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Madras High Court
LAKSHMANAN
Wilson and Company Private Limited - Appellant
Versus
K.S.Lokavinayagam - Respondent
Decided On : 01/22/1991
ARBITRATION - AWARD - STAMP DUTY - AWARD NOT DULY STAMPED - VALIDITY - AWARD IS AN INSTRUMENT AS DEFINED UNDER SECTION 2(14) OF THE INDIAN STAMP ACT, 1899 - EXECUTION OF AWARD MEANS SIGNED AND SIGNATURE AS DEFINED UNDER SECTION 2(12) OF THE SAID ACT - AWARD IS CHARGEABLE WITH DUTY IN INDIA - AWARD NOT DULY STAMPED CANNOT BE RECEIVED IN EVIDENCE BY THE COURT - COURT IS COMPETENT TO IMPOUND THE AWARD AND SEND IT TO THE COLLECTOR WITH A CERTIFICATE IN WRITING STATING THE AMOUNT OF DUTY AND PENALTY LEVIABLE THEREON - COLLECTOR MAY ADJUDGE WHETHER IT IS DULY STAMPED AND MAY REQUIRE PENALTY TO BE PAID THEREON, IF IN HIS VIEW IT HAS NOT BEEN DULY STAMPED - IF THE DUTY AND PENALTY ARE PAID, THE COLLECTOR WILL CERTIFY BY ENDORSEMENT ON THE INSTRUMENT THAT THE PROPER DUTY AND PENALTY HAVE BEEN PAID - AWARD CAN BE MADE A RULE OF THE COURT AFTER THE DEFECT IS REMOVED.
Fact of the Case:
The petitioner, a construction company, entered into an agreement with the Food Corporation of India (FCI) to construct godowns for storage of food grains. The petitioner completed the work and handed over the godowns to FCI. However, disputes arose between the parties with regard to the claim of the petitioner for additional expenses incurred due to delay in the execution of the work. The petitioner invoked the arbitration clause in the contract, and the first respondent was appointed the sole arbitrator to decide the dispute. The arbitrator passed an award in favor of the petitioner, but the award was not stamped. The petitioner filed a petition under Sections 16, 30, and 33 of the Arbitration Act, 1940 to set aside the award or in any event for remitting the same for fresh consideration. The FCI resisted the petition by filing a counter statement.
Finding of the Court:
The court held that the award was an instrument as defined under Section 2(14) of the Indian Stamp Act, 1899 and the execution of the award meant signed and signature as defined under Section 2(12) of the said Act. The court further held that the award was chargeable with duty in India and that an award not duly stamped could not be received in evidence by the court. However, the court also held that it was competent to impound the award and send it to the Collector with a certificate in writing stating the amount of duty and penalty leviable thereon. The Collector could then adjudge whether the award was duly stamped and require penalty to be paid thereon, if in his view it had not been duly stamped. If the duty and penalty were paid, the Collector would certify by endorsement on the instrument that the proper duty and penalty had been paid.
Issues: 1. Whether the award was an instrument as defined under Section 2(14) of the Indian Stamp Act, 1899? 2. Whether the execution of the award meant signed and signature as defined under Section 2(12) of the said Act? 3. Whether the award was chargeable with duty in India? 4. Whether an award not duly stamped could be received in evidence by the court? 5. Whether the court was competent to impound the award and send it to the Collector with a certificate in writing stating the amount of duty and penalty leviable thereon?
Ratio Decidendi: 1. An award is an instrument as defined under Section 2(14) of the Indian Stamp Act, 1899. 2. The execution of an award means signed and signature as defined under Section 2(12) of the said Act. 3. An award is chargeable with duty in India. 4. An award not duly stamped cannot be received in evidence by the court. 5. The court is competent to impound the award and send it to the Collector with a certificate in writing stating the amount of duty and penalty leviable thereon.
Final Decision: The court dismissed the petition filed by the petitioner to set aside the award or in any event for remitting the same for fresh consideration. The court also ordered that the award be made a rule of the court subject to the direction that the award be impounded as prescribed in Section 33 of the Stamp Act.
ORDER:- O. P. No. 268 of 1983 (filed on 21st October, 1980) was filed under Sections 16, 30 and 33 of the Arbitration Act 1940 (hereinafter referred to as "the Act") to set aside the award dated 31-10-1976 made by the arbitrator in the disputes between the petitioner/ M/s. Wilson and Company Private Limited and the Food Corporation of India and for costs of the petition.
2. O. P. No. 536 of 1987 was filed in this Court on 16-6-1977, represented on 3-8-1983, numbered and admitted on 18-11-1987, under Sections 14 (2) and 17 of the Act to file the Award into this Court and to pass a decree in terms of the award.
3. The short facts of the case are these: The petitioner/M/s. Wilson and Company Private Limited is engaged in the business of undertaking and executing construction work was one of the tenderers for the work of constructing godowns for storage of food grains at Arakonam having storage capacity of 25,000 tonnes, called for by the 2nd respondent/Food Corporation of India. The petitioner's tender was accepted by the second respondent. An agreement in writing dated 21-4-1972 was entered into between the parties in respect of the work to be executed by the petitioner. Though the formal contract in writing was entered into on 21-4-1972, the petitioner was required to start the work immediately on acceptance of its tender in and by the letter of the second respondent dated 14-12-1971. Though the second respondent wanted the petitioner to commence the work by its letter dated 14-12-1971, the work could be actually commenced only on 1-1-1972. Second respondent subsequently issued revised instructions in March, 1972 to follow a different lay-out, as a result even foundation work already executed had to be covered up. As a result of this inordinate delay of over six months in even finalising the alignment and lay-out the entire planning of the petitioner for completing the work within the contract period of 12 months was completely upset. There was also a steep rise in the prices of materials as a result of cyclone in December, 1972, power-cut in January, 1973 and due to the cement control order, brought into force towards end of 1972, and beginning of 1973 which also led to chronic shortage of cement. As a result of these developments the work had to be further delayed. According to the petitioner, all these impediments to the execution of the work arose because of the initial delay on the part of the second respondent in failing to finalise the lay-out and alignment of the work and also in calling upon the petitioner to stop the work in January, 1972 while the contract itself had to be completed within 12 months. The petitioner had to incur heavy additional expenditure by reason of escalation of prices during the period of delay. The petitioner completed the entire work and handed over the last of the godowns to the second respondent in or about 5-3-1974. Even during the execution of the work the petitioner had brought to the notice of the second respondent, the additional cost incurred by the petitioner for executing the work by reason of the delay occasioned by the default on the part of the second respondent, and called upon the second respondent to revise the rates of the work. The second respondent however was not agreeable to revise the contract rates, with the result, that disputes arose between the parties with regard to the claim of the petitioner. As the contract provided for reference to arbitration of such disputes the petitioner invoked the arbitration clause in the contract, and the first respondent was appointed the sole arbitrator to decide the dispute. The arbitrator entered upon the reference as sole arbitrator in or about June 1974 and the petitioner submitted its detailed statement of claim and supporting data to the arbitrator on 8-7-1974. The second respondent filed its counter statement on 23-11-1974. Thereafter both parties submitted documentary evidence to the arbitrator and the petitioner also exa
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