Case Name: Steel Authority of India Limited v. M/s. Waterbury Farrel & Anr.
Case Number: A. No. 955 of 2025 in E.P. SR No. 13383 of 2025
Date: Wednesday, Fourth of November, Two Thousand and Twenty-Six
Court: High Court of Judicature at Madras
Coram: Justice K. Kumaresh Babu
FACTS
Steel Authority of India Limited (SAIL), the applicant and decree holder, moved to the court of Madras High Court for issuance of directions to the respondents, M/s. Waterbury Farrel and M/s. Shriram EPC Ltd., to disclose their movable and immovable properties through affidavits, along with survey numbers and other relevant particulars, to facilitate execution of an arbitral award dated 28 February 2019. The award had been passed by an arbitral tribunal constituted under the International Chamber of Commerce (ICC), Paris, in Case No. 21382/CYK/PTA.
In respect of the execution petition, an objection arose relating to the inadequacy of stamp duty in respect of the arbitral award. Even though SAIL paid an amount of Rs. 4,39,563 for making good the shortfall in the stamp duty, the respondents claimed that it was not paid in accordance with the provision of the Indian Stamp Act. The award, they contended, was liable to be impounded under Section 33 of the said Act.
The first respondent being an offshore concern, objected to the maintenance of the execution petition on the ground that it did not have any place of business, branch office or property in India. The second respondent also questioned the validity of the stamping procedure. The principal dispute before the Court concerned whether the arbitral award required impounding before the execution proceedings could continue.
LEGAL ISSUES
- Whether an arbitral award that was initially insufficiently stamped is liable to be impounded under Section 33 of the Indian Stamp Act, 1899, before its enforcement under Section 36 of the Arbitration and Conciliation Act, 1996?
- Whether the execution proceedings could be considered maintainable and the respondents directed to disclose their movable and immovable assets despite objections regarding jurisdiction and insufficient stamping?
LEGAL PROVISIONS
- Section 36 of the Arbitration and Conciliation Act, 1996: Provides for enforcement of an arbitral award in accordance with the provisions of the Code of Civil Procedure, 1908, in the same way as if it were a decree of the Court, in compliance with the statutory provisions.
- Section 33 of the Indian Stamp Act, 1899: Obliges authorised persons receiving evidence and other officers in charge of public offices to seize an instrument when it is found to be under-stamped.
- Section 2(14) of the Indian Stamp Act, 1899: States that an instrument means a document which creates, transfers, limits, extends, extinguishes or records any right or liability.
- Section 35 of the Indian Stamp Act, 1899: Makes instruments which are not duly stamped inadmissible in evidence in accordance with the statutory provisions for payment of duty and penalty.
- Section 34 of the Arbitration and Conciliation Act, 1996: Provides the statutory process for challenging an arbitral award.
ARGUMENTS
APPLICANT (STEEL AUTHORITY OF INDIA LIMITED): According to the applicant, the deficit stamp duty on the award had been paid and the necessary affidavit regarding the procedure followed by the applicant to pay the stamp duty had been filed as per the Court’s directions. It further pleaded that the application for the execution of the decree was maintainable as per section 36 of the Arbitration and Conciliation Act, 1996. Moreover, the disclosure of the movable and immovable properties owned by the respondents was necessary to allow the applicant to make an attachment of their properties.
RESPONDENTS: The first respondent pleaded that he is a foreign entity having no business or property in India and the execution of the decree was not maintainable in the matter against him. Reference was made to Sundaram Finance Ltd. v. Abdul Samad & Anr., and Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd.
The second respondent contended that merely affixing additional stamp papers and paying the alleged deficit duty could not cure the defect. It argued that the award had to be impounded under Section 33 and referred to Hindustan Steel Ltd. v. Dilip Construction Co., 1969 (3) SCR 736, and Santosh Champalal Jain v. Smt. Vimla Bai, 1998 (2) MPLJ 164. It accordingly sought dismissal of the application and execution petition.
ANALYSIS
The Court observed that the primary question was whether the arbitral award dated 28 February 2019 required impounding under Section 33 of the Indian Stamp Act for the execution proceedings to be maintainable.
While examining Sections 36 of the Arbitration and Conciliation Act and Sections 2(14) and 33 of the Indian Stamp Act, the Court distinguished between an instrument creating contractual rights and liabilities and an arbitral award determining rights and liabilities arising from an existing agreement. It held that an arbitral award does not create a fresh right or liability but merely determines and crystallises the rights and obligations already arising from the underlying instrument.
It was further held that the reason why Section 33 was formulated is to stop any attempt of avoiding stamp tax on such instruments which require valuation. As the arbitral award simply ascertains the existing rights and obligations, then the said document falls outside the strict ambit of Section 33 as raised by the respondents. Thus, the procedural provision for the seizure of an inadequately stamped instrument cannot be used for the document being discussed.
As to the respondents’ claim that there is no asset in the Court’s jurisdiction, this matter can only be determined through the production of the necessary particulars. Furnishing such details would not prejudice the respondents, as the question of jurisdiction could subsequently be considered.
JUDGEMENT
The Madras High Court decided that the execution proceedings initiated by SAIL in E.P. SR No. 13383 of 2025 were maintainable. The Court admitted the application and ordered the respondents to submit their affidavits regarding their movable and immovable properties, including survey numbers and other pertinent details, within six weeks of the order. No costs were awarded.
CONCLUSION
The judgment clarifies the distinction between an instrument creating contractual rights and liabilities and an arbitral award that merely determines such rights and liabilities. It holds that an arbitral award cannot be subjected to the impounding procedure under Section 33 of the Indian Stamp Act merely on the ground of insufficient stamping. The decision also recognises that disclosure of assets is a necessary step in execution proceedings and that jurisdictional objections may be examined after such disclosure.
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WRITTEN BY- PRIYANSHI CHOUDHARY
Steel Authority of India Limited v. M_s. Waterbury Farrel & Anr.
