Section 3 Proviso 1 Indian Stamp Act| Any Instrument Executed By Or On Behalf Of Govt Is Exempted From Stamp Duty: Delhi High Court

The Delhi High Court has held that no stamp duty under Clause 5(c) of Schedule 1A of the Indian Stamp Act (ISA) would be applicable on any instrument executed by or on behalf of the Government due to the application of Section 3 proviso 1 of the ISA.  

The Court allowed a Petition under Section 11 of the Arbitration and Conciliation Act 1996, (Act) seeking the appointment of an arbitrator related to a dispute over a Work Order. 

The Bench of Justice Rekha Palli observed, “From a careful reading of proviso (1) of Section 3 of the Act, it becomes evident that no stamp duty would be chargeable inter alia on an instrument which has been executed by or on behalf of the Government. In the present case, the respondent has not denied that the work order dated 15.02.2016 has been executed on behalf of the Government. In these circumstances, I am of the considered view that the petitioner has correctly urged that no stamp duty was payable on this work order”.

Advocate Avinash Kr. Trivedi appeared for the Petitioner and Advocate Shobhana Takiar appeared for the Respondent.

The Petitioner approached the Court by way of a Writ Petition under Section 11 of the Act seeking the appointment of an arbitrator for adjudication of disputes related to a Work Order between the parties. The Respondent contended that the Petitioner had been fully and finally compensated and that the Petitioner had initiated legal proceedings without first exhausting the Dispute Resolution Committee (DRC) mechanism established under Clause 25 of the General Conditions of Contract (GCC).

The Court observed that the Petitioner is a partnership firm that had taken over the assets and liabilities of M/s Satya Narain, a sole proprietorship firm in whose favor a work order was issued by the Respondent. The Court rejected the Respondent’s contention that since the Petitioner is not a signatory to the work order, therefore, they could not have invoked arbitration.

The Court noted that the Petition had made a specific request to the Chief Engineer of the Respondent to refer the disputes to the DRC, but that the Respondent had failed to do so. Therefore, the Court accepted the Petitioner’s contention that no stamp duty was payable on the impugned work order. The Court appointed a former Judge of the Delhi High Court as arbitrator.

Accordingly, the Court allowed the Petition.

Cause Title: M/S SVK Infrastructures v Delhi Tourism And Transportation Development Corporation Ltd (DTTDC) (2023DHC:7747)

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