Adjudication as to Proper Stamp under Stamp Act

Saji Koduvath, Advocate, Kottayam.

Contents in nutshell

Following are clear from the Section 31 of The Indian Stamp Act, 1899 (Similar provisions are there in the State Stamp Acts also).

If only a document is not stamped or there is a doubt as to proper stamp, then only the question of ‘adjudication’ under the Stamp Act comes into consideration.
Similarly, the proposition that all instruments executed outside India should be placed for ‘adjudication’ is incorrect.

Section 31 of The Indian Stamp Act, 1899 speaks as under:

“31. Adjudication as to proper stamp.
(1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than[fifty naye paise]) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment the instrument is chargeable.
(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly: Provided that—
(a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an enquiry as to the duty with which the instrument to which it relates is chargeable; and
(b) every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.”

Unstamped or Insufficiently Stamped Pro-note

Unstamped or insufficiently stamped promissory note cannot be marked in evidence. The weight of authority is on the side that says it is incurable. Hence no secondary evidence can also be lead on the same. It cannot be used for collateral purpose also. But the creditor can prosecute a suit upon ‘original consideration’.

Read Blogs: Time Limit for Registration of Documents

Registration of Documents Executed out of India

If proper stamp duty Paid no Requirement of Adjudication

The Madras High Court, in Manoharan v. Velu, (1998) III M.L.J 272, held that a power of attorney executed on proper stamp need not be produced before the Collector for the purpose of certification or adjudication that the full duty with which it is chargeable has been paid. It was observed Manoharan v. Velu as under:

“5. This power document satisfies the definition ‘power of attorney’ as defined in Sub-sec.(21) of Sec.2 of the Act. It is not in dispute that this power document is engrossed on Indian Non-Judicial stamp paper of the value of Rs.5, which is the proper stamp duty, payable on that instrument. On these facts, the question that arises for consideration is whether the said power document should be necessarily produced before the Collector to certify by endorsement on such instrument that the full duty with which it is chargeable has been paid or not. To decide this question, the court has to necessarily look into Secs.31 and 32 of the Act. Sec.32 of the Act starts with the following words’ “When an instrument brought to the Collector under Sec.31, is etc., etc. Therefore, if the provisions of Sec.32 of the Act have to be applied, then the instrument should have been necessarily produced under the provisions of Sec.31 of the Act before the Collector concerned. Sec.31 of the Act enable a person bringing to the Collector any instrument whether executed or not and whether previously stamped or not, to have his opinion as to the duty (if any) with which it is chargeable and thereupon the Collector on payment of a fee, shall determine the duty (if any) with which, in his judgment the instrument is chargeable. Sub-sec.(2) of Sec.31 of the Act deals with the power of the Collector to collect materials, in order to determine the stamp duty, if any, chargeable on the instrument produced before him.
Therefore, it is clear that only in a case where the opinion of the Collector is sought for regarding the payment of the proper stamp duty, the Collector gets the power to proceed in accordance with Sec.31 of the Act, Once the Collector gets the jurisdiction under Sec.31 of the Act in the manner I have stated above, then only Sec.32 of the Act gets attracted.
6. Since in this case, the instrument has been charged with the proper stamp duty payable under the Act and since it has not been produced by the power of Attorney Agent of the deceased second plaintiff before the Collector, the Collector does not get any jurisdiction at all to go into that question. The argument the learned counsel for the respondents that the requirement of producing such an instrument before the Collector is mandatory, (Where the instrument had been executed outside India) cannot be sustained. The Proviso to the main section of the Act cannot alter the scope of the very section itself. To attract clause (b) of the Proviso to Sub-sec.(3) of Sec.32 of the Act necessarily the document whether it is executed in India or outside India should have been produced before the Collector under Sec.31(1) of the Act. So long as the document was not produced before the Collector, under Sec.31(1) of the Act seeking his opinion on proper stamp duty chargeable, there is no question of relying upon or referring to the Proviso to Sub- sec.(3) of Sec.32 of the Act.”

Kerala High Court, quoting above portions from Manoharan v. Velu, it was held in Anitha Rajan v. Revenue Divisional Officer, AIR 2010 Ker 153, that it was not necessary to produce the power of attorney, even if executed outside India, for adjudication if it was sufficiently stamped. The High Court definitely held further that the Village Officer, Nattika Village erred in directing the petitioner to produce the (sufficiently stamped) original power of attorney before the Revenue Divisional Officer for adjudication under sections 31 and 32 of the Kerala Stamp Act, 1959.

Impounding of Documents, When Produced; Cannot Wait Till it is Exhibited

In Yogesh Kumar Sikka v. Monika (2019) the P & H High Court held as under:

“12. Court cannot say that it would impound the document only when the document is tendered in evidence for marking. There may be instances where duty and penalty payable may be very high and the party may not choose to rely upon such insufficiently stamped document in order to avoid stamp duty and penalty. In such circumstances, it would result in loss of revenue to the exchequer. The power of impounding a document is to collect stamp duty and penalty whenever there is an escape of duty. Therefore, when it is brought to the notice of the Court that a document is insufficiently stamped, the Court exercising its power under S. 33 of the Act has to pass an order at the first instance for impounding the document. Though there is a discretion vested in the Court to exercise powers under S. 33 and 34 of the Act, no Court can hold that it would wait till the document is tendered in evidence. In such circumstances, there may be chances of loss of revenue to the exchequer.”

Read Blog: Impounding of Documents, When Produced; Cannot Wait Till it is Exhibited

Copy of a Deed Cannot be Impounded; it cannot be Validated by Impounding

Our Apex Court, in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao, AIR 1971 SC 1070, followed the Privy Council decision in Raja of Bobbili v. Imuganti China Sitaramaswami Garu, 23 Madras 49, where the Judicial Committee held as under:

“These clauses throughout deal with, and exclusively refer to, the admission as evidence of original documents which, at the time of their execution, were not stamped at all, or were insufficiently stamped. It is only upon production of the original writ, that the Collector has the power given him or the duty imposed upon him, of assessing and charging tie penalty, a duty which he must, in that case, perform by writing an indorsement upon the writ submitted to him, which then, and not till then, becomes probative in law.”

The Supreme Court observed that the reason for non-production of original, in this aspect, is immaterial. It is sated as under:

“The decisions of different High Courts make it quite clear that the cause of the non-production of the original instrument is immaterial, i.e. whether it was lost or whether it was destroyed or even if it was the allegation of the party seeking to prove its contents by alleging that the document was suppressed by his opponent.”

In Hariom Agrawal v. Prakash Chand Malviya , AIR 2008 SC 166, it is held as under:

“8. It is clear from the decisions of this Court and a plain reading of Ss. 33, 35 and 2(14) of the Act (Madhya Pradesh Stamp Act) that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be taken in evidence under Sec. 35 of the Stamp Act. Ss. 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Sec. 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the Indian Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Indian Stamp Act, 1899.”

Is ‘Impounding’ totally Independent from ‘Admissibility’

Karnataka High Court (N. Kumar, J.), in Rekha S. Chandru v. Chikka Venkatappa (2015), authoritatively held relying on Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655, that when a document was already marked by the trial Court in evidence, the objection regarding stamp duty cannot be raised at a later stage.

It further observed (obiter) by the Karnataka High Court that the impounding the document was totally different from admissibility; and therefore, an insufficiently stamped document, if admitted by mistake, was liable to be impounded by the Court and the procedure prescribed in the Stamp Act was to be followed in so far as collection of stamp duty and penalty were concerned. It appears that the above proposition of the Karnataka High Court has to be evaluated on the touchstone of the Apex Court verdict, Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655, which reads as under:

“Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction.”

Should an opportunity be given to cure defect, by paying deficit Stamp Duty?

In Kalaivani @ Devasena v. J. Ramu, 2010(1) CTC 27, it was held that an opportunity should be given to the party who produces the document with insufficient stamp, to pay the deficit stamp duty and penalty so that the document could be exhibited; and that if penalty is not paid, the document should be impounded. It is held as under:

“24. .. It is well settled that even an unregistered document is admissible in evidence for collateral purpose provided it is adequately stamped under the Stamp act. If the document is both unstamped and unregistered, as the document in question here, it is no doubt true that it cannot be looked into for collateral purpose also. But such a document should not be thrown out at the threshold itself and an opportunity must be extended to the party who wants to mark the document on his side by directing him to pay the deficit stamp duty along with the penalty upto date, then the document could be admitted in evidence for collateral purpose. If the person does not pay the Court, then the document is to be impounded and sent to the Collector for taking action under the law.”

End Notes

Instruments not duly stamped, inadmissible

Sec. 35, Indian Stamp Act reads as under:

“35. Instruments not duly stamped inadmissible in evidence, etc.–No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
Provided that—(a) any such instrumentshall, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it;
(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);
(e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of theGovernment or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.

Unstamped document cannot be looked at even for any collateral purpose

Privy Council in Ram Rattan v. Parma Nath, AIR 1946 PC 51, held that section 35 of the Stamp Act prohibited the unstamped (or inadequately stamped) document from being looked at even for any collateral purpose, as it enacts that no instrument chargeable with duty shall be admitted in evidence ‘for any purpose’. The unstamped (or inadequately stamped) document becomes admissible on payment of penalty under Stamp Act or on payment of the stamp duty after impounding.

Pay Duty With Penalty to Admit Unstamped Deed for Collateral Purpose

In Yellapu Uma Maheswari v. Buddha Jagadheeswararao, (2015) 16 SCC 787, the Apex Court held in the suit for declaration of title that an unregistered document can be relied upon for collateral purposes i.e. to prove his possession, payment of sale consideration and nature of possession; but not for primary purpose i.e. sale between the plaintiff and defendant or its terms. It is held as under:

“In a suit for partition, an unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded. Hence, if the appellant-defendant wants to mark these documents for collateral purpose it is open for them to pay the stamp duty together with penalty and get the document impounded and the trial court is at liberty to mark Exts. B-21 and B-22 for collateral purpose subject to proof and relevance.”

Section 49 of the Registration Act expressly states admissibility of unregistered documents in evidence for collateral purposes. The word ‘collateral’ signifies something beyond or parallel. According to Law Lexicon it means “that which is by the side, and not the direct line; that which is additional to or beyond a thing” (Amit Khanna. Vs Suchi Khanna, 2008-10 ADJ 426; 2009-75 AllLR 34; 2009-1 AWC 929).

The Supreme Court observed in Sri Venkoba Rao Pawar v. Sri S. Chandrashekar, AIR 2008 SCW 4829, that the collateral purpose/transaction must be independent of, or divisible from the transaction which requires registration.

The Apex Court in K.B. Saha and Sons Private Limited, 2008 AIR SCW 4829, has laid down the principle in respect of the collateral purpose.

“34. From the principles laid down in the various decisions of this Court and the High Courts, as referred to here-in-above, it is evident that :-

A document required to be registered is not admissible into evidence under section 49 of the Registration Act.
Such unregistered document can however be used as an evidence of collateral purpose as provided in the Proviso to section 49 of the Registration Act.
A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.

Section 36 of the Stamp Act – Once admitted shall NOT be called in question

Section 36 of the Stamp Act provides as under:

“36. Admission of instrument where not to be questioned – Where an instrument has been admitted in evidence such admission shall not except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped “.

Order Admitting Document, Not liable to be Reviewed or Reversed in Appeal

The Apex Court held in Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655, as under:

“Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence.
The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. …
Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-examination of their witnesses, S. 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or revision to go behind that order.
Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction.”

Objection be raised when Document Tendered

Our Apex Court held in Sirikonda Madhava Rao v. N. Hemalatha, 12 April, 2022 (referring Javer Chand v. Pukhraj Surana, (1962-2 SCR 333 and Shyamal Kumar Roy v. Sushil Kumar Agarwal, 2006-11 SCC 331) that after marking a document unopposed, it is not open to the parties, or even the court, to reexamine the order or issue. In this case. a document purporting to be an unregistered and insufficiently-stamped sale deed was marked as an Exhibit. The High Court directed that the aforesaid document should be de-marked and not be treated as an exhibit.It is said by the Supreme Court –

“Once a document has been admitted in evidence, such admission cannot be called in question at any stage of the suit or proceedings on the ground that the instrument has not been duly stamped. Objection as to admissibility of a document on the ground of sufficiency of stamp, has to raised when the document is tendered in evidence. Thereafter, it is not open to the parties, or even the court, to reexamine the order or issue.”

In Lothamasu Sambasiva Rao v. Thadwarthi Balakotiah, AIR 1973 AP 342, and several other decisions it was held that Section 35 was only a bar to the admissibility of an unstamped or insufficiently stamped document; and that when it had been admitted in evidence it could not have been, afterwards, withdrawn. See also:

Pankajakshan Nair v. Shylaja: ILR 2017-1 Ker 951;
Dundappa v. Subhash Bhimagouda Patil: 2017-3 AIR(Kar)(R) 570;
Savithramma R. C. v. Vijaya Bank; AIR 2015 Kar 175;
Jayalakshmamma v. Radhika: 2015 4 KarLJ 545;
K. Amarnath v. Smt. Puttamma: ILR 1999 Kar. 4634
Nanda Behera v. Akhsaya Kumar Behera, 2017AIR (CC) 1893

Shall not admit Unless Duly Stamped

The following two forceful propositions stand paradoxical and incongruent.

Section 33 of the Stamp Act casts a duty on every authority including the Court to examine the document to find out whether it is duly stamped or not, irrespective of the fact whether an objection to its marking is raised or not. There is a duty upon every Judge under Sec. 35 of the Indian Stamp Act not to admit a document that is not duly stamped even if no objection to mark it.
The court should not exclude an insufficiently stamped (or unstamped) deed once marked without objection under Sec. 36 of the Indian Stamp Act.

The Karnataka High Court held in Smt. Savithramma R.C v. M/s. Vijaya Bank, AIR 2015 Kar 175, as under:

“6. From the aforesaid statutory provisions and the decisions, it is clear that a duty is cast upon every judge to examine every document, which is produced or comes before him in the performance of his functions. On such examination, if it appears to the Judge that such instrument is not duly stamped, an obligation is cast upon him to impound the same. This duty is to be performed by the Judge irrespective of the fact whether any objection to its marking is raised or not. Hence, there is a need for diligence on the part of the Court having regard to the statutory obligation under Section 33 of the Karnataka Stamp Act. Section 34 of the Karnataka Stamp Act* mandates that an instrument, which is not duly stamped shall not be admitted in evidence. If any objection is taken to the admissibility of the evidence, it shall be decided then and there. If this document is found to be insufficiently stamped, then in terms of the proviso(a) to Section 34, the Court shall call upon the person, who is tendering the said document to pay duty and ten times penalty and thereafter admit the document in evidence. If duty and penalty is not paid, the document shall not be admitted in evidence.
- *^{Corrosponding to Sec. 35, Indian Stamp Act}
If such an objection is not taken at the time of admitting the said instrument in evidence, and the insufficiently stamped document is admitted in evidence then Section 35** of the Act provides that such admission shall not be called in question at any stage of the same suit or proceedings on the ground that the instrument has not been duly stamped.
- ^{**Corrosponding to Sec. 36, Indian Stamp Act}
It has nothing to do with impounding the document. A duty is cast upon every judge to examine every document that is sought to be marked in evidence. The nomenclature of the document is not decisive. The question of admissibility will have to be decided by reading the document and deciding its nature and classification. Even while recording ex parte evidence or while recording evidence in the absence of the Counsel for the other side, the Court should be vigilant and examine and ascertain the nature of the document proposed to be marked and ensure that it is a document which is admissible. The Court should not depend on objections of the other Counsel before considering whether the document is admissible in evidence or not. Section 33 of the Stamp Act casts a duty on the Court to examine the document to find out whether it is duly stamped or not, irrespective of the fact whether an objection to its marking is raised or not”

Should Court Sit Silent and Question Unstamped Documents Afterwards

Though Smt. Savithramma R.C v. M/s. Vijaya Bank (supra) clarified the position with great clarity. As shown above, it pointed out-

“6. …. The Court should not depend on objections of the other Counsel before considering whether the document is admissible in evidence or not. Section 33 of the Stamp Act casts a duty on the Court to examine the document to find out whether it is duly stamped or not, irrespective of the fact whether an objection to its marking is raised or not”

Therefore, it is not definite-

whether the court should be unfailingly diligent enough not to mark an unstamped or insufficiently stamped document,or
whether the court should sit silent and mark the document if it is not opposed, or
whether the court should raise its eye-brows after marking it unopposed.

It is yet to be solved after considering all relevant aspects.

Referring Sec. 36 of the (Indian) Stamp Act, Karnataka High Court pointed out in Nanda Behera v. Akhsaya Kumar Behera, 2017AIR (CC) 1893, relying on Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655, and Yellapu Uma Maheswari v. Buddha Jagadheeswara Rao, (2015) 16 SCC 787, as under:

“12. Thus where a question as to the admissibility of a document is raised on the ground that it has not been stamped or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence. Once the Court, rightly or wrongly, decides to admit the document in evidence, so far as the parties are concerned, the matter is closed. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit. Once a document has been admitted in evidence, it is not open either to the trial court itself or to a Court of Appeal or revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction. An unregistered document can be relied upon for collateral purpose i.e. severancy of title, nature of possession of various shares but not for the primary purpose i.e. division of joint properties by metes and bounds. An unstamped instrument is not admissible in evidence even for collateral purpose, until the same is impounded. If the petitioner wants to mark the documents for collateral purpose, it is open to him to pay the stamp duty together with penalty and get the document impounded. Thereafter the trial court shall consider the same for collateral purpose subject to proof and relevance.”

In Omprakash v. Laxminarayan, (2014) 1 SCC 618, the Apex Court observed as under:

“From a plain reading of the aforesaid provision (S. 35 of the Stamp Act), it is evident that an authority to receive evidence shall not admit any instrument unless it is duly stamped. An instrument not duly stamped shall be admitted in evidence on payment of the duty with which the same is chargeable or in the case of an instrument insufficiently stamped, of the amount required to make up such duty together with penalty. As we have observed earlier, the deed of agreement having been insufficiently stamped, the same was inadmissible in evidence. The court being an authority to receive a document in evidence to give effect thereto, the agreement to sell with possession is an instrument which requires payment of the stamp duty applicable to a deed of conveyance. Duty as required, has not been paid and, hence, the trial court rightly held the same to be inadmissible in evidence.”

The Apex Court upheld the observation of the MP High Court in Writ Petition No. 6464 of 2008, overruling the impugned judgment (Laxminarayan v. Omprakash 2008 (2) MPLJ 416). The MP High Court had observed as under:

“8. A document would be admissible on basis of the recitals made in the document and not on basis of the pleadings raised by the parties. ….
9. It would be trite to say that if in a document certain recitals are made then the Court would decide the admissibility of the document on the strength of such recitals and not otherwise. In a given case, if there is an absolute unregistered sale deed and the parties say that the same is not required to be registered then we don’t think that the Court would be entitled to admit the document because simply the parties say so. The jurisdiction of the Court flows from Sec. 33, 35 and 38 of the Indian Stamp Act and the Court has to decide the question of admissibility. With all humility at our command we overrule the judgment in the matter of Laxminarayan (supra).”

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Adjudication as to Proper Stamp under Stamp Act

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