The Delhi High Court has ruled that there is no need to levy stamp duty as per Clause 5(c) of Schedule 1A of the Indian Stamp Act (ISA) for any document/instrument executed by or on behalf of the government because of the application of Section 3, proviso 1 of the Act.

The court granted a petition filed under Section 11 of the Arbitration and Conciliation Act of 1996. This petition requested the appointment of an arbitrator to handle a dispute arising from a Work Order.

Justice Rekha Palli, in her ruling, noted that when analyzing proviso (1) of Section 3 of the Act, it is apparent that no stamp duty should be imposed, among other things, on a document that has been executed by or on behalf of the government. In this particular case, the respondent did not dispute that the work order dated 15.02.2016 had been executed on behalf of the government. Given these circumstances, Justice Palli concluded that the petitioner's argument that no stamp duty was required for this work order is valid.

The petitioner filed a Writ Petition under Section 11 of the Act, seeking the appointment of an arbitrator to resolve disputes arising from a Work Order between the parties. The respondent argued that the petitioner had already received full and final compensation and had initiated legal proceedings without first going through the Dispute Resolution Committee (DRC) process outlined in Clause 25 of the General Conditions of Contract (GCC).

The court noted that the petitioner is a partnership firm that had assumed the assets and liabilities of M/s Satya Narain, a sole proprietorship firm to whom the respondent had issued a work order. The court dismissed the respondent's argument that the petitioner, not being a signatory to the work order, was ineligible to initiate arbitration.

The court observed that the petitioner had explicitly requested the Chief Engineer of the respondent to refer the disputes to the Dispute Resolution Committee (DRC). However, the respondent had failed to take this action. Consequently, the court accepted the petitioner's argument that no stamp duty was required for the disputed work order. In response, the court appointed a former Judge of the Delhi High Court to serve as the arbitrator in the case.

As a result, the court allowed the petition.

Case: M/S SVK Infrastructures v Delhi Tourism And Transportation Development Corporation Ltd., ARB.P. 668/2023.