It is to be noted that the central Stamp Act of 1899 does not provide expressly about the validity of totally non-stamped instruments/documents as evidence. However this Act provides for the admissibility of the under stamped/insufficiently stamped instruments/documents. The central legislation in sections 33 and 35 deal about the under stamped documents and lays down some of the measures as to how a document that is under stamped can be made valid or admissible under the law. The other state legislations on the stamp duty primarily the Maharashtra Stamp Act 1958 which has similar provisions as contained in the central Act also deal with the implications of under stamped or insufficiently stamped documents/instruments. The Bombay Stamp Act in sections 33 & 35 contains the similar remedies as contained in the central Act discussed above.
Hence, It is to be noted that both the central as well as the State legislation on the Stamp duty does not pe se deal with the issues of Non-Stamped documents/instruments specifically.
The other point to be noted is that on a wide reading of the provisions regarding the under stamped instruments the various courts have also interpreted that the same rule is to be applied with the instruments that are not stamped. So, here we reach to a conclusion that the non-stamped instruments can also be made valid and admissible as an evidence in the court of law.
The Bare reading of section 33 and 45 of the Indian Stamp Act, 1899 can be found below as:
(1) Every person having by law or consent of parties, authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.
(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in 62 [India] when such instrument was executed or first executed: Provided that—
(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);
(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf.
(3) For the purposes of this section, in cases of doubt,—
(a) the State Government may determine what offices shall be deemed to be public offices; and
(b) the State Government may determine who shall be deemed to be persons in charge of public offices.
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 instrument [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 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 66 [the 67 [Government]] or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.
The above provision contained in Indian Stamp Act, 1899 IN SECTIONS 33 & 35 is similar is what is contained in Bombay Stamp , 1958 under the provisions of section 33 and 34.
After going through these provisions it is clear that under stamped/insufficiently stamped instruments can be made valid by paying the stamp duty and the penalty.
1. The question which fell for determination before the Hon’ble Apex Court in OMPRAKASH vs. LAXMINARAYAN & ORS. [2014(1) SCC 618]which was as to whether the admissibility of a document produced by the party would depend upon the recital in the document or the plea of the adversary in the suit and whether the document in question is “conveyance” as defined under the Act and is duly stamped.
“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:
(a)any such instrument 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 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;
From a plain reading of the aforesaid provision, 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.
2. A latest precedent in this regard has been laid down in M/S SMS TEA ESTATES P.LTD v. M/S CHANDMARI TEA CO. P.LTD. (2011) 14 SCC 6
In SMS Tea Estates, the lease deed was neither stamped nor registered and it was therefore held therein that “when a lease deed or any other instrument is relied upon as contending the arbitration agreement, the court should consider at the outset, whether an objection in that behalf is raised or not, whether the document is properly stamped. If it comes to the conclusion that it is not properly stamped, it should be impounded and dealt with in the manner specified in Section 38 of the Stamp Act. The court cannot act upon such a document or the arbitration clause therein. But if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, the document can be acted upon or admitted in evidence“
3. In Garware Wall Ropes Ltd v. Coastal Marine Construction & Engineering Ltd2019 SCC OnLine SC 515.
The court relied upon the judgment rendered in M/S SMS TEA ESTATES P.LTD v. M/S CHANDMARI TEA CO. P.LTD. (2011) 14 SCC 6 and held that the instrument must be duly stamped in accordance with the provisions of the Indian stamp Act for its admissibility as evidence. However if the penalty is paid then the same can be made admissible.
There are a plethora of other judgments as well where the court has interpreted both non-stamped as well as under stamped within the meaning of section 33 & 35 of the central legislation.
1. Muhammed & Others v. Nani & Others 1970 KLJ356
In this case, Karnataka HC while dealing with the validity of unstamped and under stamped instruments laid down that if the original document is under stamped or non-stamped and a copy of the same is brought before the court then the same can not me made admissible even under section 35 of the Act. Justice Iyer laid down in this judgment that only such documents whether insufficiently stamped or non-stamped can be made admissible before a court if they are original documents that initially lacked a stamped or was insufficiently stamped.
The court also interpreted that even if an original document is non-stamped, the same can be made admissible before the court by paying the stamp duty and the prescribed penalty under section 35 of the Act.
2. In S.Sivalingam vs A.Suryanarayan, C.R.P. PD No.1741 of 2014 and M.P.No.1 of 2014 decided on 30th june 2017.
while dealing with a civil revision petition with respect to registration and stamping of a document allowed this revision and directed the trial court is directed to ascertain the stamp duty and penalty payable upon the disputed document, then call upon the party who wants to rely on those documents, to pay the stamp duty and penalty, and then on payment of stamp duty and penalty, admit the document in evidence, whether it is for collateral purpose or otherwise, which could be decided at the later stage while hearing the case as guided by the Apex Court in Bipin Shantilal Panchal v. State of Gujarat and Anr. (2001) 3 SCC 1.
3. The various other judgments where the court has held that the under stamped and non-stamped documents are valid after making payment of the stamp duty and the penalty are:
A. Balachandran vs. T.C.Shanmugam 2013 (2) CTC 832
However, the position under the Stamp Act is entirely different. Under section 35 of the Stamp Act, 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, unless such instrument is duly stamped. Therefore, as per section 35 of the Stamp Act, there is a total prohibition to receive in evidence the unstamped document. To make I admissible the stamp duty and the penalty is required to be paid.
B. Thilagavathy v. Mohammed Rabeek 2007 (1) LW 806, Dinakaran v. Venkatesan & Ors. 2007 (5) CTC 77 and Subramaniam v. Gunasundari & Ors. 2007 (2) L.W. 535
In the above cases as well, the Madras HC has held that the under stamped documents can be ,made admissible under section 35 of the Act after making the payment of stamp duty charges and the penality.
C. In Ganga Ram v. Het Ram & Ors AIR 1965 Raj 47
Rajasthan HC has held that both under stamped documents as well as non-stamped documents can be validated by paying the prescribed stamp duty and the penalty.
D. M/S DHARMARATNAKARA RAI BAHADUR ARCOT NARAINSWAMY MUDALIAR CHATTRAM & OTHER CHARITIES & ORS. V. M/S BHASKAR RAJU & BROTHERS & ORS. …. RESPONDENT(S) CIVIL APPEAL No. 1599 OF 2020 (Arising out of SLP(C) No. 7088 of 2015)
This is a very recent matter that came before the Hon’ble SC by a SLP arising out of an order passes by Hon’ble Karnataka HC. Here the Hon’ble SC allowed the SLP as the matter pertaining to under stamped document was made admissible by the HC an it erred in its findings as section 33 and 34 of the Karnataka Stamp Act bars the admissibility of under stamped or insufficiently stamped documents. However such documents can only be made admissible if the valid stamp duty is paid along with the penalty. The SC observed while allowing the SLP that when the question of insufficiently stamped instruments arise they can only have evidentiary value if the duty under the Act is paid along with the Penalty.
Lastly it is to be concluded that. All such documents which are under stamped or are even not stamped can be made valid by paying the stamp duty and the penalty prescribed under the Act. It is also to be noted that the central Act as well as the Acts of respective states on stamp duty has duly envisaged the provisions in it to make an instrument admissible which is not duly stamped. The judicial interpretation has also extended the same benefits to all those instruments that are not stamped. Even such instruments can be validated by paying the duty and the prescribed penalty.