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Stamp Duty on Arbitral Award of Principal & Interest – Section 23 Indian Stamp Act

November 14, 2026 legaldeli

Comments on the post of Bar & Bench and the Order dated 3.11.2026 of the High Court of Delhi in OMP (ENF)(COMM) 14/2023 and EX.APPL.(OS) 1218/2024 of Patel KNR Infrastructure Ltd Vs. National Highways Authority of India

The arbitral award was for a sum of Rs. 18,34,02,838/-. The awarded amount comprises the principal/claim amount of Rs. 11,75,05,551/- and an interest component of Rs. 6,48,97,287/-.

However, in view of Section 23 of the Indian Stamp Act, 1899, stamp duty is not payable on the interest component of the award. Consequently, the stamp duty has rightly been calculated on the principal amount and there is no deficiency in the stamp duty paid by the decree holder.

The applicable stamp duty, calculated at 0.1% of the awarded amount, would accordingly be Rs. 1,83,402.80/-. However, the decree holder had paid stamp duty of only Rs. 1,18,105/-, besides Rs. 500/- towards stamp paper. It is, therefore, contended that the award was insufficiently stamped and could not have been enforced through execution proceedings.

Section 23 of the Indian Stamp Act, 1899 is relevant. The provision specifically stipulates that where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had no mention of interest been made therein. The provision, therefore, makes it clear that the mere inclusion of an interest component in an instrument cannot result in an enhanced stamp duty liability.

Section 23 of the Indian Stamp Act, 1899, which reads as under: “23. Instruments reserving interest. Where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had no mention of interest been made therein.”

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