An arbitral award is chargeable with stamp duty under Article 12 of Schedule I to the Indian Stamp Act, 1899 (Stamp Act). The High Courts differ on when the duty becomes payable, and the consequence follows from the timing. If it was payable when the award was signed, as the Delhi High Court held in URC Construction (P) Ltd v. Airports Authority of India (1 September 2026), the award is impounded and enforcement waits on payment of the deficit and a penalty of ten times that amount. If it is payable at enforcement, as the Karnataka High Court held in Shakeel Pasha v. City Max Hotels India Pvt Ltd (28 July 2023), the award holder pays the duty and proceeds.

The two statutes run on different clocks. Section 17 of the Stamp Act requires that chargeable instruments “shall be stamped before or at the time of execution”, execution meaning signature under Section 2(12), with one further month allowed by proviso (a) to Section 32(3) for certification by the Collector on payment of the duty alone. Under Section 36 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), an award cannot be enforced until the three-month period for a challenge under Section 34 has expired. An award holder who waits, as the Arbitration Act requires, and stamps at enforcement has on one view complied with the law and on the other been in default for at least two months.

In URC Construction (OMP (ENF.) (COMM.) 155/2026), a single judge bench held that an award attracts stamp duty on the day it is signed; that Section 36 of the Arbitration Act does not postpone that liability; that a late deposit of the deficit duty does not cure the defect, so that the award must be impounded under Section 33 of the Stamp Act; and that the enforcing court cannot waive or reduce the tenfold penalty under Section 35. The Supreme Court has not resolved the conflict. The Delhi High Court read the Stamp Act correctly and reached a result that neither statute could have intended. The practical answer lies in Section 41 of the Stamp Act.

M. Anasuya Devi: Deferring the Objection or Deferring the Duty?

The divergence traces back to M. Anasuya Devi v. M. Manik Reddy, (2003) 8 SCC 565, where the Supreme Court held that an award may be set aside only on the grounds enumerated in Section 34, and that stamping “would be relevant only when the parties would file the award for its enforcement under Section 36 of the Act”. On the narrower reading, the objection must wait for Section 36, leaving the Stamp Act to fix when the duty fell due, which is at execution. On the wider reading, the obligation to pay arises only when the award holder seeks to act upon the award, that being the first point at which the instrument is “acted upon” for the purposes of Section 35 of the Stamp Act.

The High Courts before URC Construction

The Delhi High Court's own earlier decision in Mohini Electricals Ltd v. Delhi Jal Board, 2021 SCC OnLine Del 3506, leans the other way, holding that “the Arbitration Act envisages that the payment of requisite stamp duty on an award shall only be required when a party is seeking to get the same enforced under Section 36” (para 31).

The Karnataka High Court in Shakeel Pasha (WP Nos 8352/2022 and 12935/2022) adopted the wider reading. An executing court had assessed duty at Rs 72,500 and imposed a penalty of Rs 7,25,000 under the Karnataka Stamp Act, 1957 (Karnataka Stamp Act); the High Court set the penalty aside, holding that “the question of impounding an arbitral award in an execution proceedings would not arise” (para 25). On appeal (Civil Appeal Nos 2139-2140 of 2024, 12 February 2024) the Supreme Court left that undisturbed, holding that “there is no power conferred on the Courts to direct payment of penalty and it is the power of the appropriate authorities under the Karnataka Stamp Act to impose penalty”.

The Punjab and Haryana High Court, in Quadrant Televentures Ltd v. ATC Telecom Infrastructure Pvt Ltd, 2024:PHHC:075102, and Managing Director, Haryana State Warehousing Corporation v. Ram Avtar Gupta, 2024:PHHC:130772, requires the executing court to determine sufficiency and, if the award is insufficiently stamped, to give the award holder “an option … to deposit the balance stamp duty and penalty, if any”, without deciding when the duty became payable.

The Decision in URC Construction

In URC Construction the award, drawn on stamp paper of Rs 100, had survived a Section 34 challenge that took close to seven years, and the award holder deposited the deficit duty of Rs 25,850 at enforcement. The question (para 55) was whether a decree holder may cure the defect by depositing the duty at a belated stage without penalty, or whether the court is bound under Section 33 of the Stamp Act to impound the award.

The Court answered against the decree holder on every point. The Stamp Act fixes execution as the chargeable event, and M. Anasuya Devi deferred only the objection, not the payment (paras 81, 189, 268 to 269). No provision of the Stamp Act permits a unilateral deposit after one month from execution without penalty (para 265). Section 33 obliges the court to impound the award, after which it is either admitted under Section 35 on payment of the deficit duty and ten times that amount as penalty, or sent to the Collector under Section 38(2) for adjudication under Section 40; on neither route may the court waive or reduce the penalty (paras 249 to 250, 255).

The Court observed that the two statutes “appear to be temporally inconsistent” (para 185) and that “a harmonious view would be, in fact, to permit willing Decree Holders to deposit the deficit amount and proceed with enforcement” (para 198), but held that a court exercising jurisdiction under Section 36 must act within the confines of the statute (para 199). It recorded that the bona fide pendency of a challenge is a cogent ground for the Collector to waive or impose minimal penalty (para 198) and impounded the award.

The Difficulty with the Delhi High Court's View

On the words of the Stamp Act, URC Construction is correct: Section 17 carries no qualification by reference to when the instrument will be needed, and Section 36 of the Arbitration Act speaks to enforceability rather than chargeability. The result is one that neither statute can be taken to have intended. The award holder does not sign the award, has no control over when it is signed, cannot act upon it for three months, and may not know in that period whether it will ever need to, since the judgment debtor may pay or may succeed under Section 34. The duty cannot be quantified until the award is made, since it is charged ad valorem on the amount awarded, and Mohini Electricals holds that stamping is no concern of the tribunal (paras 32 and 34). Stamping at signature is therefore not a course open to the award holder at all.

What an Award Holder Can Do

Until the Supreme Court settles the point, an award holder should proceed on the Delhi High Court's view, since that is the view under which penalty is incurred. Two courses are available. The first is to apply to the Collector under Section 41 of the Stamp Act within one year of execution and before any court impounds the award; if the omission “has been occasioned by accident, mistake or urgent necessity”, the Collector receives the deficit duty and endorses the instrument under Section 42 without penalty. An award holder who could not know the duty until the award was made, and could not act on it for three months, has a strong claim to both limbs; URC Construction recognises the route (paras 143, 154 to 155). The second, where the award is already impounded, is to pay the deficit duty and the tenfold penalty under Section 35 so that enforcement proceeds without waiting for the Collector, and then to apply under Section 39 for refund of the penalty on the ground which URC Construction itself identifies.

The Delhi High Court's reading of the Stamp Act is correct, and that is the difficulty. A statute that charges an instrument at signature cannot sensibly be applied to an instrument that its beneficiary neither signs, nor can value, nor can act upon for three months. The Karnataka High Court reached a workable result, but only by reading M. Anasuya Devi more widely than its words support. The answer lies with the Supreme Court, or with Parliament, whose draft Arbitration and Conciliation (Amendment) Bill, 2024 would insert the words “duly stamped” after “in writing” in Section 31(1) of the Arbitration Act and place the obligation on the tribunal at signature, but which had not been introduced when the Monsoon Session closed on 13 August 2026. Until one of them acts, Section 41 of the Stamp Act is the only provision that reconciles the two statutes, and the cost of the contradiction will depend on where the award is enforced.

Author is an Advocate based in Delhi. Views are personal.