this claim of exemption was sound, I ordered notice to issue to Central Government counsel and counsel for Delhi Administration to appear and address me on the point. They have appeared; and, whereas Central Government counsel has argued in support of the claim for exemption, counsel for the Delhi Administration has argued against it. Although counsel for Delton Cable Company was otherwise disinterested in the question, he has, at my request, studied the point. He, too, has argued that the award is not exempt from payment of stam duty.
(3) An award is chargeable to stamp duty under Article 12 in Schedule I to the Stamp Act. That Article defines an award as:
'ANYdecision in writing by an arbitrator or umpire, not being an award directing a partition, on a reference made otherwise than by an order of the Court in the course of a suit-'
THEREis no doubt, nor was there any suggestion to the contrary, that an award such as the one before me, would otherwise be chargeable with duty as provided by section 3 of that Act, being an instrument of the kind mentioned in Schedule 1. The argument has turned solely on the proper meaning to be placed on the words of the first proviso to that section, which exempts any instrument executed by, or on behalf of, or in. favor of the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument;
(4) No one suggested that the award in this case was 'executed by or on behalf of the Government. These words in the proviso may thereforee be eliminated from consideration. It was contended, however, that it was an 'instrument executed...............in favor of the Government.' Instrument' is defined in section. 2(14) of the Act. It is not necessary to dwell on that definition, because there can be no doubt that an award is an 'instrument' for purposes of the Stamp Act for it is mentioned in Schedule I- The words 'executed' and 'execution' arc defined in section 2(12) to mean 'signed' and 'signature'. As an award must necessarily be signed by the arbitrator, it is an 'instrument' which is 'executed'.
(5) But, it yet remains a question whcther it can appropriately be called an 'instrument executed in favor of the Government'.which is the full phrase in the proviso. When lawyers and laymen speak of a document being executed 'in favor of a party, they are. not using a term of art. 'favor' according to the dictionaries. imports the showing of kindness. This flavour of the word is lost or diluted in most legal uses of the phrase 'in favor of. In refering to a contract executed 'in favor of a party, usually no favor is implied. The contract is invariably for a consideration. Each part) executes it in favor of the other. Similar examples can be multiplied : a pronote, a bond, a mortgage deed, a sale deed, a pledge etc. : are all executed in favor of some party but normally contain no element of benevolence. The words denote merely a party to the deed or document. They are neutral in content. Of course, there are occasions when the original notion of kindness persists. It occurs in the use of the phrase in relation to a gift deed, or a will; and. perhaps, sometimes, in relation to & trust or setelment. One must look to the context to find whether the undertone of generosity exists not. In the conveyancing sense the execution of an instrument in favor of a person gives rise to thoughts of the passing of title.
(6) In which of these senses arc the words in favor of the Governmnt used in the proviso It seems plain .to me that they are used simply to refer to an instrument to which the party, other than the party executing it, is the Government. Many kinds of documents are executed only by one party to the transaction. When Government is the non-signing party these words will apply. Whilst thc words executed by. or on behalf.........of the Government' take in documents signed by or on behalf of Gvernment (whether signed by the other party or not), the words 'in favor of the Government' serve to bring in the converse case. In either case Government is a party to the transection recorded in the document. the proviso seeks to exempt such documents whether executed by one party or the other, other.both. Inherrnt in its structure is the postulate of a bilateral event. If regard is had to the nature and diversity of the documents named in the schedule to the Stamp Act. to most of which the Government may conceivably by a party, it seems apparent that the words 'in favor of the Government in the proviso were not used to allude to the showing of a kindness or the receipt of an advantage. For the same reason the more restricted conveyancing sense, to which I have referred, is inapt, because a mejorituy of the documents mentioned in the schedule have nothing to do with the passing of title.
(7) No authority dealing directly with the point has been found; certainly none was cuted. Granting that within the concepts of the Stamp Act an award is an 'instrument' which is 'executed' it is not executed by the executant (the arbitrator) 'in favor of a party to the reference; or, indeed, 'in favor of anyone at all- A favorable decision is one thing, execution of a document, quite another. An award resembles a judgment inasmuch as it decides matters respecting which there are disputes : see Emperor v. Mahamad Khan Rajakhan Pathan, I I.C. 105. In the making of an award no bilateral participation is involved; merely the conclusions of the arbitrator are stated. On behalf of the Union it was urged that an award determining disputes favorably to one party was an 'instrument executed in favor of that party-in this case the Government; and, hence the proviso applied. Thus, 'in favor of was sought to be given the meaning 'to the 'benefit of advantage of. It was said that those words of the proviso were capable of bearing this meaning, in addition to the one I attribute to them as being a manner of referring to the non-executing party to a document' I do not agree. I think that would be doing violence to the words in the setting in which they occur. It does not seem to me a proper use of language to describe an award as an Instrument executed in favor of the successful party. if it were, by analog it would be equally correct to describe a judgment in the same or similar terms. At least, I cannot recall ever having seen or heard it referred to in that way, whether in a statute or elsewhere. Judgments are 'pronounced' or 'delivered'; an award is 'made', 'signed' and 'published'. The definitions of 'instrument' and 'executed' contained in the Stamp Act do not alter their intrinsic quality. Rather, Article 12 in Schedule I recognises that an award is a 'decision in writing'.
(8) Reference to the legislative history of the proviso corroborates the view I have formed. In the Stamp Act of 1860 the equivalent provision was a General Exemption in Schedule A. It stated that:
'DEEDS,instruments and writings of any kind, in which Government, or any Board, Commission, Court, or public officer may, in public capacity, be a party do not require stamps.'
CLEARLYthis provision exempted only those documents 'in which' Government was a party. Its language was broad enough to include documents executed by or on behalf of the Government or in its favor. By the Stamp Act of 1862 the latter category (these in favor of Government) was deprived of the exemption hitherto subsisting. This was achieved by recasting the General Exemption in item 66 of Schedule 'A' to this Act as follows :
ANYdeed, instrument, or writing of any kind made or executed by or on behalf of the Government by any Government Board, commission, court, officer or Agent' Since, to qualify for the exemption, a document had to be 'made or executed by or on behalf of the Government', necessarily Government would have to be a party. Then, in the Stamp Act of 1879 there was a reversion. The General Exemption was now item 18 of Schedule Ii to this Act. It once again exempted documents executed 'in favor of Government. In the Stamp Act of 1899, the one still in force, that General Exemption is reproduced verbatim as the first proviso to section 3. Through all the changes of terminology and the scope of the exemption, one idea has remained constant; that Government must be a party to the document. At no time is an intention discernible to exempt documents operating 'in favor of Government although it be not a Party-
(9) Furthermore, what reasons could there be to exempt an arbitral award if it contained a decision favorable to the Government, but not if it were adverse None that I could think of, nor was any made known to me. The scheme of the Stamp Act is such that an award must be stamped before its contents are published and the result known. Section 17 directs that :
'ALLinstruments, chargeable with duty and executed by any person in India shall be stamped before or at the time of execution.'
FAILUREto comply with this mandatory provision is an offence under section 62(b). It has been held that the duty to stamp an award is primarily that of the arbitrator: see Ramkumar v. Kushalchand Ganeshdas and others and Emperor v. Bri] Pal Saran And others, 32 Allahabad 198. A passing observation to the contrary in Anantram v. Lala Murlidhar, A.I.R. 1924 Nag 204 does not appear to be sound. None of the provisions of the Stamp Act were adverted to in that case. In Emperor v. Puttoo Lal and others, A.I.R. 1924 Oud 240 arbitrators were actually prosecuted for singing an unstamped award. As, thereforee, an award must be stamped before or at the time that the arbitrator signs it, and it can only begin to have effect after that is done, a successful and a losing 'party can emerge only thereafter. The award already having been stamped, the futility of an exemption depending on what it decides is manifest. To my mind this conclusively demonstrates how impossible is the argument for the Union.
(10) The procedural mechanics are to be found in the Arbitration Act 1940. When an arbitrator has made his award, section 14(1) of that Act states that he shall sign it and shall give notice in writing to the parties of the making and signing thereof, and of the amount of fees and charges payable in respect of the arbitrator and award.' Should its other requirements be fulfillled, section 14(2) makes it incumbent on the arbitrator to file the award upon payment of the fees and charges due in respect of the arbitration and award and all the costs and charges of filing the award......'
REMEMBERINGthe compulsions of the Stamp Act this procedure seems to imply that, in any event, the arbitrator must ensure that the award is duly stamped before he signs the same. If he be out of pocket on that account he may obtain reimbursement in accordance with section 14 of the Arbitration Act. Doubts were expressed in Rikhabdass v. Ballahhdas and others, : AIR1962SC551 whether 'the fees and charges mentioned in section 14(1) include the stamp duty payable on the award', but the point was left undecided. In section 14(2), however, there are the words 'costs and charges of filing the award' in addition to 'the fees and charges due in respect of it. Presumably the legislature had something in mind when inserting these additional words. Stamp duty paid on an award is, it seems to me, a part of the cost of filing it, as otherwise it would be liable to a penalty. Besides, it is difficult to visualise what else the 'costs' of filing an award would comprise as distinguished from the 'charges'.
(11) To avail of the first proviso to section 3 of the Stamp Act it must also be proven that, but for the exemption, 'the Government would be liable to pay the duty chargeable in respect of such instrument' : see The Indian Stamp Act, 1899 In the matter of A.I.R 1934 Bom 231 and Mrs, C. R, Parry and another v. Union of India and others, . An award is not one of the instruments dealt with in section 29 of that Act, so no assistance can be derived from it save to the extent that its opening words acknowledge that liability for stamp duty may be the subject of agreement. No provision seems to have been made in the Act for the incidence of duty on documents other than those mentioned in section 29 : see Shoranbasappa Tippanna Indi v. Sanganbasappa Sridramappa Shahapur and others, A.I.R. 1935 Bom 256, which suggests the conclusion that as between the parties incidence of stamp duty is controlled by their agreement; a conclusion obliquely confirmed by section 44 which entitles any person who has paid the duty or penalty levied on an instrument to recover it from some other person bound 'by agreement' to bear the expense of that duty.
(12) The amicable settlement reached in the course of arbitration proceedings in this case expressly provided that the stamp duty on the award would be borne by the Government' It was obviously an agreement. In consequence, the further requirement of the proviso was fulfillled. Counsel for Delhi Administration contended that this view would be justified only if the liability of Government to pay the stamp duty on the award formed part of the arbitration agreement but not if stipulated later. I find nothing in the Stamp Act limiting the stage until which such an agreement may be validly made.
(13) Nevertheless, as, in my judgment, for the reasons I have stated earlier, the award is not an instrument executed 'in favor of the Government it is not exempt from stamp duty. thereforee, it must be impounded, and I order accordingly.
(14) The award is a multifarious instrument: it disposes of three references made pursuant to three different arbitration agreements. Strictly there ought to have been three separate awards. Comprising or relating, as it does, to several distinct matters, the award is chargeable under section 5 of the Stamp Act with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable. The Union has moved to have it made a rule of the Court. If it pays the duty with which the award is chargeable together with a penalty of five rupees or of a sum equal to ten times such duty, whichever is more, within one month from to-day, the award will be admitted in evidence. Otherwise, the Registrar will send the award in original to the Collector in accordance with section 38(2) of the Stamp Act. Costs of the' hearing so far will abide the result.