Indian Stamp (MP Amendment) Act, 2014 is binding on instruments even if they are executed outside Madhya Pradesh: Madhya Pradesh HC

The Madhya Pradesh High Court recently dismissed a petition against the order of an executing court in Madhya Pradesh, whereby a company was asked to pay deficit stamp duty in line with the Stamp Act applicable to Madhya Pradesh, for executing an arbitral award passed in Calcutta. (Magma Fincorp Limited v. Omshanker & Anr).The High Court held that the petition was liable to be dismissed since the provisions of the Indian Stamp (Madhya Pradesh Amendment) Act, 2014 (Stamp Act of 2014) are mandatory in nature and cannot be given a go by, even in respect of an arbitral award passed outside the state since a specific provision has been made in the Stamp Act of 2014 itself for stamping the award..Justice Subodh Abhyankar held,.“….the provisions of the Stamp Act of 2014 cannot be circumvented and are binding in respect of instruments chargeable with stamp duty in the State of Madhya Pradesh notwithstanding that they are executed outside the Madhya Pradesh as has been clearly provided by Section 48A of the Stamp Act, 2014.”Madhya Pradesh High Court.Justice Abyankar pointed out that Article 12 of the Schedule IA appended to the Stamp Act of 2014, provide for stamping of an arbitral award which is chargeable as an instrument..The Court added that merely because Section 36 of the Arbitration and Conciliation Act provided that an award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court, it would not obviate the applicability of the Stamp Act of 2014 which provided that an ‘award’ is an instrument chargeable with stamp duty as per Section 3 of the said Act..The petitioner company had approached the High Court under Article 227 of the Constitution of India against the order passed in an Arbitration Execution Case by Additional District Judge, Chhindwara, Madhya Pradesh..The petitioner had approached the Court of the Additional District Judge for initiating execution proceedings under Section 36 of the Arbitration and Conciliation Act, 1996..The Executing Court in Chhindwara had directed the petitioner to pay the deficit stamp duty as per the provisions of the Stamp Act of 2014 on the award passed in Calcutta..It was the case of the petitioner that as per the Madhya Pradesh Arbitration Rules, 1997, on an execution application filed under Section 36 of the Arbitration Act, only a fixed court fees of Rs.200/- was required to be paid. Hence no further stamp duty could be directed to be paid on the award..It is further submitted as per the provisions of Indian Stamp (Bengal Amendment) Act, 1935, the maximum stamp duty of Rs.100/- as provided under Article 12 of the said Act for an arbitration award has already been paid..It was also argued that since there was no dispute on transfer of decree from one Court to another, there was no occasion for the Executing Court to pass the its order to pay the deficit stamp duty in accordance with Indian Stamp (Madhya Pradesh Amendment) Act, 2014..While disallowing the argument that the petitioner had already paid the requisite court fees as provided under the Madhya Pradesh Arbitration Rules, the Court also held that the petitioner was confusing payment of court fees for execution purposes with the stamp duty chargeable on the arbitral award, which could not be accepted..The Court also noted that, "If the contention of the learned counsel for the petitioner is accepted that the arbitral award is not liable to be stamped, then it would lead to an anomalous situation and render the provisions of the Stamp Act otiose, which does not appear to be the intention of the legislature...Thus, this Court has no hesitation to hold that it cannot be said that the Stamp Act is not applicable on an award passed by the Arbitrator.".The petition was, thus, dismissed on being devoid of merits..Before parting with the matter, the High Court also made critical note of the casual manner in which the Executing Court had passed its order, observing, ."...in the considered opinion of this Court, such casual direction is not sufficient and in fact it was for the learned Judge of the Executing Court only to pass the appropriate orders in accordance with the provisions of the Stamp Act, 2014 and as has been provided in the case of Peteti Subba Rao vs. Anumala S. Narendra, (2002)10 SCC 427 and after the award is properly stamped, the learned Judge is requested to proceed further in the matter in accordance with law.".Read the order here: