The Madhya Pradesh High Court held that the executing court can determine if stamping on arbitral award meets requirements under the Indian Stamp Act, 1899.
The respondent-Bank had initiated arbitration proceedings against the petitioner for recovery of overdue loan amount borrowed by him. The claim made by the respondent-Bank was allowed by the Arbitrator and award was passed in favour of the respondent-Bank on 31.03.2017 holding that respondent-Bank is entitled to recover a sum of Rs.2,03,600/- with cost of Rs.500/-and the said award had attained finality.
The facts, in issue, are as under that petitioner had availed finance a tractor of Eicher Company from the respondent-bank in the year 2015-16 and paid 6 monthly instalments and due to non-payment of one full instalment, the respondent-Bank seized and confiscated the tractor. Further stated that respondent-bank unilaterally appointed Arbitrator and he has passed unilateral award on 31.03.2017 and the recovery is being sought.
The counsel for the petitioner submitted that the Managing Director of respondent-Bank became ‘ineligible’ to appoint Arbitrator and he could not nominate the sole Arbitrator unilaterally without consent of petitioner. Further would submit that the award passed by the Arbitrator is ‘ineligible’ under amended Act of the Arbitration and Conciliation Act and that when the respondent-Bank sought to be enforcement of the award by filing the execution petition, the same is not adequately stamped as per the Indian Stamped Act read with Schedule 1-A, Article12 and further would submit that the learned trial Judge had not mentioned in the award that the stamp duty paid by the respondent-Bank for enforcement of the award.
The counsel for respondent-Bank submitted that there was an agreement dated 29.06.2015 between the petitioner and the respondent-Bank much prior to the amendment Act, therefore, the Managing Director of respondent-Bank has empower to nominate the sole Arbitrator. Further would submit that the Arbitrator who was nominated by the respondent-Bank is not interested either of the party and he was an advocate in Chennai and independently passed an award. Further would submit that the executing Court has not attached the land or house of the petitioner, therefore, issuance of notice to the petitioner by the execution Court for attachment of the movables and annexed to the petition, is in accordance with law.
A Single Bench of Justice Duppala Venkata Ramana observed that “In the instant case the Executing Court had erred in rejecting the objections filed by the petitioner without holding whether the award is ‘adequately stamped’ as per the Indian Stamp Act Schedule-I-A, Article 12. The Executing Court ought to have decided whether the award is required to be stamped and registration under Schedule 1-A, Article 12. The Executing Court ought to have passed a reasoned order on the second objection i.e. the award is not adequately stamped”.
“If the Arbitrator appointed unilaterally and the award is passed as result of such unilateral appointment, the same would be decided under Section 34 of the Arbitration Act. In a case where only one party has a right to appoint a sole Arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole Arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015” the Court held.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
