Copy of a Deed Cannot be Impounded

Jojy George Koduvath, Kottayam.

Introduction

The word ‘Impound’, in law, means ‘to keep in custody of the law’. It is usually, now-a-days, used to denote the legal action taken by the Courts and other Officials when an unstamped or insufficiently stamped document is produced (by a party) before it.

Duty of Every Court to Impound Unstamped or Insufficiently Stamped Document

It is the duty of every court to impound unstamped or insufficiently stamped document. It is emphatically pointed out, relying on Section 33 of the Maharashtra Stamp Act, 1958, in Shri Jayasingh Narayan Tupe v. Shri Sambhaji Baburao Pawar, 2013(3) MhLJ 433.

Time of Impounding is, 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.”
• See also: Miss. Sandra Lesly Annabartlets v. Miss. P. Gunavathy, ILR 2013 Kar 368

Order XIII Rule 8 of Code of Civil Procedure, 1908 reads as under- 

• “Rule 8: Court may order any document to be impounded. Notwithstanding anything contained in rule 5 or rule 7 of this Order or in rule 17 of Order VII, the Court may, if it sees sufficient cause, direct any document or book produced before it in any suit to be impounded and kept in the custody of an officer of the Court, for such period and subject to such conditions as the Court thinks fit. ”  

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.”
  • Note: Similar provisions in the State-Stamp-Acts also.

Read Blogs: Adjudication as to Proper Stamp under Stamp Act

• Unstamped & Unregistered Documents and Collateral Purpose

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’.

Can a Copy of an Unstamped Instrument be Accepted in Evidence?

It cannot be.

It was so specifically held in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao, AIR 1971 SC 1070.Appellant (plaintiff) in this case instituted the suit against respondents (defendants) praying for specific performance of the agreement to lease. Copy alone was produced. The original was insufficiently stamped. Defendants denied the execution of the agreement. The original agreement was according to the plaintiff had remained with the defendants. Oral evidence was given by the plaintiff to prove the execution of the said document. The question arose before the Apex Court was whether the consideration of the copy of the written insufficiently stamped agreement was barred by the provisions of sections 35 and 36 of the Stamp Act.

S. 35 of the Stamp Act reads as under:

• “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 …… 

The Apex Court held as under:

• “13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped.
• The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence.”

Does S. 36 Bar Questioning an Unstamped Document Once Marked Without Objection

(See End Notes)

Sec. 36 reads as under:

• “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 around that the instrument has not been duly stamped.”

In Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao, AIR 1971 SC 1070, it is held as under:

• If Section 35 only deals with original instruments and not copies, section 36 cannot he so interpreted so as to allow secondary evidence of an instrument to have its benefit.  The words “an instrument” in Section 36 must have the same meaning as that in Section 35. 

Can a Copy of an Unstamped Instrument be Impounded?

Cannot be.

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.”

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.”

It is further pointed out in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao, AIR 1971 SC 1070, that the well-settled law that a copy of an instrument could not be validated is reiterated in The State of Bihar v. Karam Chand Thapar & Bros Ltd. [1962] 1 S.C.R. 827.

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.”

Stamp Duty to be Levied Would be the Duty Payable as on the Date of Execution

The stamp duty to be levied on impounding would be the duty payable as on the date of execution of the document and the value of the property as on that date; and not the date of its impounding.

Section 27 of the Indian Stamp Act, says as under:

• 27. Facts affecting duty to be set forth in instrument.—The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein.

Who has to Pay Stamp-Duty

Section 29 of The Indian Stamp Act, 1899 governs it. It reads as under:

• 29. Duties by whom payable: In the absence of any agreement to the contrary, the expense of providing the proper stamp shall be borne
  • (a) in the case of any instrument described in any of the following Articles of Schedule I, namely-
    • No. 2. (Administration Bonds),
    • No. 6. (Agreement relating to Deposit of Title deeds, Pawn or Pledge),
    • No. 13. (Bill of Exchange),
    • No. 15. (Bonds),
    • No. 16. (Bottomry Bond),
    • No. 26. (Customs Bond),
    • No. 27. (Debenture),
    • No. 32. (Further Charge),
    • No. 34. (Indemnity-bond),
    • No. 40. (Mortgage-deed),
    • No. 49. (Promissory-note),
    • No. 55. (Release),
    • No. 56. (Respondentia Bond),
    • No. 57. (Security Bond or Mortgage-deed),
    • No. 58. (Settlement),
    • No. 62(a). (Transfer of shares in an incorporated company or other body corporate),
    • No. 62(b). (Transfer of debentures, being marketable securities, whether the debenture is liable to duty or not, except debentures provided for by section 8),
    • No. 62(c). (Transfer of any interest secured by a bond, mortgage-deed or policy of insurance),
• by the person drawing, making or executing such instrument:
  • (b) in the case of a policy of insurance other than fire-insurance –
• by the person effecting the insurance:
  • (bb) in the case of a policy of fire-insurance-
• by the person issuing the policy:
  • in the case of a conveyance (including a reconveyance of mortgaged property) by the grantee: in the case of a lease or agreement to lease-
• by the lessee or intended lessee:
  • in the case of a counterpart of a lease-
• by the lessor:
  • in the case of an instrument of exchange-
• by the parties in equal shares:
  • in the case of a certificate of sale-
• by the purchaser of the property to which such certificate relates: and,
  • in the case of an instrument of partition–
• by the parties thereto in proportion to their respective shares in the whole property partitioned, or, when the partition is made in execution of an order passed by a Revenue-authority or civil court or arbitrator, in such proportion as such authority, court or arbitrator directs.

Instruments Impounded, How dealt with

Section 38 of The Indian Stamp Act, 1899 reads as under:

• 38. Instruments impounded, how dealt with—(1) Where the person impounding an instrument under section 33 has by law or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by section 35 or of duty as provided by section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.
• (2) In every other case, the person so impounding an instrument shall send it in original to the Collector.

In N. Jagannadham v. V. Mangamma, 1997 (2) ALD 549, Andhra High Court held as under:

• “If the party instead of requiring the document to be admitted in evidence merely wants the Court to send it to the Collector to be dealt with under Section 40, the Court has no option but to send it to the Collector as provided in Section 38 (2).
• The Court cannot compel the party to pay duty and penalty and have it admitted in evidence”

Collector’s power to stamp instruments impounded

Sec. 40 deals with it. It reads:

40. Collector’s power to stamp instruments impounded

• (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section 38, sub-section (2), not being an instrument chargeable with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, he shall adopt the following procedure–
  • (a) if he is of opinion that such instrument is duly stamped, or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamp, or that it is not so chargeable, as the case may be;
  • (b) if he is of 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 five rupees; or, if he thinks fit, 2[an amount not exceeding] ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees:
• Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.
• (2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matters stated therein.
• (3) Where an instrument has been sent to the Collector under section 38, sub-section (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer.

End Notes

Instruments not duly stamped, inadmissible

Insufficiency of Stamp: Sec. 35 of the 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 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; … ….. ….”

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.

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 “.

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 had been held that Section 35 was only a bar to the admissibility of an unstamped or insufficiently stamped document; and that when it was admitted in evidence it cannot afterwards be 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

Two forceful propositions stand paradoxical and incongruent

The following two forceful propositions stand paradoxical and incongruent.

1. There is a duty upon every Judge not  to  admit a document that is not duly stamped even if no objection to mark it.
2. The court should not exclude an insufficiently stamped (or unstamped) deed once marked without objection.

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.””

Though Smt. Savithramma R.C v. M/s. Vijaya Bank, AIR 2015 Kar 175, clarified the position with great clarity, still, it is not definite whether the court should sit silent and mark the document if it is not opposed; and to raise its eye-brows after marking it unopposed. It is yet to be solved after considering all relevant aspects. It appears that the latest view of the Supreme Court is that given in Omprakash v. Laxminarayan, (2014) 1 SCC 618.

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).”