Deal: Delhi High Court issues notice in an application seeking deposit of stamp duty while adjudicating enforcement of a foreign award

The Delhi High Court on Friday was confronted with the question of application of the Constitution Bench decision of the Supreme Court in M/s N.N. Global Mercantile v M/s Indo Unique Flame Ltd. & Ors, Civil Appeal Nos. 3802 – 3803 of 2020 (N.N. Global) in a petition for enforcement of a Singapore-seated foreign award under Sections 47 – 49 of the Arbitration Act. (Simplot India LLC & Anr. v/s Himalaya Food International Limited, OMP (EFA) (COMM.) 1 of 2020)

In its 25 April 2023 ruling in N.N. Global, the Supreme Court affirmed its earlier decisions in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., Civil Appeal No. 5820 of 2011 and Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., Civil Appeal No. 3631 of 2021 to hold that an unstamped arbitration agreement is “unenforceable”, “invalid”, “bereft of life”, “non-est” and cannot be “acted upon” by a Court at the stage of reference of disputes under Section 11 of the Arbitration Act.

The Respondent, Himalaya Food International Limited, challenged the enforceability of the foreign award under Section 48(1)(a) of the Arbitration Act on the ground that the underlying arbitration agreement being unstamped is not “valid” under the Indian law i.e., governing law of the agreement. Himalaya supplemented its challenge against the enforceability of the foreign award in view of the position recently clarified by the Supreme Court in N.N. Global and argued that the findings on the invalidity of an unstamped agreement will also be applicable to proceedings for enforcement of foreign awards under Part – II of the Arbitration Act.

Himalaya also filed an application seeking deposit of unpaid stamp duty on the arbitration agreement on the ground that the Petitioners ought to comply with their contractual obligation to pay stamp duty on the arbitration agreement irrespective of the adjudication on the enforceability of the foreign award. It was argued that foreign entities such as the Petitioners, seeking enforcement of a foreign award under Part – II of the Arbitration Act, cannot be allowed to bypass the mandatory provisions of fiscal statutes of India.

On hearing the arguments in the application, Justice Manoj Kumar Ohri issued notice to the Petitioners and directed them to place their objections against this application.

The Respondent Himalaya Food International Limited was represented by Senior Advocate Ashish Dholakia along with the Trilegal team that was led by our Partner, Mohit Rohatgi, and attorneys Rajendra Dangwal, Senior Associate; Samriddhi Shukla and Nutan Keswani, Associates.

Media Link:

https://dhcappl.nic.in/dhcorderportal/GetFile.do

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