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Behari Lal Suri Vs. Executive Engineer - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtJammu and Kashmir High Court
Decided On
Case NumberArbitration Appln. No. 85 of 1974
Judge
Reported inAIR1981J& K54
ActsJammu and Kashmir Arbitration Act, 2002 Smt. - Sections 16(1) and 30; ;Jammu and Kashmir Stamp Act, Smvt. 1977 - Sections 35, 40 and 42; ;Jammu and Kashmir Stamp Rules - Rule 2; ;Stamp Act, 1899 - Sections 25 and 33 - Schedule - Article 12
AppellantBehari Lal Suri
RespondentExecutive Engineer
Appellant Advocate L.K. Sharma, Adv.
Respondent Advocate S.D. Sharma, Adv.
Cases ReferredNani Bala v. (Ram Gopal
Excerpt:
- .....by the parties and rightly so, that the award of the arbitrator was required to be made on a stamp paper. section 17 of the stamp act provides that instruments chargeable with duties and executed by any person in india are required to be stamped before or at the time of their execution. according to learned counsel for the petitioner the award not being on a stamp paper is inadmissible in evidence and as such cannot be acted upon for any purpose whatsoever. on the other hand, learned additional advocate general appearing for the respondent, submits that though the award is not on a stamp paper, yet the court can admit it in evidence on payment of stamp duty and penalty or in the alternative remit the award to the arbitrator for re-writing the same on a stamp paper and it cannot be.....
Judgment:
ORDER

A.S. Anand, J.

1. Certain disputes having arisen between the petitioner and the respondent, the same were referred to the arbitration of Pir Zada Ghulam Nabi Commissioner and Secretary to Government Housing and Urban Development Department, Jammu and Kashmir in terms of an agreement entered into between the parties. The Arbitrator entered upon the reference and published his award. The petitioner thereafter filed an application under Sections 14/17 of the Arbitration Act requesting for a direction to the Arbitrator to file the award in court. A notice was accordingly issued and the arbitrator filed the award in court. The parties took notice of the filing of the award on 31-3-1975. The petitioner thereafter filed an application under Section 33 of the Arbitration Act praying that the award be declared as invalid and non existent in the eye of law on a number of grounds. The respondent resisted the application and filed his objections to the application under Section 33 of the Arbitration Act. He requested that the award be made a rule of the Court.

2. On 11-8-1975 following issues were framed :

1. Whether the award is not properly stamped if so, what is its effect O. P. P.

2. Whether the award is invalid as the Arbitrator has miscalculated the items, while multiplying the same O. P. P.

3. Whether the Arbitrator has committed misconduct while respecting certain items? O. P. P.

4. Relief.

2-A. An application was filed by the respondent on April 5, 1976, stating therein that he may be permitted to raise an additional objection in the nature of a preliminary objection to the maintainability of the petition. Vide order of the Court dated 17-4-1976, following additional issue in the nature of a preliminary issue was framed :

'Is the application filed by the petitioner barred by time? O. P. R.

3. The petitioner only appeared as his own witness and did not lead anyother evidence. The respondent, on the other hand, did not lead any evidence at all.

Issue No: 1

A perusal of the award, dated 12th September, 1974 shows that the same has been prepared on a plain paper. It is not disputed by the parties and rightly so, that the award of the arbitrator was required to be made on a stamp paper. Section 17 of the Stamp Act provides that instruments chargeable with duties and executed by any person in India are required to be stamped before or at the time of their execution. According to learned counsel for the petitioner the award not being on a stamp paper is inadmissible in evidence and as such cannot be acted upon for any purpose whatsoever. On the other hand, learned Additional Advocate General appearing for the respondent, submits that though the award is not on a stamp paper, yet the Court can admit it in evidence on payment of stamp duty and penalty or in the alternative remit the award to the arbitrator for re-writing the same on a stamp paper and it cannot be declared invalid on this account. Reliance in this respect is placed on a iudg-ment of the judicial Commissioner of Nagpur in Ram Kumar v. Kushal Chand Ganesh Dass, AIR 1928 Nag 166, where the Court, after holding that the award in question was unstamped and had therefore, no valid existence, remitted the same to the arbitrator under para 14 Schedule 2 Civil P. C. (corresponding to Section 16 of the Arbitration Act) for re-writing and engrossing it on a stamp paper.

4. So far as the question of remitting the award to the arbitrator under Section 16 of the Arbitration Act is concerned, the matter is concluded by the Supreme Court Judgment reported in AIR 1962 SC 551 wherein the proposition of law as laid down by the Nagpur High Court (supra) was overruled. In the course of judgment, the Court laid down the following law on the point :

'Under Section 16 an award can be remitted to the arbitrators for reconsideration. When it is remitted, for rewriting it on a stamped paper, it is not remitted for reconsideration. Reconsideration by the arbitrators necessarily,imports fresh consideration of matters already considered by them. It follows that the reconsideration can only be as to the merits of the award. They reconsider nothing when they re-write the award on a stamped paper. Want of stamp being a defect de hors the award is not covered by Section 16(1)(c). An order of the Court remitting an award to the arbitrator for re-submission after duly stamping it and registering it cannot, therefore, be based on Section 16(1).'

Thus, there is no warrant for the proposition that the defect as noticed in this case can be removed by remitting the award to the arbitrator for re-writting the same. However, the other argument that the award can be admitted in evidence on payment of stamp duty and penalty in terms of Section 35 of the Stamp Act cannot be easily ignored as the scope of such a contention is provided by the observations of the Supreme Court in this very judgment wherein, while concluding, it observed as under :

'......Nothing that we have said inthis judgment will affect the rights of the parties to take such steps, if any, which are available to them at law for curing the defect arising from the award being on an unstamped paper.'

This shows that the question of applicability of the provisions of the Stamp Act were left open and it is for this Court to see whether Section 35 of the Stamp Act can be pressed into service to cure the defect to make the award admissible in evidence.

5. An unstamped award cannot be received in evidence by the Court nor can it be acted upon but the Court is competent to impound such an 'instrument' and to send it to the Collector with a certificate in writing stating the amount of duty and penalty levied thereon and after the defect is cured to act upon the Award. In my opinion it would not be in the interest of justice to defeat the claim of a party on that techanicality, when the party is willing to have the defect cured. The earlier judgment in point of time on this point is reported in (1913) 20 Ind. Cas 491, Gowardhan Das v. Kesho Ram, decided by the Punjab Chief Court on 23rd Jan. 1913. The Division Bench confronted with almost an identical problem laid down the following law:--

'In proceedings under Section 20 of the second Schedule to the Code of Civil Procedure, an unstamped award may be admitted in evidence and filed in the Court after payment of the penalty under the provisions of Indian Stamp Act.'

This was also the view which the Nagpur High Court took in Anant Ram v. Murli Dhar, AIR 1924 Nag 204. It is needless to multiply the judgments on this point because of the latest judgment of Patna High Court reported in AIR 1974 Pat 315 where the Division Bench prescribed over by the Chief Justice. Shri N. L. Untwalia (Now Judge Supreme Court) considered the law on the point in the background of the case, the facts of which were identical with those of the present case. The entire law is summarised in para 8 of the judgment which reads thus:--

'Now the questions for consideration are:

(i) What is the effect of the said defect, and

(ii) Whether there is any mode for rectifying the same. Learned counsel for the appellant has argued that in the absence of stamp, the award is invalid in law and as such it is liable to be set aside in view of Section 30(c) of the Act which empowers a Court to set aside an Award if it is 'otherwise invalid'. It is true that the words 'otherwise invalid' should not be read ejusdem generis with the other cases mentioned in Clauses (a) and (b) of Section 30 and they should be restricted to case where the award is invalid on one or more grounds other than those mentioned in that section. But, in my opinion, only because the award is not on a stamp paper it will not be invalid within the meaning of Section 30 of the Act. It is merely a defect in the award. In this connection a reference may be made to the case of Rikhabdas v. Ballabhdas (AIR 1962 SC 551) where their Lordships were considering the case of an award which was unstamped and unregistered. Their Lordships quoted an extract from Nani Bala v. (Ram Gopal (AIR 1945 Cal 19) saying want of registration is a defect dehors the award of the decision of the arbitrator. Their Lordships then said ..... 'what was saidthere about a want of registration isclearly equally applicable to a want of stamp'. Towards the concluding portion of the judgment they stated that it was open to the parties to take such steps, if any, as were available to them at law for curing the defect arising from the award being on an unstamped paper......'

This judgment clearly spells out the law, as indeed it ought to be, because the Supreme Court as early as 1962 had clearly provided a guidance in this behalf. In a later case reported in AIR 1969 SC 1238, the Supreme Court itself dealt with an identical matter in details, in a case where the facts were much too similar to the present case. The facts of the case before the Supreme Court were:

On July 14, 1967, the appellant filed an application for setting aside the award under Sections 30 and 33 of the Indian Arbitration Act, 1940. One of the contentions raised by the appellants was that the award was unstamped and on that account 'invalid and illegal and liable to be set aside'. The respondents then applied to the District Court that the award be impounded and validated by levy of Stamp Duty and penalty. By order dated September 29, 1967. the District Judge directed that the award be impounded. He then called upon the respondents to pay the appropriate stamp duty on the award and penalty and directed that an authenticated copy of the instrument be sent to the Collector, DRUG, together with a certificate in writing stating the receipt of the amount of duty and penalty. The Order of the District Judge was challenged in revision before the High Court of Madhya Pradesh. The High Court rejected the petition and the appellant thereafter filed appeal in the Supreme Court. On these facts dismissing the appeal the law was thus stated by the Supreme Court: (at p. 1240 of AIR 1969 SC) 'The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument,.....'

6. Their Lordships went on to opine that whereas Section 35 creates a bar to an unstamped instrument being admitted in evidence or being acted upon. Section 40 provides the procedure for instruments being impounded and Section 42 provides for the instruments to be acted upon after the payment of stamp duty and penalty, according to the procedure prescribed by that section.

7. Thus, the settled law on the point is that an unstamped award cannot be acted upon or admitted into evidence but becomes admissible in evidence after the defect is cured under Section 35 of the Stamp Act and can be acted upon thereafter.

8. This takes me to the next question as to how the defect is to be cured in this case? In this behalf reference to Rules 1 and 2 of the Rules regarding unstamped and insufficiently stamped documents, have to be followed. While Rule 1 deals with the impounding of the documents, the second lays down the manner in which the penalty is to be imposed. Rule 2 reads as under:--

'2. When such document may be admitted in evidence...... Under Section35 such instrument may be admitted in evidence in a civil Court if the party desiring to use it shall pay the amount necessary to make up the proper stamp duty together with a penalty amounting to five times if the instrument is produced or presented within one year of the date of its execution and in other cases to ten times the amount of the proper duty or deficient portion thereof.'

Since the stamp on which the award was to be engrafted was to be of the denomination of Rs. 13.00 and the award has been presented in the Court within one year from the date of its execution, the respondent shall pay penalty five times the actual stamps which comes to stamps worth Rs. 65/-in addition to the normal stamp duty. The Award is accordingly impounded and Mr. Sharma is directed to make up the deficiency within a period of two weeks. An authenticated copy of the document shall be sent to the Collector Jammu for records. The file will comeup for further orders after the expiry of the period. In the view that I have taken above, I refrain form deciding other issues in the case till the defect regarding the stamp duty is got cured by the Addl. Advocate General. File to come up after the expiry of two weeks.


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