Stamping of agreements/deeds is governed by the Stamp Act. If the document is not sufficiently stamped, then by virtue of Section 35 of the Stamp Act there is a bar on ‘admitting’ such a document in evidence or acting upon it.
Section 36 tells us that if this objection is not taken at the first instance, it stands waived and inadmissibility of the document cannot be argued later.
Further, Section 33 empowers the court, acting as the protector of state revenue, to examine and impound an unstamped/insufficiently stamped document. The section stipulates that, if an instrument chargeable with stamp duty produced before a court and is not duly stamped, court shall impound the same. Therefore, there is a mandate on the court to impound the document when this issue is brought to its attention.
With the basics being thus, a couple of questions with respect to this issue :
- Who can impound?
* Any person authorized to receive evidence either by law or parties consent;
* Any person in charge of public office.
* Includes a ‘Court’
2. When can a document be impounded?
- When document produced or comes before the court in performance of its functions.
- Production connotes voluntary production or in pursuance of a court order (eg : Warrants cannot be issued against a person to compel him to produce a document for the purposes of impounding of the same).
3. What kind of document?
* Only the original. Courts under statutory obligation to impound even suo motu.
3A. At what stage is this objection required to be decided ?
What is important to note is that whenever such an objection is raised that objection has to be decided first, before anything else. This is different from other objections which are merely recorded at trial and final decision deferred till appreciation of evidence.
(Javer Chand And Others vs Pukhraj Surana 1961 AIR 1655)
Also supported by Bipin Shantilal Panchal v. State of Gujarat (3 judges bench) 2001 (3) SCC 1, where it was noted :
“14.When so recast, the practice which can be a better substitute is this: Whenever an objection is raised during evidence taking stage regarding the admissibility of any material or item of oral evidence the trial court can make a note of such objection and mark the objected document tentatively as an exhibit in the case (or record the objected part of the oral evidence) subject to such objections to be decided at the last stage in the final judgment. If the court finds at the final stage that the objection so raised is sustainable the judge or magistrate can keep such evidence excluded from consideration. In our view there is no illegality in adopting such a course. (However, we make it clear that if the objection relates to deficiency of stamp duty of a document the court has to decide the objection before proceeding further. For all other objections the procedure suggested above can be followed.)”
Step by Step procedure of impounding : (as gleaned from Chilakuri Gangulappa v. RDO, Madanpalle and Ors) 2001 (4) SCC 197 and provisions of Section 33 of the Stamp Act) :
- Non stamped or Insufficiently Stamped Instrument comes before the Court
- On its own finding or in case of objection and dispute as to whether the document is insufficiently stamped – Court decides the objection then and there, and doesn’t postpone the decision or tentatively admit the document.
- In case it is found to be so insufficiently stamped. Court IMPOUNDS the same. This is a mandate upon the court in order to guard public revenue.
- The court has to give the party producing the document an option to validate it and render it admissible by paying penalty within the terms of S.35.
- If penalty is so paid – S.38 mandates you to send to the collector/SDM, an authenticated copy of the instrument together with a certificate in writing, stating the amount of duty and penalty paid and send such amount to collector.
- Collector may exercise power to refund part of penalty so paid (S.39)
- If penalty is not so paid, Court has to send it to the Collector. On receipt of the document through either of the said avenues the Collector has to adjudicate on the question of the deficiency of the stamp duty. If the Collector is of the opinion that such instrument is chargeable with duty and is not duly stamped he shall require the payment of the proper duty or the amount required to make up the same together with a penalty of an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof.
- Collector shall then give certificate which shall be conclusive evidence of the fact that it has been stamped and document is sent back to the court for reception in evidence.