1. Section 19-A of Stamp Act applies for difference of duty; Sections 33 and 35 for impounding and penalty not attracted in execution. (Para 8 , 9 , 10 , 11 )
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2025 Supreme(Online)(MP) 11183
HIGH COURT OF MADHYA PRADESH
Alok Awasthi, J
Indo Thai Securities Ltd – Appellant
Versus
Gajendra Mohniya – Respondent
MISC. PETITION No. 2986 of 2025 | EX(AB)/731/2024 | MJC-AV/118/2023
Advocates:
For the Appellants/Petitioners: Chiranjeev Saboo
For the Appellants/Petitioners: Chiranjeev Saboo
When an arbitral award duly stamped in one state is executed in another state with higher duties, only the difference in stamp duty is payable under Section 19-A of the Stamp Act; penalty under Section 35 is not applicable as the award is enforced as a decree.
Headnote:(A) Constitution of India - Art. 227 - Arbitration and Conciliation Act, 1996 - Sections 34 and 36 - Indian Stamp Act, 1899 - Sections 19-A, 33 and 35 - Execution of arbitral award - Deficit stamp duty - Imposition of penalty - Where an arbitral award is passed in one state and duly stamped according to the laws of that state, and later executed in another state where higher stamp duty is applicable, the party is liable only to pay the difference in stamp duty as per Section 19-A of the Indian Stamp Act. Penalty under Section 35 is not attracted as the award is not being produced as evidence but is being enforced as a decree under Section 36 of the Arbitration Act. (Paras 5, 6 and 7)
Facts of the case:
The petitioner sought execution of an arbitral award passed in Mumbai, which was duly stamped according to the Maharashtra Stamp Act. Upon filing for execution in Madhya Pradesh, the trial court required payment of deficit stamp duty. Despite the petitioner paying the difference, the court imposed a 2% penalty and dismissed the execution petition for non-compliance.
Findings of Court:
Non-stamping or inadequate stamping is a curable defect. A harmonious reading of the Arbitration Act and Stamp Act implies that only the difference in duty is payable when an instrument becomes chargeable at a higher rate in Madhya Pradesh; hence, the penalty imposed by the lower court was wrongly assessed.
Issues: Whether a penalty under Section 35 of the Indian Stamp Act is applicable when an arbitral award, duly stamped in another state, is put to execution in Madhya Pradesh.
Ratio Decidendi: The court ruled that Section 35 of the Stamp Act applies when an instrument is produced for admission as evidence. Since an arbitral award is enforced as a decree under Section 36 of the Arbitration Act, its admissibility is not in dispute, and therefore, only the difference in stamp duty under Section 19-A is payable, excluding any penalty.
Result: Petition allowed.
Legal Category Hierarchy
- practice and procedure
- arbitration
- stamp duty and registration
Table of Contents
2. In execution of an award under Section 36 of Arbitration Act, only difference of stamp duty under Section 19-A is payable, not penalty. (Para 11 , 12 )
3. Petition allowed — Execution proceedings restored — Difference of stamp duty payable — Penalty waived off. (Para 8 )
4. Does Section 35 of the Indian Stamp Act apply to an arbitral award being executed as a decree?
No, Section 35 does not apply because the award is not produced as evidence; Section 19-A read with Section 33 governs payment of difference of stamp duty. (Para 9 , 10 , 11 )
5. What stamp duty is payable on an arbitral award executed in Madhya Pradesh when already stamped in another state?
Under Section 19-A, the award is chargeable with the higher rate of duty under Schedule-IA, Clause 12 (2% of award amount), less duty already paid. (Para 8 , 11 )
6. Can a court impose penalty under Section 35 of the Stamp Act for deficient stamping of an arbitral award in execution proceedings?
No, penalty under Section 35 is not attracted when the award is admissible under Section 36 of the Arbitration Act. Only difference of stamp duty is payable. (Para 10 , 11 )
ORDER
Petitioner has filed this petition under Article 227 of the Constitution
of India challenging the order dated 29.04.2025 passed by the Commercial
Court, Indore in Case No.EX(AB)/731/2024, whereby the execution
application has been dismissed on the ground that the award is not
executable due to non-compliance of the order, whereby the difference of
stamp duty and penalty was imposed on the Award passed under the
Arbitration and Conciliation Act, 1996.
2. The facts of the case are that the petitioner is a stock company and
member of National Stock Exchange (NSE), Bombay Stock Exchange
(BSE), MCX Stock Exchange Ltd. (MCX) and National Commodity &
Derivatives Exchange Ltd. (NCDEX). The respondent is an individual
trading company engaged in various markets and service provider of the
Signature Not Verified
Signed by: GEETA PRAMOD
Signing time: 19-12-2025
18:24:35
NEUTRAL CITATION NO. 2025:MPHC-IND:36281
2 MP-2986-2025
petitioner as broker for facilitating its stock market trading and commodity.
The respondent incurred losses while trading at MCX and failed to settle the
same due to which dispute arose between the parties, which was referred to
MCX Arbitration, Mumbai in terms of the bye-laws of MCX and SEBI
Rules and Shri Dinesh Kumar Bishnoi, Panel Arbitrator of MCX Arbitration,
Mumbai was appointed to adjudicate the dispute between the parties. The
Arbitrator vide its arbitral award dated 18.08.2023 decided the dispute in
favour of the petitioner. The said award was challenged by the respondent
by filing a petition before the Commercial Court, Indore under Section 34 of
the Arbitration and Conciliation Act, 1996 (in short "the Act of 1996") which
was registered as MJC-AV/118/2023. Vide order dated 03.09.2024, the
Commercial Court, Indore dismissed the said application by affirming the
arbitral award. The said dismissal order was not challenged by the
respondent in an appeal under Section 37 of the Act of 199 and therefore, the
order dated 03.09.2024 attained finality and consequently, the arbitral award
dated 18.08.2023 became ripe for its enforcement. Thereupon, execution
petition was filed by the petitioner for enforcement of the arbitral award
dated 18.08.2023, which got registered as EX(AB)/731/2024. During the
proceedings on 29.04.2025, it was apprised to the petitioner that deficit
stamp duty needs to be paid on the arbitral award in terms of the M. P.
Amendment of the Indian Stamp Act, 1899 whereupon, counsel for the
petitioner informed that the award was passed in Mumbai and as per
Maharashtra Stamp Act, 1958 (in short "the Act of 1958"), there was a fixed
stamp duty of Rs.500/- on an arbitral award, which was duly paid and
Signature Not Verified
Signed by: GEETA PRAMOD
Signing time: 19-12-2025
18:24:35
NEUTRAL CITATION NO. 2025:MPHC-IND:36281
3 MP-2986-2025
thereafter, occasion to pay any additional stamp duty in Madhya Pradesh
arose only at the time of execution petition. Due to technical glitches in the
Sampada Portal's version from 1.0 to 2.0, deficit stamp duty could not be
paid and thereafter, the matter was fixed for 05.05.2025. When the matter
came up for hearing on 05.05.2025, the petitioner having paid the balance
stamp duty as prescribed under the Act of 1899 appeared and shocked to see
that in the impugned order dated 29.04.2025, the Court below had imposed a
penalty of 2% over and above the balance stamp duty to be paid. Being
aggrieved by imposition of penalty, present petition has been preferred.
3. At the outset, counsel submits that the petitioner is not challenging
the applicability of Section 19-A of the Act of 1899, whereby an additional
amount of stamp duty is liable to be paid on the Award under Schedule-IA
Clause 12, i.e., 2% of the Award amount or the market value of the property
to which Award relates, whichever is higher. The petitioner is ready to pay
the difference amount of stamp duty. The petitioner is only aggrieved by the
imposition of penalty under Section 35 of the Act of 1899. It is further
submitted that the Court has wrongly applied the prov
