2003 (10) TMI 682 - SC - Indian Laws

Supreme Court clarifies stamp duty timing in enforcement process, overturns premature judgment

The Supreme Court allowed the appeals, setting aside the High Court's judgment due to premature consideration of stamp duty and registration requirements ... - Issues:Composition of arbitral tribunal, proper notice of arbitral proceedings, scope of arbitrators' authority, validity of award under Section 31 of the Act, impartiality of arbitrators, stamp duty and registration requirement.Composition of Arbitral Tribunal:The case involved a dispute between joint family members referred to an Arbitral Tribunal, which was supposed to consist of five members but only had four. The respondents challenged the award on grounds of improper composition under Section 10 of the Arbitration and Conciliation Act, 1996. The Principal Sub-Judge rejected the petitions, leading to appeals before the High Court, which upheld the invalidity of the award due to lack of stamp duty and registration. However, the Supreme Court held that the issue of stamping and registration was premature at the Section 34 proceedings stage and should be addressed at the enforcement stage under Section 36. The Court clarified that the question of stamping and registration falls under Section 47 of the Code of Civil Procedure, not Section 34 of the Act.Proper Notice and Scope of Authority:The respondents also alleged that they were not given proper notice of the arbitral proceedings and were not provided an opportunity to present their case. Additionally, they claimed that the arbitrators exceeded the scope of the reference for arbitration. The High Court's decision was primarily based on the lack of stamping and registration of the award, deeming it invalid. However, the Supreme Court emphasized that the issue of stamping and registration should be considered during the enforcement stage under Section 36, not at the Section 34 proceedings stage. The Court set aside the High Court's judgment and remitted the matter for further consideration.Validity of Award and Impartiality of Arbitrators:The respondents further contended that the award was not supported by reason under Section 31 of the Act and that the arbitrators acted impartially and committed fraud. The Supreme Court did not delve into these specific issues but focused on the premature consideration of stamp duty and registration requirements at the Section 34 stage. The Court emphasized that objections regarding admissibility due to non-registration and non-stamping should be raised during the enforcement stage under Section 36.Conclusion:The Supreme Court allowed the appeals, setting aside the High Court's judgment, and remitted the matter for further consideration. The Court clarified that the issue of stamping and registration should be addressed at the enforcement stage under Section 36, not during the Section 34 proceedings. The parties were granted the opportunity to raise objections regarding stamping and registration during the enforcement process.