HINDUSTAN STEEL LTD. V. DILIP CONSTRUCTION CO. (1969) 1 SCC 597: AIR 1969 SC 1238
FACTS
The respondents entered into a contract with Hindustan Steel Ltd. for various services at Nandini mines.
Disputes arose between the parties, which were referred to arbitration as per Clause 61 of the agreement.
The arbitrators disagreed, and the dispute was referred to an umpire who made an award on April 19, 1967.
The award was filed in the Court of the District Judge, Rajnandgaon, and notice was given to the parties.
The appellant filed an application to set aside the award, arguing that it was unstamped and therefore invalid.
The District Judge directed that the award be impounded. He then called upon the respondents to pay the appropriate stamp duty on the award and penalty.
Against that order the appellant moved the High Court of Madhya Pradesh in exercise of its revisional jurisdiction.
The High Court rejected the petition and the appellant appeals to this Court with special leave.
ISSUE
Whether an unstamped award could be entertained and acted upon by the Court, or if it must first be impounded and stamped before being considered valid.
RULE
Section 38 deals with the impounding of the instruments. By Section 39 the Collector is authorised to adjudge proper penalty and to refund any portion of the penalty which has been paid in respect of the instrument sent to him. Section 40 prescribes the procedure to be followed by the Collector in respect of an instrument impounded by him or sent to him under Section 38.
The Court emphasized the importance of Section 42(2) of the Act, which explicitly states that an instrument certified as duly stamped by the Collector can be acted upon as if it had been stamped from the beginning.
HELD
The Court held that the award, being an "instrument" within the meaning of the Section 2(14) Stamp Act, was required to be stamped.
An unstamped instrument cannot be received in evidence by the Court or acted upon.
However, the Court has the authority to impound the instrument and send it to the Collector for stamping. Provided by sec 42 of Stamp Act
Mst. Bittan Bibi v. Kuntu Lal: The Court referred to this case where it was held that an instrument, once admitted in evidence, may not necessarily be acted upon until it is duly stamped. This interpretation was found consistent with the provisions of the Stamp Act.
Once stamped, the instrument can be admitted in evidence and acted upon.
The Court clarified that Section 36 of the Stamp Act does not prohibit an unstamped instrument from being acted upon after stamping; it only removes the bar against admitting the instrument in evidence.
The appeal was dismissed, affirming the decision of the District Court.