Recently, the Hon’ble Delhi High Court in M/s URC Construction (P) Ltd. v. Airports Authority  of India1, has addressed an important issue at the intersection of the Arbitration and Conciliation  Act, 1996 (“Arbitration Act”) and the Indian Stamp Act, 1899 (“Stamp Act”). The judgment  examines two important questions arising at the enforcement stage: (i) what happens when an arbitral award sought to be enforced under Section 36 of the Arbitration Act is insufficiently  stamped; and (ii) whether a decree holder can cure the deficiency by subsequently paying the  deficit stamp duty, or whether the award must necessarily be impounded and dealt with in  accordance with the procedure under the Stamp Act. 

FACTUAL MATRIX 

The dispute between M/s URC Construction (P) Ltd. (“URC”/Decree Holder”) and the Airports  Authority of India (“AAI/Judgment Debtor”) arose out of a contractual arrangement between the  parties, which was subsequently referred to arbitration. The arbitral award was substantially passed  in favour of URC, directing AAI to pay a sum of ₹2.85 Crores. 

URC thereafter filed an enforcement petition under Section 36 of the Arbitration and Conciliation  Act, 1996 (“Arbitration Act”) before the Hon’ble Delhi High Court for enforcement of the award.  During the enforcement proceedings, the Court noticed that the arbitral award had been  insufficiently stamped, with only a stamp duty of ₹100 affixed to it. After filing the enforcement  petition, URC paid the deficient stamp duty of ₹25,850. The Court, however, raised the issue of  insufficient stamping on its own during the enforcement proceedings. 

The principal issue before the Court was whether an insufficiently stamped arbitral award could  be enforced merely upon subsequent payment of the deficit stamp duty by the Decree Holder, or  whether the award was required to be impounded under Section 33 of the Stamp Act and dealt  with in accordance with the statutory procedure, including payment of penalty, where applicable. 

SUBMISSIONS ON BEHALF OF THE DECREE HOLDER (URC):

Counsel for URC raised the following principal arguments: 

• Stamping is a curable defect: It was argued that deficiency in stamp duty is a curable  defect and that the Stamp Act itself provides a mechanism for curing such deficiency by  payment of the deficit duty and applicable penalty. 
• Stamping becomes relevant at the enforcement stage: Relying on M. Anasuya Devi v.  M. Manik Reddy2, it was argued that neither the Arbitration Act nor the arbitral process requires the award to be stamped as a pre-condition to its validity. The issue of stamping  becomes relevant when the award is sought to be enforced under Section 36 of the  Arbitration Act. 
• Friction between the timelines under the two statutes: URC argued that the Stamp Act  and the Arbitration Act operate on different timelines. Under Section 17 of the Stamp Act,  stamp duty is required to be paid before or at the time of execution of the instrument, while  proviso (a) to Section 32(3) restricts the Collector from making the statutory endorsement where the instrument is brought before him after one month from its execution. On the  other hand, under Section 36 of the Arbitration Act, states that an arbitral award becomes enforceable only after the period for challenging the award under Section 34 has expired,  which is 3 (three) months from the date on which the party making that application has  received the arbitral award, with a further extension of up to 30 (thirty) days in certain cases. According to URC, this creates a practical friction between the two statutory  schemes, since the one-month period under the Stamp Act may expire before the award  becomes enforceable under Section 36 of the Arbitration Act. 
• Arbitration Act as the special law: Reliance was placed on the Supreme Court’s decision  in In Re: Interplay Between Arbitration Agreements under Arbitration and Conciliation  Act, 1996 and Stamp Act, 18993, where the Supreme Court categorically held that the  Arbitration Act would prevail over the Stamp Act and the Contract Act since it is a special  law and hence Section 5 therein must be given due regard, which envisages minimal  judicial intervention.

SUBMISSIONS ON BEHALF OF THE JUDGMENT DEBTOR (AAI) Counsel for AAI opposed the above submissions on the following grounds: 

• The Stamp Act is a fiscal statute and must be strictly applied: The real question was  not whether duty could be paid later, but whether mere payment of the deficit amount,  without following the statutory procedure and without payment of penalty where  applicable, was sufficient to overcome the bar under Section 35 of the Stamp Act. 
• Stamp duty is linked to execution, not enforcement: Section 17 of the Stamp Act  requires an instrument to be stamped before or at the time of its execution. The limitation  under proviso (a) to Section 32(3) is also linked to the date of execution. This statutory  timeline operates independently of the time at which the award becomes enforceable under  Section 36 of the Arbitration Act and, therefore, the two timelines cannot be conflated. 
• Impounding is mandatory the moment the defect surfaces: Once an insufficiently  stamped award is produced before the Court, the Court’s duty to impound the award under  Section 33 of the Stamp Act is triggered. Section 35 of the Stamp Act further prevents the  Court from acting upon the award until the requisite stamp duty and applicable penalty are  dealt with in accordance with law. Reliance was placed, inter alia, on Mohini Electricals and In Re: Interplay. 
• Only the Collector can waive penalty, not the Court: The power to waive penalty under  Section 41 of the Stamp Act vests solely with the Collector, and only if the specific  conditions of that provision are satisfied. The award therefore statutorily bound the URC  to approach the collector in accordance with the procedure as prescribed under the Stamp  Act and not to pay the deficit amount on its own. 

THE COURT’S ANALYSIS AND REASONING 

The Central Issue:

An arbitral award becomes enforceable only after the 3 (three) month plus 30 (thirty) day window  to challenge it under Section 34 has lapsed. The Hon’ble Supreme Court in M. Anasuya Devi had  held that an objection about insufficient stamping is premature at the Section 34 stage it can only  be raised when enforcement is sought under Section 36 of the Arbitration Act. 

The Court essentially had to consider three questions: 

1. When does stamp duty become relevant. Does the issue of insufficient stamping arise only  when the arbitral award is sought to be enforced under Section 36?  
2. If the award is insufficiently stamped, can the Decree Holder itself pay the deficient stamp  duty at the enforcement stage and proceed with execution?  
3. Whether the Court bound to follow the impounding procedure under Section 33 of the  Stamp Act? 

The Framework Under the Arbitration Act :

The Court noted that Sections 5, 16 and 19 of the Arbitration Act reflect the legislative intent of  minimal judicial interference and party autonomy. Section 36 provides that once the period for  challenging an award under Section 34 has expired, the award is enforceable in the same manner  as a decree of the Court under the Code of Civil Procedure, 1908.  

The Court also noted that an arbitral award is a “chargeable instrument” under Article 12 of  Schedule IA (as applicable to Delhi) of the Stamp Act, and that duty is payable on the principal  amount awarded. 

Clarifying M. Anasuya Devi and the Section 34 Position :

The Hon’ble High Court examined the Supreme Court’s decision in M. Anasuya Devi and observed  that it had often been misread. In that case, the Supreme Court held that an objection regarding  insufficient stamping of an arbitral award is premature at the Section 34 stage and becomes  relevant when the award is sought to be enforced under Section 36. 

The Court clarified that M. Anasuya Devi has a limited effect. It only means that insufficient stamp  duty is not a ground for setting aside an arbitral award under Section 34 of the Arbitration Act. It does not create any exception to Section 33 of the Stamp Act or remove the requirement of proper  stamping. 

In simple terms, M. Anasuya Devi does not mean that stamp duty need not be paid. It only means  that the issue of insufficient stamping cannot be raised to challenge the award under Section 34  and is to be considered at the enforcement stage. 

The Court, however, noted the practical difficulty arising from this position. While the Court  cannot examine the adequacy of stamp duty at the Section 34 stage, the issue becomes relevant  when enforcement is sought under Section 36. By that time, the one-month period referred to under  the Stamp Act may already have expired. This creates an apparent gap between the timelines under  the two statutes. 

The Effect of In Re: Interplay and Its Limits :

The Court next considered the Supreme Court’s Seven-Judge Bench decision in In Re: Interplay  Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act,  1899. 

The Supreme Court in In Re: Interplay overruled the earlier approach in SMS Tea Estates and  Garware Wall Ropes. The Supreme Court held that the issue of stamping should not prevent the  Court from referring the parties to arbitration at that stage. An insufficiently stamped instrument  is not rendered void merely because of the stamping defect, the defect can be subsequently cured  in accordance with the Stamp Act. 

However, the Hon’ble Court was careful to note that this ruling was confined to the referral stage,  and said nothing about Section 36 enforcement. In fact, the Hon’ble Supreme Court had reaffirmed  that Section 35 “gives teeth” to the Stamp Act by “ensuring that stamp duty is paid before rights  and obligations arising from an agreement are enforced,” and had clarified that the question is at  which stage the agreement would be impounded and not whether it would be impounded at all.  

High Court’s Conclusion on the Interplay  

The Court distinguished between the different stages of arbitration.

• At the Section 34 stage, insufficient stamping cannot be used as a ground to challenge or  set aside the arbitral award, in view of M. Anasuya Devi. 
• At the enforcement stage under Section 36, however, the position is different. Once an  insufficiently stamped award is produced before the Court for enforcement, the Court must  apply the provisions of the Stamp Act. This includes the obligation to impound the award  under Section 33 and follow the procedure prescribed under the Stamp Act. 

The Statutory Scheme of the Stamp Act 

Relevant provisions of the Stamp Act: 

• Section 17 says: “All instruments chargeable with duty shall be stamped before or at the  time of execution.” 
• Proviso (a) to Section 32(3) gives a further grace period of one month from execution,  within which a party may still get the Collector to certify the instrument as duly stamped.  Once this one month is over, the Collector can no longer give that certificate. 
• Section 33 requires every person who has the authority to receive evidence, or who holds  a public office, shall impound any instrument that comes before them if it is not duly  stamped. 
• Section 35 bars any authority including a Court from acting upon such an instrument unless  the deficient duty, and a penalty is paid. 
• Section 38 lays down what happens once an instrument is impounded. It gives two options:  If the authority itself admits the instrument after collecting duty and penalty, it simply sends the Collector an authenticated copy of the instrument, a certificate stating how much duty  and penalty was collected, and the money itself. In every other case, the original instrument  must be sent to the Collector. 
• Section 40 empowers the Collector to require payment of the proper duty together with a  penalty. Once the instrument reaches the Collector, he checks whether it is properly  stamped. If not, he must require payment of the proper duty “together with a penalty of five rupees; or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty  or of the deficient portion thereof.

The Act allows penalty to be reduced, refunded, or waived only in three narrow situations:  

1. Section 37, where an instrument is stamped with the right value but the wrong type of  stamp, the State Government may allow it to be certified as duly stamped without extra  penalty; 
2. Section 39, the Collector “may, if he thinks fit,” refund part of a penalty already  collected; and  
3. Section 41, if a party comes forward on his own within one year of execution and  satisfies the Collector that the failure to stamp happened by “accident, mistake or urgent  necessity. 
4. Section 42 provides for endorsement once duty and penalty are paid, after which the  instrument may finally be “acted upon”, i.e., enforced.
   The Hon’ble High Court concluded that nowhere does the Stamp Act allow a decree holder to pay  the missing duty on his own and skip the penalty.

“no occasion arises for a Decree Holder to unilaterally pay the stamp duty or the deficit  duty at a belated stage, without the penalty component (if applicable) being paid either to  the impounding authority under Section 33 or the Collector.” 

The Mandatory Character of Impounding and Penalty  

The Hon’ble Court concluded on the mandatory nature of impounding and penalty is supported by  the Supreme Court’s consistent interpretation of the Stamp Act. In State of A.P. v. P. Laxmi Devi4, the Supreme Court held that the use of the word “shall” in Section 33 makes impounding  mandatory where an insufficiently stamped instrument is produced before an authority competent  to impound it. This position is also reflected in Ram Rattan v. Bajrang Lal where the Supreme Court held that an insufficiently stamped instrument cannot be acted upon until the requisite duty  and penalty are paid. 

The Hon’ble Court further drew an important distinction between the existence of the penalty and  the quantum of the penalty. Under Section 35 of the Stamp Act, the authority impounding the  instrument is required to permit the instrument to be acted upon only upon payment of the deficient  stamp duty together with the prescribed penalty. The enforcing Court therefore has no discretion  to waive or reduce the penalty prescribed under Section 35. The discretion contemplated under  Section 40 is different i.e., once the matter reaches the Collector, the Collector may determine the  quantum of penalty, up to the statutory maximum, having regard to the circumstances of the case. 

It held that, payment of penalty is mandatory for the purpose of curing the defect and enabling  enforcement, while discretion, to determine the quantum of penalty is vested with the Collector and not the enforcing Court. [Para’s 176 to 184] 

Reconciling the Timelines 

The Court rejected URC’s contention that the Stamp Act and the Arbitration Act prescribe  conflicting timelines. 

According to the Court, the apparent conflict arises only because the two statutes operate at  different stages and for different purposes. Under the Stamp Act, the relevant event is the execution  or signing of the arbitral award. An award is therefore required to be stamped before or at the time  of execution, or within one month thereafter. The obligation to pay stamp duty is thus not  dependent upon when the award becomes enforceable. 

While Section 36 of the Arbitration Act deals with when an arbitral award becomes enforceable.  It provides that an award becomes enforceable only after the period for filing a Section 34  challenge has expired, subject to the additional period permitted by the statute. The Court clarified  that this later date of enforceability does not extend or postpone the obligation to pay stamp duty under the Stamp Act.  

The Court further clarified that the Section 34 proceedings and the stamping requirement operate  independently. This explains the practical difficulty identified by the Court. Since stamping may  not be an issue at the Section 34 stage and enforcement itself is deferred under Section 36, decree holders may wait until enforcement proceedings to address the stamp duty. By then, however, the  1 (one) month period under the Stamp Act may have expired. At that stage, the decree holder  cannot unilaterally pay only the deficit stamp duty by purchasing an e-stamp and seek enforcement. Once the statutory period has expired and an insufficiently stamped award is brought before the  competent authority, the procedure under the Stamp Act, including impounding and payment of  the applicable penalty, must be followed. 

At the same time, the Court recognised the practical hardship that may arise where Section 34  proceedings, a Section 37 appeal, or an SLP remains pending. It therefore observed that such  pendency may constitute a cogent ground for the Collector to waive or impose a minimal penalty  in accordance with the Stamp Act. The relief, however, is to be considered by the Collector under  the Stamp Act, it does not permit the decree holder to bypass the statutory procedure by paying  the deficit duty on its own. 

Thus, it was concluded that there is no conflict between the two statutory timelines: the one-month period under the Stamp Act governs the obligation to stamp the award following its execution,  while the three-month period under Section 36 governs when the award may be enforced. [Para’s  185 to 199] 

The Duty to Impound an Insufficiently stamped award 

Section 33 of the Stamp Act casts a duty on the Court to impound an insufficiently stamped  instrument when it is produced before it. This, however, raised a procedural difficulty in the  context of arbitral awards. The issue is the Court is under a statutory duty to impound an insufficiently stamped award. 

In case of District Registrar and Collector, Hyderabad v. Canara Bank, it was established that a  Court cannot compel production of the original instrument merely for the purpose of impounding  it. Since the Arbitration Act does not require the original award to accompany an enforcement  petition, a decree holder could potentially seek enforcement on the basis of a copy, leaving the  Court unable to impound the original. 

The Court reconciled this apparent conflict by which the coercive power of search and seizure,  from Section 33, operates when an instrument comes before the Court in the course of its judicial  functions. The Court also relied on the Delhi High Court’s Practice Directions, including Practice  Direction No. 26/Rules/DHC dated 30.08.2010, concerning the transmission and maintenance of  arbitral records before the Court, and Practice Direction No. 33/Rules/DHC dated 08.04.2015,  providing for digitisation of arbitral records and electronic filing. The Court therefore held that the  original award may come before the Court in the ordinary course of dealing with the arbitral record,  without the Court having to compel its production solely for the purpose of impounding. 

At the same time, a decree holder cannot rely on the non-production of the original to circumvent  the Stamp Act. Where it seeks to cure the stamping defect and proceed with enforcement, it must  furnish the original award. The Court further noted that where the decree holder is willing to pay  the deficient stamp duty along with the applicable penalty, the Court may proceed under Sections  35 and 38(1) by acting upon the award and forwarding the authenticated copy and amount collected  to the Collector. If the requisite payment is not made, the original award is to be impounded and  dealt with under Section 38(2). 

The Court thus drew a clear distinction between compelling production of the original and acting upon an insufficiently stamped award: while the former cannot be compelled merely to facilitate  impounding, the latter remains subject to the mandatory requirements of Sections 33 and 35 of the  Stamp Act. [Para’s 200 to 243] 

Penalty under the Stamp Act: No Discretion with the Enforcing Court 

The Court acknowledged that a decree holder may have bona fide reasons for not paying stamp duty earlier, particularly where the award was subject to proceedings under Sections 34, 37 or an  SLP. 

However, it held that such circumstances do not give the enforcing Court any power to waive or reduce the penalty prescribed under Section 35. The Court drew a distinction between Section 35 of the Stamp Act, which prescribes the penalty payable for curing an insufficiently stamped  instrument, and Section 40 of the Stamp Act, which expressly gives the Collector discretion to  determine the quantum of penalty up to ten times the deficient duty. 

Relying on H.C. Dhanda Trust and Peteti Subba Rao, the Court clarified that the Collector’s  discretion must be exercised reasonably and that the maximum penalty is not to be imposed  mechanically. Thus, while the enforcing Court cannot waive or reduce the prescribed penalty, the  Collector retains limited discretion regarding its quantum. 

Balancing Compliance with Speed: Two Practical Routes 

Routing every case through the Collector could undermine the Arbitration Act’s objective of  speedy enforcement, the Court identified two practical routes to minimise delay: 

1. Court level cure: Where the decree holder is willing to pay the deficient stamp duty and  applicable penalty, the Court may proceed under Sections 35 and 38(1) of the Stamp Act, to receive the payment and act upon the award, while forwarding an authenticated copy,  certificate and the amount collected to the Collector. If the decree holder does not avail of  this route, the original award may be impounded and sent to the Collector under Section  38(2). 
2. Time bound reference to the Collector: Where adjudication by the Collector is required,  the Court may invoke its inherent powers under Rule 16, Chapter I of the Delhi High Court  (Original Side) Rules, 2018, to direct the Collector to determine the stamp duty and penalty  within a fixed timeframe. 

WAY FORWARD: AN ACT OF THE COURT SHOULD PREJUDICE NO ONE 

Having settled the legal position, the Court issued a comprehensive set of directions to ensure that  stamp duty compliance does not become a recurring impediment to enforcement under Section 36.  The directions were also intended to address the Court’s earlier Notification No.  01/Original/DHC/2026 dated 13.07.2026, which required Section 36 petitions to contain a  declaration regarding stamp duty and gave pending decree holders four weeks to cure any  deficiency. The Hon’ble Court accordingly directed that: 

1. Every Section 36 petition must carry a declaration on the first page of the e-file stating the  date of the award, the date on which stamp duty was paid, the amount awarded, and the  quantum of stamp duty payable on the award.
2. Proof of payment of sufficient stamp duty (must be annexed to the petition.  
3. iThe Registry must record an office note quantifying the amount of duty paid against what  is actually chargeable or noting non-payment. 
4. Pending petitions (filed on or before 13.08.2026) with inadequately stamped awards are  liable to be impounded and listed directly before the Joint Registrar, who will proceed  under Section 35 or Section 38(2) of the Stamp Act. 
5. In case of Future petitions (filed after 13.08.2026), the Registry will return any petition  accompanied by an inadequately stamped award under objections, and the award will be  impounded forthwith and listed before the Joint Registrar. 
6. Decree holders in pending matters may, if they wish, withdraw their petition with liberty  to restore it once stamp duty is properly paid.
7.  Where enforcement proceedings were stayed under Section 34 or Section 37 of the  Arbitration Act. The Registrar General or Joint Registrar may call for the original award  where it has not otherwise been requisitioned. however, failure to voluntarily furnish it  would not attract a penalty, although the Section 35 bar on acting upon the award would  continue.

   The Court clarified that these directions do not extend to foreign arbitral awards, relying on Shriram EPC Ltd. v. Rioglass Solar Sa7.  

APPLICATION TO THE PRESENT CASE 

The Hon’ble Court held that the arbitral award was liable to be impounded under Section 33 of the  Stamp Act. URC was directed to furnish the original award before the Joint Registrar. The  concerned Collector of Stamps was requested to expedite adjudication, preferably within 6 (six) weeks from the date the award is sent.  

The matter was to be placed before the Court again only after the requisite stamp duty and penalty,  if applicable, had been deposited. In effect, URC’s own unilateral payment of Rs. 25,850 towards  the deficit stamp duty was not treated as sufficient to cure the defect. The execution petition itself  was not dismissed it remains pending but the award must now travel through the Joint Registrar  and, if necessary, the Collector of Stamps, with penalty (if any) to be assessed in accordance with  the Stamp Act, before the enforcement proceedings can resume before the Court. 

WHY THIS JUDGMENT MATTERS 

The judgment is significant because it: 

• Clarifies the scope of In Re: Interplay: the Supreme Court’s decision concerns stamp  duty at the referral stage under Sections 8 and 11 and does not eliminate stamp duty scrutiny  at the enforcement stage under Section 36 of the Arbitration Act. 
• Closes the door on unilateral curing of stamp defects: deficient stamp duty cannot  simply be deposited by the decree holder at the enforcement stage. The applicable penalty  must be paid, and any discretion to reduce or waive the penalty lies with the Collector, not  the enforcing Court. 
• Provides a uniform enforcement framework: the Court has laid down practical  directions covering declarations, Registry scrutiny, impounding, timelines and pending  matters, thereby bringing greater certainty to Section 36 proceedings.

Written by: Shubhangi Dengre