SAJAN VARGHESE Vs. STATE OF KERALA

JUDGEMENT

(1.) This writ petition concerns the scope and ambit of Ss. 31, 33, 39, 40, and 41 of the Kerala Stamp Act, 1959 (for short, 'the Stamp Act').

(2.) The petitioners are the directors of M/s.Saj Holdings Pvt. Ltd., a company incorporated under the Indian Companies Act, 1956. The petitioners entered into Ext.P5 agreement for sale with the 3rd and 4th respondents, whereby the former agreed to sell their share in the company in favour of the latter. Ext.P5 agreement contained an arbitration clause providing for arbitration between the petitioners and the 3rd and 4th respondents in case of dispute. According to the 3rd and 4th respondents, certain sums are due to them from the petitioners and the company in connection with the agreement. Therefore, they invoked the arbitration clause in the agreement and preferred AR No.150/2023 before this court, seeking the appointment of an Arbitrator to adjudicate the dispute. The petitioners herein were two of the respondents in AR No.150/2023. The petitioners brought to the notice of this court in AR No.150/2023 that Ext.P5 agreement was an insufficiently stamped document. This Court disposed of AR No.150/2023 appointing Justice.(Retd.) T.R.Ramachandran Nair as the sole arbitrator to adjudicate the dispute. Relying on the Seven Judge Bench decision of the Supreme Court in In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 [2023 SCC OnLine SC 1666], the question regarding the insufficiency of the stamping was left open to be decided by the Arbitrator.

(3.) The Arbitrator issued notice to the parties to the arbitration regarding the commencement of the arbitration. The petitioners entered appearance before the Arbitrator and filed Ext.P2 application seeking a direction to the 3rd and 4th respondents to produce the original of Ext.P5 agreement, impound the same, follow the procedure prescribed under the Stamp Act for insufficiently stamped documents and proceed with the adjudication of the arbitration case only after the 3rd and 4th respondents cured the defect relating to the insufficient stamp duty. Thereafter, the 3rd and 4th respondents filed their claim statement in the arbitration case. Along with the claim statement, they produced only a copy of Ext.P5 agreement. The petitioners then filed Ext.P4 application before the Arbitrator for the dismissal/ termination of the arbitration case on account of the non-production of the duly stamped original of Ext.P5 agreement. While so, the 3rd and 4th respondents produced before the Arbitrator the original of Ext.P5 agreement on 18/7/2024, which bore a certificate dtd. 17/7/2024 issued by the 2nd respondent under Sec. 41(1) of the Stamp Act. The certificate stated that the deficit stamp duty of Rs.1,50,000.00 and fine of Rs.10,000.00 have now been remitted. According to the petitioner, the certificate dtd. 17/7/2024 shown in Ext.P5 has been illegally and improperly issued by the 2nd respondent only to help the 3rd and 4th respondents. The writ petition has been filed to quash the certificate dtd. 17/7/2024 found in Ext.P5 and to give a direction to the 2nd respondent to reconsider the issue of stamp duty and penalty, if any, payable for Ext.P5 agreement in accordance with law.