Whether the court should appoint arbitrator even if arbitration agreement is insufficiently stamped?

 Arbitration is seen as a speedy remedy but if applicants and

respondents who may have counter-claims, have to await the fate of adjudication of documents for stamping and conclusion of the statutory challenge, the purpose of arbitration may be defeated. In my view, once parties are ad-idem on the fact that they have signed the writing containing an arbitration clause, the parties having acknowledged that an arbitration clause was embodied in the substantive contract, cannot prevent the court from disposing an application under Section 11 and the High Court, in my view, need not await the decision of the claimant in the case at hand as to whether or not to pay stamp-duty, as adjudicated. If this is not to be so, a large number of arbitration proceedings will be held up right at the inception, which is not desirable. {Para 38}

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

ARBITRATION APPLICATION NO.225 OF 2016

Pigments & Allieds  Vs. Carboline (India) Pvt. Ltd. 

CORAM : A. K. MENON, J.

DATE : 28TH FEBRUARY, 2022.

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Whether insufficiently stamped document can be impounded even after it is exhibited?

A reference to sections 35 and 58 of the Stamp Act shows that section 35 only gives finality to the decision in regard to the admissibility of the document in evidence. It does not operate as a bar to impounding of the same. Order impounding document confirmed."

24. It appears to me that the same course was liable to be adopted in the present matter also. It appears that the Trial Court failed in appreciating and understanding the object of Section 33 of the Stamp Act. The object of this Section is to safeguard the revenue. As has been held by this Court in the aforesaid Judgment, Section 35 of the Stamp Act only gives finality to the decision in regard to the admissibility of the said document in evidence, it however does not operate as a bar for impounding of the said document. The Trial Court in the impugned order has observed that filing of an application by the present petitioner for impounding of document in question was only with the intention to protract the trial. If that be so, the Trial Court could have taken appropriate care in that regard also. There was no impediment to forward the original document to the Collector to impound the same by keeping on record the attested or certified copy of the document in question. It need not be stated that the Trial Court may not be required to wait for the decision of the Collector on the issue of impounding and can very well proceed further with the trial of the Suit. Since the agreement of sale dated 04.05.2009 has been admitted in the evidence, it would not be open for the present petitioner to call in question such admission at any stage of the Suit or proceeding on the ground that it has not been duly stamped.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Writ Petition No. 2810 of 2019

Decided On: 29.04.2019

 Priya  Vs.  Parushuram Printers and Ors.

Hon'ble Judges/Coram:

P.R. Bora, J.

Citation: 2019(5) MHLJ 678

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Whether insufficiently stamped promissory note is admissible in evidence after impounding it?

Therefore, it follows from the authoritative pronouncements of this Court and also the High Court of Assam referred above, "promissory note" which is payable otherwise than on demand not duly stamped as required by Schedule Article 49(b) of Indian Stamp Act, 1899, is inadmissible in evidence. Same cannot be received in evidence even on payment of deficit stamp duty and penalty. The defect that, promissory note is not duly stamped or inadequately stamped, cannot be cured in view of the proviso (a) to Section 35 of the Indian Stamp Act, 1899, as held by this Court in the case of M/s. Wolstenholme International Ltd., (supra). 

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Writ Petition No.9317 of 2011

Decided On: 25.07.2012

Shiva Sahakari Up Jal Sinchan Sanstha Ltd. Vs.  The Nanded District Central Coop. Bank and Ors.

Hon'ble Judges/Coram:

S.S. Shinde, J.

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SC : Court Can't Appoint Arbitrator When The Contract Containing Arbitration Clause Is Insufficiently Stamped

One reasonable way of harmonising the provisions contained in
Sections 33 and 34 of the Maharashtra Stamp Act, which is a general
statute insofar as it relates to safeguarding revenue, and Section
11(13) of the 1996 Act, which applies specifically to speedy resolution
of disputes by appointment of an arbitrator expeditiously, is by

declaring that while proceeding with the Section 11 application, the
High Court must impound the instrument which has not borne stamp
duty and hand it over to the authority under the Maharashtra Stamp
Act, who will then decide issues qua payment of stamp duty and
penalty (if any) as expeditiously as possible, and preferably within a
period of 45 days from the date on which the authority receives the
instrument. As soon as stamp duty and penalty (if any) are paid on the
instrument, any of the parties can bring the instrument to the notice of
the High Court, which will then proceed to expeditiously hear and
dispose of the Section 11 application. This will also ensure that once a
Section 11 application is allowed and an arbitrator is appointed, the
arbitrator can then proceed to decide the dispute within the time frame
provided by Section 29A of the 1996 Act.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3631 OF 2019

GARWARE WALL ROPES LTD. Vs COASTAL MARINE CONSTRUCTIONS & ENGINEERING LTD.

R.F. NARIMAN, J.
Dated:April 10, 2019.

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Whether court can grant interim relief even if arbitration agreement is insufficiently stamped?

1st Question
“Whether a court, under the Arbitration and Conciliation Act,
1996, can entertain and grant any interim or ad-interim relief
in an application under Section 9 of the said Act when a
document containing arbitration clause is unstamped or
insufficiently stamped?”

2nd Question
“Whether, inter alia, in view of Section 11 (6A) of the
Arbitration and Conciliation Act, 1996, inserted by Arbitration
and Conciliation (Amendment) Act, 2016, it would be
necessary for the Court before considering and passing final
orders on an application under Section 11(6) of the Act to
await the adjudication by the stamp authorities, in a case
where the document objected to, is not adequately stamped?
Hence, the above two questions, firstly falling under
Section 9 of the ACA and secondly falling under Section 11 of
the ACA and having common features, namely, as to what is
the effect and consequence of the document being not
sufficiently stamped, when the court is called upon to exercise
jurisdiction under the provisions of Section 9 and Section 11 of
the ACA, are issues falling for consideration of this Bench.

Answer
Taking a overall view of the scheme of the ACA,
judgments delivered by the Supreme Court, we are of the view
that the party need not be put to a disadvantage merely
because an objection has been raised in respect of
insufficiency of the stamp on the agreement presented before
the court. Neither a contesting party could deprive legitimate
rights of a litigant in praying for timely intervention of the
court by praying for appointment of an arbitral tribunal nor for

interim reliefs in the fact situation of a case. That would be
rendering a party without any forum and in a given situation
the outcome would be, at times, catastrophic and disastrous
and the damage could be irreparable one. A balanced
approach, keeping in view the legislative intent and the view
adopted by the Supreme Court, needs to be adopted, so that
the purpose of enacting the provisions of Sections 11 and 9 of
the ACA as amended by the Amendment Act is not defeated.
119. If an application under Section 11 or under Section
9 is required to be postponed till the order of adjudication is
passed by the learned Collector of Stamps with such
uncertainty of the time it would take to decide and the
hierarchy of remedies after such order, as it would be subject
to an appeal or a revision, as the case may be and till such
time no order either under Section 11 of under Section 9
should be passed, then the Legislature would not have
provided for speedy disposal of the applications under Section
11 or under Section 9 of the Act by inserting sub-Section (13)
in Section 11 and sub-Section (2) in Section 9 of the Act.

(L) ANSWERS TO THE QUESTIONS FRAMED :
120. In view of the above deliberation, we answer the
questions as framed by us as follows :-
Sr. No.
Question Answer
1 Whether a court, under the
Arbitration and Conciliation Act,
1996, can entertain and grant any
interim or ad-interim relief in an
application under Section 9 of the
said Act when a document
containing arbitration clause is
unstamped or insufficiently
stamped
In the Affirmative
2 Whether, inter alia, in view of
Section 11 (6A) of the Arbitration
and Conciliation Act, 1996,
inserted by Arbitration and
Conciliation (Amendment) Act,
2016, it would be necessary for
the Court before considering and
passing final orders on an
application under Section 11(6) of
the Act to await the adjudication
by the stamp authorities, in a case
where the document objected to,
is not adequately stamped?
In the Negative
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.466 OF 2017

Gautam Landscapes Private Limited.  Vs. Shailesh S.Shah 

CORAM : NARESH H. PATIL, CJ.,
R. D. DHANUKA &
G. S. KULKARNI, JJ.

PRONOUNCED ON: APRIL 04, 2019.

JUDGMENT: (PER NARESH H. PATIL,CJ.)
This judgment is held not good law in view of Supreme court Judgment.Please see the link: https://www.lawweb.in/2019/04/sc-court-cant-appoint-arbitrator-when.html

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Whether court can grant decree for specific performance on contract on basis of insufficiently and unregistered agreement of sale if it is exhibited?

 It is also settled that receiving a document in evidence and its admissibility under the Indian Stamp Act, 1899 and the Registration Act, 1908 are different matters. A document, which is not required to be stamped or registered stands on a different footing after the same was received in evidence, but a document which requires to be sufficiently stamped and registered before it is made admissible in evidence would not be made admissible in evidence merely because it is exhibited and received in evidence. For such document marking of exhibit is only for convenience and it does not decide the admissibility of the document. Holding it otherwise would make the provisions of the Indian Stamp Act, 1899 and the Registration Act, 1908 redundant and the Court's would allow decree for specific performance on the basis of documents which are not enforceable.

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR

FA No. 87 of 2012

Decided On: 22.02.2019

 Mahadev Singh Vs.  Bihari Lal Sanadaya

Hon'ble Judges/Coram:

Prashant Kumar Mishra and Vimla Singh Kapoor, JJ.

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Whether a party can adduce secondary evidence of photocopy of insufficiently stamped document after impounding it?

 It was the case of the appellant-tenant that the original copy of the agreement which was with him was stolen and thus he was unable to produce the original document dated 28.3.1988, but was in possession of a photostat copy of the agreement and made a prayer for receipt of the photocopy of the agreement as secondary evidence under Section 63 of the Indian Evidence Act, 1872.

The provisions of this section (section 35) which allow a document to be admitted in evidence on payment of penalty, have no application when the original document, which was unstamped or was insufficiently stamped, has not been produced; and, accordingly, secondary evidence of its contents cannot be given. To hold otherwise would be to add to the Act a provision which it does not contain. Payment of penalty will not render secondary evidence admissible, for under the stamp law penalty is leviable only on an unstamped or insufficiently stamped document actually produced in Court and that law does not provide for the levy of any penalty on lost documents . This Court had an occasion again to consider the scope and ambit of Sections 33(1), 35 and 36 of the Act and Section 63 of the Indian Evidence Act in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and others AIR 1971 SC 1070 and held that :-

13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document.

Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfil the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 35 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. `Instrument is defined in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act.

14. If Section 35 only deals with original instruments and not copies Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its benefit.

Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Indian Stamp Act, 1899.

SUPREME COURT OF INDIA

Hariom Agrawal Vs. Prakash Chand Malviya dated 8 October 2007.

B.N. Agrawal,P.P. Naolekar & P. Sathasivam

(arising out of Special Leave Petition (Civil)No.12573 of 2006)
Citation:(2007) 8 SCC 514
(2007)

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Supreme Court: Procedure to be followed by court for impounding of insufficiently stamped document

 It is clear from the first sub-section extracted above that the court has a power to admit the document in evidence if the party producing the same would pay the stamp duty together with a penalty amounting to ten times the deficiency of the stamp duty. When the court chooses to admit the document on compliance of such condition the court need forward only a copy of the document to the Collector, together with the amount collected from the party for taking adjudicatory steps. But if the party refuses to pay the amount aforesaid the Collector has no other option except to impound the document and forward the same to the Collector. On receipt of the document through either of the said avenues the Collector has to adjudicate on the question of the deficiency of the stamp duty. If the Collector is of the opinion that such instrument is chargeable with duty and is not duly stamped "he shall require the payment of the proper duty or the amount required to make up the same together with a penalty of an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof."

13. In the present case, an argument is raised that the instrument is not actually an agreement of sale as envisaged in the Schedule to the Stamp Act (subject to amendment made by the State of Andhra Pradesh) but it is only a deed of compromise entered into by two disputing persons. We refrain from expressing any opinion on the said plea as it is open to the parties to raise their contentions regarding the nature of the document before the trial court. In the present case the trial court should have asked the appellant, if it finds that the instrument is insufficiently stamped, as to whether he would remit the deficient portion of the stamp duty together with a penalty amounting to ten times the deficiency. If the appellant agrees to remit the said amount the court has to proceed with the trial after admitting the document in evidence. In the meanwhile, the court has to forward a copy of the document to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty as provided in Section 40(1)(b) of the Act. Only if the appellant is unwilling to remit the amount the court is to forward the original of the document itself to the Collector for the purpose of adjudicating on the question of deficiency of the stamp duty. The penalty of ten times indicated therein is the upper limit and the collector shall take into account all factors concerned in deciding as to what should be the proper amount of penalty to be imposed.

IN THE SUPREME COURT OF INDIA

Appeal (civil) 1800 of 2001

Decided On: 14.03.2001

Chilakuri Gangulappa vs. Revenue Divisional Officer, Madanpalle and Ors.

Hon'ble Judges/Coram:

K.T. Thomas and R.P. Sethi, Advs.

Citation: 2001 (4) SCC 197

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Whether partition deed which is not stamped is admissible in evidence for collateral purpose?

 The trial Court has directed to exhibit the document styled as "partition deed". The Trial Court observed that the parties can use the said document for collateral purpose. If the document requiring compulsory registration is not registered, then the document can be used for collateral purpose in view of section 49 of the Registration Act. There would be no bar to refer said document for collateral purpose. However, even if the document is used for collateral purpose, the document is required to be stamped properly. Unless and until the document is stamped the document cannot be admitted in evidence. Reference can be made to section 34 of the Bombay Stamp Act. Reading the document, it appears that the document effects partition amongst the parties in front of panchas. In view of that even if said documents is used for collateral purpose, the document will be required to be stamped. 

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

L.P.A. No. 44 of 2013 in W.P. No. 2705 of 2012 and Civil Appln. No. 3353 of 2013

Decided On: 08.12.2017

Ranchhod Dharamdas Mali Vs. Laxman Dharamdas Mali and Ors.

Hon'ble Judges/Coram:

S.V. Gangapurwala and S.M. Gavhane, JJ.

Citation: 2018(3) MHLJ 775

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Whether it is permissible for court to eschew exhibited document from record of case?

The expression 'admitted in evidence' occurring in Section 36 of the Indian Stamp Act means the act of letting the document in as part of the evidence as a result of judicial determination of the question whether it can be admitted in evidence or not. The Court must apply its mind to the question whether the document is admissible or not. It was pointed out that had the Court below, before commencement of cross-examination, read the chief affidavit in Court and asked whether the Defendant has got any objection in admitting the disputed document or had the Court gone into the question whether the document was sufficiently stamped or not, this controversy would not have arisen at all. The learned Counsel for the Petitioner would submit that, here the document was proved and tendered in evidence and was marked as Ext. A-1 to which no objection was raised by the Defendant before the commencement of the cross-examination or even in the course of the argument. In order that a document may be considered as 'admitted in evidence' the Court should have applied its mind to the question of admissibility from the point of view of the Stamp Law, but once the Court rightly or wrongly decides to admit a document, so far as the parties are concerned, the matter is closed and the admission cannot be called in question at any stage of the suit or proceedings on the ground that the instrument had not been duly stamped.

10. Even though in the written statement filed by the Defendant it was contended by the Defendant that the document in question is only a bond and cannot be admitted as it is insufficiently stamped, no such objection was raised when the document was tendered in evidence. Where the document had been put to the witness and the Court had relied upon the statement of the witness it cannot be held that there was no application of the judicial mind, so much so, the contention that there was only mere marking under Order XIII, Rule 4 Code of Civil Procedure and not admission of the document in evidence cannot be sustained. It was after the document was formally proved that the endorsement referred to in Rule 4 of Order XIII was made and as such it cannot be said that the document was not admitted in evidence. When a document has been admitted in evidence and exhibited it is not open to the Court to eschew that document from the record on account of the subsequent discovery that the document was insufficiently stamped.

IN THE HIGH COURT OF KERALA

C.R.P. No. 479 of 2010

Decided On: 22.06.2011

Lakshmanan, T.C. Vs. Vanaja and Ors.

Hon'ble Judges/Coram:

N.K. Balakrishnan, J.

Citation: 2011 (3) KLT 347 : 2011 (3) KLJ 406 : ILR 2011 (3) Ker. 228 : 2011 (3) KHC 86

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Whether promissory note which is not duly stamped is admissible in evidence after its impounding?

Therefore, it follows from the
authoritative pronouncements of this Court and
also the High Court of Assam referred above,
"promissory note" which is payable otherwise than
on demand not duly stamped as required by
ScheduleI Article 49(b) of Indian Stamp Act,
1899, is inadmissible in evidence. Same cannot be
received in evidence even on payment of deficit
stamp duty and penalty. The defect that,
promissory note is not duly stamped or
inadequately stamped, cannot be cured in view of
the proviso (a) to Section 35 of the Indian Stamp
Act, 1899, as held by this Court in the case of
M/s. Wolstenholme International Ltd., (supra).
Therefore, this Court is of the opinion that, the
view taken by the Cooperative
Court, Nanded i.e.
trial Court, is the correct view.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.9317 OF 2011

Shiva Sahakari Up Jal Sinchan Sanstha Ltd. Vs The Nanded District CentralCoop.

CORAM: S.S. SHINDE, J.

PRONOUNCED ON :25/07/2012

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Whether the court can not impound insufficiently stamped document if a party is seeking to withdraw it?

In the instant case there is no dispute that the Bombay City Civil Court falls in the category of person specified in sub-section (1) of Section 33. It has by law authority to receive evidence. So the first condition of Section 33 is fulfilled, As the document in question has been produced before the court by the petitioners themselves for being acted upon, the second condition is also fulfilled. The document was sought to be admitted in evidence. The signatures of the respective parties as well as the contents of the instrument were duly proved. It was only at that stage when a question was raised by the court in regard to the adequacy of the stamp duty paid on the said instrument that time was sought by the parties and later the application for modification of the decree itself was withdrawn. The question is whether the court before whom an inadequately stamped document had been produced for modification of the decree passed by it earlier, can be restrained from impounding the same under Section 33 of the Act by the concerned party by withdrawing the application itself with which the said document had been produced. To put it differently, in such a situation whether the court becomes functus officio for the purpose of Section 33 of the Act. The answer, in my opinion, in clear terms is in the negative. A duty has been cast on the authority or the court to impound a document under Section-33 if any such document which is inadequately stamped is produced before it to be acted upon and that duty does not come to an end On withdrawal of the document by the party liable to pay additional duty and penalty. The powers, duties and jurisdiction of the court to pass orders on the application of the party for modification of the decree on the basis of such application and the document produced therewith and the powers, functions and jurisdiction of the court under Section 33 of the Stamp Act to impound the inadequately stamped document produced or coming before it are two distinct and different powers and jurisdictions. For the purpose of modification of the decree, the court might become functus officion withdrawal of the application but for the purpose of taking action under Section 33, it cannot become functus officio if all the requirements of Section 33 are fulfilled. If the contention of the petitioners is accepted then in every case a party may produce before the court any document which is not adequately stamped and take a chance of same being admitted and in the event of the inadequacy of the stamp being deducted (sic detected Ed.) withdrawal the same to avoid impounding under Section 33 and recovery of deficiency of the penalty and fine by the Collector.

Bombay High Court

M/S. Deepak Corporation vs Pushpa Prahlad Nanderjog on 4 March, 1994

Equivalent citations: AIR 1994 Bom 337, 1995 (1) BomCR 452, 1995 (1) MhLj 489

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