Aakash Dwivedi

Abstract: This article examines the ongoing interpretive controversy before the Karnataka High Court as to whether arbitral awards granting monetary relief attract stamp duty under Article 11 of the Karnataka Stamp Act, 1957. The Supreme Court has held that unstamped awards are unenforceable. Thus, the determination of this question is significant for the efficacy of the arbitral process. How the Karnataka HC chooses to answer this question will also affect other States with analogous legislations. I critically examine the divergent judicial views before the Karnataka HC.

Introduction

Arbitration, as an alternative to litigation, provides for the speedy resolution of disputes, and to that effect seeks to minimize judicial interference. Ultimately, however, parties must rely upon domestic courts to facilitate the execution of their awards, and to this extent, courts will always have the last word. Petitions challenging or enforcing an award, as the culmination of the arbitral process, remain especially susceptible to judicial interference. This precarity disproportionately projects upon the perceived efficacy of the arbitral process as a whole, since these final stages can serve as single points of failure even if the process was otherwise conducted in a timely and efficient manner.

It is in this context that the rather unglamorous and routine requirement of stamping an arbitral award assumes some pragmatic importance. The Supreme Court has held that the payment of stamp duty is an essential prerequisite for enforcement under s. 36 of the Arbitration & Conciliation Act, 1996 (“A&C Act”). Thus, the non-payment of stamp duties is often utilized by litigators to resist and strategically delay the enforcement of an award (this continuing practical relevance of stamp duty is also the reason d’être for this article). Importantly, the calculation of stamp-duty is a parochial exercise and varies from state-to-state. The adverse use of stamping obligations has given rise to an entire gamut of jurisprudence vis a vis stamp-duty and arbitral awards at both the Central and State levels. For instance, whether non-payment is a grounds of set aside under s. 34 [1]; whether foreign arbitral awards are liable to pay stamp-duty [2]; whether unstamped awards ought to be impounded [3]; and most prominently whether an unstamped arbitration agreement can be said to prima facie exist under s. 8, and whether an arbitrator may be appointed under s. 11 on the basis of such an agreement, culminating in a 7-judge bench decision in 2023 [4].

In this blog, I examine one such interpretive debate that is currently unfolding within the Karnataka High-Court, viz. the appropriate interpretation of Article 11 of the Karnataka Stamp Duty Act. Article 11 of the Act, like its provincial counterparts, calculates stamp duty for arbitral awards on two broad bases- first, the subject matter of the award (movable or immovable property), and second, pursuant to determination of the subject-matter, an ad valorem calculation of the amount due. The legal point which remains nebulous before the High Court is the applicability of stamp duties to awards granting monetary relief, i.e., awards granting liquidated or unliquidated damages (whether arising out of contract, or otherwise).

The issue of classification is whether such awards can be characterized as ‘movable property’. As one can imagine, relief in damages is frequently granted, making the determination of this question simultaneously significant for both revenue-collection and enforcement proceedings before courts in Karnataka. Various co-ordinate benches have taken divergent views on the applicability of art. 11 to such awards. This divergence has been the cause of much confusion in the State’s Commercial Courts and unnecessarily delays execution proceedings for at least the amount of time required to decide such interim petitions (which can take anywhere between several months to over a year, from my limited personal experience). Therefore, a reference to a larger bench is necessary and long overdue. Alternatively, the issue may percolate to the Supreme Court.

Importantly, this piece is not concerned with whether stamp duty ought to be levied at all on arbitration agreements and awards, which is a normative question and has been dealt with elsewhere. In this piece, I critically discuss the divergent positions adopted by the Karnataka High Court. I advance factors that ought to be considered by courts in settling the standard.

Money and Movable Property : Understanding the Split

The question first arose in 2023, in Karnataka State Highways v M/s. KMC-VDB. Here, the petitioner had filed a petition under Section 34 of the A&C Act for the setting aside of an arbitral award granting liquidated damages to the respondent to the tune of ₹35 crore (¶3). In the meanwhile, the respondent sought enforcement, which the petitioner resisted on the ground of non-payment of stamp duty. In response, the advocate for the respondent contended that Article 11 of the Karnataka Stamp Act only mandates payment of stamp duty for awards dealing with movable or immovable property, whereas in the instant case, the award dealt with neither (¶5). Rather, it was only an award for damages, ‘which is an actionable claim and therefore does not attract stamp duty’.

This argument is doubly problematic. It assumes, first, that a sum awarded as damages remains an ‘actionable claim’ after adjudication, and second, that monetary awards being an ‘actionable claim’ is sufficient to preclude them from the distinct and broader category of ‘movable property’. As demonstrated below, neither assumption is correct: the former misdescribes the legal character of an award, and the latter rests on an unwarranted conflation of the statutory scope of ‘goods’ with the definitional content of ‘movable property’. I return to this point after examining the court’s reasoning.

The court accepted the respondent’s argument without much independent analysis (¶7). It held that the Karnataka Stamp Act makes no provision to collect stamp duty on an award of damages. In response, the petitioners contended that damages are ‘movable property’ within the meaning of Article 11; an argument the court swiftly rejected on the grounds that, whereas movable property in art. 11 refers only to ‘tangible’ properties (¶8), the present award is in the nature of damages arising from a contract for service which is not a tangible property. The practical effects of such a reading of Article 11 are attractive: if awards granting damages attract no duty, an executing court need not impound them, and non-stamping ceases to be a bar to enforcement. The outcome is pro-arbitration and, to that limited extent, welcome. The difficulty is that it does not follow from a reasonable reading of the statute: as I argue below, the text points the other way, and the strain in the court’s reasoning reflects this.

The court does not elaborate on why money is not a tangible property, or even what is meant by a ‘tangible property’. The court, to construe the meaning of ‘movable property’ seems to be drawing from s. 2(7) of the Sale of Goods Act (a mistake made by the respondent also). S. 2(7) defines ‘goods’ as every kind of moveable property ‘other than actionable claims and money’. Reliance on this statutory scheme is unpersuasive as the definition in the Sale of Goods Act is explicitly limited to ‘goods’, which cannot be conflated with the broader category of ‘movable property’. Further, the phrasing of s. 2(7), (“every kind of movable property other than…”) itself makes clear that normally, actionable claims and money are indeed movable property, creating a need for their specific exclusion in a statute that is concerned only with the sale of tangible physical goods.

Returning to the respondent’s characterization of monetary awards as ‘actionable claims’, two points must be noted. First, awards granting damages are not an actionable claim at all. Section 3 of the Transfer of Property Act, 1882 confines actionable claims to claims to an unsecured debt. Once an arbitral tribunal has adjudicated a claim for damages, and accordingly passed an award, the award exists as a crystallized monetary entitlement of the antecedent claim, and it is enforceable as a decree rather than by action. An award, in other words, is the antithesis of an actionable claim. Secondly, and at the risk of repetitiveness, the exclusion in s. 2(7) operates only upon the statutory category of ‘goods’ for the purposes of that Act. Thus, neither provision bears on the meaning of the broader category ‘movable property’ in art. 11.

Additionally, to the extent that the Karnataka Stamp Act is silent on the question of what constitutes movable property, the court ought to have taken note of other statutory definitions. The understanding of money being included movable property is corroborated by s. 3(26) of the General Clauses Act, and s. 2(9) of the Registration Act, both of which define movable property as ‘property of every description, except immovable property’. Such residuary articulations of movable property indubitably bring money and actionable claims within their ambit and are legitimate sources for statutory interpretation per s.3 of the General Clauses Act. Even judicially, the inclusion of money within the scope of movable property has been largely uncontroversial (see here and here).

Along these lines, a more cogent position has been taken by another co-ordinate bench of the High Court. In June 2024, in State of Karnataka v M/S Siddarth Infotech (WP No.15601/2024), an identical question arose during enforcing proceedings. An award of about ₹179 crore in damages had been made against the State. When the award-holder sought to execute it, the court’s office objected that stamp duty had not been paid. The executing court waived the objection and the requirement to pay stamp duty. It accepted the award-holder’s argument, founded on Karnataka State Highways, that an award of damages relates to neither movable nor immovable property. On writ appeal, the High Court reversed this holding. It held that a ‘plain reading of art. 11’ mandates the payment of stamp duty requiring the levying of the applicable stamp duty under art. 11(b)(iii), subject to the exemption under s. 3 of the Act (¶8). Thus, the court construed movable property under art. 11 to include money.

Settling the Standard

The court in Siddharth Infotech primarily relies on a ‘plain reading’ of art 11. Therefore, a close reading of art. 11 is necessary to determine whether the plain text of art. 11 indeed supports the court’s conclusion. Art. 11(b) provides that where the subject matter of award is movable property, the duty is to be levied in accordance with the total amount or market value of the property. A plain construction of the use of the word ‘amount’, with the disjunctive ‘or’, would suggest that it stands in contra-distinction to the market value of movable property of a non-monetary nature. This is corroborated by decisions before the Supreme Court, which has previously interpreted the import of the phrase ‘amount or value of property’, and held that the use of the expression ‘amount’ suggests the inclusion of money within its scope. Thus, the use of ‘amount or value’ in art. 11 plainly reflects an intention to include money awards. This disjunctive phrasing of the provision seems to have been overlooked by the earlier coordinate bench in Karnataka State Highways.      

Such an interpretation of the plain text is corroborated the purposes of the statute. The sole purpose of stamp duty collection is revenue generation. It is therefore implausible that the government would constrict the scope of ‘movable property’ to awards dealing with the sale or purchase of ‘tangible’ goods only, excluding entirely awards arising out of contracts for services. This is a particularly dubious proposition in a predominantly service-economy like that of Karnataka (Services constituting 70% of productive economic activity, occupying a presumably commensurate share of disputes being arbitrated).

Indeed, other States have begun to recognize the lucrative nature of commercial arbitration, and the potential for revenue-generation therein. This has caused a decisive reorientation of the stamp-duty regime towards a model of revenue-extraction vis a vis large monetary awards. For instance, in Maharashtra, while earlier a flat ₹500 duty was levied on all awards irrespective of the amount thereof, the Maharashtra Stamp (Amendment) Ordinance 2024 introduces an ad valorem model comparable to the Karnataka act. However, unlike the Karnataka act, the Maharashtra Stamp Duty Act makes no distinction between the amount and market value of the property. It refers only to the amount granted in relation to movable property. A plain reading of the same suggests that it includes awards granting damages. In contrast, the Delhi Stamp Duty act uses similar language as the Karnataka act in referring to the amount or market value of property. Similar language can also be seen in art. 12 of the Madhya Pradesh Stamp Act. Courts in these jurisdictions have previously imposed stamp-duty on awards granting damages (see here, here, and here). Admittedly, these decisions do not directly engage with the definitional question of whether money constitutes movable property. I rely on them only to show that, in States whose statutes share Karnataka’s text and purpose, the inclusion of money within ‘movable property’ has remained a non-issue. 

A Deepening Split

Notwithstanding the cogency of the decision in Siddarth Infotech, a later co-ordinate bench in Mahindra & Mahindra v KV Chandrashekar (WP No. 29299/2013) relied on the ruling in Karnataka State Highways to hold that the subject-matter of awards involving monetary claims is not movable property, as movable properties refer only to ‘tangible’ property (¶16). The court did not consider the more recent decision by a co-equal bench in Siddharth Infotech that reads art. 11 to the contrary. Interestingly, the decision in Karnataka State Highways, which is relied on by Mahindra, has since been stayed by the Supreme Court in both ‘effect and operation’ pending appeal.

Notwithstanding the stay and appeal, the split has deepened. Following Mahindra, two single-judge benches of the Karnataka High Court have held that awards for money fall outside art. 11: Bajaj Finance v Devi Enterprises (July 2026) and most recently in Manappuram Finance v Deputy Registrar (September 2026). Neither notice that Karnataka State Highways, on which Mahindra itself rests, stands stayed by the Supreme Court. Thus, the precedential value of this line of decisions remains seriously uncertain.

On the other side of the divide, in Sundaram BNP Paribas Home Finance v Raghavendra R (December 2025), and its companion Sundaram BNP Paribas Home Finance v Paresh Inamdar H, the court has treated arbitral awards granting monetary relief as attracting stamp duty under art. 11. In the same month, in Beejay Associates v Union of India, the Dharwad bench of the Karnataka High Court directed deficit duty under art. 11(b) to be paid on a monetary award. These decisions proceed on the same premise as in Siddarth Infotech; namely, that awards granting monetary damages or reliefs attract stamp duty under art. 11. To that extent, they are irreconcilable with the line of cases following Karnataka State Highways and Mahindra.

This split has deepened in insulated silos. Both line of cases engages with the same question at distinctly inadequate levels of specificity: although neither line engages the definitional question with any rigor, one disposes of it in a sentence and the other simply assumes the answer. Thus, though normally the Karnataka State Highways and Mahindra line of cases would’ve had a greater bearing on the definitional question, their authority is legally uncertain due to the stay order, and logically dubious for all the reasons elucidated above. That this split has become a source of confusion for executing courts is abundantly clear; for instance, in February 2026 the HC doubted the correctness of a decision of an executing court that waived stamp-duty on an arbitral award while placing reliance on Karnataka State Highways. It directed that the application be re-decided after the stay order is brought to the attention of the executing court.

Thus, in view of this deepening split and the ensuing disorientation experienced by executing courts, the need for a reference to a larger bench of the High Court is made all the more acute.

Conclusion

The need to finally resolve this issue also arises from the normative and practical desirability of parity with other states. The terminology used in other acts, for instance the Delhi and MP legislations, mirrors the language of the Karnataka Act. It is also pari materia the Central Legislation, the Indian Stamp Act, 1899. Because these courts have not yet confronted the question directly, the Karnataka High Court’s answer may either preclude or invite similar objections to enforcement elsewhere (the former being the preferred outcome). High courts in general should strive to confer an interpretation that creates a cohesive paradigm for enforcement across states and should therefore consider the need for parity as overarching to other parochial concerns.

This is particularly significant given the silence of the arbitration act vis a vis the payment of stamp-duty. Indeed, after persistent lobbying on precisely this question, the draft Arbitration and Conciliation (Amendment) Bill, 2024 introduces a mandatory requirement of ‘duly stamping’ under amended s. 31. However, the amendment does not speak to the method or basis of the amount to be ‘duly stamped’, which invariably continues to be a question of constructing the respective state stamp duty statutes. Thus, unless a cohesive understanding of ‘duly stamped’ is forthcoming from the High Courts or the Supreme Court, we may witness peculiar forms of enforcement arbitrage or forum shopping. A palpable concern is that awards holders may elect to enforce their awards overwhelmingly in the courts of Karnataka, depriving other States of stamp-revenue and simultaneously inundating local courts with execution petitions. This is not merely a theoretical concern. For instance, three of the cases cited above (Mahindra, Manappuram, and Sundaram BNP) reflect this pattern. These cases dealt with awards passed in arbitrations seated in Mumbai or Chennai, which were sought to be enforced in Karnataka. This can be attributed to a variety of reasons beyond forum shopping; the debtors’ assets may simply have been located in Karnataka. Nonetheless, it throws into sharp relief the cross-provincial implications of how this question is answered, which is the limited basis for this paper’s insistence on parity.

One hopes that future benches will consider the factors outlined above while interpreting art. 11. Namely, the court ought to first, give effect to the plain meaning of art. 11, second, the conception of ‘movable property’ in cognate statutes, and third, in light of the purpose of stamp-duty legislation, which is explicitly revenue generation. Fourth, the court also ought to consider the need for parity in statutory interpretation vis a vis other State legislation, without which similar objections and petitions will proliferate, these being infructuous to an effective arbitral process. Finally, the silence of the A&C act on this point makes the need for parity all the more pressing.

A final disposal of this fickle point of law will aid in streamlining administrative procedure for execution petitions, thereby disposing of a rather frivolous means of resisting the enforcement of arbitral awards.

Aakash Dwivedi is a 4th year B.A. LL.B. student at National Law School of India University