Delhi High Court: Examining Stamp Duty Adequacy in Arbitration Agreements Within Writ Jurisdiction

Explore how Delhi High Court, in a recent decision, upholds its jurisdiction under Article 226 to evaluate stamp duty adequacy in arbitration agreements, reinforcing the significance of the Indian Stamp Act.

Court’s Authority Post Arbitration Invocation

In a recent ruling, Justice Subramonium Prasad, on the Delhi High Court bench, clarified that the court retains the authority to address stamp duty concerns under Article 226 (writ jurisdiction) even after the initiation of arbitration. The judgment emphasized that the arbitral tribunal’s power on stamp duty does not impede the court’s jurisdiction.

Background and Writ Petition

The legal contention emerged when a party involved in arbitration approached the Delhi High Court through a writ petition, seeking a declaration of nullity for the arbitration agreement. A pivotal aspect raised by the petitioner was the alleged inadequacy of stamp duty. The respondent argued that the arbitral tribunal held the competence to rule on the petitioner’s objection.

Indian Stamp Act Implications

Delving into the nuances of the Indian Stamp Act, the Court highlighted its underlying purpose: ensuring the state’s entitlement to revenue. The Court unequivocally affirmed that the High Court retains the prerogative to decide on the sufficiency of stamp duty, irrespective of the Arbitral Tribunal’s ongoing examination of the matter.

Court’s Directive

While upholding its authority, the Court directed the petitioner to approach the Chief Controlling Revenue Authority to seek a resolution on the adequacy of stamp duty. This nuanced decision reinforces the coexistence of jurisdictional powers between the High Court and the Arbitral Tribunal in matters concerning stamp duty within arbitration agreements.