Supreme Court in case of SMS Tea Estates Pvt. Ltd. (supra) while considering the application under section 11 has construed similar provisions of the Stamp Act and has held that unless the stamp duty and penalty due in respect of the instrument is paid, the court cannot act upon the instrument which would mean that it cannot act upon the arbitration agreement also which is part of the instrument. It is held that if an agreement/contract/instrument containing arbitration clause is produced in application filed under section 11, it should disclose the stamp duty that has been paid on the original. Section33 cast a duty upon every court that a person having by law authority to receive evidence as also every arbitrator who is a person having by consent of parties authority to receive evidence before whom an unregistered instrument chargeable with duty is produced, to examine the instrument in order to ascertain whether it is duly stamped. It is held that if the court comes to the conclusion that the instrument is not duly stamped, it has to impound the document and deal with it as per section 38 of the Stamp Act.
14. Supreme Court has held that the Court should before admitting any document into evidence or acting upon such document examine whether the instrument/document is duly stamped and whether it is instrument which is compulsorily registrable and if the same is found to be not duly stamped, in view of section 35 of the Stamp Act, bars the same document being acted upon. Consequently even the arbitration clause therein cannot be acted upon. It is held that the court should then proceed to impound the document under section 33 of the Stamp Act and follow the procedure of section 35 and section38 of the stamp Act.
15. Section 33 and 34 of the Bombay Stamp Act are in pari materia with section 33 and 35 of the Stamp Act considered by the Supreme Court in case of SMS Tea Estate Pvt. Ltd. (supra). In my view, since the applicants themselves have pleaded that the MOU created various rights in favour of the applicants including right to carry out development on the land and to sell the flats etc. and such arguments are accepted prima facie by the learned principal District Judge, applicant cannot be permitted to raise an inconsistent plea for the purpose of payment of stamp duty. Even otherwise on consideration of the provisions of MOU in my prima facie view, the said MOU requires payment of stamp duty under article 5(g-a) of Schedule I of Bombay Stamp Act, 1958. Since the applicants have paid stamp duty of Rs. 100/- only on the MOU, the same is insufficiently stamped and thus Chief Justice or his designate cannot act upon such instrument including the arbitration agreement which is forming part of the said MOU.
16. Under section 34 of the Bombay Stamp Act, in my view there is clear bar and such instrument thus cannot be acted upon including the arbitration clause forming part of such instrument. The judgment of Supreme Court in case of SMS Tea Estates Pvt. Ltd., squarely applies to the facts of this case. I am respectfully bound by the judgment of Supreme Court.
CIVIL APPELLATE JURISDICTION
Shri. Nilesh Shantilal Tank, Age 42 years,
ARBITRATION PETITION NO. 9 OF 2013
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Versus
Shri. Ashwin Tulsidas,
CORAM : R.D. DHANUKA,J.
JUD. PRONOUNCED ON
: AUGUST, 22,2014
Citation: 2014(2)MhLj862
By this application filed under section 11(6) of the Arbitration and Conciliation
Act, 1996, the applicants seek appointment of arbitrator.
Mr. Madon, learned senior counsel appearing for the respondents
2.
raises a
preliminary objection about maintainability of this application on the ground that the
Memorandum of understanding dated 6th November, 2008 which contains an arbitration
agreement, has not been stamped in accordance with the provisions of the Bombay Stamp
Act, 1958. It is submitted by the learned senior counsel that the memorandum of
understanding is required to be impounded in this proceedings and shall be sent for
adjudication.
3.
Some of the relevant facts for the purpose of deciding the preliminary objections
raised by the respondents are summarized as under :
(a)
It is the case of the applicants that the applicants and the respondents
entered into a memorandum of understanding dated 6 th Nov. 2008. Under the
said document the respondents granted
development rights of the property
described under the said agreement to the applicants inter alia to construct a
building on certain part of the property and to obtain TDR in respect of certain
area affected as road in development plan of Mira Bhayander Municipal
Corporation and other rights in respect of the said property including right to sell
the premises in such building to be constructed on the said property, to receive
TDR from the Municipal Council by surrendering such area affected by road and
upon the terms and conditions set out in the said document for the consideration
mentioned therein.
(b)
It is the case of the applicants that the respondents vide their advocate's
letter dated 15th December, 2010 called upon the applicants to perform the
obligations mentioned in clauses 2, 3 and 10 of the said memorandum of
understanding within a period of one month making such time of one month as
an essence of contract and further mentioned that in default the respondents shall
treat the said MOU/ contract as cancelled/terminated. The applicants vide their
advocate's letter dated 6th January 2011 requested the respondents to fix up the
joint meeting to finalize the plans and to take immediately necessary steps for
submitting plans to the Municipal Corporation and to take positive steps for
development of the property and construction of buildings thereon. By letter
2011 sent through their advocates, the respondents
dated 5th February,
purportedly terminated and cancelled the MOU dated 6 th November, 2008. The
applicants denied the allegations made by the respondents in their advocate's
letter dated 5th February, 2011 by addressing a letter dated 7th June, 2011.
(c)
The respondents in reply to the said letter, vide their letter dated 11 th
June, 2011 contended that the said MOU dated 6 th November 2008 was only in
the nature of “expression of interest”.
(d)
The applicants vide their advocates letter dated 18 th august, 2011 denied
the said contentions. The parties thereafter entered into further correspondence.
The applicants through their advocates letter dated 21 st November, 2011 invoked
clause 19 of the said MOU and appointed Mr. R.J. Ashar Architect as arbitrator
and called upon the respondents to concur with the said name as arbitrator. The
respondents vide their advocates letter dated 15 th December, 2011 once again
contended that the said MOU had already been terminated and therefore, the
applicants were not entitled to invoke any of the terms and conditions including
the arbitration agreement. The applicants vide their advocate's letter dated 2 nd
January, 2013 denied the said contentions of the respondents.
On 1st February, 2013, the applicants filed this application under section
(e)
11(6) of the Arbitration and Conciliation Act, 1996. On 19 th January, 2013 the
applicants herein filed an application under section 9 of the Arbitration and
Conciliation Act, 1996 in the District Court at Thane (Civil Misc. Application
No.21 of 2013). By an order dated 30th August, 2013 the learned Principal
District Judge, Thane allowed the said application filed under section 9 and
granted injunction restraining the respondents, their agents or anybody else on
their behalf from alienating, creating third party
interest in any manner
whatsoever etc. Being aggrieved by the said order and judgment dated 30 th
August, 2013 the respondents have filed Arbitration Appeal (45 of 2013) in this
court under section 37 of the Act which was also heard along with this
application.
Mr. Madon learned senior counsel for the respondents in this application invited
my attention to various clauses of MOU and also the prima facie findings rendered by the
learned Principal District Judge in order dated 30 th August, 2013 and in particular
paragraph 10 to 12 of the said Order and judgment and would submit that the learned
Principal District Judge has accepted the submissions of the applicants herein that prima
facie there was genuine contract executed between parties for lawful consideration with
a lawful object of development of the land. It is also held that clause 10 of the said MOU
ig
prima facie indicated that the alleged MOU dated 6th Nov. 2008 was not a bare agreement
to execute another agreement but it was a concluded contract to render services on the
part of the applicants towards proposed development of the suit lands. It is also held that
the intention and purpose to execute full-fledged agreement as contemplated under clause
10 was for the purpose of earmarking the portions of the suit land and to demarcate the
same for individual construction after apportionment of the FSI/TDR amongst both the
parties. The Principal District Judge also gave a prima facie finding that the alleged
MOU was a valid contract enforceable within the ambit of law.
5.
Mr. Madon also invited my attention to the averments made by the applicants in
their application filed under section 9 of the Act contending that the said MOU was a
concluded agreement and various rights were created under the said agreement in favour
of the applicants. It is submitted that the applicants have not challenged the prima facie
finding rendered by the learned Principal District Judge.
Mr. Madon, placed reliance on the judgment of the Supreme Court in case of SMS
Tea Estates Pvt. Ltd. Vs. Chandmary Tea Company Pvt. Ltd. (2011) 14 SCC 66 and
in particular paragraphs 3, 7, 8, 9, 17 to 22.6 and would submit that since the MOU
would attract the payment of stamp duty under Article 5(g-a) of schedule I of the
Bombay Stamp Act, 1958 and since stamp duty as payable under the said article has not
been paid by the applicant on the MOU, the said MOU is liable to be impounded by this
court under section 33 of the Bombay Stamp Act. : Paragraph 3, 7, 8, 9, 17 to 22.6 of the
said judgment read thus :
“3. Prior to the execution of the said lease deed, on 29.11.2006 the
Respondent had offered to sell the two Tea estates to the Appellant for a
consideration of Rupees four crores. The Appellant agreed to purchase
them subject to detailed verification. The Appellant wrote a letter dated
27.6.2007 to the Respondent agreeing to purchase the said two Tea estates.
7.
The Respondent denied that they had agreed to sell the two tea
estates to the Respondent for a consideration of Rupees four crores. The
Appellant also denied that the Respondent had invested any amount in the
tea estates. It contended that as the lease deed itself was invalid, the
Appellant could not claim appointment of an arbitrator under the
arbitration agreement forming part of the said deed.
8. The learned Chief Justice of Guwahati High Court dismissed the
Appellant's application by order dated 28.5.2010. He held that the lease
deed was compulsorily registrable under Section 17 of the Registration
Act and Section 106 of the TP Act; and as the lease deed was not
registered, no term in the said lease deed could be relied upon for any
purpose and therefore Clause 35 could not be relied upon for seeking
reference to arbitration. The High Court also held that the arbitration
agreement contained in Clause 35 could not be termed as a collateral
transaction, and therefore, the proviso to Section 49 of the Registration
Act would not assist the Appellant. The said order is challenged in this
appeal by special leave.
9. On the contentions urged the following questions arise for
consideration:
(i) Whether an arbitration agreement contained in an unregistered (but
compulsorily registrable) instrument is valid and enforceable?
(ii) Whether an arbitration agreement in an unregistered instrument which
is not duly stamped, is valid and enforceable?
(iii) Whether there is an arbitration agreement between the Appellant and
Respondent and whether an Arbitrator should be appointed?
17. What if an arbitration agreement is contained in an unregistered (but
compulsorily registrable) instrument which is not duly stamped? To find
an answer, it may be necessary to refer to the provisions of the Indian
Stamp Act, 1899 ('Stamp Act' for short). Section 33 of the Stamp Act
relates to examination and impounding of instruments. The relevant
portion thereof is extracted below:
“33. Examination and impounding of instruments.-(1) Every
person having by law or consent of parties authority to
receive evidence, and every person in charge of a pubic
office, except an officer of police, before whom any
instrument, chargeable, in his opinion, with duty, is produced
or comes in the performance of his functions, shall, if it
appears to him that such instrument is not dull stamped,
impound the same.
(2) For that purpose every such person shall examine every
instrument so chargeable and so produced or coming before
him in order to ascertain whether it is stamped with a stamp
of the value and description required by the law in force in
India when such instrument was executed or first executed:”
18. Section 35 of Stamp Act provides that instruments not duly
stamped is inadmissible in evidence and cannot be acted upon. The
relevant portion of the said section is extracted below:
“35. Instruments not duly stamped inadmissible in evidence,
etc. -- No instrument chargeable with duty shall be admitted
in evidence for any purpose by any person having by law or
consent of parties authority to receive evidence, or shall be
acted upon, registered or authenticated by any such person or
by any public officer, unless such instrument is duly stamped:
Provided that--
(a) any such instrument shall be admitted in evidence on
payment of the duty with which the same is chargeable, or, in
the case of an instrument insufficiently stamped, of the
amount required to make up such duty, together with a
penalty of five rupees, or, when ten times the amount of the
proper duty or deficient portion thereof exceeds five rupees,
of a sum equal to ten times such duty or portion.”
19. Having regard to Section 35 of Stamp Act, unless the stamp duty
and penalty due in respect of the instrument is paid, the court cannot act
upon the instrument, which means that it cannot act upon the arbitration
agreement also which is part of the instrument. Section 35 of Stamp Act is
distinct and different from Section 49 of Registration Act in regard to an
unregistered document. Section 35 of Stamp Act, does not contain a
proviso like to Section 49 of Registration Act enabling the instrument to
be used to establish a collateral transaction.
The scheme for appointment of arbitrators by the Chief Justice of
Guwahati High Court 1996 requires an application under Section 11 of the
Act to be accompanied by the original arbitration agreement or a duly
certified copy thereof. In fact, such a requirement is found in the
scheme/rules of almost all the High Courts. If what is produced is a
certified copy of the agreement/contract/instrument containing the
arbitration clause, it should disclose the stamp duty that has been paid on
the original. Section 33 casts a duty upon every court, that is a person
having by law authority to receive evidence (as also every arbitrator who
is a person having by consent of parties, authority to receive evidence)
before whom an unregistered instrument chargeable with duty is
produced, to examine the instrument in order to ascertain whether it is
duly stamped. If the court comes to the conclusion that the instrument is
not duly stamped, it has to impound the document and deal with it as per
Section 38 of the Stamp Act.
20.
Therefore, when a lease deed or any other instrument is relied upon
as contending the arbitration agreement, the court should consider at the
outset, whether an objection in that behalf is raised or not, whether the
document is properly stamped. If it comes to the conclusion that it is not
properly stamped, it should be impounded and dealt with in the manner
specified in Section 38 of Stamp Act. The court cannot act upon such a
document or the arbitration clause therein. But if the deficit duty and
penalty is paid in the manner set out in Section 35 or Section 40 of the
Stamp Act, the document can be acted upon or admitted in evidence.
21.
22. We may therefore sum up the procedure to be adopted where the
arbitration clause is contained in a document which is not registered (but
compulsorily registrable) and which is not duly stamped:
22.1.
The court should, before admitting any document into evidence or
acting upon such document, examine whether the instrument/document is
duly stamped and whether it is an instrument which is compulsorily
registrable.
22.2. If the document is found to be not duly stamped, Section 35 of
Stamp Act bars the said document being acted upon. Consequently, even
the arbitration clause therein cannot be acted upon. The court should then
proceed to impound the document under Section 33 of the Stamp Act and
follow the procedure under Section 35 and 38 of the Stamp Act.
22.3. If the document is found to be duly stamped, or if the deficit stamp
duty and penalty is paid, either before the Court or before the Collector (as
contemplated in Section 35 or 40 of the Stamp Act), and the defect with
reference to deficit stamp is cured, the court may treat the document as
duly stamped.
22.4. Once the document is found to be duly stamped, the court shall
proceed to consider whether the document is compulsorily registrable. If
the document is found to be not compulsorily registrable, the court can act
upon the arbitration agreement, without any impediment.
22.5. If the document is not registered, but is compulsorily registrable,
having regard to Section 16(1)(a) of the Act, the court can de-link the
arbitration agreement from the main document, as an agreement
independent of the other terms of the document, even if the document
itself cannot in any way affect the property or cannot be received as
evidence of any transaction affecting such property. The only exception is
where the Respondent in the application demonstrates that the arbitration
agreement is also void and unenforceable, as pointed out in para 8 above.
If the Respondent raises any objection that the arbitration agreement was
invalid, the court will consider the said objection before proceeding to
appoint an arbitrator.
22.6. Where the document is compulsorily registrable, but is not
registered, but the arbitration agreement is valid and separable, what is
required to be borne in mind is that the Arbitrator appointed in such a
matter cannot rely upon the unregistered instrument except for two
purposes, that is (a) as evidence of contract in a claim for specific
performance and (b) as evidence of any collateral transaction which does
not require registration.”
7.
Learned counsel would submit that such MOU which is not properly stamped
cannot be admitted in evidence for any purpose and even such document cannot be acted
the Act. Section 34 of the Bombay Stamp Act, 1958 reads thus :
upon by the court even for the purpose of granting interim measures under section 9 of
8.
“34. Instrument not duly stamped inadmissible in evidence etc.
No instrument chargeable with duty shall be admitted in evidence for any
purpose by any person having by law or consent of parties authority to
receive evidence, or shall be acted upon, registered or authenticated by
any such person or by any public officer unless such instrument is duly
stamped or if the instrument is written on sheet of paper with impressed
stamp (such stamp paper is purchased in the name of one of the parties to
the instrument).
Provided that, -
(a) any such instrument shall, subject to all just exceptions, be admitted
in evidence on payment of -
(I) the duty with which the same is chargeable, or in the case of any
instrument insufficiently stamped, the amount required to make up such
duty, and
(ii) a penalty at the rate of 2 per cent of the deficient portion of the stamp
duty for every month or part thereof, from the date of execution of such
instrument;
Provided that, in no case, the amount of the penalty shall exceed double
the deficient portion of the stamp duty.”
Mr. Madon, learned senior counsel placed reliance on the unreported order and
judgment of this court delivered on 25th June, 2013 by the Division Bench in case of
Lakadawala Developers Pvt. Ltd. Vs. Badal Mittal and Ors., in Appeal (L) No. 272
of 2013 and would submit that the Division Bench after adverting to the judgment of the
supreme Court in case of SMS Tea Estate Pvt Ltd. (supra) and after considering the MOU
containing similar provisions as in this case held that the objection in regard to the
document being insufficiently stamped has to be considered in the proceedings under
section 9 before granting interim measures. It is submitted that since the document is not
sufficiently stamped, the same was liable to be impounded and till the stamp duty and
penalty payable were adjudicated upon by the Collector of Stamps and the same were
paid, no order for interim measures could be made in the proceedings filed by the
respondents under section 9. Paragraph 1 to 6 of the said order/judgment read thus :
ig
“1. At the hearing of the application under Section 9 of the Arbitration
and Conciliation Act, 1996, an objection was raised on behalf of the
Appellant on the ground that the Memorandum of Understanding
(MOU) dated 29 July 2011 was insufficiently stamped and that in
consequence, the document could not be acted upon unless the stamp
duty and penalty, if any, payable thereon was adjudicated upon.
Reliance was placed on the decision of the Supreme Court in SMS Tea
Estates Pvt. Ltd. Vs. Chandmari Tea Co. Pvt.Ltd., 2011(4)-Arb.L.R. -
265(S.C.) - At paragraphs 10 and 11 where the Supreme Court held as
follows :
"10. ... ... ... ... ... ... ... ... ... ...
Having regard to Section 35 of the Stamp Act, unless the
stamp duty and penalty due in respect of the instrument is
paid, the court cannot act upon the instrument, which
means that it cannot act upon the arbitration agreement
also which is part of the
instrument. ... ... ... ..."
"11. ... ... ... ... Therefore, when a lease deed or any other
instrument is relied upon as contending the arbitration
agreement, the court should consider at the outset,
whether an objection in that behalf is raised or not,
whether the document is properly stamped. If it comes to
the conclusion that it is not properly stamped, it should be
impounded and dealt with in the manner specified in
Section 38 of the Stamp Act. The court cannot act upon
such a document or the arbitration clause therein. But if
the deficit duty and penalty is paid in the manner set out
in Section 35 or Section 40 of the Stamp Act, the
document can be acted upon or admitted in evidence."
2. The learned Single Judge in the judgment which is impugned in
appeal held that the question as to whether the MOU was
insufficiently stamped, could be decided in the arbitral proceedings
before the arbitrator and the arbitration agreement could be delinked
from the other provisions of the MOU so as to enable the Court to
grant interim measures. This view of the learned Single Judge is
prima facie contrary to the judgment of the Supreme Court.
3. On behalf of the Respondents it has been submitted that the MOU
dated 29 July 2011 contemplates in Clause-15 that parties would enter
into a final agreement with respect to the development and
construction of the rehabilitation and free sale buildings for each part
of each phase of the property. Hence, it has been urged by the learned
counsel for the Respondents that the stamp duty would be payable
only on the execution of the final agreement for each phase.
4. The agreement between the parties which is contained in the MOU
dated 29 July 2011, prima facie, does contemplate that the
Respondents will finance the construction of and construct the
rehabilitation and free sale buildings on the property in question. In
consideration thereof, Clause-4 stipulates that the Appellant would
hand over to the Respondents a certain proportion of the constructed
area of the free sale buildings. Clause-6 required the Respondents to
pay a sum of Rs.1.50 crores to the Appellant to enable the Appellant
to finance transit accommodation for the slum dwellers which was
payable every month on and from 1 April 2011 till the completion of
the development of the entire property. In the event of default on the
part of the Respondents in making the said payment, the Appellant
was required to repay the entire amount received and the cost of
construction incurred by the Respondents on the property till the date
of default. Clause-11 of the MOU cast specific obligations on the
Respondents to construct the rehabilitation and free sale buildings;
work being required to be commenced after requisite permissions
were received. The construction was required to be completed within
36 months after receipt of requisite permissions for each building.
5.
The objection in regard to the document being insufficiently
stamped ought to have been considered by the learned Single Judge
when the document came before the Court in the course of the
proceedings under Section 9. A consideration of the issue could not
have been deferred to the arbitration proceedings having regard to the
provisions of Section 33(1) of the Bombay Stamp Act, 1958. Article
5(ga) of the Schedule relates to the stamp duty payable on an
agreement or MOU where it relates to giving authority or power to a
promoter or a developer by whatever name called for construction on,
development of or sale or transfer (in any manner whatsoever) of any
immovable property. Prima facie, the document would require
stamping and has been insufficiently stamped having regard to the
provisions of Article 5(ga) of the Schedule to the Bombay Stamp Act,
1958.
6.
In the circumstances, we pass the following order :
(i)
The MOU dated 29 July 2011 (Exhibit-D) is impounded. An
authenticated copy of the MOU shall be forwarded by the
Prothonotary and Senior Master to the Collector of Stamps, Mumbai
Suburban District, for adjudication of the stamp duty and penalty, if
any, payable on the document under the provisions of the Bombay
Stamp Act, 1958;
(ii)
The Collector of Stamps, Mumbai Suburban District shall
expedite the determination in terms of clause (i) above and complete
the exercise within a period of four weeks of the receipt of a duly
authenticated copy of the document together with an authenticated
copy of this order from the Prothonotary & Senior Master;
(iii) Pending further orders, the direction contained in the impugned
order of the learned Single Judge dated 29 April 2013 shall remain
stayed;
(iv) The further hearing of the appeal shall stand over to 19 August
2013.”
Mr. Madon learned senior counsel submits that the judgment of Supreme Court in
9.
case of SMS Tea Pvt. Ltd. (supra) and the order and judgment of this court in case of
Lakadawala Developers Pvt. Ltd. (supra) are squarely applicable to the facts of this case
and are binding on this court. The court thus cannot act upon the MOU including the
arbitration agreement which is forming part of such MOU till the same is adjudicated
upon and proper stamp duty and penalty is paid thereon.
10.
Mr. Jahagirdar, learned senior counsel for the applicants on the other hand submits
that Article 5(g-a) of Schedule I of the Bombay Stamp Act would not apply to the
document in question. It is submitted that since the eventualities provided in clause 6, 9,
10 and 15 of the MOU having not arisen, question of payment of stamp duty at this stage
did not arise. It is submitted that further agreement was agreed to be entered under the
said MOU on the happening of certain events and stamp duty could be paid only on
11.
execution of such further document.
A perusal of the averments made in this application and in particular paragraph 1
clearly indicates that it is case of the applicants that under the said MOU the respondents
granted the development rights of the property described therein to the applicants inter
TDR including right
alia to construct building on certain part of the property, to obtain
to sell the premises in such buildings to be constructed on the said property. A perusal of
the order and judgment delivered by the learned Principal District Judge which is not
impugned by the applicants herein clearly indicates that the learned Principal District
Judge has rendered a prima facie finding that the MOU dated 6 th Nov. 2008 was not a
bare agreement to execute another agreement or simply that it was an expression of the
desire on the part of the respondents but it was a concluded contract to render services on
the part of the applicants herein towards proposed development of the suit land. A
perusal of the pleadings filed by the applicants in their application under section 9 also
clearly indicates that it was case of the applicants that under the said MOU
the
respondent had granted development rights in the property to construct buildings and to
sell flats.
12.
In my view, in view of the stand taken by the applicants in this application under
section 11 and also in the application filed under section 9 and the applicants not having
challenged the prima facie findings rendered by the learned principal District Judge that
the MOU was not a bare agreement to execute another agreement and was a concluded
agreement, applicants cannot be permitted to now urge contrary to their own pleadings
and the findings of the learned Principal District Judge by contending that the stage of
payment of stamp duty had not arisen and it would not attract any payment of stamp duty
under any of the provisions of schedule I to the Bombay Stamp Act, 1958.
13.
Supreme Court in case of SMS Tea Estates Pvt. Ltd.(supra) while considering the
application under section 11 has construed similar provisions of the Stamp Act and has
held that unless the stamp duty and penalty due in respect of the instrument is paid, the
court cannot act upon the instrument which would mean that it cannot act upon the
arbitration agreement also which is part of the instrument.
It is held that if an
agreement/contract/instrument containing arbitration clause is produced in application
filed under section 11, it should disclose the stamp duty that has been paid on the
original. Section 33 cast a duty upon every court that a person having by law authority to
receive evidence as also every arbitrator who is a person having by consent of parties
authority to receive evidence before whom an unregistered instrument chargeable with
duty is produced, to examine the instrument in order to ascertain whether it is duly
stamped. It is held that if the court comes to the conclusion that the instrument is not
duly stamped, it has to impound the document and deal with it as per section 38 of the
Stamp Act.
14.
Supreme Court has held that the Court should before admitting any document into
evidence or acting upon such document examine whether the instrument/document is
duly stamped and whether it is instrument which is compulsorily registrable and if the
same is found to be not duly stamped, in view of section 35 of the Stamp Act, bars the
same document being acted upon. Consequently even the arbitration clause therein
cannot be acted upon. It is held that the court should then proceed to impound the
document under section 33 of the Stamp Act and follow the procedure of section 35 and
Section 33 and 34 of the Bombay Stamp Act are in pari materia with section 33
15.
section 38 of the stamp Act.
and 35 of the Stamp Act considered by the Supreme Court in case of SMS Tea Estate Pvt.
Ltd. (supra). In my view, since the applicants themselves have pleaded that the MOU
created various rights in favour of the applicants including
right to carry out
development on the land and to sell the flats etc. and such arguments are accepted prima
facie by the learned principal District Judge, applicant cannot be permitted to raise an
inconsistent plea for the purpose of payment of stamp duty. Even otherwise on
consideration of the provisions of MOU in my prima facie view, the said MOU requires
payment of stamp duty under article 5(g-a) of Schedule I of Bombay Stamp Act, 1958.
Since the applicants have paid stamp duty of Rs.100/- only on the MOU, the same is
insufficiently stamped and thus Chief Justice or his designate cannot act upon such
instrument including the arbitration agreement which is forming part of the said MOU.
16.
Under section 34 of the Bombay Stamp Act, in my view there is clear bar
and
such instrument thus cannot be acted upon including the arbitration clause forming part
of such instrument. The judgment of Supreme Court in case of SMS Tea Estates Pvt.
Ltd., squarely applies to the facts of this case. I am respectfully bound by the judgment of
17.
Supreme Court.
The order and judgment of Division Bench delivered on 25 th June, 2013 in Appeal
(L) No. 272 of 2013 in case of Lakadawala Developers Pvt. Ltd. (supra) which has
adverted to the judgment of supreme Court in case of SMS Tea Estate Pvt. Ltd. (supra)
ig
while considering the appeal arising out of order passed by the learned Single Judge
under section 9 has held that the MOU would require stamping and has been
insufficiently stamped having regard to the provisions of article 5(g-a) of Schedule I of
Bombay Stamp Act, 1958 and has ordered that the said document be impounded and be
forwarded to the Collector of Stamp for adjudication of stamp duty and penalty to be
payable under the Bombay Stamp Act. In my view, the said judgment of Division Bench
would squarely apply to this application under section 11 of the Arbitration and
Conciliation Act, 1996. The principles laid down by the Division Bench in the said order
and judgment while considering the appeal arising out of order under section 9 would
also apply to the application under section 11.
18.
(i)
I, therefore, pass the following order :
The MOU dated 6th November, 2008 (Exh. A to he petition) is impounded. An
authenticated copy of the said MOU shall be forwarded by the Registrar of this court to
the Collector of Stamps, Thane for adjudication of stamp duty and penalty, if any
payable on the document under the provisions of Bombay Stamp Act,1958.
The Collector of Stamps, Thane shall expedite the determination in terms of clause
(ii)
(i) above and complete the exercise within a period of four weeks of the receipt of a duly
authenticated copy of the instrument together with an authenticated copy of this order
from the Registrar of this court.
(ii)
Place the arbitration petition on board for hearing and final disposal after
adjudication of stamp duty and penalty by the Collector of Stamps Thane is made and the
(iii)
MOU is properly stamped and penalty levied if any is paid.
Parties are at liberty to apply for hearing of this application after this process is
over.
(R.D. DHANUKA,J.)
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