Mrs. Vinnu Goel vs Deputy Commissioner Stamp Registration & Ors.

Facts of the case

Mrs. Vinnu Goel (hereinafter “petitioner”) is the plaintiff in a suit wherein she sought to declare Memorandum of Understanding (MOU) from 12 November 2014 between the defendants No. 1 to 3 and herself as null and void.

However, Respondents No. 2 & 3 filed an application under Section 8 of the Arbitration & Conciliation Act in the same case, requesting reference to the arbitration. The petitioner in that application argued that the MOU is creating rights in properties thus amounting to conveyance and therefore requires stamping under Stamp act, 1899. Reliance was placed on the Supreme Court judgement of N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. (N.N. Global II), wherein the court held that an arbitration agreement which attracts stamp duty but not stamped or insufficiently stamped cannot be acted upon. However, the petitioner’s argument was dismissed by the coordinate bench of Delhi High Court by a judgement dated 08 August 2023, which is under consideration in appeal before a division bench of the Delhi High Court.

Meanwhile, the petitioner filed this writ petition seeking two reliefs. First, declaration that MOU has been incorrectly and insufficiently stamped. Second, stamping of the MOU is non-est in the eyes of the law.

Issue involved in the case

Whether a court has the jurisdiction to adjudicate the matter concerning the sufficiency of stamp duty in light of the jurisdiction of arbitral tribunal?

Arguments raised

The petitioner argued that the first relief of the current Writ Petition should be granted as it is the responsibility of authorities to determine if a document has been properly stamped. As the MOU is creating property rights, it should be treated as a conveyance under the Indian Stamp Act and thus should be charged with stamp duty based on property value. They referred to Section 33 of the Indian Stamp Act, which mandates the examination and impounding of improperly stamped instruments by relevant authorities. Additionally, they relied on Section 33(2)(b), which allows High Court judges to delegate this duty to appointed officers.

On the contrary, the Respondents argued that the current Writ Petition is an effort to bypass the judgment dated 08 August 2023. They asserted that the coordinate bench has dismissed the contention made by the Petitioner regarding the admissibility of the MOU, considering it unfounded. They further stated that the bench has ruled that even if the document is not registered but is required to be, according to Section 16(1)(a) of the Act, the Court has the authority to separate the Arbitration Agreement from the main document and can refer the parties to arbitration. Further, they argued that in any case, the scope of the Arbitral Tribunal is broad enough to encompass all preliminary issues affecting its jurisdiction, including the matter of stamp sufficiency.

Judgement & Reasoning

The Delhi High Court analysed the Sections 31, 33 and 56 of the Stamps Act and rejected the prayer of the Petitioner to declare the stamping/ endorsing done by the Respondent as non-est in the eyes of law and stated that the same cannot be granted as the inadequately stamped agreements or non-stamped agreements are inadmissible as evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable. Further, non-stamping or inadequate stamping is a curable defect. It was held in view of the judgment passed by the Seven Judges Bench of the Apex Court in Re : Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899.

The court dismissed the contention of the respondent that by granting first relief, it will undo the judgement of coordinate bench. The court observed that in the said application, the issue of stamp duty was not decided, and the court only observed that stamping of MOU is not relevant while referring parties to arbitration.

The contention of the Respondent that arbitral tribunal has jurisdiction to decide on the issue of stamp duty was also dismissed and court observed that anything that can be done by Arbitral Tribunal cannot denude the jurisdiction of this Court as the issue has a bearing on the state’s revenue of the stamp duty.

The Delhi High Court dismissed the writ petition along with any pending applications. The Court permitted the petitioner to approach the Controlling Revenue Authority for determination of the amount of duty with which the instrument in question is chargeable.

Author(s)

Saumya Sonkar

Student at Faculty of Law, University of Allahabad