An arbitral award is a document that attracts stamp duty. That sentence is uncontroversial, and it is also the point at which a large number of execution petitions run into difficulty — not because the duty is heavy, but because it was calculated on the wrong basis, or paid by the wrong party, or assumed to have been covered by something paid earlier in the proceedings.

Where the liability comes from

In Delhi, stamp duty on an award is governed by Article 12 of Schedule 1A to the Indian Stamp Act, 1899, as amended for Delhi by the Indian Stamp (Delhi Amendment) Act, 2001. The duty is charged on the amount or market value of the property to which the award relates.

The practical question at the execution stage is rarely whether duty is payable. It is whether the duty already paid can be shown to be complete.

The three points that recur

  1. Duty is on the award, not the claim. The figure that matters is what the tribunal awarded, together with any interest and costs that form part of the award, not what was originally claimed.
  2. A sum paid at an earlier stage is not necessarily the duty. Amounts affixed to or paid along with the award when it was made are frequently treated by parties as discharging the liability in full. Where they fall short, the balance has to be made good before the award can be acted on.
  3. An insufficiently stamped award is not a dead letter. Section 35 of the Act bars such an instrument from being acted upon, but the position is curable — the deficient duty, and the penalty where one is levied, can be paid and the instrument then received.

What to do at the time of filing

Before an execution petition is filed, it is worth putting three things on record in a single application: what duty has been paid to date and by whom, the basis on which the balance has been computed, and an undertaking to pay that balance. Courts are considerably more receptive to a party that raises the shortfall itself than to one that is confronted with it on an objection.

A note on this piece

This note is a general description of a statutory position and is written for information only. Rates, articles and amendments differ between States and change over time, and the application of any of this to a particular award depends entirely on its own facts. It is not legal advice and should not be relied upon as such.

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