The executing court lacks authority to impose penalties or demand payment of stamp duty on arbitral awards until appeal procedures conclude, emphasizing that such authority lies with designated authorities under the Stamp Act.

ORDER :

1. The petitioner/State of Karnataka-Judgment Debtor No.1 is before this Court calling in question an order dated 03-07-2025 passed by the LXXXII Additional City Civil and Sessions Judge, Commercial Court, Bengaluru on I.A.No.7 in Commercial Execution No.716 pf 2023, whereby the application filed by the State under Section 33 of the Karnataka Stamp Act, 1957 (‘Karnataka Stamp Act’ for short) is rejected. The application filed was to impose stamp duty and penalty upon the arbitral award that was sought to be executed by the decree-holder.

2. Facts, in brief, germane are as follows:-

2.1. The petitioner is the State of Karnataka, in particular the Department of Education. The 1^st respondent is the decree-holder one M/s Siddharth Infotech Private Limited. Dispute arose between the two on certain payments that were to be made by the State for a contract entered into between the State and the decree-holder. The matter was referred to arbitration. The Arbitrator answering the reference passes an award on 18-05-2022 in favour of the decree-holder awarding Rs. 178,98,38,525/-. The judgment-debtor/petitioner files a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’ for short) for setting aside the award, which comes to be dismissed by the trial Court. The judgment-debtor/petitioner has filed Commercial Appeal No.403 of 2023 under Section 37 of the Act challenging the rejection of Section 34 petition.

2.2. In the interregnum, the decree holder files an application in Commercial Execution No.716 of 2023 seeking enforcement of the arbitral award before the concerned Court on 20-12-2023. On 27-01-2024, the executing Court waives of the stamp duty payable on the award, by relying on a judgment of this Court, on the ground that the award was for payment of damages and not for movables under Article 11 of the Karnataka Stamp Act. The judgment-debtor files an application in I.A.No.5 challenging the order of waiver of stamp duty granted by the trial Court which comes to be rejected, the rejection of which was affirmed by this Court in Writ Petition No.15601 of 2024. A Division Bench hearing the Commercial Appeal No.403 of 2023, passes an order of stay directing the judgment- debtor to deposit 75% of the arbitral award before the Registrar.

2.3. The executing court through an order dated 26-03-2025 allows I.A.No.6 filed by the decree-holder to send the original arbitral award to the collector for the purpose of stamping wherein the trial court directs the collector to collect stamp duty and penalty. Subsequently, on 29-03-2025, the decree-holder, tries to advance the case before the Executing Court/Trial Court and files the original award along with the memo and challan showing voluntary payment of Rs. 46,12,096 as stamp duty. The judgment- debtor then files an application in I.A.No.7 before the concerned Court under Section 33 of the Karnataka Stamp Act for impounding the original arbitration award and to calculate the stamp duty and penalty in accordance with the order dated 26-03-2025. The executing Court rejects the application filed by the judgment-debtor holding that the party shall pay the stamp duty and penalty after the judgment in the writ petition pending before this Court. The State being aggrieved by the said order is before this Court in the subject petition.

3. Heard Sri Aditya Vikram Bhat, learned Additional Government Advocate appearing for the petitioner and Sri Chintan Chinnappa, leaned counsel appearing for respondent No.1.

4. The learned Additional Government Advocate appearing for the State would vehemently contend that the order of the concerned Court bears no application of mind. The concerned Court refers to a pending writ petition before this Court but, there is no writ petition pending. What is pending is commercial appeal in Commercial Appeal No.403 of 2023 filed by the State challenging the rejection of Section 34 application. He would further contend that the stamp duty and penalty