India: An Arbitral Award Cannot Be Set Aside Merely On The Ground Of An Insufficiently Stamped Arbitration Agreement

AN ARBITRAL AWARD CANNOT BE SET ASIDE MERELY ON THE GROUND OF AN INSUFFICIENTLY STAMPED ARBITRATION AGREEMENT: ARG OUTLIER MEDIA PVT LTD v HT MEDIA LTD¹

Date: 29 August 2023

The Delhi High Court has held that the jurisdiction of the Court hearing a challenge under §34 of the Arbitration and Conciliation Act, 1996 is limited, and contravention of a statute that is not linked to public policy or public interest cannot be a ground to set aside an arbitral award.

Brief Facts

ARG Outlier challenged an award in favour of HT Media inter alia on the ground that the agreement containing the arbitration clause was not sufficiently stamped.

It was contended that in view of the decision of the Constitution Bench of the Supreme Court in NN Global Mercantile v Indo Unique Flame Ltd², an agreement not properly stamped cannot be admitted in evidence. ARG Outlier accordingly argued that until stamp duty and an appropriate penalty had been paid, the award could not be enforced.

Decision

The Delhi High Court emphasised that the arbitrator's findings on the issue of stamping was a mixed question of fact and law. The Court held that it is settled law that Courts exercising jurisdiction under §34 do not sit as Courts of Appeal against the findings of the Tribunal. Accordingly, even if it is assumed that the arbitrator had made a mistake in the interpretation of the stamping provisions, this could not be a ground to interfere with the award.

In respect of the decision in NN Global, the Delhi High Court held that the judgment would not be applicable in cases where the agreement had already been admitted in evidence. The Court further questioned whether a §34 Court could be vested with the power to inter alia impound a document under §61 of the Indian Stamp Act, 1899 which is a remedy available to an Appellate Court against an order of a Court exercising its civil, revenue or criminal jurisdiction and admitting any instrument in evidence as duly stamped. In any event, the Court held that even if a §34 Court could impound the document and refer it for the determination of the stamp duty payable and penalty to be levied, this could not affect the enforcement or validity of the award.

Conclusion

The judgment of the Delhi High Court continues to reinforce the non-interference approach adopted by Courts hearing challenges against arbitral awards. The Court's findings in respect of the limited jurisdiction available under §34 will assist award holders, especially when technical objections are raised at the time of enforcement.

Footnotes

1. Decision dated 4 July 2023 passed by the Delhi High Court in O.M.P (COMM) 161/2023 & IA 8019/2023

2. 2023 SCC OnLine SC 495

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