The Delhi High Court has held that stamp duty on an arbitral award must be calculated on the principal amount, excluding the interest component. Justice Jasmeet Singh clarified that including interest in the total awarded sum cannot increase the stamp duty liability under Section 23 of the Indian Stamp Act, 1899.
The Court dismissed a review petition filed by the National Highways Authority of India (NHAI) against an earlier order directing payment of the remaining interest to Patel KNR Infrastructure Limited.
Background
The arbitral award dated January 18, 2020, amounted to ₹18.34 crore, comprising ₹11.75 crore towards the principal claim and approximately ₹6.49 crore in interest.
NHAI argued that the award was insufficiently stamped because the company had paid stamp duty of ₹1,18,105 instead of the claimed applicable amount of ₹1,83,402.80. It contended that the alleged deficiency made the award unenforceable.
Patel KNR Infrastructure Limited opposed the argument, relying on Section 23 of the Stamp Act, which excludes interest from increasing the stamp duty payable on an instrument.
Justice Jasmeet Singh examined Section 23 and accepted the company's argument. The Court observed:
"The provision, therefore, makes it clear that the mere inclusion of an interest component in an instrument cannot result in an enhanced stamp duty liability."
The Court further clarified:
"The interest component cannot be included in the computation of stamp duty merely because it forms part of the total amount awarded by the Arbitral Tribunal."
The Court also rejected NHAI's reliance on earlier judicial decisions, observing that those cases did not specifically examine the exclusion of interest under Section 23.
On the scope of review jurisdiction, the Court reiterated:
"A review cannot be treated as an appeal in disguise or an opportunity to re-agitate issues which have already been considered."
Finding no apparent error in its April 30, 2024 order, the Delhi High Court dismissed NHAI's review petition. The Court held that the interest component was not required to be included while calculating stamp duty on the arbitral award.
The matter was directed not to be listed further.
