S. B. Singh v. Union Of India (UOI) — 1980 DIGILAW 155 (ALL)

JUDGMENT : M.N. Shukla, J. The Appellant claiming to be the sole proprietor of the firm M/s. S.B. Singh & Sons carrying on business at Deoria, entered into a contract dated 21-8-1970 with the opposite parties relating to the sale of released bridge girders. There was a dispute between the parties and Sri K.M. Mall, Dy. General Manager of Respondent No. 1, was appointed arbitrator and he gave his award dated 1-12-1971. The Appellant prayed that the award be made a rule of the Court. The opposite-parties filed objections and one of the objections was to the effect that the award was not made on sufficiently stamped paper and hence it was a nullity. 2. On behalf of the Appellant it had been contended in the court below, that in the first instance the award was on sufficiently stamped paper and, in the alternative, if it was found to be insufficiently stamped he was prepared to make good the deficiency. The award was actually written on a paper bearing stamps worth Rs. 6325 only. The award was in respect of property worth Rs. 4,41,978/-. The Appellant had also valued his application at the same amount. According to Article 12(b) Sch. I of the Stamp Act an award made otherwise than by an order of the court in the course of a suit, if it exceeds Rs. 1000/- for every additional Rs. 1000/- or part thereof, Rs. 150 has to be paid. Computed in this manner the award for Rs. 4,41,978/- should have been written on a paper bearing stamps of Rs. 684/-. Thus, it is obvious that the award had been written on insufficiently stamped paper. On account of this infirmity the contention of the Respondents, which found favour with the court below, was that the award could not be enforced. The same argument has been strenuously urged before us by the learned Counsel for the Respondents. We are, however, unable to accede to the same. 3. The learned Counsel for the Respondents strongly relied on the decision in Rikhabdas Vs. Ballabhdas and Others, AIR 1962 SC 551 where the court had to consider the case of an award which was unstamped and unregistered. It was held that the award could not be remitted to the arbitrator for the purpose of getting it stamped and or registered. The learned Counsel for the Respondents strongly relied on the decision in Rikhabdas Vs. Ballabhdas and Others, AIR 1962 SC 551 where the court had to consider the case of an award which was unstamped and unregistered. It was held that the award could not be remitted to the arbitrator for the purpose of getting it stamped and or registered. That decision turned entirely on the interpretation of Section 16 of the Arbitration Act which is attracted only when the award has to be examined for purposes of reconsideration. It was ruled that the case did not come within any of the clauses of Section 16 and the Arbitrator became functus officio after making the award. The view expressed was (sic) those circumstances the original award, which was the one written by the Arbitrator, could not be sent back to him for re-writing after supplying the requisite stamps. It is, however, significant that in that case no request was at all made to make good the deficiency in the stamp duty under the provisions of Section 35 of the Stamp Act. That is why towards the concluding portion of the judgment their Lordships observed that it was open to the parties to take such steps, if any, as were available to them at law for curing the defect arising from the award being on an unstamped paper. It is manifest from the judgment of the Supreme Court in Rikhabdass v. Ballabhadradass (supra) that an insuperable legal difficulty was created in that case on account of the fact that the only prayer made on behalf of the Applicant was that the award be remitted for rectification to the Arbitrator for re-writing the same on a duly stamped paper. It was for this reason that no other point was decided and such other right or remedy as might be available to the parties in order to obtain relief was left open. The position was made explicit by a later decision of the Supreme Court in Hindustan Steel Ltd. v. Dilip Construction Co. AIR 1969 SC 1238 where this point was fully examined and the dictum enunciated as to how relief could be given to a party in a case where an award was written on an insufficiently stamped paper. The position was made explicit by a later decision of the Supreme Court in Hindustan Steel Ltd. v. Dilip Construction Co. AIR 1969 SC 1238 where this point was fully examined and the dictum enunciated as to how relief could be given to a party in a case where an award was written on an insufficiently stamped paper. The observations of the Supreme Court made in Rikhabdass's case must, therofore, be confined to the facts of that case which are clearly distinguishable from those of the one in hand. The powers of the Arbitrators to deal with an award either in the first instance or after remission by an order of the court as provided under the Arbitration Act are distinct from the powers conferred on a court under the Stamp Act which lays down a complete procedure for dealing with the admissibility of instruments which are insufficiently stamped. It cannot be doubted that an award is “an instrument” within the meaning of the Stamp Act. See Hindustan Steel Ltd. v. Dilip Construction Co. (supra). Section 35 casts a duty on the Court to “impound” an instrument which is not duly stamped and which is sought to be filed before it. Section 33(1) provides insofar as it is relevant: (1) Every person having by law or consent of parties authority to receive evidence...before whom any instrument, chargeable...with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. Section 35 of the Stamp Act provides, insofar us it is relevant: “No instrument chargeable with duty snail 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...” The procedure for impounding instruments u/s 33 is provided in Section 38 of the Stamp Act which reads: * * * When this procedure has been complied with, a certificate has to be issued endorsing that the proper duty and penalty etc. have been levied and the effect of such instrument would be as provided in Section 42(2) of the Stamp Act which reads: (2) Every instrument so endorsed shall thereupon be admissible in evidence and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on his application in this behalf to the person from whose possession it came into the hands of the officer impounding it, or as such person may direct:... Thus, it is clear that after the impounding has taken place and the deficiency in stamp duty has been made good and the penalty etc. have been paid, the instrument becomes perfectly admissible in evidence. Section 36 of the Stamp Act clearly provides: Where an instrument has been admitted in evidence, such admission shall not except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. Thus, there is no doubt that after full compliance of the procedure set out in the above provision, a document or instrument suffering from the deficiency of stamp duty etc. becomes admissible in evidence; the defect is cured and its admissibility cannot be challenged later. 4. A point was, however, still urged on behalf of the Respondents that even though with the aid of Sections 35 and 36 such a defective instrument may become admissible in evidence and the question of its admissibility may become immune from further challenge, yet the award cannot be enforced inasmuch as such an instrument, notwithstanding that it has been admitted in evidence cannot, at any rate be “acted upon”. The learned Counsel for the Respondents sought support for this proposition from a decision of this Court in Mt. Bittan Bibi and Another Vs. Kuntu Lal and Another, AIR 1952 All 996 . That case was, however, expressly overruled by the Supreme Court in Hindustan Steel Ltd. v. Dilip Construction Co. (supra). Section 42(2) specifically provides that “every instrument so endorsed shall thereupon be...acted upon and authenticated as if it had been duly stamped. Thus the infirmity of the award is fully cured by an order of the court allowing the impounding of the document, the payment of the deficiency in stamp duty. As observed by Shah, J. in Hindustan Steel Ltd. v. Dilip Construction Co. Thus the infirmity of the award is fully cured by an order of the court allowing the impounding of the document, the payment of the deficiency in stamp duty. As observed by Shah, J. in Hindustan Steel Ltd. v. Dilip Construction Co. (supra) in para 4 of the report: The argument ignores the true import of Section 36. By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not only duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the term of Section 42(2) which enact, in term unmistakable, that every instrument endorsed by the Collector u/s 42 shall be admissible in evidence and may be acted upon as if it had been duly stamped. 5. We would also like to refer to the observations made by the Supreme Court in the same case to the effect that the underlying object of the provisions of the Stamp Act is to secure revenue for the State on certain classes of instruments. It is not meant to be a weapon for attack to be placed in the hands of a litigant for the purpose of bringing about the discomfiture of his adversary. It was observed in para 5 of the reports: The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments: it is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the ground of the initial defect in the instrument. Viewed in that light the Scheme is clear. The stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the ground of the initial defect in the instrument. Viewed in that light the Scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, Sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and Sub-section (2) of Section 42 enacts the consequences resulting from such certification. 6. The learned Counsel for the Respondents, however, made a feable attempt to distinguish the case of Hindustan Steel Ltd. v. Dilip Construction Co. (supra) on the ground that there the award had been filed by the Arbitrator and not at the instance of the parties and consequently it was the Arbitrator alone who could be asked to make good the deficiency in the stamp duty and the intervention of any other party was not required. It was argument that it was in those circumstances alone that the power u/s 35 of the Stamp Act could be exercised by the Court and hence the instant case was distinguishable. This is only trying to make a distinction without a difference. Ultimately an order has to be passed by the Court and not by any other authority u/s 14 of the Arbitration Act, and as we have already seen in the earlier part of the judgment the powers conferred on the Court under the Arbitration Act are quite different from the powers contained in the Stamp Act which sets up a complete machinery, in so far as action necessary for curing the defects arising out of insufficient stamp duty etc. is concerned. In respect of instruments deficiently stamped that power cannot in any manner be whittled down by such consideration as to whether the award is filed in the Court at the instance of a party or by an order of the Court or by the Arbitrator himself. That is wholly immaterial. Therefore, an insufficiently stamped award is not a nullity. If it is impounded and the deficiency is made good and the penalty etc., if any, is paid the document becomes admissible in evidence and can be acted upon. Such award can be enforced. 7. That is wholly immaterial. Therefore, an insufficiently stamped award is not a nullity. If it is impounded and the deficiency is made good and the penalty etc., if any, is paid the document becomes admissible in evidence and can be acted upon. Such award can be enforced. 7. For the reasons aforesaid, we allow the appeal and set aside the order of the Court below. We do not express any opinion on the merits of the objections because they were dismissed on the sole ground of deficiency of the stamp duty on the award. The case shall go back to the court below for giving an opportunity to the Appellant to make good the deficiency in the stamp duty and pay such penalty as may be levied. After giving such opportunity the objections shall be decided expeditiously on this point again and the final order be passed. 8. In the circumstances of the case, we direct the parties to bear their own costs.