1. Documents establish relationships between parties like a banker and borrower and avoid ambiguities. They must pass certain tests under laws like the Stamp Act, Evidence Act, Limitation Act, and Registration Act to be recognized by courts. 2. Common types of documents discussed include loan documents, commercial documents, financial documents, transport documents, risk documents, and identification documents. 3. Documents must be properly executed by filling all blanks, obtaining necessary signatures and stamps, and registering certain documents within time limits.

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Documentation

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3. Documentation
 Documents establish relationship between the
banker and the borrower and avoids
ambiguities.
 Documents executed by a company should be
sealed as per the provisions of Articles of
Association of the company
• Primary Evidence: As per section 62 of the
Indian Evidence Act, primary evidence means
the document itself produced for the inspection
of the court.
• The main purpose of document is to create a
documentary evidence of a transaction.
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4. Meaning of Document
 As per section 3 of the Indian Evidence Act a
document is any matter expressed or described
by letter, figures or marks intended to be used
for recording that matter
 As per section 62 of the Indian Evidence Act,
primary evidence means the document itself
produced for the inspection of the court.
 As per section 29 of the Indian Penal Code,
“document” is any matter expressed or
described intended to be used as evidence.
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5. Instrument
• As per section 2 of the Indian Stamp Act, an
instrument is a document by which any right or
liability is created, transferred, limited,
extended, extinguished or recorded.
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6. Examples of documents
• Pass book, Statement of Account,
• Date of Birth Certificate,
• Application forms,
• Affidavits, Pass Ports,
• Cheques issued, Money receipts,
• Declarations, Letters,
• Travel Documents,
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7. Examples of documents
• E Records, Emails, SMSes, WhatsApp Chats
and printouts,
• Correspondence,
• Bills, Invoices,
• Educational certificates,
• Appointment letters, Salary Certificates,
• Copies of Adhar Cards, PAN Cards, Driving
Licenses, etc
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8. Examples of Loan related documents
• Application for Loan,
• Agreement for Loan
• Promissory Note,
• Guarantee Bond
• Lien Letter,
• Letter of continuing Guarantee
• Pledge Deed,
• Hypothecation Deed,
• Mortgage Deed
• Statement of Account of Loan
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9. Examples of Loan related documents
• Copies of the notices and Acknowledgements
• Letters received from Borrower and Guarantor
• Acknowledgement of Debt
• Authority Letter to deduct installments
• Post Dated Cheques
• Balance Sheets, Profit and Loss Statements
• Quotations,
• Stock Statements
• Project Reports,
• Business Plans submitted by borrower
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10. Classification of documents
 Commercial Documents : Eg. Invoice, Purchase Order, Bill
of Entry,
 Financial Documents: Eg. Bill of Exchange, Cheque,
Statement of Account, Pass Book, etc
 Transport Documents: Eg. Bill of Lading, Lorry Receipt,
Railway Receipt, Post Parcel receipt, Airway Bill, Currier
Receipt
 Risk Covering Documents: Eg. Insurance Policy
 Official / Regulatory Documents. GST Registration, Pan
Card, MSMEregistration
 Miscellaneous Documents. Date of Birth Certificate, Adhar
(UID) Card,, Education Certificates.
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11. S E L W E R test
– To be recognized by a Court, the documents
should pass a test which may be called as
“S E L W E R test”
• S : STAMP ACT
• E : EVIDENCE ACT
• L : LIMITATION ACT
• W: WITNESSES
• E : EXECUTION
• R : REGISTRATION ACT
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12. Stamp duty on documents
• The documents like Promissory Note, Usance
Bill of Exchange require stamp duty as per the
Indian Stamp Act.
• Certain other documents like agreements,
hypothecation deeds, guarantee letter etc attract
stamp duty as per respective state stamp Acts.
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13. The list of the instruments
• The list of the instruments chargeable with
stamp duty as given in the schedule 1 of the
Indian Stamp Act, 1899 are as under:-
• Adoption Deed, Acknowledgement of Debt,
Affidavit, Agreements, Pledge, power of
Attorney, Usance Bill, Bill of Lading, Bond,
Debenture, Conveyance Deed, Exchange of
Property, Gift, hiring agreements, Insurance,
Indemnity Bonds, Lease Agreements, Share
Certificates, Letter of Credit, Guarantee, Articles
of Association, memorandum of Association,
Mortgage deed, partition deed, Partnership
Deed, Promissory Note, Protest of a Bill,
Transfer of Shares and Debentures, Warranty of
goods, etc.
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14. Multiple facilities
• As per section 5, if an instrument contains several
distinct matters, stamp duty should be paid on the
aggregate amount.
• For example if you have executed a hypothecation
deed for a term loan of Rs.5.00 lacs and a cash credit
facility of Rs.3.00 lacs, then the stamp duty should be
paid as per the rate applicable for Rs.8.00 lacs.
• In case of renewal of facility for the same amount fresh
stamp duty is not advolerm.
• In case of enhancement of facility stamp duty will be
on the difference amount.
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15. Type of Stamp duty
• The stamps which can be pasted on printed
documents are called adhesive stamps.
• Franking machines have become popular after the
recent scam
• Non judicial stamp papers.
• As per section 12, if an adhesive stamp is not
cancelled the instrument will be deemed to be
unstamped.
• As per section 17, an instrument should be stamped
before or at the time of execution of documents.
• It cannot be stamped afterwards.
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16. Non judicial stamp papers
• A part of the contents can be written on the
stamp paper and the remaining part can be
continued on the white paper.
• In this case the judicial stamp paper should be
treated as first page
• Attach the printed document to stamp paper.
• Take signature of the signatories at the joint in
respect of all joints covering both pages
• Fill all the blanks before obtaining the signature.
• Don’t hand over the unfilled but signed
document to the borrower.
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17. Under stamped or unstamped
• If the value of the stamp duty used is less than
required stamp duty it is called under stamped.
• If no stamp duty is affixed it is called unstamped.
• As per section 31, if an instrument is unstamped
or under stamped, collector of stamps can
confiscate/impound the instruments.
• As per section 35, an instrument not duly
stamped cannot be admitted as evidence in the
Court of Law.
• It can be regularised by paying 10 time the
stamp duty
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18. Time limit of Stamp duty
• Stamp paper should be used within 6 months
from the date of purchase.
• If not sued you can surrender it and claim
refund.
• A stamp paper purchased today cannot be used
for creating a document as of past date.
• If a stamp paper is purchased on 10-7-2022, it
cannot be used after 10-1-2023 and it cannot be
used for a transaction done before 10-7-2022.
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19. Who has to pay Stamp duty
• As per section 29, the stamp duty should be paid
by the person executing the documents
• The stamp paper should be purchased in the
name of a party to a contract.
• If there is a contract between X and Y the stamp
papers should be purchased in the name of X or
Y.
• The stamp papers purchased in the name of
third parties cannot be used.
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20. Indian Evidence Act
• As per section 62 of the Indian Evidence Act, primary
evidence means the document itself produced for the
inspection of the court.
• As per section 61 of the Indian Evidence Act, the
contents of a document may be proved either by
primary or secondary evidence.
• As per section 59 of the Indian Evidence Act, all facts
except the contents of document may be proved by
oral evidence.
• Proving a fact becomes easy with the help of a
documentary evidence.
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21. Limitation Act:
• The purpose of limitation act is to fix a time
frame within which an aggrieved party can go to
court to enforce his rights.
• How long can you preserve these documents?
• You cannot be expected to preserve your
documents for ever.
• Hence, the Limitation Act comes to your risqué
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22. Preservation of Records
• The Limitation Act prescribes the time limit within
which an aggrieved party can go to Court to enforce
his rights.
• You can renew the validity period the documents by a
fresh written agreement with the counter party
regarding extension of limitation period
• Once, that period is over, you can destroy your old
records.
• It means you have to preserve al the relevant
documents till the limitation period in respect of that
transaction is not yet over.
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23. Period of limitation
• The period of limitation is as under;
• Money suit : 3 years
• Mortgage suit :12 years
• Suit for decree : 3 years
• Execution of decree :12 years
• The period of limitation starts from the date of
cause of action.
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24. Security for Loans
S.
No
Security Mode of Creating Security
1 Deposits with Banks Lien
2 LIC Policies, Debentures Assignment
3 Immovable properties Mortgage: Equitable Mortgage
and Registered Mortgage,
Charge on Land
4 Movable property such as
stocks, book debts, shares,
Pledge. Possession with the
Lender
5 Movable property such as
Machinery, Furniture,
Vehicles
Hypothecation fixed Charge
(Possession with Borrower)
6 Movable property such as
stocks, book debts, shares,
Hypothecation floating Charge
(Possession with Borrower)
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25. Witnesses
• The documents which require witnesses must be
signed by the witnessess.
• The identity of the witnesses such as name and
address should be preserved.
• Examples: nomination by illiterate, Mortgage
deed, Lease agreements, Will etc
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26. Execution of documents
• Execution means:
1. Filling up of all blanks,
2. Signature by all parties preferably on all pages and also on joints to
show the continuety of the documents.
Precautions:
• Signatories in official capacities should show the capacity in which
they are signing such as Partner, Director, PA Holder
• Rubber stamps and Company seals
• Signatures should be obtained in the Bank premises in presence of
Bank officer
• Prevent overwritings.
• Use same ink and same hand writing through out
• Hand writing should be legible
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27. Registration
• The documents needed to be regisgtered must
be registered within the prescribed time limit.
• For Example:
• Mortgage Deed, Will with Sub Registrar
• Charge on the assets of a company with ROC
• Trust Deed with Charity Commissioner
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