M/S SHRIRAM EPC LIMITED versus RIOGLASS SOLAR SA on 13 September 2018

[2018] 10 S.C.R. 749

M/S SHRIRAM EPC LIMITED

v.

RIOGLASS SOLAR SA

(Civil Appeal No. 9515 of 2018)

SEPTEMBER 13, 2018

[R. F. NARIMAN AND INDU MALHOTRA, JJ.]

Arbitration and Conciliation Act, 1996 – ss. 48 and 49 –Foreign award – Enforceability of, when award not stamped – Held:Foreign award not bearing stamp duty under the Stamp Act, wouldnot be rendered unenforceable – Term ‘award’ under Item 12 ofSchedule I of the Stamp Act, does not include foreign award, thus, aforeign award not being includible in Schedule I, is not liable forstamp duty – Stamp Act, 1899 – Item 12, Schedule I.

Dismissing the appeal, the Court

HELD: 1. The Single Judge of the High Court is correct,and the fact that a foreign award has not borne stamp duty underthe Stamp Act, 1899 would not render it unenforceable.[Para 25] [770-A-B]

2.1 It becomes clear that the only “award” that is referredto in the Stamp Act, 1899 is an award that is made in the territoryof British India provided that such award is not made pursuant toa reference made by an order of the Court in the course of a suit.It is important to note that there were several princely states inIndia governed by sovereign rulers which had their own laws.Arbitration laws, if any, in the said princely states, if they were toculminate in awards, would not be “awards” under either the CivilProcedure Code, 1882 or the Arbitration Act, 1899. They wouldtherefore, be foreign awards insofar as British India is concerned.An award made in a princely state, or in a foreign country, ifenforced by means of a suit in British India, would not be coveredby the expression “award” contained in Item 12 of Schedule I ofthe Stamp Act, 1899. Only awards which are decisions in writingby an arbitrator or umpire, made in British India, on a referencemade otherwise than by an order of the Court in the course of asuit would be included. [Para 10] [759-E-H]

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A2.2 “Award” under Item 12 of Schedule I of the Stamp Act,1899 has remained unchanged till date. In 1899, this “award”would refer only to a decision in writing by an arbitrator or umpirein a reference not made by an order of the Court in the course ofa suit. This would apply only to such award made at the time inBritish India, and today, after the amendment of Section 1(2) ofBthe Stamp Act, 1899 by Act 43 of 1955, to awards made in thewhole of India except the State of Jammu and Kashmir. This beingthe case, the expression “award” has never included a foreignaward from the very inception till date. Consequently, a foreignaward not being includible in Schedule I of the Stamp Act, 1899,Cis not liable for stamp duty. The Tamil Nadu Amendment of theStamp Act, 1899 contains the identical definition of “award” asgiven in Item 12 thereof. The only difference is in the figurescontained for stamp duty. [Para 16] [765-C-E]

2.3 The Stamp Act, 1899 is a fiscal statute which must beDconstrued literally. Any ambiguity in the said statute would enureto the benefit of the assessee who has to pay stamp duty.[Para 17][766-B-C]

2.4 There is no doubt whatsoever that if stamp duties areleviable in India on foreign awards, the imposition should not beEsubstantially more onerous than the stamp duty that is imposedon recognition or enforcement of domestic arbitral awards. Forthe said Article to apply, stamp duty must first be leviable on aforeign award, which, is not the case. Equally, reliance upon the194[th] Law Commission of India Report, insofar as stamp duty ondomestic awards is concerned, would again have little bearing,Fgiven the finding that under the present state of the law, foreignawards are not liable to stamp duty under the Stamp Act, 1899.[Para 23][769-B-C]

2.5 An argument that Section 47 of the Act requires threethings and only three things to be produced before the Court forGenforcement of a foreign award, and that therefore, stamp dutynot being one of the three things required, cannot ever be levied,is an extreme argument. All that Section 47 deals with isproduction before the Court of proof of the fact that a foreign H

award is sought to be enforced. In no manner does Section 47interdict the payment of stamp duty if it is otherwise payable inlaw. This argument must thus be rejected. Equally, the argumentthat under Section 48(2)(b), even if stamp duty is payable on aforeign award, it would not be contrary to the public policy ofIndia, must be rejected. The fundamental policy of Indian law, ashas been held in Renusagar Power Co. Ltd. v. General ElectricCo. makes it clear that if a statute like the Foreign ExchangeRegulation Act, 1973 dealing with the economy of the country isconcerned, it would certainly come within the expression“fundamental policy of Indian law”. The Stamp Act, 1899, being afiscal statute levying stamp duty on instruments, is also an Actwhich deals with the economy of India, and would, on a parity ofreasoning, be an Act reflecting the fundamental policy of Indianlaw. [Para 24] [769-D-G]

Narayan Trading Co. v. Abcom Trading Pvt. Ltd.(2013) 2 MP LJ 252 – approved.

Senior Electric Inspector and Ors. v. LaxminarayanChopra and Anr. [1962] 3 SCR 146 – distinguished.

M. Anasuya Devi and Anr. v. M. Manik Reddy and Ors.(2003) 8 SCC 565 : [2003] 4 Suppl. SCR 853 ; FuerstDay Lawson Ltd. v. Jindal Exports Ltd. (2001) 6 SCC356 – held inapplicable.

Bharat Aluminium Co. v. Kaiser Aluminium TechnicalServices Inc. (2012) 9 SCC 552 : [2012] 12 SCR 327 ;Gujrals Co. v. M.A. Morris AIR 1962 P&H 167 ; NavalGent Maritime Ltd. v. Shivanath Rai Harnarain (I) Ltd.(2009) 163 DLT 391 ; Orient Middle East Lines Ltd.,Bombay and Anr. v. Brace Transport Corporation ofMonrovia and Ors. AIR 1986 Guj 62 ; ThyssenStahlunion GMBH v. Steel Authority of India Ltd.(1999) 9 SCC 334 : [1999] 3 Suppl. SCR 461;Renusagar Power Co. Ltd. v. General Electric Co.(1994) 1 Suppl. SCC 644 : [1993] 3 Suppl. SCR 22 ;Associate Builders v. Delhi Development Authority(2015) 3 SCC 49 – referred to.

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9515of 2018.D

From the Judgment and Order dated 09.02.2017 of the HighCourt of Judicature at Madras in O.P. No. 587 of 2015.

K. V. Vishwanthan, Sr. Adv., Ms. Pooja Saigal, Ravi Raghunath,Ms. Vrinda Bhandari, Snehasish Mukherjee, Venkataraman R., DhananjayERay Bhaskar, Advs. for the Appellant.

Shashank Garg, Ms. Amrita Grover, Divyakant Lahoti, Tariq Khan,Parikshit Ahuja, Debjyoti, Advs. for the Respondent.

The Judgment of the Court was delivered by FR. F. NARIMAN, J. 1. Leave granted.

2. The present appeal arises from the judgment of a Single Judgeof the High Court of Judicature at Madras, dated 09.02.2017, in which apetition filed to enforce a foreign award was allowed. Several groundswere taken before the learned single Judge. We are concerned withGonly one ground that has been argued before us, namely, that as theaward has not been stamped, it cannot be enforced under Sections 48and 49 of the Arbitration and Conciliation Act, 1996 (“1996 Act”).

3. The brief facts that are necessary for determination of thepresent controversy are as follows:

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3.1. An ICC award was delivered in London on 12.02.2015 byMr. Christopher Style QC in the following terms:

“363. After consideration of all the factual and legal submissionswhich have been presented to me and for the reasons set out infull above, I award, declare and adjudge as follows:

(1) I declare that I have no jurisdiction over the Second and ThirdRespondents.

(2) I declare that Rioglass is not obliged to issue a PerformanceBank Guarantee as provided for in clause 6 of the Agreement, asamended by Amendment No.1.

(3) I declare that Rioglass is entitled to sell as scrap the mirrorsthat it holds in storage in relation to Delivery Four.

(4) I declare that Shriram acted in breach of the Agreement in therespects set out above.

(5) I order Shriram to pay Rioglass €4,366,598.70, consisting ofdamages amounting to €4,151,570.52 and interest amounting to€215,028.18.”

3.2. Objections dated 21.07.2015 under Section 34 of theArbitration and Conciliation Act, 1996 were filed by the Appellant whichwere dismissed on 27.09.2016, stating that a petition under Section 34would not be maintainable as against a foreign award, citing this Court’sjudgment in Bharat Aluminium Co. v. Kaiser Aluminium TechnicalServices Inc., (2012) 9 SCC 552. Meanwhile, the Respondent filed apetition under Section 47 of the 1996 Act, dated 05.08.2015, to enforcethe said award. As stated hereinabove, all objections to the said awardwere rejected by the learned Single Judge on 09.02.2017. An appeal tothe Division Bench resulted in an Order dated 14.03.2018, stating that inview of Section 50 of the 1996 Act, the said appeal would not bemaintainable. This is how the present SLP has been filed against thedecision of the learned Single Judge.

4. Shri K.V. Viswanathan, learned senior advocate, appearing onbehalf of the Appellant, has submitted before us, that given the provisions A

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Aof the Indian Stamp Act, 1899, it is clear that a foreign award would becovered by the said Act. This being so, and stamp duty not having beenpaid, the said foreign award cannot be enforced. He relied strongly on ajudgment of the Punjab and Haryana High Court reported in GujralsCo. v. M.A. Morris, AIR 1962 P&H 167. According to him, the contraryjudgments of the Delhi High Court reported in Naval Gent MaritimeBLtd. v. Shivanath Rai Harnarain (I) Ltd., (2009) 163 DLT 391, andthe Madhya Pradesh High Court judgment reported in Narayan TradingCo. v. Abcom Trading Pvt. Ltd., (2013) 2 MP LJ 252, are incorrect.According to the learned senior advocate, the Delhi High Court judgmentis really a judgment on registration of a foreign award, even though itCpurports to speak about stamp duty payable. The judgment of the MadhyaPradesh High Court, on the other hand, is not correct in stating that aforeign award would not be included within the term “award” underSchedule I of the Indian Stamp Act, 1899. He relied upon the GujaratHigh Court judgment reported in Orient Middle East Lines Ltd., Bombay and Anr. v. Brace Transport Corporation of MonroviaDand Ors., AIR 1986 Guj 62, which stated that Article III of the NewYork Convention would make it clear that stamp duty, being in the natureof fees or charges for recognition and enforcement of a foreign award,can be enforced in accordance with the rules of procedure of the territoryin which the award is sought to be enforced. This being so, the NewEYork Convention itself recognizes that foreign awards may have to bearstamp duty for enforcement in the country in which they are sought tobe enforced. He further relied upon the 194[th] Law Commission Report,which had suggested changes insofar as stamp duty is concerned inPart II of the 1996 Act.

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5. Learned counsel appearing on behalf of the Respondent, onthe other hand, relied strongly upon the judgment of the Delhi High Courtas well as the Madhya Pradesh High Court referred to hereinabove.According to the learned counsel, the expression “award” which occursin Schedule I of the Indian Stamp Act, 1899 applies only to a domesticGaward and not a foreign award. He relied on the fact that the IndianStamp Act was enacted in 1899, in which “award” has never beenenlarged so as to include foreign awards after the Arbitration (Protocoland Convention) Act, 1937 and/or the Foreign Awards (Recognition and

Enforcement) Act, 1961 were enacted. Also, according to the learnedcounsel, the only requirement for the enforcement of a foreign award islaid down in Section 47 of the Act, which does not require the award tobe stamped. A without prejudice argument was also made that underSection 48(2)(b), even if a foreign award were required to be stamped,but is not stamped, enforcement of such award would not be contrary tothe fundamental policy of Indian law.

6. Having heard learned counsel for the parties, it is important tofirst set out the relevant provisions of the Indian Stamp Act, 1899. Section1 of the Indian Stamp Act, 1899 as it originally stood, reads as follows:

“1. Short title, extent, and commencement.—(1) This Actmay be called the Indian Stamp Act, 1899.

(2) It extends to the whole of British India inclusive of UpperBurma, British Baluchistan, the Santal Parganas, and the Parganaof Spiti; and

(3) It shall come into force on the first day of July 1899.”

Section 2(14) defines “instrument” as follows:

“2. Definitions.—

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(14) “Instrument” includes every document by which anyright or liability is or purports to be created, transferred, limited,extended, extinguished, or recorded:”

“Instruments chargeable with duty” are dealt with by Section 3.Section 3 states as follows:

“3. Instruments chargeable with duty.—Subject to theprovisions of this Act and the exemptions contained in Schedule I,the following instruments shall be chargeable with duty of theamount indicated in that Schedule as the proper duty therefore,respectively, that is to say—

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(a) every instrument mentioned in that Schedule which, nothaving been previously executed by any person, is executed inIndia on or after the first day of July, 1899; (b) every bill of exchange payable otherwise than on demandor promissory note drawn or made out of India on or after thatday and accepted or paid, or presented for acceptance orpayment, or endorsed, transferred or otherwise negotiated, inIndia; and

(c) every instrument (other than a bill exchange or promissorynote) mentioned in that Schedule, which, not having beenpreviously executed by any person, is executed out of India onor after that day relates to any property situate, or to any matteror thing done or to be done, inIndia and is received in India:

Provided that no duty shall be chargeable in respect of—

(1) any instrument executed by, or on behalf of, or in favour of,the Government in cases where, but for this exemption, theGovernment would be liable to pay the duty chargeable inrespect of such instrument;

(2) any instrument for the sale, transfer or other disposition,either absolutely or by way of mortgage or otherwise, of anyship or vessel, or any part, interest, share or property of or inany ship or vessel, registered under the Merchant ShippingAct, 1894, or under Act 19 of 1938, or the Indian Registrationof Ships Act, 1841 (10 of 1841) as amended by subsequentActs.

(3) any instrument executed, by, or, on behalf of, or, in favourof, the Developer, or Unit or in connection with the carryingout of purposes of the Special Economic Zone.

Explanation.—For the purposes of this clause, the expressions“Developer”, “Special Economic Zone” and “Unit” shall havemeanings respectively assigned to them in clause (g), (za) and(zc) of section 2 of the Special Economic Zones Act, 2005.”

Under Sections 33 and 35, instruments that are not duly stampedin accordance with the provisions of the Act are inadmissible in evidence, and any such instrument which is not duly stamped is liable to beimpounded as provided in Section 33 of the Act. Item No.12 of ScheduleI of the Indian Stamp Act, 1899 reads as follows:

Description of Instrument Proper Stamp-duty “12. AWARD, that is to say, any decision in writing by an arbitrator or umpire, not being an award directing a partition, on a reference made otherwise than by an order of the Court in the course of a suit.—

(a) where the amount or value of The same duty as a bond (No. the property to which the award 15) for such amount. relates as set forth in such award does not exceed Rs. 1000;(b) in any other case. Five rupees.

Exemption

Award under the Bombay District Municipal Act, 1873 (Bom.Act 6 of 1873), Section 81, or the Bombay Hereditary OfficesAct, 1874 (Bom. Act 3 of 1874), Section 18.”

7. The main bone of contention in the present appeal is whetherthe expression “award” would include a foreign award.

8. In order to determine this question, it is important to see thestate of the law insofar as arbitration is concerned in the year of theIndian Stamp Act, 1899. At this point of time, there were two sets oflaws dealing with arbitration. The first was contained in the Code ofCivil Procedure, 1882. In Part V, Chapter XXXVII spoke of referenceto arbitration. Under Sections 506 to 522 of the Code of Civil Procedure,1882, parties to a suit may apply for an order of reference to arbitration,in which case, the arbitrator or umpire, as the case may be, may deliveran award which ultimately may be enforced by a judgment which is tobe according to the award and a decree to follow. By Sections 523 to526, agreements to refer disputes to arbitration may be filed in Court, A

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Aand awards delivered thereon. Needless to add, the Civil ProcedureCode, 1882 applied to British India.

9. Close on the heels of the Indian Stamp Act, 1899, comes theIndian Arbitration Act, 1899. As per Section 1(2) of this Act, this Actalso extended to the whole of British India, but Section 2 made it clearBthat the Act will apply only in cases where the subject matter submittedto arbitration, if it were the subject of a suit, could be instituted in aPresidency Town. Section 2 of this Act states as follows:

“2. Application.—Subject to the provisions of section 23, thisCAct shall apply only in cases where, if the subject-matter submittedto arbitration were the subject of a suit, the suit could, whetherwith leave or otherwise, be instituted in a Presidency-town:

Provided that the Local Government, with the previous sanctionof the Governor-General in Council, may, by notification in theDlocal official Gazette, declare this Act applicable in any other localarea as if it were a Presidency-town.”

Section 4 of the said Act states as follows:

“4. Definitions.—In this Act, unless there is anything repugnantEin the subject or context,- (a) “the Court” means, in the Presidency-towns, the High Court,and, elsewhere, the Court of the District Judge; and (b) “submission” means a written agreement to submit present orFfuture differences to arbitration, whether an arbitrator is namedtherein or not.”

Section 11 then states:

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“11. Award to be signed and filed.—(1) When the arbitratorsor umpire have made their award, they shall sign it, and shall givenotice to the parties of the making and signing thereof, and of theamount of the fees and charges payable to the arbitrators or umpirein respect of the arbitration and award.

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(2) The arbitrators or umpire shall at the request of any party tothe submission or any person claiming under him, and upon paymentof the fees and charges due in respect of the arbitration and award,and of the costs and charges of filing the award, cause the award,or a signed copy of it, to be filed in the Court; and notice of thefiling shall be given to the parties by the arbitrators or umpire.

(3) Where the arbitrators or umpire state a special case undersection 10, clause (b), the Court shall deliver its opinion thereon;and such opinion shall be added to, and shall form part of, theaward.”

Section 15, which is important, states as follows:

“15. Award when filed to be enforceable as a decree.—(1)An award on a submission, on being filed in the Court in accordancewith the foregoing provisions, shall (unless the Court remits it tothe reconsideration of the arbitrators or umpire, or sets it aside),be enforceable as if it were a decree of the Court.

(2) An award may be conditional or in the alternative.”

10. On a reading of the aforesaid provisions of these Acts, itbecomes clear that the only “award” that is referred to in the IndianStamp Act, 1899 is an award that is made in the territory of British Indiaprovided that such award is not made pursuant to a reference made byan order of the Court in the course of a suit. At this point in time, it isimportant to note that there were several princely states in India governedby sovereign rulers which had their own laws. Arbitration laws, if any, inthe aforesaid princely states, if they were to culminate in awards, wouldnot be “awards” under either the Civil Procedure Code, 1882 or theIndian Arbitration Act, 1899. They would therefore be foreign awardsinsofar as British India is concerned. An award made in a princely state,or in a foreign country, if enforced by means of a suit in British India,would not be covered by the expression “award” contained in Item 12of Schedule I of the Indian Stamp Act, 1899. Only awards which aredecisions in writing by an arbitrator or umpire, made in British India, ona reference made otherwise than by an order of the Court in the courseof a suit would be included.

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11. This position continued even when the Code of Civil Procedure,1908 contained a Second Schedule, which substituted the arbitrationprovisions contained in the Code of Civil Procedure, 1882. Here again,under the Second Schedule, parties to a suit may apply for an order ofreference to arbitration and an award would follow. Section 16 of theSecond Schedule is important, and states as follows:

“16. Judgment to be according to award.— (1) Where theCourt sees no cause to remit the award or any of the mattersreferred to arbitration for re-consideration in manner aforesaid,and no application has been made to set aside the award, or theCourt has refused such application, the Court shall, after the timefor making such application has expired, proceed to pronouncejudgment according to the award.

(2) Upon the judgment so pronounced a decree shall follow, andno appeal shall lie from such decree except insofar as the decreeDis in excess of, or not in accordance with, the award.”

Under Sections 20 and 21, arbitration without the intervention ofa Court is referred to, and awards delivered in such cases are to beincorporated in a judgment by a Court, after which a decree is to follow,which decree then becomes enforceable.

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12. Next in line, chronologically speaking, is the Arbitration(Protocol and Convention) Act, 1937, in which, certain foreign awardsgoverned by the Geneva Convention of 1923 were to be recognized andenforced in signatory countries, India being one. In this Act, “foreignFaward” is defined as follows:

“2. Interpretation.—In this Act “foreign award” means an awardon differences relating to matters considered as commercial underthe law in force in India, made after the 28th day of July, 1924,—

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(a) in pursuance of an agreement for arbitration to which theProtocol set forth in the First Schedule applies; H

(b) between persons of whom one is subject to the jurisdictionof some one of such powers as the Central Government, being satisfied that reciprocal provisions have been made, may, bynotification in the Official Gazette, declare to be parties to theConvention set forth in the Second Schedule, and of whom theother is subject to the jurisdiction of some other of the powersaforesaid; and

(c) in one of such territories as the Central Government beingsatisfied that reciprocal provisions have been may by likenotification, declare to be territories to which the said conventionapplies, and for the purposes of this Act an award shall not be deemed tobe final if any proceedings for the purposes of contesting thevalidity of the award are pending in the country in which it wasmade.”

13. The Arbitration Act, 1940 then came into force, repealing boththe Arbitration Act, 1899 as well as the Second Schedule to the Code ofCivil Procedure, 1908. This Act, under Section 1(2), extended to thewhole of India except the State of Jammu and Kashmir. Under this Act,“award” was defined as follows:

“2. Definitions.—

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(b) “award” means an arbitration award;”

Under this Act, Chapter II dealt with arbitration without theintervention of a Court. Section 17 is important, and is set out as follows:

“17. Judgment is terms of award.— Where the Court sees nocause to remit the award or any of the matters referred to arbitrationfor reconsideration or to set aside the award, the Court shall, afterthe time for making an application to set aside the award hasexpired, or such application having been made, after refusing it,proceed to pronounce judgment according to the award, and uponthe judgment so pronounced a decree shall follow and no appealshall lie from such decree except on the ground that it is in excessof, or not otherwise in accordance with, the award.”

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Under Chapter III, arbitration with intervention of a Court wherethere is no suit pending is dealt with, and in Chapter IV, arbitration whicharises in references from suits is dealt with. This Act, like its predecessors,also applied only to awards that were made first in British India, andlater in the territory of India except the State of Jammu and Kashmir.

14. In 1961, after the New York Convention of 1958, the ForeignAwards (Recognition and Enforcement) Act, 1961, came into force torecognize and enforce New York Convention Awards. Here again, suchawards were referred to as “foreign awards” in Section 2 thereof whichdefines foreign awards as follows:

“2. Definition.—In this Act, unless the context otherwise requires,“foreign award” means an award on differences between personsarising out of legal relationships, whether contractual or not,considered as commercial under the law in force in India, madeon or after the 11th day of October, 1960—

(a) in pursuance of an agreement in writing for arbitration towhich the Convention set forth in the Schedule applies; and (b) in one of such territories as the Central Government beingsatisfied that reciprocal provisions have been made, may, byEnotification in the official Gazette, declare to be territories towhich the said Convention applies.”

15. As is well-known, the present Arbitration and Conciliation Act,1996 then came into force and repealed the Arbitration (Protocol andConvention) Act, 1937, The Arbitration Act, 1940, and the Foreign AwardsF(Recognition and Enforcement) Act, 1961 bringing, with certain importantchanges, domestic awards within Part I, foreign awards relatable to theNew York Convention within Chapter I of Part II, and foreign awardsrelatable to the Geneva Convention within Chapter II of Part II. In thepresent Act, under Section 2(1)(c), “arbitral award” is defined as follows:G“

“2. Definitions.—(1) In this Part, unless the context otherwiserequires,—

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(c) “arbitral award” includes an interim award;”

Section 44 in Chapter I of Part II defines a New York Conventionaward as follows:

“44. Definition.—In this Chapter, unless the context otherwiserequires, “foreign award” means an arbitral award on differencesbetween persons arising out of legal relationships, whethercontractual or not, considered as commercial under the law inforce in India, made on or after the 11th day of October, 1960—

(a) in pursuance of an agreement in writing for arbitration towhich the Convention set forth in the First Schedule applies,and (b) in one of such territories as the Central Government, beingsatisfied that reciprocal provisions have been made may, bynotification in the Official Gazette, declare to be territories towhich the said Convention applies.”

Section 53 in Chapter II of Part II defines a Geneva Conventionaward as follows:

“53. Interpretation.—In this Chapter “foreign award” meansan arbitral award on differences relating to matters considered ascommercial under the law in force in India made after the 28thday of July, 1924,—

(a) in pursuance of an agreement for arbitration to which theProtocol set forth in the Second Schedule applies, and (b) between persons of whom one is subject to the jurisdictionof some one of such powers as the Central Government, beingsatisfied that reciprocal provisions have been made, may, bynotification in the Official Gazette, declare to be parties to theConvention set forth in the Third Schedule, and of whom theother is subject to the jurisdiction of some other of the powersaforesaid, and

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and for the purposes of this Chapter an award shall not be deemedto be final if any proceedings for the purpose of contesting thevalidity of the award are pending in the country in which it wasmade.”

The other important sections which have a bearing on theBcontroversy before us are as follows:

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“46. When foreign award binding.—Any foreign award whichwould be enforceable under this Chapter shall be treated as bindingfor all purposes on the persons as between whom it was made,and may accordingly be relied on by any of those persons by wayof defence, set-off or otherwise in any legal proceedings in Indiaand any references in this Chapter to enforcing a foreign awardshall be construed as including references to relying on an award.

47. Evidence.—(1) The party applying for the enforcement of aDforeign award shall, at the time of the application, produce beforethe Court—

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(a) the original award or a copy thereof, duly authenticated inthe manner required by the law of the country in which it wasmade; (b) the original agreement for arbitration or a duly certifiedcopy thereof; and

(c) such evidence as may be necessary to prove that the awardis a foreign award.

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(2) If the award or agreement to be produced under sub-section(1) is in a foreign language, the party seeking to enforce the awardshall produce a translation into English certified as correct by adiplomatic or consular agent of the country to which that partyGbelongs or certified as correct in such other manner as may besufficient according to the law in force in India.

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Explanation.— In this section and in the sections following inthis Chapter, “Court” means the High Court having originaljurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of asuit on its original civil jurisdiction and in other cases, in the HighCourt having jurisdiction to hear appeals from decrees of courtssubordinate to such High Court.”

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“49. Enforcement of foreign awards.—Where the Court issatisfied that the foreign award is enforceable under this Chapter,the award shall be deemed to be a decree of that Court.”

16. It will thus be seen that “award” under Item 12 of Schedule Iof the Indian Stamp Act, 1899 has remained unchanged till date. As hasbeen held by us hereinabove, in 1899, this “award” would refer only to adecision in writing by an arbitrator or umpire in a reference not made byan order of the Court in the course of a suit. This would apply only tosuch award made at the time in British India, and today, after theamendment of Section 1(2) of the Indian Stamp Act, 1899 by Act 43 of1955, to awards made in the whole of India except the State of Jammuand Kashmir. This being the case, we are of the view that the expression“award” has never included a foreign award from the very inception tilldate. Consequently, a foreign award not being includible in Schedule I ofthe Indian Stamp Act, 1899, is not liable for stamp duty. Shri Viswanathanalso relied upon the Tamil Nadu Amendment of the Indian Stamp Act,1899. The Tamil Nadu Amendment contains the identical definition of“award” as given in Item 12 thereof. The only difference is in the figurescontained for stamp duty. Consequently, this does not take the mattervery much further.

17. Shri Viswanathan then argued, based on Senior ElectricInspector and Ors. v. Laxminarayan Chopra and Anr., (1962) 3SCR 146, that an Act must be construed as on date, despite the fact thatthe definition contained in an old Act may not literally fit the bill. We areafraid that this judgment is wholly distinguishable in that, in the aforesaidcase, the definition of “telegraph line” in the Indian Telegraph Act, 1885,was construed as being wide enough to include electric lines used forthe purpose of wireless telegraph. This Court held that in a modernprogressive society, it would be unreasonable to confine the intention ofthe legislature to the meaning attributable to a word used at the time the A

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Alaw was made, and, unless a contrary intention appeared, an interpretationshould be given to the words used in the statute to take in new facts andsituations, if such words are capable of comprehending them. As statedhereinabove, this judgment is wholly distinguishable in that, given thefactual scenario of 1899, and the fact that foreign awards existed eventhen, in princely states as well as foreign countries, no new fact situationBhas arisen subsequently in order to apply the ratio of the said judgment.Further, we must not forget that the Indian Stamp Act, 1899 is a fiscalstatute which must be construed literally. Any ambiguity in the said statutewould enure to the benefit of the assessee who has to pay stamp duty.This being the case, Shri Viswanathan’s argument based on the aforesaidCjudgment, must be rejected.

18. We now come to some of the judgments referred to by counselfor the parties. The Punjab and Haryana High Court judgment (supra),strongly relied upon by Shri Viswanathan, referred to and relied uponSection 3(c) of the Indian Stamp Act, 1899, and held that an instrumentDmentioned in the Schedule which is executed out of India, being a foreignaward, would relate to a matter or thing done or not to be done in India,and that, therefore, stamp duty would be payable on such an award. It isimportant to note that this judgment does not refer to the definition of“award” in Item 12 of Schedule I at all. For this reason alone, this judgmentEcannot take us very much further, as it is clear that a foreign award, ashas been held by us, is not contained within the expression “award” inItem 12 of Schedule I and is, therefore, not an “instrument” which istaxable under Section 3(c) of the Indian Stamp Act, 1899.

19. The Delhi High Court judgment (supra), strongly relied uponby learned counsel appearing on behalf of the Respondent also does notFtake us very much further. As has been rightly pointed out by ShriViswanathan, the said judgment refers to the definition of “foreign award”contained in the 1996 Act, but then goes on to rely upon a SupremeCourt judgment, stating that such foreign award would not requireregistration as it can be enforced as a decree. It further went on to relyGupon the Supreme Court judgment in M. Anasuya Devi and Anr. v.M. Manik Reddy and Ors., (2003) 8 SCC 565, to state that the Court,while deciding enforceability of a foreign award under Sections 47 and48, cannot hold the award non-enforceable on the ground of it beingunstamped. This also, strictly speaking, is incorrect, as M. Anasuya(supra) merely stated, in the context of a domestic award, that theH

question as to whether an award is required to be stamped would berelevant only at the enforcement stage under Section 36 of the 1996 Actand not at the stage of challenge, which is governed by Section 34 of the1996 Act. We cannot forget that there is no challenge stage so far as aforeign award is concerned – so long as none of the grounds in Section48 are attracted, the award becomes enforceable as a decree. The stageof enforceability, therefore, has arisen in these cases, and it cannot besaid that the ratio of M. Anasuya (supra) would apply so that stampduty would become payable only at some subsequent stage. This judgmentis equally incorrect in stating that Fuerst Day Lawson Ltd. v. JindalExports Ltd., (2001) 6 SCC 356, would apply. One sentence in FuerstDay Lawson (supra) reads, “[T]he only difference as found is that whileunder the Foreign Awards Act a decree follows, under the new Act theforeign award is already stamped as the decree.” This sentence doesnot lead to the conclusion, following the judgment in Thyssen StahlunionGMBH v. Steel Authority of India Ltd., (1999) 9 SCC 334, thatunder the 1996 Act, a foreign award is considered to be stamped already.All that this sentence means is that the foreign award is to be regardedas a decree. The expression “stamped” means “regarded”. This judgmentalso does not carry us much further.

20. On the other hand, the Madhya Pradesh High Courtjudgment (supra) hits nearer home. This judgment, in paragraph 12thereof, states why foreign awards do not have to suffer stamp duty inthe following terms:

“12. The Law on Arbitration in India was substantially containedin three enactments namely, The Arbitration Act, 1940, TheArbitration (Protocol and Convention) Act, 1937 and The ForeignAwards (Recognition and Enforcement) Act, 1961. It was widelyfelt the 1940 Act, which contains the General Law of Arbitration,has become outdated. The Arbitration and Conciliation Act, 1996came in force to consolidate and amend the Law relating toDomestic Arbitrations, International Commercial Arbitration,enforcement of foreign arbitral awards and to define the lawrelating to conciliation, commission on international trade in short(UNCITRAL) Model Law and Rules. Apart from other object,the object of the Act is to provide that every final arbitral award isenforced in the same manner as if it were a decree of the Court.While Arbitration and Conciliation Act, 1996 was enforced, no A

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amendment was made in the definition of award given in the IndianStamp Act. Similarly, the Schedule which lays down the stampduty payable on award was not amended by including the foreignaward. It appears that law makers while enforcing the Arbitrationand Conciliation Act, 1996 was of the view that foreign awardshall be enforceable as if it were a decree of the Court, noamendment was brought either in the definition of award or in theSchedule relating to payment of stamp duty on award. Since thedefinition of award given at Entry No. 11 of the Schedule of theIndian Stamp Act does not cover the foreign award and one ofthe objects to enforce the new Act was to enforce final award asif it was a decree and keeping in view the law laid down by theHon’ble Apex Court in the matter of Fuerst Day Lawson Ltd.(supra), wherein the Hon’ble Supreme Court has held that underthe new Act the foreign award is already stamped as decree, thisCourt is of the view that the petition filed by the petitioner has nomerits and deserves to be dismissed. In view of this, the petitionfiled by the petitioner is disposed of holding that foreign award isalready stamped and is enforceable as decree.”

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21. The reasoning contained in paragraph 12 has our approval,short of the reasoning contained following Fuerst Day Lawson (supra)which, as we have already stated above, did not indicate that foreignEawards can never suffer stamp duty.

22. The other judgment heavily relied upon by Shri Viswanathan,namely the Gujarat High Court judgment (supra), merely refers toArticle III of the New York Convention to state that so far as proceduralaspects relatable to foreign awards are concerned, we must go by theFCode of Civil Procedure, and going by the Code of Civil Procedure, theCourt at Bhavnagar would have no jurisdiction to enforce the foreignaward in the facts of that case. Since Article III of the New YorkConvention is strongly relied upon by Shri Viswanathan, we need to setit out. It states:G“Article III

“Article III

Each Contracting State shall recognise arbitral awards as bindingand enforce them in accordance with the rules of procedure ofthe territory where the award is relied upon under the conditions laid down in the following articles. There shall not be imposedsubstantially more onerous conditions or higher fees or chargeson the recognition or enforcement of arbitral awards to which thisConvention applies than are imposed on the recognition orenforcement of domestic arbitral awards.”

23. There is no doubt whatsoever that if stamp duties are leviablein India on foreign awards, the imposition should not be substantiallymore onerous than the stamp duty that is imposed on recognition orenforcement of domestic arbitral awards. For the said Article to apply,stamp duty must first be leviable on a foreign award, which, as we haveheld earlier in this judgment, is not the case. Equally, reliance upon the194[th] Law Commission of India Report, insofar as stamp duty on domesticawards is concerned, would again have little bearing, given our findingthat under the present state of the law, foreign awards are not liable tostamp duty under the Indian Stamp Act, 1899.

24. An argument was made by learned counsel for the Respondentthat Section 47 of the Act requires three things and only three things tobe produced before the Court for enforcement of a foreign award, andthat therefore, stamp duty not being one of the three things required,cannot ever be levied. We are afraid that this again is an extremeargument. All that Section 47 deals with is production before the Courtof proof of the fact that a foreign award is sought to be enforced. In nomanner does Section 47 interdict the payment of stamp duty if it isotherwise payable in law. This argument must thus be rejected. Equally,the argument that under Section 48(2)(b), even if stamp duty is payableon a foreign award, it would not be contrary to the public policy of India,must be rejected. The fundamental policy of Indian law, as has beenheld in Renusagar Power Co. Ltd. v. General Electric Co., 1994Supp (1) SCC 644, and followed in Associate Builders v. DelhiDevelopment Authority, (2015) 3 SCC 49, makes it clear that if astatute like the Foreign Exchange Regulation Act, 1973 dealing with theeconomy of the country is concerned, it would certainly come within theexpression “fundamental policy of Indian law”. The Indian Stamp Act,1899, being a fiscal statute levying stamp duty on instruments, is also anAct which deals with the economy of India, and would, on a parity ofreasoning, be an Act reflecting the fundamental policy of Indian law.This argument on behalf of the Respondent must also, therefore, berejected.

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770SUPREME COURT REPORTS

A25. We, therefore, hold that the learned Single Judge of the MadrasHigh Court is correct, and the fact that a foreign award has not bornestamp duty under the Indian Stamp Act, 1899 would not render itunenforceable for the reasons given in our judgment. The appealaccordingly stands dismissed.

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Nidhi Jain

Appeal dismissed.

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