Arbitral Award Need Not Be Impounded For Insufficient Stamping, As It Only Determines Rights: Madras High Court

The Madras High Court has recently held that an arbitral award need not be subjected to the stamp duty impounding process when it merely determines rights and liabilities arising from an existing contract, rather than creating fresh rights or obligations.

A Single Bench of Justice K. Kumaresh Babu made the observation while allowing an application filed by Steel Authority of India Limited (SAIL) in its execution proceedings against Waterbury Farrel and Shriram EPC Limited. The court directed both companies to disclose their movable and immovable properties within six weeks.

The court ruled, "Even though the said Award is termed to be an Instrument, it is to be noted that it does not create a fresh right or liability, but only determines the right and liability flowing out of an instrument voluntarily executed between the parties. In that regard an Award cannot be termed to as an Instrument which falls within the rigour of Section 33 of Indian Stamps Act, for determining the Stamp Duty by following the guidelines to ascertain the value of the document."

The dispute concerned an arbitral award dated February 28, 2019, passed by a tribunal constituted under the aegis of the International Chamber of Commerce in Paris.

According to Shriram EPC, SAIL had earlier approached a Delhi court to enforce the award. After Shriram EPC objected that it was insufficiently stamped and liable to be impounded, SAIL withdrew those proceedings with liberty to approach the competent court.

SAIL subsequently initiated execution proceedings before the Madras High Court. It sought disclosure of the respondents' assets to enable it to seek their attachment.

SAIL's counsel expressed willingness to pay the deficit stamp duty. The court recorded this submission on July 31, 2025. On September 12, 2025, counsel informed the court that the requisite duty had been paid. The court then directed SAIL to file an affidavit explaining the procedure adopted.

In its affidavit dated September 23, 2025, SAIL stated that it had paid ₹4,39,563 towards stamp duty.

Shriram EPC argued that merely affixing additional stamp papers to the award could not rectify the deficiency. It maintained that the award had to be formally impounded and forwarded to the competent Stamp Collector to determine the proper stamp duty and penalty, if any.

Waterbury Farrel separately challenged the court's jurisdiction. It contended that it had no place of business, branch office or assets in India. It also questioned the service of summons and argued that the execution proceedings were not maintainable against it.

The central question before the court was whether the 2019 award had to be impounded before execution could proceed.

Examining Section 36 of the Arbitration and Conciliation Act, 1996, alongside Sections 2(14) and 33 of the Indian Stamp Act, the court distinguished between an instrument that creates contractual rights and liabilities and an arbitral award that determines rights and liabilities arising from an existing agreement.

It held that while an instrument creates rights or liabilities under a contract, an arbitral award merely determines those arising from that contract.

"An Instrument is a one which creates a right/ liability based upon a contract that is being/ had been entered between the parties. Whereas an Award which arises out of an arbitral proceedings, which had been initiated based upon the aforesaid instrument entered between the parties, only determines the rights and liabilities of the parties arising out of such an instrument", it held.

The court reasoned that an arbitral award crystallises existing rights and liabilities and requires no further adjudication by the Stamp Authority.

It also observed that Waterbury Farrel's claim that it had no attachable assets could be examined only after it disclosed its assets by affidavit. The court's jurisdiction could be considered thereafter.

Accordingly, the court held the execution proceedings maintainable and allowed SAIL's application. It directed both companies to disclose their movable and immovable properties, including survey numbers and other relevant particulars, within six weeks from the date of the order. 

For Petitioner (Steel Authority of India Limited): Advocate Sunil Kumar Jain for Advocate Venkatesan.

For Respondent (Waterbury Farrel): Advocate R. Vidhya Shankar.

For Respondent (Shriram EPC Limited): Advocate Siddharth Khattar.