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1986 DIGILAW 332 (CAL)

BENGAL HIRE PURCHASE CORPN. v. HARENDRA SINGH

1986-08-06

PRATIBHA BONNERJEA

body1986
PRATIBHA BONNERJEA, J. ( 1 ) THE present application has been taken out by the petitioner for setting aside the award dated 16-11-82. The notice under S. 14 (2) of the Arbitration Act was received by the petitioner on 28-1-83. The notice of motion of this application was taken out on 28-2-83. ( 2 ) THE disputes arose out of a hire purchase agreement dated 17th Feb. 1982 and the said disputes were decided by the Arbitrator in terms of the arbitration agreement between the parties dated 17th Feb. 1982 resulting in the present award. ( 3 ) THE petitioner, during the pendency of the reference, had taken out an application under S. 33 of the Arbitration Act being Matter No. 930 of 1982 for a declaration that there was no valid arbitration agreement between the parties as he had not signed any alleged arbitration agreement. That matter was set down for trial on evidence and after a long hearing the said matter was disposed of by me on 16-7-85 holding that the petitioner and the guarantors in the hire purchase agreement dated 17-2-82 did sign the said arbitration agreement and the same was binding on the petitioner in that application. ( 4 ) THE present award dated 16-11-80 is a non-speaking award. The grounds for setting aside the award have been set out in para 22 of the petition. Altogether 11 grounds have been taken for attacking the validity of this award, during the hearing, of this application only the last ground, that the award is otherwise invalid, was pressed on the allegation that the said arbitration agreement was not stamped and was void. It should be noted that there was not a single averment regarding the stamp in the whole of the petition. I have no doubt that this ground has taken the respondent by surprise. The petitioner was constrained to confine his case on the ground of 'stamp' only as all other grounds in this petition were common with the grounds taken in the trial on evidence matter which had already been considered and disposed of by me on 16-7-85. I held against the petitioner on all these points. The petitioner was constrained to confine his case on the ground of 'stamp' only as all other grounds in this petition were common with the grounds taken in the trial on evidence matter which had already been considered and disposed of by me on 16-7-85. I held against the petitioner on all these points. ( 5 ) THE petitioner's counsel strongly relies on Sec. 35 (1) of the Indian Stamps Act which provides as follows :-"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 officer, unless such instrument is duly stamped. "he submits that under Art. 5 of the Stamps Act, an arbitration agreement is chargeable with duty and as such an unstamped arbitration agreement cannot be admitted in evidence or acted upon by the parties thereto or by the arbitrator. In the present case, an unstamped arbitration agreement had been filed before the arbitrator. This document was inadmissible in law and consequently the award dated 16-11-80 based on that inadmissible evidence was also bad in law and should be set aside. The petitioner's counsel relied on AIR 1946 PC 51 (Ram Rattan v. Parmanand) in support of his contention that the words, in Sec. 35, should be given their natural meaning and effect. If an unstamped document is admitted to prove some collateral matter it would amount to admitting in evidence a document in violation of the express provisions of S. 35 of the Stamp Act. ( 6 ) THE respondent's counsel, while admitting that the arbitration agreement dated 17-2-82 was an unstamped document, submits that the arbitrator has already admitted the document in evidence and it has been acted upon by him by making his award. The facts of this case will attract the provisions of sec. 36 of the Stamp Act which are as follows :- section 36 :-"where an instrument has been admitted in evidence, such admission shall not, except as provided in S. 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. "section 61 (1) deals with the revision of certain decisions of courts regarding sufficiency of stamp. "section 61 (1) deals with the revision of certain decisions of courts regarding sufficiency of stamp. Sec. 61 (2) deals with the steps to be taken by Court when it comes to the finding that the document should not have been admitted in evidence without paying duty and penalty etc. as provided in S. 35 of the Act, and will record a declaration to that effect, determine the amount of duty, with which the instrument will be chargeable and may require any person in whose possession and power such instrument is, to produce the same, and may impound the same when produced. Sub-Section (3) provides that thereafter the Court shall send a copy of its order to the Collector and where the instrument, to which it relates, has been impounded or is otherwise in the possession of such Court shall also send the Collector such instrument and the Collector thereupon may take step to prosecute the person concerned for violating the provisions of the Stamp Act. ( 7 ) THE respondent's counsel also relies on AIR 1961 SC 1655 (Javer Chand v. Pukhraj Surana) where it was held :-"once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or Revision to go behind that order such an order is not one of those judicial order which are liable to be revived or revised by the same court or a court of superior jurisdiction. "the petitioner's counsel however submits that under S. 36 of the Stamp Act once an unstamped instrument is admitted in evidence its admissibility cannot be questioned at any stage of the same suit or the same proceeding. According to him, the restriction is confined to the same suit or proceeding and is not in respect of any independent proceeding relating to the said instrument. He submits that S. 36 has no application in the present case which is an independent proceeding under S. 33 of the Arbitration Act and has been taken out after the reference has ended in making the award. A proceeding to set aside the award is an independent fresh proceeding and as such it is outside the scope of Sec. 36 of the Stamp Act. Under S. 33, the jurisdiction of this is confined either to declare the award as void or valid and nothing else. A proceeding to set aside the award is an independent fresh proceeding and as such it is outside the scope of Sec. 36 of the Stamp Act. Under S. 33, the jurisdiction of this is confined either to declare the award as void or valid and nothing else. In the present case, the award is based on an unstamped agreement and must be declared void. In answer to this submission, the counsel for the respondent relies on AIR 1921 Cal 613 (Rung Lal Kalooram v. Kedar Nath Kesriwal) wherein an independent suit for setting aside the award on the ground that the award was void as it was based on an unstamped arbitration agreement and/or submission inadmissible in evidence, the Division Bench of this Court held at page 614 :-"the submission was, in my judgement, admitted in evidence by the arbitrator, and having been admitted in evidence by the arbitrator it was not open to either of the parties to call in question such admission in the arbitration proceeding on the ground that the submission had not been duly stamped. The award, therefore, which was made upon the submission, was, in my judgement a valid award. " ( 8 ) HE submits that the aforesaid observation was made in an independent suit. It should be noted that prior to the passing of 1940 Act, a suit had to be filed for setting aside the award. By Arbitration Act of 1940, a suit has been prohibited under the provisions of Sec. 32 of the Act. Sec. 33 has taken the place of the suit. Both the suit and an application u/s. 33 are independent proceedings for challenging the award and stand on the same footing. If in the suit the plaintiff was debarred from challenging the admissibility of the unstamped award as held in AIR 1921 Cal 613, the petitioner in Sec. 33 application should be equally debarred from raising the point of admissibility as he is hit by the provisions of Sec. 36 of the Stamp Act. If in the suit the plaintiff was debarred from challenging the admissibility of the unstamped award as held in AIR 1921 Cal 613, the petitioner in Sec. 33 application should be equally debarred from raising the point of admissibility as he is hit by the provisions of Sec. 36 of the Stamp Act. The respondent's counsel also invites my attention to page 615 of Runglal's case where it was held :-"it has to be remembered that the provisions of the Stamp Act were passed for the purpose of protecting the revenue and, in my judgement, the words which have been relied on by the learned Advocate General of Sec. 35 under the circumstances of this case and having regard to the proviso to S. 35 and the terms of S. 36 of the Stamp Act, have not the effect of rendering the award invalid. "the respondent's counsel also strongly relies on AIR 1969 SC 1238 (Hindustan Steel Ltd. v. M/s Dilip Construction Ltd.) para 5 where it was specifically held :-"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 the weapon of technicality to meet the case of 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 instrument will not be defeated on the ground of the initial defect in the instrument. "the respondent's counsel submits that the arbitration agreement has already been impounded by this Court in trial on evidence being Matter No. 930 of 1982 for regularising the irregularity and for securing the revenue. Under the circumstances, the submission of the petitioner's counsel must be rejected. ( 9 ) IN my unreported judgement dated 16-7-85, in Matter No. 930 of 1982 (Harendra Singh v. M/s Bengal Hire Purchase Corporation and ORs.) Harendra Singh had prayed for a declaration that there was no arbitration agreement between the parties because the blank documents signed by Harendra Singh were converted into alleged arbitration agreement and the alleged hire purchase agreement. I have already recorded, that in that matter I held against Harendra Singh on all points. In that case, on behalf of Harendra the points that the alleged arbitration agreement was unstamped and inadmissible were specifically taken. I have already recorded, that in that matter I held against Harendra Singh on all points. In that case, on behalf of Harendra the points that the alleged arbitration agreement was unstamped and inadmissible were specifically taken. By my order dated 16-7-85 directed that the arbitration agreement being Ext. 13 in the reference, be impounded in accordance with the provisions of Ss. 35 and 42 of the Stamp Act and arrangement be made accordingly by the Registrar, O. S. to produce the document before the Collector and directed that the entire cost, expenses and penalty for impounding Ext. 13 be paid by the respondent M/s Bengal Hire Purchase Corporation. Therefore, the lacuna and/or the irregularity in the arbitration agreement concerned had already been directed to be cured and the payment of the Government revenue on the instrument had been secured by that order. Therefore there is no basis for the attack on this award in the present case. The petitioner should not have proceeded with this application after my order dated 16-7-85 and to compel the respondent to incur unnecessary cost and expenses for fighting out this infructuous application. ( 10 ) I, therefore, hold that the award is perfectly valid and binding on the parties and the present application must be dismissed with costs. Application dismissed.