Arbitration proceedings ought to resemble a 400-metre race - quick, direct and unhindered. In India, however, they have turned into something closer to a steeplechase, littered with hurdles. The recent judgment of the Delhi High Court in URC Construction (P) Ltd v. Airports Authority of India, pronounced on September 1, 2026, on the stamping of an arbitral award for enforcement proceedings under Section 36 of the Arbitration and Conciliation (A&C) Act, 1996, adds one more such hurdle.
The tension between the Indian Stamp Act, 1899 and the A&C Act is not new. Whether a court can appoint an arbitrator under Section 11 of the A&C Act where the agreement is unstamped was hotly debated earlier. In NN Global v. Indo Unique Flame, a Constitution Bench, by a 3:2 majority, held that in case of an unstamped agreement, a High Court can proceed further under Section 11 of the A&C Act only once a certificate has been issued under Section 42(2) of the Stamp Act. In an earlier critique, I had observed that our approach remains rooted centuries back despite technological advancement and developments in arbitration law.
Finally, In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act, a seven-judge bench held that arbitration clauses in unstamped or inadequately stamped agreements are nonetheless enforceable at the pre-referral stage under Section 11 of the A&C Act. The Court observed that business and commercial entities prefer arbitration because it “obviates cumbersome judicial process, which often prove expensive, complex and interminable”. It held that it is the duty of courts to interpret the A&C Act in a manner that gives life to the principles of modern arbitration in India.
The judgment in URC Construction, however, takes a technical approach and fails to reconcile the requirements of the Indian Stamp Act with contemporary legislative advancements and a need to enforce awards expeditiously.
In URC Construction, the Delhi High Court held that when an inadequately stamped award is produced before the court, the statutory obligation under Section 33 of the Stamp Act to impound the instrument is attracted. It has been held that mere subsequent payment of the deficit stamp duty does not, by itself, cure the defect. The procedure prescribed under the Stamp Act - including payment of the applicable duty and penalty and compliance with the statutory mechanism for dealing with an impounded instrument - must be followed before the award can be acted upon for enforcement. The Court has directed that enforcement petitions involving inadequately stamped awards be dealt with through the Joint Registrar under Sections 35 or 38 of the Stamp Act, as the circumstances may warrant, and that such petitions be placed before the court only after the requirements of the Stamp Act have been duly satisfied.
The judgment is analysed with reference to four issues:
(A) The judgment fails to appreciate the difference between the timelines prescribed over a century ago and those in force today.
When the Stamp Act was enacted in 1899, arbitration did not operate under a single, unified statute. The Code of Civil Procedure, 1882 contained a separate and detailed scheme for references to arbitration. Alongside this framework, the Arbitration Act, 1899 governed consensual arbitration without court intervention for disputes connected with presidency towns.
The Arbitration Act, 1899 itself did not prescribe a specific limitation period for challenging an award. The applicable limitation law prescribed a period of 10 days for proceedings to set aside an award, running from the date of the award. The requirement of stamping an award within 30 days must be viewed against the legal framework prevailing when the Stamp Act was enacted.
Admittedly, the original statutory timeline of stamping under the Stamp Act sits uneasily with a modern arbitral regime in which enforcement may realistically arise years after the award.
Under the A&C Act, 1996, an award may be challenged under Section 34 for up to 120 days, followed by proceedings under Section 37 and, potentially, before the Supreme Court. As the Court itself recognises, this creates an obvious disconnect between the requirement to stamp an award within 30 days and the much longer period during which its validity remains uncertain. What purpose is served by requiring a successful party to incur stamp duty within 30 days when the award may remain under challenge for years and the need to enforce it may not arise at all? The judgment identifies this anomaly, but does not adequately address its consequences and remains focused on the 30-day period, failing which penalty must follow.
(B) The Court failed to consider the relevance of Section 36 of the Stamp Act.
The Court does not deal with Section 36 of the Stamp Act, although the provision was cited in arguments. Section 36 provides that the admissibility of an instrument cannot be reopened on the ground of insufficient stamping “where an instrument has been admitted in evidence.” A limited exception to this is provided in Section 61. In the context of an arbitral award, can a party which has participated in the arbitration, contested the award and exhausted its remedies, thereafter resist enforcement by denying the existence or contents of the award? The Court's approach permits precisely such a result and, in effect, introduces stamping as a fresh obstacle at the very last stage of the arbitral process.
C) The directions leave the procedure entirely uncertain.
The judgment leaves it to the Joint Registrar to decide whether to proceed under Section 35 or Section 38(2) of the Stamp Act, depending upon the facts and circumstances of each case. The judgment provides no guidance as to the circumstances in which one provision, rather than the other, should be invoked. Consequently, the procedure to be followed by a decree-holder seeking enforcement of an award may vary depending upon the approach adopted by the particular Joint Registrar. Proceedings under Section 36 of the A&C Act are meant to facilitate, rather than further delay enforcement. If the Court considered impounding to be mandatory, it ought to have prescribed a uniform procedure instead of creating an additional layer of uncertainty. Where a party is willing to pay the maximum penalty prescribed under the Stamp Act or in situations discussed below, the issue could have been resolved at the level of Joint Registrar under Section 38 (2) of the Stamp Act, rather than further sending it to the Collector of Stamps.
(D) The Court could itself have addressed the delay and permitted executions to proceed.
The judgment is focused on the issue of penalty and that discretion is vested only with the Collector of Stamps to decide on the quantum of penalty. The judgment itself recognises that the pendency of proceedings under Section 34 or Section 37 of the A&C Act, or before the Supreme Court, may constitute a valid explanation for the delay in stamping an award and may justify the non-imposition of a penalty. Once this is accepted, there is little reason to direct the Joint Registrar or the Collector of Stamps to subsequently determine the issue of penalty. The existence and pendency of such proceedings are objective and readily verifiable facts. An executing court can examine whether the delay was occasioned by bona fide challenge proceedings and, upon being satisfied that no penalty is warranted, simply direct the decree-holder to pay the requisite stamp duty and thereafter proceed with execution.
Instead, the directions compel the award-holder to enter another uncertain statutory process merely to determine whether a penalty should be imposed. This is particularly difficult to reconcile with the objective of Section 36 of A&C Act, which treats an arbitral award as enforceable as a decree once the statutory conditions are fulfilled. If the deficiency in stamping is curable and the circumstances explaining the delay are already before the court, the more pragmatic approach would have been to require payment of the stamp duty and permit execution to continue, rather than sending the parties through yet another procedural labyrinth.
URC Construction, therefore, illustrates the difficulty of applying the Stamp Act mechanically to modern arbitral enforcement. The State's right to recover stamp duty is unquestionable; but that does not necessarily mean that every deficiency in stamping must bring enforcement proceedings to a standstill. The judgment gives insufficient weight to the structure of the A&C Act, the practical realities of challenge proceedings and the curative mechanisms available under the Stamp Act itself. Unless reconsidered, the decision risks creating precisely the kind of additional procedural hurdle that the modern arbitration regime was enacted to eliminate.
Amit Gupta is a Senior Advocate based in Delhi.