Point of Law: Section 23 of Stamp Act makes it clear that where interest is expressly made payable, the instrument shall not be chargeable with duty higher than that with which it would have been chargeable if there was no mention about the interest.

ORDER :

Heard Shri. A. Murali, learned Advocate for petitioner, Shri. R. Subramanya, learned Additional Advocate General (AAG) and Shri. M.Vinod Kumar, learned AGA for respondent-State.

2. Briefly stated the facts of the case are, petitioner obtained an award dated May 21, 2012 from the Arbitral Tribunal headed by Justice S. Venkataraman (Retd.) against Karnataka State Road Transport Corporation ('KSRTC' for short).

3. The Arbitral Tribunal held that petitioner was entitled to receive Rs.3,51,12,209.63 ps. with interest at 12% p.a. from April 6, 2010. Accordingly, it directed KSRTC to pay Rs.4,40,65,822.63 ps. (including interest up to the date of the award) together with interest at 12% p.a. on the determined amount till the date of payment. In addition, the Tribunal also allowed petitioner's claim for Rs.2,70,48,509.94 ps. towards reimbursement of tax on works contract payable with interest at 12% p.a. from the date of the Award till the date of payment.

4. KSRTC challenged the Award under Section 34 of the Arbitration and Conciliation Act, 1996 ('Arbitration Act' for short) in A.S. No.63/2012 and the same stood dismissed by judgment and order dated February 7, 2017.

5. Petitioner submitted a representation through its Advocate on March 30, 2017 enclosing a copy of the award with a request to determine and inform the Stamp duty payable on the Award to enable petitioner to pay the same.

6. By the impugned order dated August 4, 2017, the District Registrar and the Deputy Commissioner of Stamps has directed petitioner to pay stamp duty of Rs.1,09,65,400/-. Hence, this writ petition.

7. Shri. Murali, made following submissions:

In its representation, petitioner has sought for determination of the Stamp duty in the hands of the District Registrar;

Learned Arbitrator has directed payment of Rs.4,40,65,822.63 ps. and Rs.2,70,48,509.94 ps. Thus the total amount works out to Rs.7,11,14,332.57 ps.;

Award passed under the Arbitration Act is required to be stamped under Article 11 of the Karnataka Stamp Act, 1957 ('Stamp Act' for short) and in this case, the Stamp duty is 5% of the amount;

No Stamp duty is payable on the interest component;

The District Registrar ought to have conveyed the Stamp duty payable by exercising powers under Section 31(1) of the Stamp Act. However, the respondent has incorrectly calculated the Stamp duty by imposing penalty under Section 39(2) which deals with the documents which are impounded.

8. With the above submissions, he prayed for allowing this writ petition.

9. Opposing the writ petition, Shri. Subramanya, learned Addl. Advocate General submitted that once any instrument which is not duly stamped is brought before the respondent, he is duty bound to impound the same and the respondent has rightly done so. Petitioner is entitled to receive the interest as per the award. Therefore, the respondent has rightly added the interest component. Further, since the instrument was impounded, the Registrar has rightly imposed the penalty. With these submissions, he sought to justify the impugned order.

10. I have carefully considered rival contentions and perused the records.

11. The operative portion of the Award is unambiguous. Learned Arbitrator has directed the KSRTC to pay money under two heads. A sum of Rs.4,40,65,822.63 ps. (which is inclusive of interest till the date of Award) is towards petitioner's claim towards Annual Maintenance Contract and Rs.2,70,48,509.94 ps. towards reimbursement of tax. The total works out to Rs.7,11,14,332.57 ps. It is the case of both petitioner as also the respondent that the chargeable Stamp duty is 5% under Article 11 of the Stamp Act.

12. The issues which need to be decided are with regard to the correct Award amount, whether interest can be added and imposition of penalty.

13. Re: Correct Award amount

As recorded hereinabove, the operative portion of the Award is clear and the total amount awarded is Rs.7,11,14,332.57 ps.

Unfortunately, the respondent has added the sum of Rs.3,51,12,209.63