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2022 Supreme(Kar) 901

IN THE HIGH COURT OF KARNATAKA BENCH AT DHARWAD
Suraj Govindaraj, J.
Smt. Shalini & Ors. - Appellants
Versus
National Highway & Ors. - Respondents
Writ Petition No. 100591 of 2021(GM ST/RN)
Decided On : 28-02-2022

Advocates appeared:
Sri. S C Jainar, Advocate, for the Appellant; Sri. Sagar Laddamath and Sri. B. P. Mathapati, Sri. M. B. Kanavi, Advocate, for the Respondent.

Headnote:

Stamp Duty - Arbitration Award - Karnataka Stamp Act - Article 11 of the Karnataka Stamp Act - Section 3-G of the National Highways Act, 1956 - Summary of Acts and Sections: The court discussed the applicability of stamp duty on an arbitration award under Section 3-G of the National Highways Act, 1956, and held that the award of compensation rendered by the Arbitrator in terms of Section 3-G of the National Highways Act, 1956, is not an arbitral award in terms of Article 11 of the Karnataka Stamp Act, 1957, requiring it to be stamped in terms of the said Article. The court declared that no stamp duty is liable to be paid on an award for compensation made under Section 3 (G) the NHA.

Fact of the Case:

The petitioners sought to quash an order requiring payment of stamp duty on an arbitration award for compensation under Section 3-G of the National Highways Act, 1956.

Finding of the Court:

The court held that the award of compensation under Section 3-G of the National Highways Act, 1956, is not an arbitral award requiring stamp duty under Article 11 of the Karnataka Stamp Act, 1957.

Issues: The main issue was whether the arbitration award under Section 3-G of the National Highways Act, 1956, is subject to stamp duty under Article 11 of the Karnataka Stamp Act, 1957.

Ratio Decidendi: The court reasoned that the award of compensation under Section 3-G of the National Highways Act, 1956, is a statutory arbitration imposed upon a land loser without his consent and is not amenable to stamp duty under Article 11 of the Karnataka Stamp Act, 1957.

Final Decision: The writ petition was allowed, and the court set aside the direction to pay stamp duty on the arbitration award. The court declared that no stamp duty is liable to be paid on an award for compensation made under Section 3 (G) the NHA.

ORDER

1. The petitioners are before this Court seeking for the following reliefs:

    a. Issue a writ in the nature of certiorari quashing the impugned order dated 22.12.2020 passed by the Hon'ble Principal District Judge, Dharwad in EP No.302/2015 vide Annexure-J, in respect of the Stamp duty to pay as per Article 11 of the Karnataka Stamp Act.

    b. Pass any other order as this Hon'ble Court deems fit on the facts and circumstances of the case.

    2. The grievance of the petitioners is that, the petitioners are the decree holders and owners of the land bearing survey No.604 measuring 05 acres 05 guntas, under which an extent of 10,220 sqmtr was taken possession for construction of flyover by the National Highways Authorities of India (NHAI). The competent Authority had passed an award as regards the lands acquired. However, being dissatisfied by the said award, the petitioners submitted a reference for arbitration on 31.10.2012, in terms of Section 3-G(5) of the National Highway Act, 1956 (hereinafter for brevity referred to as NHA), seeking for enhancement of compensation.

    3. The Arbitrator has thereafter passed an award, awarding compensation of ?l,186/- per sq.mtr along with interest at 9% p.a. The respondent had made payment of part of the award and the balance of amount of the compensation not having been paid, the claimants/Decree Holders have filed Execution Petition No.302/2015 before the Principal District Judge, Dharwad, which was objected to by the respondent - NHAI.

    4. In the said execution proceedings, an objection was raised that the award passed by the Arbitrator not having been stamped in terms of Article 11 of the Karnataka Stamps Act, 1957 (hereinafter for brevity referred to as the KSA), the same could not be considered for initiating and prosecuting execution proceedings.

    5. The Executing Court vide the impugned order dated 22.12.2020 at Annexure-J was of the opinion that the award passed by the Arbitrator is required to be stamped. The petitioner not having stamped the said document, the decree-holder was called upon to pay the requisite stamp duty on the award within a period of one month from the date of the order. Apart therefrom, the Executing Court directed the NHAI the judgment debtor to pay interest on the compensation awarded from the date of taking possession of the property, i.e., from the year 2002.

    6. It is this order that is challenged by the petitioners only insofar as the direction by the Executing Court to make payment of requisite stamp duty on the award passed by the Arbitrator, by contending that the same is not an arbitral award in terms of Article 11 of the KSA.

    7. Sri. S. C. Jainar, learned counsel for the petitioners submits that the award, which has been passed is as regards compensation for land acquired in the land acquisition proceedings initiated for and on behalf of the NHAI. It is only on account of compensation awarded being on the lower side that,in terms of Section 3-G(5) of NHA, the petitioner was constrained to approach the statutory Arbitrator, in terms of statutory arbitration contemplated under the Act, which is not a private arbitration where the petitioners could be said to have consented for appointment of arbitrator and as such, though the provision of Arbitration and Conciliation Act 1996 (hereinafter for brevity referred to as the A&C Act) are made applicable to arbitration under Section 3-G of the NHA, the compensation awarded would not be an award in terms of Article 11 of the KSA, requiring it to be stamped and as such, the arbitration award in essence is an award of compensation, which is in discharge of the sovereign powers of the State and as such, he submits that the finding of the Executing Court that stamp duty ought to be paid in terms of Article 11 of the KSA, is misconceived.

    8. Per contra, Sri. Sagar Ladda, learned counsel, who appears for NHAI submits that, since an Arbitral award is sought to be enforced in the execution proceedings without the stamping made thereo

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