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TMI Blog2020 (2) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act to be accompanied by the original arbitration agreement or a duly certified copy thereof. In fact, such a requirement is found in the scheme/rules of almost all the High Courts. If what is produced is a certified copy of the agreement/contract/instrument containing the arbitration clause, it should disclose the stamp duty that has been paid on the original - If the court comes to the conclusion that the instrument is not duly stamped, it has to impound the document and deal with it as per Section 38 of the Stamp Act. A perusal of the clauses of the lease deed dated 12.3.1997 would also reveal, that the lessee had undertaken all the responsibility of obtaining vacant possession of Schedule B property and to secure vacant possession by ejecting the unauthorised occupants. Responsibility of sanctioning the building plans was also undertaken by the respondents. It would further reveal, that it was also agreed between the parties, that in the event of any of the tenants approaching a court of law, such period of litigation shall not in any manner affect the agreed tenure of the lease deed of 38 years - the submission made by Shri Balaji Srinivasan, learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit, which was to be refunded to it at the end of the period of 38 years, if the lease was not extended between the parties. As per the terms of the said lease deed, a certain monthly ground rent was also required to be paid by the respondent No.1 lessee to the appellant No.1 Trust. As per the said lease deed, the respondent No.1 lessee was to construct a multipurpose auditorium with minimum seating capacity of one thousand persons. The said auditorium was to be used for marriages, etc. together with dining hall, kitchen, guest rooms, etc. The respondent No.1 lessee had also undertaken to obtain vacant possession of property mentioned in Schedule B subject to all cooperations being extended to it, by the lessor for ejectment of the existing tenants of the lessor. The said lease deed was executed on 31.5.1996 on the basis of the resolution of the appellant No.1 Trust dated 30.4.1996. 8. A subsequent lease deed dated 12.3.1997 came to be executed between the appellant No.1 and the respondent No.1. Most of the terms and conditions in the subsequent/fresh lease deed dated 12.3.1997 are identical with the terms and conditions as are found in the first lease deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the notice, the appellants entered their appearance and filed their statement of objections on 2.6.2014 thereby, praying for dismissal of the petition on various grounds. 12. Since it was the basic contention of the appellants, that the lease deed dated 12.3.1997 being insufficiently stamped had to be mandatorily impounded under Section 33 of the Karnataka Stamp Act, 1957 and it could not be relied upon unless proper duty and penalty was paid, the single judge of the Karnataka High Court referred the matter to the Registrar (Judicial) for determination of the said issue. The Registrar (Judicial) of the High Court of Karnataka by a detailed report dated 25.9.2014 held, that the document in question was lease deed and not an agreement to lease and therefore, directed the respondent Nos. 1 and 2 to pay deficit stamp duty and penalty of ₹ 1,01,56,388 /( Rupees One crore One lakh FiftySix thousand Three hundred and Eighty Eight only). 13. The respondent Nos. 1 and 2 filed their objections to the report of the Registrar (Judicial). The High Court of Karnataka without consideration of the report of the Registrar (Judicial) passed the impugned order thereby, allowing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in the State of Karnataka when such instrument was executed or first executed: Provided that,- (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of the High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, the Government may determine,- (a) what offices shall be deemed to be public offices; and (b) who shall be deemed to be persons in charge of public offices. 34. Instruments not duly stamped inadmissible in evidence, etc. No instrument chargeable with duty shall be admitted in evidence for any purpose by any pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 have not complied with the said directions and have not paid the deficit stamp duty and penalty. In this background, a question that would arise for consideration is, as to whether clause 36 in the lease deed dated 12.3.1997 could be acted upon to enforce the arbitration clause contained therein. 19. The issue is no longer res integra. This Court in the case of SMS Tea Estates Private Limited vs. Chandmari Tea Company Private Limited (2011) 14 SCC 66 had occasion to consider the provisions which are in pari materia with the provisions of the Karnataka Stamp Act, 1957. The relevant paragraphs are as under: 17. What if an arbitration agreement is contained in an unregistered (but compulsorily registerable) instrument which is not duly stamped? To find an answer, it may be necessary to refer to the provisions of the Stamp Act, 1899 ( the Stamp Act , for short). Section 33 of the Stamp Act relates to examination and impounding of instruments. The relevant portion thereof is extracted below: 33.Examination and impounding of instruments.-( 1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the scheme/rules of almost all the High Courts. If what is produced is a certified copy of the agreement/contract/instrument containing the arbitration clause, it should disclose the stamp duty that has been paid on the original. Section 33 casts a duty upon every court, that is, a person having by law authority to receive evidence (as also every arbitrator who is a person having by consent of parties, authority to receive evidence) before whom an unregistered instrument chargeable with duty is produced, to examine the instrument in order to ascertain whether it is duly stamped. If the court comes to the conclusion that the instrument is not duly stamped, it has to impound the document and deal with it as per Section 38 of the Stamp Act. 21. Therefore, when a lease deed or any other instrument is relied upon as contending the arbitration agreement, the court should consider at the outset, whether an objection in that behalf is raised or not, whether the document is properly stamped. If it comes to the conclusion that it is not properly stamped, it should be impounded and dealt with in the manner specified in Section 38 of the Stamp Act. The court cannot act upon such a docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a suit for injunction against the respondents which was duly contested by the respondents by filing written statement on 18.6.2011, the respondents after participating in the suit proceedings for a period of about 2 years and 3 months, filed the present application before the High Court under Section 11(6) of the Arbitration Act. It is further to be noted, that if in the pursuit of the respondents, the lease deed dated 12.3.1997 was legal and valid document and it could be relied on for referring the dispute to arbitration in view of clause 36 thereof, nothing precluded them from filing an application under Section 8 of the Arbitration Act before the City Civil Court at Bangalore in O.S. No.8952 of 2010 at the earliest opportunity available. It appears, that the respondent Nos. 1 and 2 are taking selfcontradictory stands. In the written statement before the City Civil Court at Bangalore, they have admitted, that the document was a lease deed, whereas before the High Court they have taken a stand, that the document was an agreement for developing the property after the property is made vacant by evicting the tenants. The stand is also totally contrary to the terms expressed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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