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2013 (6) TMI 838 - HC - Indian LawsApplication u/s 9 of the Arbitration and Conciliation Act, 1996, - An objection was raised on behalf of the Appellant on the ground that the Memorandum of Understanding (MOU) was insufficiently stamped and that in consequence, the document could not be acted upon unless the stamp duty and penalty, if any, payable thereon was adjudicated upon - HELD THAT - The document came before the Court in the course of the proceedings under Section 9. A consideration of the issue could not have been deferred to the arbitration proceedings having regard to the provisions of Section 33(1) of the Bombay Stamp Act, 1958. Article 5(ga) of the Schedule relates to the stamp duty payable on an agreement or MOU where it relates to giving authority or power to a promoter or a developer by whatever name called for construction on, development of or sale or transfer of any immovable property. Prima facie, the document would require stamping and has been insufficiently stamped having regard to the provisions of Article 5(ga) of the Schedule to the Bombay Stamp Act, 1958. In the circumstances, Court pass the following order (i) The MOU is impounded. An authenticated copy of the MOU shall be forwarded by the Prothonotary and Senior Master to the Collector of Stamps, Mumbai Suburban District, for adjudication of the stamp duty and penalty, if any, payable on the document under the provisions of the Bombay Stamp Act, 1958; (ii) The Collector of Stamps, Mumbai Suburban District shall expedite the determination in terms of clause (i) above and complete the exercise within a period of four weeks of the receipt of a duly authenticated copy of the document together with an authenticated copy of this order from the Prothonotary Senior Master; (iii) Pending further orders shall remain stayed;
Issues:
1. Insufficiency of stamp duty on the Memorandum of Understanding (MOU) dated 29 July 2011. 2. Whether the arbitration agreement can be delinked from the MOU for interim measures. 3. Interpretation of Clause-15 of the MOU regarding stamp duty payment. 4. Analysis of the clauses in the MOU related to construction, payments, and obligations. 5. Consideration of the objection of insufficient stamping during Section 9 proceedings. 6. Application of Section 33(1) of the Bombay Stamp Act, 1958. 7. Impounding and adjudication of stamp duty on the MOU. Analysis: 1. The appellant raised an objection regarding the insufficiency of stamp duty on the MOU dated 29 July 2011, citing the Supreme Court's decision in SMS Tea Estates Pvt. Ltd. vs. Chandmari Tea Co. Pvt. Ltd. The Court emphasized that without the proper stamp duty and penalty payment, the document, including the arbitration agreement within it, cannot be acted upon. 2. The learned Single Judge held that the question of insufficiency of stamp duty could be decided during arbitral proceedings and suggested delinking the arbitration agreement from other provisions of the MOU for interim measures. However, this view was deemed contrary to the Supreme Court's judgment. 3. The respondents argued that stamp duty would only be payable upon the execution of the final agreement for each phase as per Clause-15 of the MOU dated 29 July 2011, which contemplates future agreements for development and construction. 4. The clauses in the MOU outlined the obligations of the parties regarding construction, payments, and timelines. It detailed the financing of construction, payment obligations, default consequences, and construction timelines, indicating a comprehensive agreement between the parties. 5. The Court highlighted that the objection of insufficient stamping should have been addressed during the Section 9 proceedings and could not be deferred to arbitration, citing the Bombay Stamp Act, 1958. The document was found to be insufficiently stamped under Article 5(ga) of the Act. 6. Section 33(1) of the Bombay Stamp Act, 1958 was invoked to impound the MOU for adjudication of stamp duty and penalty. The Court ordered the document to be forwarded to the Collector of Stamps for determination within a specified timeline, staying the previous order and rescheduling the appeal hearing. 7. Consequently, the Court ordered the impoundment of the MOU, expedited adjudication of stamp duty, stayed the previous order, and rescheduled the appeal hearing, ensuring compliance with stamp duty regulations and procedural requirements under the law.
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