Written while pursuing the NUJS MA in Business Laws (http://startup.nujs.edu/). It often so happens that an agreement or conveyance or any other document is improperly stamped and not in compliance with the Indian Stamp Act, 1958, or any of the State stamp legislations. This article discusses the provisions relating to such documents and the different ways such stamping requirements could be complied with and rectified.

1. WHAT TO DO IF AN AGREEMENT IS NOT
ADEQUATELY STAMPED
By Tejaswinee Roychowdhury
B.A.LL.B. (Hons), Department of Law, University of Calcutta
Year 1 - LL.M., Department of Law, University of Calcutta
Semester 2 - M.A. in Business Laws (Intellectual Property and Cyber
Laws), WBNUJS
Written while pursuing the NUJS MA in Business Laws. It often so happens
that an agreement or conveyance or any other document is improperly stamped
and not in compliance with the Indian Stamp Act, 1958, or any of the State
stamp legislations. This article discusses the provisions relating to such
documents and the different ways such stamping requirements could be
complied with and rectified.
TEJASWINEE ROYCHOWDHURY 1

2. INTRODUCTION
Stamping under the Indian Stamp Act, 1899, is of utmost necessity because
such stamping ensures the legal validity of the agreement or deed or document
or affidavit or power of attorney in question. For instance, in case of an
agreement, adequate stamping enables its enforceability in a court of law. In
case of a document of a property, such as a sale or any other transfer of title
deed, a deed if not adequately stamped will dispute the title it transfers and the
same will neither be enforceable in a court of law nor be admissible as
evidence. For a document to be stamped in India, for ensuring legal validity, it
is essential that the property or any other thing concerning the document be
physically or virtually situated in the territory of India and the execution of the
document be in the territory of India or at least one of the executing parties be a
resident of India. Additionally, inadequate stamping is penalizing under the
Indian Stamp Act.
However, despite the simplicity behind the reason why stamping is necessary,
there are a lot of rising question and complexities surrounding it given the
steady development in the information technology sector. Additionally,
questions often arise in the Courts as to validity of foreign documents in India,
validity of Indian documents in foreign courts and tribunals, assumption as to
stamping of registered documents and so on.
Let us discuss in details all the legal provisions in relation to stamping of
documents along with the possible complexities that have to be dealt with
every day.
NECESSITY OF STAMPING
As discussed above, stamping documents and agreements is necessary because
of the following interrelated reasons –
1. Legality – Proper stamping ensures the legal validity of the document. If
a document has no or questionable legal validity, then rights of the
parties in question becomes affected through lack of enforceability and
TEJASWINEE ROYCHOWDHURY 2

3. admissibility. However, it is to be noted that mere inadequate stamping
will not invalidate an agreement.
2. Enforceability – If an agreement or deed has legal validity, it can be
easily enforced. Proper stamping enables an agreement or deed to be
registered under the Indian Registration Act, 1908, which in turn ensures
its enforceability.
3. Admissibility – Legal validity allows the document to be admissible as
evidence in a suit where the property in question is in a disputed title, or
there is a question relating to the subject matter of the document.
However, no law is absolute and therefore, there are certain excusable
situations where inadequately stamped documents may be allowed as
evidence. This provision will be discussed in details later.
4. Avoiding Penalty – Given that the penalty for executing inadequately
stamped documents is to be paid by the party executing it, it is in the best
interests of such executing party to comply with the stamps.
There are certain documents and agreements the adequate stamping of which
are compulsory in law. It, thus, becomes necessary to stamp such documents. It
is important to note that the Indian Stamp Act, 1899, lists no such documents.
However, the Indian Registration Act, 1908, under Section 17, gives a list of
documents which are to be compulsorily registered. Since registration requires
stamping, the same documents are required to be adequately stamped by law.
These documents include the following –
1. Instrument relating to gift of an immovable property.
2. Non-testamentary instruments other than gift of immovable property
which purport to presently or in future create / declare / assign / limit /
extinguish a right, title or vested / contingent interest of a movable
property valued at or above INR 100 and immovable property.
3. Any non-testamentary instrument acknowledging the payment or receipt
of any consideration which create / declare / assign / limit / extinguish a
right, title or interest.
4. Lease deeds of an immovable property, where the lease exceeds a year.
TEJASWINEE ROYCHOWDHURY 3

4. 5. Non-testamentary instruments which transfer or assign a decree or order
of a Court, or an award, the value of which exceeds INR 100 and
immovable property. However, certain instruments may be exempted by
the State Government by publishing in its Official Gazette.
6. Documents consisting of contracts to transfer as a part of consideration
any immovable property for Section 53A of the Transfer of Property Act,
1882.
7. Documents to adopt a son executed other than by conferring on will after
January 1, 1872.
The points 2 and 3 are bound by exceptions under the Indian Registration Act,
1908, and these exceptions include – composition deed; instrument of shares in
joint stock company; debenture issued by company which doesn’t create /
declare / assign / limit / extinguish a right, title or vested / contingent interest
except entitling the holder to security of registered document; endorsement
upon debenture transfer; any document other than Section 53A of TP Act,
1882; decree or order of court; grant of immovable property by Government;
partition instrument; order under Land Improvement Act or Land Improvement
Loans Act, Agriculturist’s Loans Act, Charitable Endowments Act;
endorsement on mortgage deed acknowledging payment of mortgage money;
Certificate of Sale granted to buyer of property sold by public auction by Civil
or Revenue Officer.
Additionally, a deed of assignment or a copy of the power of attorney are
required to be adequately stamped before being produced before the Indian
Patent Office or the Trademark Registry. [1]
ELECTRONIC AGREEMENTS – STAMPING REQUIREMENTS
With the steady advancement in information technology, electronic agreements
have captured the attention of the law-makers. Be it in e-commerce or a simple
terms and conditions while opening a Google or Facebook account, electronic
agreements are of prime importance today. Electronic agreements and contracts
in India are validated by the Information Technology Act, 2000, and are also
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5. admissible as evidence by virtue of the Indian Evidence Act, 1872. These two
legislations also provide for creating and admitting into evidence of digital
signature, or as we now know it after the 2008 IT Act Amendment, the
electronic signature. The Supreme Court in Trimex International FZE v.
Vedanta Aluminium Limited, India, 2010, gave validation to agreements
concluded through e-mails disregarding the fact that there was no formal
contract to begin with.
Now the question arises as to the stamp duty on electronic agreements and
documents. Breakthrough legislation has been made in this regard by the
Maharashtra State Government in 2005 when it included in Schedule I of the
Maharashtra Stamp Act, 1958, electronic contracts, making it an instrument
on which stamp duty is payable by virtue of the Section 3 of the Act. In
addition to this, Maharashtra E – Registration and E-Filing Rules, 2013,
allows stamp duty and registration fees to be payable online.
Apart from this, it is to be noted that an important part of evidence of e-
transaction or e-commerce is the receipt. While the Maharashtra Stamp Act,
1958, does not provide for stamped receipts, the Indian Stamp Act, 1899,
mandates the adequate stamping of receipts bearing transactions or of property
of over Rs. 5000. Therefore, this provision requires the receipt of an e-
transaction to be stamped. [2]
EVIDENTIARY VALUE OF INADEQUATELY STAMPED
INSTRUMENTS
It is a general rule under the Section 35 of the Indian Stamp Act, 1899, that
instruments not duly stamped will not be admissible as evidence. The same
Section and subsequent Sections enlist a set of exceptions for this general rule
which include the following –
1. The instrument in question will become immediately admissible once the
duty is paid. In case the stamping was inadequate, it will become
immediately admissible once the remaining duty is paid along with a fine
of Rs. 5 or if the proper duty or deficient portion exceeds Rs. 5, then, ten
times such duty or portion. Essentially, this is the recourse which is to
TEJASWINEE ROYCHOWDHURY 5

6. be taken by a party or their pleader in case of inadequately stamped
agreements.
2. In a situation where a stamped receipt is to be demanded, if an
unstamped receipt is given, then such receipt becomes admissible on the
payment of Re. 1 fine by the person who tenders it.
3. In case of an agreement or contract which is effected by way of two or
more letter correspondence and one of such letter is adequately stamped,
the agreement or the contract will be considered to be duly stamped.
4. Section 35 cannot overrule the admission of any document or instrument
in evidence, even if it is inadequately stamped, if such instrument is
admitted in any proceeding before a criminal court, other than in a
proceeding under Chapter XII and / or Chapter XXXVI of the Code of
Criminal Procedure.
5. Section 35 cannot prevent a document or instrument, executed by or on
behalf of the Government, where it bears the Collector’s Certificate as
per Section 32 of the Act, from being admitted as evidence, regardless of
whether they are adequately stamped or not.
6. Section 36 of the Act allows an inadequately stamped instrument to be
admissible in evidence once it has already been admitted evidence, and it
cannot be called into question on that very ground excepting the
provision of Revision of the decision of the Court under Section 61 of
the Act.
7. Section 37 of the Act allows an instrument to be admissible in evidence
from the date of its execution in the event that the stamp is of improper
description although of sufficient amount, given that the duty chargeable
is certified as duly stamped.
There is also an exception beyond the above provisions of the Indian Stamp
Act, 1899. When considering the general rule provided in Section 35 of the
Indian Stamp Act, 1899, it is to be noted that this Section is in contradiction
with Section 49 of the Indian Registration Act, 1908 and this has been a
concern in contentions in various cases. The proviso that has been inserted by
the Amendment by Act 21 of 1929, states that an unregistered document which
affects any immovable property which is required by the provisions of the
TEJASWINEE ROYCHOWDHURY 6

7. Indian Registration Act, 1908, or the Transfer of Property Act, 1882, to be
registered, may be admissible in evidence in a suit for specific performance of
a contract under Chapter II of the Specific Relief Act, 1877, as an evidence of
collateral transactions which are not required to be registered or effected by
registered instruments.
Case Reference: Dipak Agarwal v. Mahua Chakraborty & Anr, 2014
In the case of Dipak Agarwal v. Mahua Chakraborty & Anr, 2014, before the
Calcutta High Court, the Civil Judge (Senior Division) of Howrah, in a
Money Suit for recovery of Rs. 2,90,000, allowed an unregistered and
unstamped agreement to be allowed into evidence. The learned Counsel for the
petitioner contended before the Hon’ble Court that despite the clear bar
provided under Section 35 of the Indian Stamp Act, 1899, the unregistered and
unstamped agreement can be allowed into evidence by virtue of the proviso
under Section 49 of the Indian Registration Act, 1908.
The Hon’ble High Court, however, brought into light the opinion of the
Supreme Court in Avinash Kumar Chauhan v. Vijay Krishna Mishra (2009)
2 SCC 532 where the Hon’ble Court opined upon the dichotomy between the
two Sections of the two statutes that the Section 35 of the Indian Stamp Act,
1899, precludes relevance of such a provision as it categorically provides that a
document of like nature might not be admitted for any reason at all. In the
event that all reasons for which the it is to be admitted in evidence is excluded,
there is no perceived reason regarding how the record would be admissible for
collateral purposes.
The Apex Court relied upon the decision of the Privy Council in the case of
Ram Rattan v. Parma Nand, (1946) 48 BOMLR 363, where the phrase ‘for
any purpose’ was given the interpretation to have the natural meaning and the
natural effect that flows from such meaning which includes a collateral purpose
and that “unstamped partition deed cannot be used to corroborate the oral
evidence” to determine the factum of partition as distinct from terms.
Further, in the case of Sanjeeva Reddi v. Johanputra Reddi, AIR 1972 AP
373, the Andhra High Court pointed out that the scope of Section 35 of the
Indian Stamp Act, 1899, is non-inclusive of non-registration under Section 49
TEJASWINEE ROYCHOWDHURY 7

8. of the Indian Registration Act, 1908, as this Section 49 is only concerned with
the non-registration of documents listed under the Section 17 of the same Act
and the provisions of the Transfer of Property Act, 1882. But at the same time,
Section 49 also does not prohibit admissibility of such a document for a
collateral purpose.
Additionally, the Andhra High Court in the case of T. Bhaskar Rao v. T.
Gabriel and Ors., AIR 1981 AP 175, pointed out the proviso (a) to Section 35
of the Indian Stamp Act, 1899, where the instrument in question will become
immediately admissible once the duty is paid. In case the stamping was
inadequate, it will become immediately admissible once the remaining duty is
paid along with a fine of Rs. 5 or if the proper duty or deficient portion exceeds
Rs. 5, then, ten times such duty or portion. Similar view was held by the
Supreme Court in Omprakash v. Laxminarayan & Ors, 2013.
Judgment: Therefore, whilst keeping the above judgments in mind, the
Calcutta High Court in the case of Dipak Agarwal v. Mahua Chakraborty &
Anr, 2014, modified the order of the Trial Court saying that the agreement in
question shall be sent to the Collector of the concerned District to ascertain the
required stamp duty.
RECTIFICATION OF INADEQUATE AND IMPROPER STAMPS
In case of inadequate or improper stamping of documents or agreements, it is
important that it be rectified. Inadequate stamping may mean no stamp or
insufficient amount of stamp or stamp of full amount but of improper
description. Now, the question arises as to how to rectify them or the
procedural laws which allow rectification. Let us go through the provisions
available in Indian law that facilitate such rectification.
1. WHEN INSUFFICIENTLY STAMPED DOCUMENT IS ALREADY
SUBMITTED BEFORE THE COURT AS EVIDENCE – As discussed
earlier, the inadequately stamped documents and instruments, once the
remaining duty is paid along with a fine of Rs. 5 or if the proper duty or
deficient portion exceeds Rs. 5, then, ten times such duty or portion,
become rectified and as such become admissible as evidence. This is the
TEJASWINEE ROYCHOWDHURY 8

9. procedure mentioned in Section 35 Proviso (a) of the Indian Stamp Act,
1899. The Supreme Court in 2013 has upheld the provision in the case
of Omprakash v. Laxminarayan & Ors. Further, the Proviso (b) of the
same Section allows in a situation where a stamped receipt is to be
demanded and an unstamped receipt is given, to make such receipt
admissible on the payment of Re. 1 fine by the person who tenders it.
2. WHEN PLAINT IS PRESENTED BEFORE THE COURT ON
INADEQUATELY STAMPED PAPER – If a plaint is presented before
the Court on insufficiently or improperly stamped paper, then the Court
has the power to reject the plaint by virtue of Order 7 Rule 11 of the
Code of Civil Procedure, 1908. This is because under the Section 4 of
the Court Fees Act, 1870, the High Court is barred from receiving
insufficiently stamped document. However, at first, the Court will allow
the plaintiff a period of time to pay the present the plaint on proper stamp
papers, failing which the plaint will be rejected. It should be noted that in
this scenario, stamp paper equates to court fees which are to be paid by
the plaintiff. Once the plaint is presented on proper stamp papers, the suit
or appeal will be treated as instituted from the date on which it was
originally presented. [3] This provision was upheld by the Supreme
Court in the case of Mannan Lal v. Chhotaka Bibi, (1970) 1 SCC 769.
3. WHEN AN INADEQUATELY STAMPED INSTRUMENT IS
PRESENTED FOR REGISTRATION – An inadequately stamped
instrument is presented for registration under the Indian Registration Act,
1908, the Registrar or Sub-Registrar will return the instrument so that it
be properly stamped and presented again for registration. Then re-
registration procedure is to be followed as per the Section 23A of the
Indian Registration Act, 1908.
4. IMPOUNDING INADEQUATELY STAMPED INSTRUMENTS –
When an inadequately stamped instrument is presented in any public
office, such officer, may on realising that the instrument is inadequately
stamped, impound (take over) such instrument under Section 33 of the
Indian Stamp Act, 1899. However, as per Section 34 of the Act, such
officer has the power to require a duly stamped receipt where the duty
does not exceed ten naye paise instead of impounding the unstamped
receipt. The impounded instruments are sent to the Collector under
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10. Section 38 of the Act. Under Section 40 of the Act, the Collector has the
power to stamp the impounded instruments and levy the duties and fines
from the person by whom the duty is originally payable.
5. WHEN INSTRUMENTS ARE INADEQUATELY STAMPED BY
ACCIDENT – The Section 41 of the Indian Stamp Act, 1899, also
provides for situations where an instrument on which ten naye paise duty
is payable, is inadequately stamped and the person who executed it, on
his own motion brings it to the notice of the Collector saying that such
inadequate stamping was an accident, mistake or urgent necessity then
the Collector will allow the proper stamp duty to be paid to correct the
error without levying any fine.
6. WHEN INADEQUATELY STAMPED INSTRUMENTS ARE
REGISTERED – There is no reason to assume that just because an
instrument or document is registered under the Indian Registration
Act, 1908, such document is adequately or properly stamped. In a
situation where an instrument is improperly stamped by mistake or
otherwise, the Registering Officer will call for the original document
from the party that presented the same for registration, give the party an
opportunity to be heard as to why the instrument was inadequately
stamped, record such reasons in writing furnish a copy to such party and
impound such instrument. [4]
7. PENALTY FOR INADEQUATE STAMPS – The Indian Stamp Act,
1899, under Chapter VII provides for multiple stamp law offences and
prescribes the penalty for the same. For instance, under Section 62, the
penalty for executing an instrument inadequately stamped is a fine upto
Rs. 500 which may be reduced based on fines already paid earlier.
8. FOREIGN DOCUMENTS BEING BROUGHT INTO INDIA – In case
of instruments executed in a foreign country, Sections 18 of the Indian
Stamp Act, 1899, provide that documents executed out of India are to be
stamped within 3 months of such instrument or document being brought
into India. Section 18 applies to instruments other than bills of exchange
and promissory notes while Section 19 applies to bills of exchange and
promissory notes drawn out of India, which says that it proper stamp has
to be affixed in India before cancelling it. From various judgments given
TEJASWINEE ROYCHOWDHURY 10

11. by the Supreme Court and various High Courts, for instance, Malaysian
Airlines Systems Bhd Vs. M/S. Stic Travels (P) Ltd., 2000(7) SC ALE
670 and Kuldip Kaur and ors. Vs. Prakash Chand Khurana and ors.,
AIR 1983 Delhi 328, it appears that documents executed outside India
are required to be mandatorily stamped when they are brought into
India regardless of whether they were duly stamped in the country in
which they were executed. This seems to emanate from the legal maxim
lex fori, which essentially means that the law of the country in which the
action is brought is the law which is to be followed, and here, the stamp
duty to be payable in India forms a part and parcel of the procedural laws
in India. Further, when the question arises as to what one should do in
case of foreign documents being brought into India, i.e., if they are
stamped in another country do they need to be stamped in India again, a
subsequent question arises – Do foreign courts or tribunals accept
Indians agreements or documents that are not properly stamped
according to Indian laws? Due to lack of any legislation in this regard, it
is difficult to point it out definitely. All that can be said is, a document
executed India, stamped or not, would by the principle of lex fori, have
to be stamped in the country in whose Courts it is sought to be produced.
However, it is to be noted that if an intellectual property from India is
sought to be registered with the US Patent Office, the Indian
counterpart is required to be adequately stamped before being
produced before the Indian Patent Office or the Trademark Registry.
As can be seen from the provisions above, no matter which procedure is
adopted, the primary aim remains the rectification of inadequate or improper
stamping, sometimes along with fines. Therefore, if the question arises that
what a person should do if an agreement is not adequately stamped, then the
rectification of such inadequate stamp, is essentially, the only thing one must
do. Which of the above provisions have to be complied with will depend on
when the inadequate stamping has been discovered and by whom it has been
discovered.
CONCLUSION
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12. Despite straightforward legislations in the regard of stamping, certain
questions still remain under grey areas. For example, information technology
law, as discussed earlier is still developing and which the Maharashtra
Stamp Act, 1958, has already acknowledged it, the Central legislation, i.e.,
the Indian Stamp Act, 1899, is yet to familiarise itself with the scenario.
Additionally, the stamp law legislations of various states in India are not at par
with each other, making it a legislation that is not uniform in its applications.
One of the biggest problems in our country is that certain legislations are
continuing since the British era and are in need of immediate amendments so as
to cope up with the changing and developing society.
FOOTNOTES
[1] RK Dewan & Co, Stamping requirements in the Indian legal system,
Lexology, May 6, 2014
(http://www.lexology.com/library/detail.aspx?g=30819092-41e5-4b1e-8ef2-
ab7d1cf806e8)
[2] Agama Law Associates, E-CONTRACTS IN INDIA
(https://archanabala.com/2015/06/03/e-contracts-in-india/#_ftn2)
[3] Takwani, C.K., Civil Procedure Code, Eastern Book Company, 7th
Ed., Pg.
241
[4] Akash Shah, Effect of not Duly Stamped Instrument, Legal Services India,
Oct 11, 2012 (http://www.legalservicesindia.com/article/article/effect-of-not-
duly-stamped-instrument-1333-1.html)
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