Evidence Admitted By Arbitrator Cannot Be Faulted Later For Improper Stamping: Delhi HC Dismisses Petition Challenging Arbitral Award

The Petitioners challenged the sole arbitrator’s decision based on an incorrect interpretation of the arbitration agreement and the agreement not being properly stamped.

The Bench of Justice Navin Chawla said that “It is settled law that the Court exercising jurisdiction under Section 34 of the Act does not sit as a Court of Appeal against the findings of the learned Arbitral Tribunal. Its jurisdiction under Section 34 of the Act is rather limited and even a contravention of a statute, that is not linked to a public policy or public interest, cannot be a ground for setting aside an Arbitral Award under Section 34 of the Act.”

The Court further said that “Section 36 of the Indian Stamp Act states that where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61 of the Indian Stamp Act, be called in question at any stage of the same suit or proceeding or on the ground that the instrument has not been duly stamped. The Agreement, not being properly stamped, could not have been admitted in evidence, however, once having been admitted in evidence by the Arbitrator, the Award passed by relying thereon cannot be faulted on this ground. This Court does not act as a court of appeal against the Award and therefore, may not even have the powers.”

Senior Advocates Sandeep Sethi and Malvika Trivedi appeared for the Petitioner while Senior Advocate Ashok Kumar Singh appeared for the Respondent.

The Petitioner challenged the award of the sole arbitrator on the grounds that the agreement has been incorrectly stamped. The Petitioner submitted that the agreement was executed in New Delhi but signed by the Petitioner in Mumbai so Maharashtra Stamp Duty would be applicable. Further, the Petitioner claimed that the cost imposed on the Petitioner by the Arbitrator is incorrect due to misinterpretation.

The Petitioner was directed to pay Rs. 5 Crores to the Respondent along with interest based on the terms of the agreement which was challenged under Section 34 of the Act in the Delhi High Court.

The Court after a careful examination of facts and circumstances said that “At the outset, it is to be emphasized that the above finding is a mixed question of facts and law. The learned Sole Arbitrator has found the Agreement to be properly stamped, observing that under the Agreement it was agreed that the same has been executed in New Delhi; everything under the Agreement was to happen in New Delhi; and the document is even signed in New Delhi by one of the parties. Therefore, even assuming that the learned Sole Arbitrator made a mistake in the interpretation of the Maharashtra Stamp Act, in my view, it cannot be a ground to interfere with the Arbitral Award in the exercise of the limited jurisdiction under Section 34 of the Act.”

The Court further added that “It was specifically agreed that in case the petitioner and the respondent are not, either jointly or severally, able to sell a part of the unconsumed/unsold inventory of the respondent within the term of the Agreement, then the petitioner shall be under an obligation to buy back such unconsumed/unsold inventory from the respondent within a period of 180 days following the expiry of the term of the Agreement. In the present case, the respondent had not used any inventory of the petitioner and the same also remained unsold. The respondent was, therefore, entitled to receive the full value of the inventory in terms of Article 2.4 of the Agreement.”

Accordingly, the High Court dismissed the Petition

Cause Title: Arg Outlier Media Private Limited. v. HT Media Limited

Click here to read/download the Judgment