Mere Reference Of Dispute To Arbitration Does Not Preclude The High Court From Examining Issue Of Stamp Duty In A Writ Petition: Delhi High Court

The bench of Justice Subramonium Prasad held that merely because the arbitral tribunal is empowered to carry out the same exercise, it cannot deprive the High Court from entertaining a writ petition to determine if the state has been deprived of the revenue or not.

Facts

The parties entered into an MoU dated 12.11.2014. It contained an arbitration clause for resolution of the dispute.

A dispute arose between the parties leading to the filing of a suit by the petitioner. Thereafter, the respondents filed an application under Section 8 of the A&C Act seeking reference of the dispute to arbitration in view of the arbitration clause in the MoU. The Court allowed the petition and referred the dispute to arbitration. Aggrieved thereby, the petitioner preferred an LPA which is pending consideration before the High Court.

Thereafter, the petitioner filed the writ petition seeking certain directions including declaration of the agreement as null and void.

Contention of the Parties

The petitioner made the following submissions:

• That the respondents inadequately stamped the MoU, warranting a review by the authorities to determine if proper stamping occurred. The petition seeks a declaration that the MoU, as it creates rights in properties, constitutes conveyance under the Indian Stamp Act and thus requires ad valorem stamping.
• That Section 33(2) provides that in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.

The respondent made the following counter-arguments:

• That the issue has already been decided by the Court while dealing with the application under Section 8 of the Act wherein the Court rendered a finding that the MoU is not inadmissible in evidence. This petition seeks to circumvent that finding by the Court.
• That in terms of Section 16(1)(a) of the A&C Act, the arbitral tribunal is competent to deal with the objection raised by the petitioner. Section 16 empowers the tribunal to impound the non-stamped or insufficiently stamped instruments.

Analysis by the Court

The Court referred to Sections 31, 33 and 56 of the Indian Stamp Act to hold that the intent of these provisions is to ensure that the state is not deprived of its revenue.

It held that any direction by the Court for determination of the amount of stamp duty would not undo the findings given by the co-ordinate bench in Section 8 application as the Court therein held that issue of stamping is not relevant consideration for reference to arbitration, therefore, the issue of amount of stamp duty was not decided therein.

The Court held that merely because the same exercise can be performed by the arbitral tribunal, it would not denude the jurisdiction of the High Court from entertaining this writ petition as the question that is being considered is whether the State has been deprived of the revenue of the stamp duty payable on the instrument or not.

The Court clarified that it is not making any observation on the merits of the case. Accordingly, the Court directed the petitioner to approach the Chief Controlling Revenue Authority to decide on the issue of sufficiency of stamp duty paid on the instrument.

Case Title: Mrs. Vinnu Goel v. Deputy Commissioner of Stamp Registration & Ors

Citation: 2024 LiveLaw (Del) 108

Date: 16.01.2024

Counsel for the Petitioner: Ms. Kanika Agnihotri, Mr. Shaurya Rohit, Mr. Gandharv Garg, Advocates.

Counsel for the Respondent: Mr. Ajay Verma, Sr. Advocate with Mr. Ishaan Verma and Ms. Diviani K. Verma, Advocates

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