LI Network
Published on: 31 July 2023 at 15:35 IST
The Delhi High Court, presided over by Justice Navin Chawla, recently ruled that the issue of insufficient stamping of an agreement can only be challenged under the Stamp Act and cannot serve as a basis to set aside an arbitral award.
The Court clarified that it lacks the authority granted by Section 61 of the Indian Stamp Act, 1899, as it does not function as an appellate court in matters concerning arbitral awards, according to Section 34 of the Arbitration and Conciliation Act, 1996.
In light of this, the Court emphasized, “Even assuming that the learned Sole Arbitrator made a mistake in the interpretation of the Maharashtra Stamp Act, in my view, it cannot be a ground to interfere with the Arbitral Award in the exercise of the limited jurisdiction under Section 34 of the Act.”
Senior Counsel Sandeep Sethi and Senior Counsel Malvika Trivedi, among others, represented the petitioner, while Senior Counsel Ashok Kumar Singh and others appeared for the respondent.
The case pertained to a petitioner who filed a Section 34 petition under the Arbitration and Conciliation Act challenging an award that directed them to pay Rs. 5 crores along with interest to the respondent.
The petitioner argued that the agreement, which contained an arbitration clause, should have been impounded due to incorrect stamping. Moreover, they contended that the respondent had not provided any evidence of loss and thus should not be entitled to any amount.
After hearing the parties and examining the relevant statute, the Court reaffirmed that the Court exercising jurisdiction under Section 34 of the Act does not function as an appellate court regarding the arbitrator’s findings.
The Court’s authority under Section 34 is limited, and even a contravention of a statute not linked to public policy or public interest cannot be grounds for setting aside an arbitral award.
Furthermore, the Court expressed its opinion that such an instrument should not have been admitted as evidence without the payment of duty and penalty under Section 35 of the Indian Stamp Act.
Ultimately, the Court dismissed the petition, finding no merit in the petitioner’s arguments. No costs were awarded in the matter.
