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ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO.22660 OF 2025
Sachin Corporation & Anr. ….Petitioners
Mr. E.A. Sasi a/w. Bhagyashri Mangale, Tejas Shinde & Arnav
Rane, Advocates for Petitioners.
Mr. Nirman Sharma i/b. Dharam & Co., Advocate for
Respondents.
ORAL JUDGMENT
1. This Petition has been filed seeking directions to the Collector of Stamps invoking Section 27 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) to expeditiously complete the assessment of stamp duty and penalty as applicable, so that the instruments sought to be relied upon in evidence can be introduced into the proceedings and get examined by the Arbitral Tribunal. JULY 30, 2025 Aarti Palkar
2. Having heard Mr. E.A. Sasi, Learned Advocate representing the Petitioners and Mr. Nirman Sharma, Learned Advocate representing the Respondents, and having examined the record and the law with their assistance, in my opinion, it would be open to the Arbitral Tribunal to compute the value of the stamp duty without having to wait for the Stamp Authorities, in view of the framework envisaged in the Maharashtra Stamp Act, 1958 (“Stamp Act”).
3. While allowing the prayer made in the Petition could appear to be an obvious choice, on reflection, I felt it would be necessary to examine the requirements of law and consider whether, as a matter of law, it is necessary to hold up arbitration proceedings waiting only for instruments to be duly stamped.
4. It is seen that multiple Arbitral Tribunals routinely direct that inadequately stamped instruments be sent to the Stamp Authorities for assessment of stamp duty and penalty regardless of the nature of the instrument and the transactions that the instrument evidences. Pending such assessment and adjudication, arbitration proceedings come to a standstill. This Court is often visited with requests for extension of mandate of Arbitral Tribunals, with the period of the mandate having run out simply waiting for the instrument to be stamped and returned. There are also requests such as the one made in this Petition, purporting to invoke Section 27 of the Arbitration Act since that provision deals with Court assistance in taking evidence. Maharashtra Stamp Act:
5. Therefore, it would be appropriate to examine the provisions of the Stamp Act, which enable the Arbitral Tribunal to take its own view on instruments being under-stamped; compute the stamp duty amount and penalty payable; direct that such amount be paid; send it over to the Collector of Stamps; admit the instrument into evidence and continue with the arbitration proceedings. Once such amount is paid over to the Collector of Stamps along with the authenticated copy of the instrument, it is for the Collector of Stamps who may then apply his mind to the computation of the value involved, and potentially adopt proceedings for any deficit in the computation of stamp duty by the Arbitral Tribunal. Section 33 – Stamp Act:
6. First, the provisions of Section 33 of the Stamp Act, which requires Arbitral Tribunals to impound inadequately stamped instruments must be noticed:
33. (1) Subject to the provisions of section 32A, every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police or any other officer, empowered by law to investigate offences under any law for the time being in force, before whom any instrument, chargeable, in his opinion, 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 irrespective whether the instrument is or is not valid in law. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order to ascertain whether it is stamped with a stamp of the value and description required by the law for the time being in force in the State when such instrument was executed or first executed: Provided that— (a) *****; (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court may appoint in this behalf. (3) ***** [Emphasis Supplied]
7. It is seen from a plain reading of Section 33, that every person authorised by law to receive evidence, shall impound an instrument chargeable with stamp duty if he forms an opinion that the instrument is not duly stamped i.e. if it is not stamped or stamped with inadequate duty. Arbitral Tribunals have authority in law to receive evidence. Therefore, Arbitral Tribunals must examine instruments produced before them and form an opinion about adequacy of stamping. They are obliged to impound the instruments that are not duly stamped. Inherent in this power, coupled with a duty to take a view on inadequate stamping, is embedded a power and a duty to take a view on what is the appropriate quantum of stamp duty. Section 32A – Stamp Act:
8. Section 33 is subject to Section 32A, which is not reproduced in its entirety, in the interest of brevity. Only two sub-sections are extracted below: 32A. (1) Every instrument of conveyance, exchange, gift, certificate of sale, deed of partition or power of attorney to sell immovable property when given for consideration, deed of settlement or transfer of lease by way of assignment and also any other instruments mentioned in
SCHEDULE I chargeable with duty on the basis of market value of the property, presented for registration under the provisions of Registration Act, 1908, shall be accompanied by a true copy thereof: Provided that, in case of such instruments executed on or after the 4th July 1980, to the date of commencement of the Bombay Stamp (Amendment) Act, 1985, an extract of the instrument to be taken from the registration record shall be deemed to be the true copy accompanying the instrument, presented for registration for the purposes of sub-section (1). (2) ***** (3) If any person referred to in section 33, before whom any such instrument is produced or comes in the performance of his functions, has reason to believe that the market value of the immoveable property which is the subject matter of such instrument has not been truly set forth therein, he may, after performing his function in respect of such instrument, refer the instrument alongwith a true copy of such instrument to the Collector of the District for determination of the true market value of such property and the proper duty payable on the instrument: Provided that if the person, before whom any such instrument is produced or comes in performance of his functions, is an officer appointed as the Collector under clause (f) of section 2, and he has reason to believe that the market value of the immovable property which is the subject matter of such instrument has not been truly set-forth therein, he shall, for the purpose of assessing the stamp duty, determine the true market value of such property in the manner laid down in the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995.
9. Suffice it to say, Section 32A deals with specific instruments listed therein, typically those warranting registration under the Registration Act, 1908, and instruments where stamp duty payable would depend on the market value of the property involved. Under Section 32A(1) the instruments covered by the provision are instruments of conveyance, exchange, gift, certificate of sale, deed of partition or power of attorney to sell immovable property when given for consideration, deed of settlement or transfer of lease by way of assignment; and also any other instruments chargeable with stamp duty on the basis of market value of the property. Section 32A also contains multiple references to the registering officer since the provision brings within its jurisdiction, instruments that necessitate registration.
10. Even a plain reading of Section 32A would indicate that such instruments entail adjudication and assessment of market value, an action that lies in the domain of the Collector. Section 32A(3), which indicates a reference to the Collector (not the Collector of Stamps but the Collector of the District where the immovable property is situated) also uses the phrase “such instrument” which clearly points to only instruments referred to in Section 32A(1) of the Stamp Act being covered by the mandate of Section 32A(3). Therefore, in the case of such instruments, where the person authorised under Section 33 (including the Arbitral Tribunal) has reason to believe that the market value of the immovable property involved has not been truly set forth in the instrument, a reference may be made to the Collector of the District. Section 34 – Stamp Act:
11. Section 34 deals with implications of a person referred to in Section 33, determining that the instrument is inadequately stamped. The relevant portions are extracted below:-
34. 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 public officer unless such instrument is duly stamped or if the instrument is written on sheet of paper with impressed stamp such stamp paper is purchased in the name of one of the parties to the instrument: Provided that,— (a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of—
(i) the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, the amount required to make up such duty, and
(ii) a penalty at the rate of 2 per cent. of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of such instrument: Provided that, in no case, the amount of the penalty shall exceed four times the deficient portion of the stamp duty; (b) to (d) ***** (e) nothing herein contained shall prevent the admission of a copy of any instrument or of an oral admission of the contents of any instrument, if the stamp duty or a deficient portion of the stamp duty and penalty as specified in clause (a) is paid.
12. Essentially, the Arbitral Tribunal must not admit into evidence, any instrument chargeable with duty that is inadequately stamped. However, Clause (a) in the proviso to Section 34 is an exception, and stipulates that if the chargeable stamp duty and penalty, computed at the rate of 2% of the deficient portion of the stamp duty for every month or part thereof, from the execution of the instrument is paid, the instrument would be admissible into evidence. Section 34 by itself does not require that the instrument must be sent to the Stamp Authorities by the Arbitral Tribunal. Equally, it does not explicitly provide that the Arbitral Tribunal may compute the stamp duty amount and the applicable penalty. However, it does clearly provide that once such amounts are paid, nothing in Section 34 would prevent admission of a copy of any instrument into evidence. Section 35 – Stamp Act:
13. Section 35 provides as follows:
35. Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 58, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.
14. Therefore, if inadequate stamping of an instrument is cured by payment of stamp duty and penalty as stipulated in Section 34, and is thereby admitted into evidence by the Arbitral Tribunal, then in those proceedings, the ground of inadequate stamping cannot be raised again. This position in law is subject to Section 58, which is dealt with subsequently in this judgement. Section 37 – Stamp Act:
15. The next relevant and key provision in this analysis is Section 37(1), which reads as follows:-
37. (1) When the person impounding an instrument under Section 33 has by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by section 34 or of duty as provided by section 36, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.
16. Section 37(1) provides that where the Arbitral Tribunal (the person impounding the instrument under Section 33) admits the instrument into evidence upon payment of penalty, it shall send an authenticated copy of the instrument, with a certificate in writing, stating the amount of stamp duty and penalty levied, along with such amount to the Collector. This provision indicates that the Arbitral Tribunal may collect the duty amount, since it is the Arbitral Tribunal that would send the amount to the Collector. Under Section 37(2), in all other cases, the instrument must be sent to the Collector. Section 39 –Stamp Act:
17. What the Collector is meant to do is provided for in Section 39, which is extracted below:
39. (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under sub-section (2) of section 37, not being an instrument chargeable with a duty of twenty naye paise, or less, he shall adopt the following procedure:— (a) if he is of opinion that such instrument is duly stamped or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be; (b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of an amount equal to 2 per cent of the deficient portion of the stamp duty, for every month or part thereof from the date of execution of the instrument subject to the payment of a minimum penalty of rupees one hundred: Provided that, in no case, the amount of the penalty shall exceed four times the deficient portion of the stamp duty: Provided further that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section. (2) Subject to the provisions of section 53A, every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein. (3) Where an instrument has been sent to the Collector under sub-section (2) of section 37 the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.
18. When it is the Collector who impounds an instrument or when the Collector receives an instrument under Section 37(2), the provisions of Section 39 are attracted. As seen from the extract above, the Collector shall examine the duty payable and charge the same with penalty and certify that the instrument has been duly stamped. The multiple references in Section 39 to the provisions of Section 37(2) of the Stamp Act together with the reference to situations where the Collector is the authority impounding the instrument under Section 33, and the absence of references to Section 37(1) would underline the relevance of Section 37(1), as analysed above. Therefore, where it is the Arbitral Tribunal that computes the stamp duty and sends the amount to the Collector, there is no requirement for certification by the Collector – that certification would have been done already by the Arbitral Tribunal. This would be seen from Section 41 of the Stamp Act. Section 41 – Stamp Act:
19. In this backdrop, Section 41 of the Stamp Act would bear extraction:
41. (1) When the duty and penalty (if any) leviable in respect of any instrument (not being any instrument referred to in sub-section (1) of section 32A), have been paid under section 34, section 39 or section 40, the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect thereof, and the name and residence of the person paying them. (2) Subject to the provisions of section 53A, 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 the application in this behalf, to the person who produced it, or to the person from whose possession it came into the hands of the Officer impounding it, or to any other person according to the directions of such person: (a) no instrument which has been admitted in evidence upon payment of duty and a penalty under section 34, shall be so delivered before the expiration of one month from the date of such impounding, or if the Collector has certified that its further detention is necessary and has not cancelled such certificate; (b) nothing in this section shall affect the provisions of rule 9 of Order XIII in Schedule I of the Code of Civil Procedure, 1908.
20. Section 41 provides that the person authorised to admit the instrument into evidence shall certify, by endorsement on the instrument, that the duty payable has been paid. It is not just the Collector who is empowered under Section 41 to certify payment of adequate duty – it includes any person authorised to receive evidence under Section 33, which would include the Arbitral Tribunal. Therefore, it is apparent that the Arbitral Tribunal could indeed compute the duty payable, collect the same, certify the payment, and transmit the amount to the Collector. Section 58 – Stamp Act:
21. Finally, it must be remembered that Section 35, extracted above, provides that the adequacy of stamp duty on an instrument shall not be called into question in the same proceedings after the instrument is admitted into evidence except as provided in Section 58 of the Stamp Act. Therefore, Section 58 is extracted below:
58. (1) When any Court in the exercise of its civil or revenue jurisdiction or any Criminal Court in any proceeding under Chapter IX or Part D of Chapter X of the Code of Criminal Procedure, 1973, makes any order admitting any instrument in evidence as duly stamped or as not requiring a stamp, or upon payment of duty and a penalty under section 34, the Court to which appeals lie from, or reference are made by, such first mentioned Court may, of its own motion or on the application of the Collector, take such order into consideration. (2) If such Court, after such consideration is of opinion that such instrument should not have been admitted in evidence without the payment of duty and penalty under section 34, or without the payment of a higher duty and penalty than those paid, it may record a declaration to that effect, and determine the amount of duty with which such instrument is chargeable, and may require,—
(i) the party or person concerned to make the payment of the proper duty or the amount required to make up the same, together with a penalty under section 34, or payment of a higher duty and penalty than those paid, to itself or to the Collector; and
(ii) any person in whose possession or power such instrument then is, to produce the same, and may impound the same when produced (3) When any declaration has been recorded under sub-section (2), the Court recording the same shall send a copy thereof 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 him such instrument. (3A) When the duty and penalty leviable in respect of any instrument in accordance with the declaration made under sub-section (3) and required to be paid thereunder are paid to the Court or to the Collector, then the Court or, as the case may be, the Collector shall certify by endorsement thereon that the proper duty and penalty, stating the amount of each, have been levied in respect of such instrument, and the name and residence of the person paying the same. (3B) Every instrument so endorsed shall thereupon be delivered, on an application in this behalf, to the person from whose possession the instrument came in the possession of such Court, or as such person may direct, to any other person authorised by him. (4) The Collector may thereupon, notwithstanding anything contained in the order admitting such instrument in evidence, or in any certificate granted under section 41, or in section 42, prosecute any person for any offence against the stamp law which the Collector considers him to have committed in respect of such instrument: (a) no such prosecution shall be instituted where the amount including duty and penalty, which, according to the determination of such Court, was payable in respect of the instrument under section 34, is paid to the Court or the Collector, unless the Collector thinks that the offence was committed with an intention of evading payment of the proper duty, (b) except for the purposes of such prosecution no declaration made under this section shall affect the validity of any order admitting any instrument in evidence, or of any certificate granted under section 41.
22. Section 58(1) deals with situations where a Court has admitted an instrument into evidence and the Collector is of the view that it is inadequately stamped. Section 58 is an exception to the protection under Section 35 against calling into question the adequacy of stamp duty. One way to read Section 58 would be that even this exception would not apply since the ingredients of Section 58 only contain situations where a Court has computed the duty and admitted an instrument into evidence. A more purposive manner of reading Section 58 would be to apply it to situations where any person authorised to admit an instrument into evidence (under Section 33) and to collect stamp duty (under Section 37(1) read with Section 41(1) of the Stamp Act) and the Collector is of the view that computation entails a deficiency.
23. Under Section 58, the appellate Court may on its own motion or upon the Collector filing a challenge to the computation, consider the element of adequacy of stamp duty paid. The High Court, which has a reference jurisdiction under Section 54 of the Stamp Act too may consider the issue upon a reference being made.
24. Even that Court may either collect the deficient amount itself or send the matter to the Collector, which again indicates that the Collector is not the solely authorised person to compute and collect the duty. In the context of arbitration, while the Court exercising jurisdiction under Section 34 is not an appellate court, it is indeed the Court that considers a challenge to the arbitral award. Therefore, when read contextually, the Court under Section 58 could be the Court exercising jurisdiction under Section 34 of the Arbitration Act, or the High Court, which has a reference jurisdiction under the Stamp Act. Implications of the Framework:
25. To summarise, that the person impounding the instrument has to first come to a view that the stamp duty paid is inadequate, would mean that the person impounding the instrument (which would include Arbitral Tribunals) must necessarily ascertain the stamp duty payable to arrive at a view on that subject. On a conjoint reading of clause (a) to the proviso to Section 34, Section 37(1), Section 39 and Section 41 of the Stamp Act, it would become clear that duty and penalty payable on an inadequately stamped instrument, that is not covered by Section 32A of the Stamp Act, may be computed by the Arbitral Tribunal, collected, and sent over to the Collector along with a certificate and an authenticated copy of the instrument in question, to thereby admit the instrument into evidence
26. In the backdrop of the aforesaid scheme, it becomes clear that Arbitral Tribunals ought not to routinely send the instruments that are inadequately stamped to the Collector and place the proceedings on hold waiting for the Stamp Authorities to take their own time to compute the stamp duty payable, process the demand for stamp duty and return the instrument to the Arbitral Tribunal. In view of the analysis set out above, Arbitral Tribunals may, as far as practicable, and in relation to instruments not covered by Section 32A of the Stamp Act, conduct such exercise, proceed to permit payment of duty by the parties, and continue with the arbitration proceedings. In short, Arbitral Tribunals may, in respect of instruments not covered by Section 32A of the Stamp Act, compute the duty payable, collect the same, admit the instrument into evidence, proceed with the arbitration, by following the procedure stipulated in the Stamp Act, namely, sending the amounts collected along with an authenticated copy of the instrument, certified that applicable duty has been paid, and send the same to the Stamp Authorities. In the event of any deficiency being perceived by the Stamp Authorities, it would also be open to them to take appropriate action and initiate proceedings for collection of any deficiency in the duty amount. Meanwhile, such proceedings would not come in the way of continuation of arbitration in view of Section 35 of the Stamp Act, in the course of the arbitration proceedings. Case Law Cited:
27. Mr. Sharma had initially invited my attention to two judgements by Learned Single Judges of this Court in the case of Prabhakar[1], which in turn relied upon the judgement in Santosh Anant Raut[2] to indicate that it is the Collector alone who may have the power to determine the stamp duty payable on an inadequately stamped instrument.
28. A careful reading of Santosh Anant Raut would indicate the judgement relied upon Section 32A(3) to indicate that the Court impounding an instrument must send the instrument to the Collector. However, as seen above, this requirement would apply only to such instruments as covered by Section 32A(1) of the Stamp Act. In Prabhakar, the issue involved valuation ascribed in an “isar pavti”, which is payment of earnest money for purchase of land – clearly an instrument involving valuation of immovable property, thereby falling within the jurisdiction of Section 32A of the Stamp Act. Therefore, in my opinion, neither case would present an impediment to Arbitral Tribunals in respect of computing the stamp duty and penalty payable on instruments not falling within the jurisdiction of Section 32A of the Stamp Act.
1 Prabhakar & Ors. Vs. Pandit and Anr. – 2014 SCC OnLine Bom 2287
2 Santosh Anant Raut vs. Pukharaj Chogmal Rathod and Anr. – 2010 (4) Mh.L.J. 22
29. After the aforesaid judgements were cited by Mr. Sharma, I felt it necessary to request both Mr. Sasi and Mr. Sharma to examine the matter and assist the Court. On the next date of hearing, both the Learned Counsel had consensus that on instruments not falling within the scope of Section 32A, it would be open to the Arbitral Tribunals to compute the stamp duty, and therefore, the framework for doing so has been articulated above. Conclusions:
30. It is common ground that the instrument involved in the instant case is not one necessitating any adjudication of market value of property in order to compute the stamp duty and determine any deficiency in payment of duty. Therefore, in terms of the framework articulated above, it shall be open to the Arbitral Tribunal to compute the stamp duty involved, collect the same, admit the instrument into evidence and send the instrument along with the duty and penalty amount, if any, to the Stamp Authorities, and continue with the arbitration proceedings leaving it to the Collector to take a final view on any further deficiency or excess payment arising out of the computation made by the Arbitral Tribunal.
31. Purely for felicity of reference, the findings of law in this judgement may be summarised thus: a) Arbitral Tribunals are persons authorised to admit instruments into evidence; b) Therefore, Arbitral Tribunals are empowered to assess deficiency in stamp duty and impound inadequately stamped instruments; c) In the case of instruments not covered by Section 32A of the Stamp Act, Arbitral Tribunals are empowered to collect the deficient stamp duty, penalty amount, if any, and remit the same to the Collector along with a certificate of such computation and an authenticated copy of the instrument, and in the meantime, admit the instrument into evidence and continue with the arbitration; and d) In the case of instruments covered by Section 32A of the Stamp Act, the process stipulated in Section 32A(3) may be followed.
32. With the aforesaid directions, the Petition is finally disposed of with liberty to the Learned Arbitral Tribunal to compute the stamp duty and admit the instrument in question into evidence by following the procedure stipulated in the Stamp Act and analysed above.
33. All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website. [ SOMASEKHAR SUNDARESAN, J.]