While Rs.17.09 Crores Bank Guarantee Released to British Marine PLC After Dismissal of Section 34 and 37 Proceedings, Rs.213 Crores Remain With Court Due to Non-Availability of Original Award and Stamp Duty Compliance Concerns
In a significant ruling delivered on October 1, 2026, the Delhi High Court, presided over by Justice Vinod Kumar, addressed the enforcement and execution challenges surrounding an arbitral award in the dispute between British Marine PLC (Decree Holder) and Steel Authority of India Ltd. (Judgment Debtor). The judgment sheds light on critical procedural requirements under the Arbitration and Conciliation Act, 1996, and the Indian Stamp Act, 1899, especially concerning the release of deposited decretal amounts and the enforceability of unstamped arbitral awards.
Background:
The dispute arose from an arbitral award passed in favor of British Marine PLC. Steel Authority of India Ltd., the judgment debtor, had deposited 50% of the decretal amount, totaling over Rs. 230 crore, pursuant to the Court's orders dated December 18, 2023, and February 27, 2024. This amount was deposited as a part of the execution proceedings initiated by British Marine PLC.
Earlier Developments and Bank Guarantee Release:
Following the deposit, British Marine PLC sought the release of part of the deposited amount. An earlier application resulted in the release of Rs. 17.09 crore to the Decree Holder against a bank guarantee furnished by British Marine PLC to the Court. Subsequently, the judgment debtor's petition under Section 34 (challenge to arbitral award) and appeal under Section 37 of the Arbitration and Conciliation Act were dismissed, and no stay was granted by the Supreme Court.
Given the dismissal of all challenges and absence of any stay, the Court held that retaining the bank guarantee was redundant. Consequently, the Court ordered the discharge and release of the bank guarantee amounting to Rs. 17.09 crore in favor of British Marine PLC. The ruling directed the concerned bank to release the security, marking a crucial step in the enforcement of arbitral awards.
Retention of Balance Amount Due to Unstamped Award:
However, British Marine PLC's request for the release of the remaining balance of Rs. 213.24 crore was refused. The Court highlighted a significant procedural impediment - the original arbitral award was not before the Executing Court but was held in a sealed cover by the Supreme Court pursuant to earlier directions.
The judgment emphasized that under the Indian Stamp Act, 1899 (specifically Article 12 read with Article 15 of Schedule IA, Delhi Amendment), an arbitral award is a chargeable instrument requiring stamp duty payment. The Court noted that a copy of the award cannot be stamped or impounded. Therefore, without the original award and proper stamping formalities, the award remains unexecutable.
The Court referred to a recent coordinated bench decision in M/S URC Construction (P) Ltd v. Airports Authority of India (2026), which underscored the strict adherence required under the Stamp Act, Registration Act, and procedural mandates for executing arbitral awards.
Directions and Legal Implications:
The Delhi High Court dismissed the application for release of the balance amount but clarified that British Marine PLC is free to take necessary steps to bring the original award before the Court, comply with stamping requirements, and thereafter seek enforcement. This ruling reinforces the principle that compliance with statutory formalities is indispensable for executing arbitral awards.
The judgment also reiterates that an unstamped arbitral award is non-executable, maintaining consistency with established precedents. Moreover, the Court's refusal to release the balance amount despite the dismissal of substantive challenges under Sections 34 and 37 highlights the procedural sanctity associated with the execution process.
Conclusion:
The judgment serves as a crucial reminder to litigants and practitioners that the enforcement of arbitral awards involves not only substantive adjudication but also strict compliance with procedural and statutory mandates, such as stamp duty payment. The Delhi High Court's decision ensures that the sanctity of such formalities is upheld even in high-stakes commercial disputes.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Execution of arbitral award - Release of deposited decretal amount can be refused where original award is not before Executing Court and objection of unstamped award is raised - Copy of award cannot be stamped or impounded - Unstamped award is not executable - Bank guarantee furnished for earlier partial release liable to be discharged after dismissal of Section 34 petition and Section 37 appeal and in absence of any stay from Supreme Court.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 - Sections 34, 36, 37; Indian Stamp Act, 1899 - Article 12, Article 15 (Schedule IA, Delhi Amendment)
British Marine PLC v. Steel Authority of India Ltd., (Delhi) : Law Finder Doc Id # 2989585
