The Supreme Court on Tuesday stayed a Delhi High Court order directing the impounding of insufficiently stamped domestic arbitral awards presented for enforcement, Bar and Bench reported on Wednesday. A Bench of Justices KV Viswanathan and Arun Palli stayed the operation and effect of the High Court's September 1 and September 7 orders until further orders and issued notice on the petitions.

Source: Bar and Bench

The Bench directed that the practice directions issued by the Delhi High Court on July 13 concerning the payment of stamp duty on arbitral awards would continue to operate, and enforcement proceedings may continue, Bar and Bench reported. The stay is an interim order; the Supreme Court has not yet decided the underlying question of when stamp duty on an arbitral award becomes payable.

Source: Bar and Bench

What the High Court had held

In its September 1 ruling in the enforcement petition filed by URC Construction Private Limited against the Airports Authority of India (AAI), the Delhi High Court held that a domestic arbitral award attracts stamp duty when it is signed, not when it is presented for enforcement, Bar and Bench reported. It further ruled that unilateral payment of deficient stamp duty more than a month after the signing of an award would not cure the defect, and that such an award would have to be impounded under the Indian Stamp Act, 1899.

Source: Bar and Bench

The High Court directed that enforcement petitions filed after August 13, 2026 involving insufficiently stamped awards be returned under objections and placed before the Joint Registrar for impounding, Bar and Bench reported. In the URC case itself, the award dated March 26, 2019 (corrected on May 7, 2019) directed AAI to pay Rs 2,59,07,248.60 with interest at 10 per cent; it had been drawn on stamp paper of Rs 100 and the decree holder paid the deficit duty of Rs 25,850 on July 29, 2026, the High Court's judgment records.

Source: Delhi High Court judgment, URC Construction v. AAI

Why the question is contested

High Courts have taken differing views on when the duty falls due. The Karnataka High Court in Shakeel Pasha v. City Max Hotels India Pvt Ltd (2023) treated stamp duty as payable at the enforcement stage, while the Supreme Court's earlier ruling in M. Anasuya Devi v. M. Manik Reddy (2003) said the question of stamping would be relevant only when parties filed the award for enforcement under Section 36 of the Arbitration and Conciliation Act, 1996, LiveLaw's analysis of the URC ruling noted. The Delhi High Court in URC read those precedents differently, holding that they deferred the objection, not the obligation to pay.

Source: LiveLaw

The practical stakes are significant for companies seeking to enforce arbitral awards: under the Delhi ruling, a late-paid deficit could expose an award to impounding and a penalty of up to ten times the deficit under Section 35 of the Stamp Act before enforcement could proceed, Legal500's analysis noted. With the stay in place, that impounding procedure will not operate under the September orders while the Supreme Court hears the challenge.

Source: Legal500