Supreme Court Explains Procedure For Admitting Insufficiently Stamped Instruments Under Karnataka Stamp Act, 1957

The Supreme Court recently explained the procedure related to admission of insufficiently stamped instruments as evidence as per Karnataka Stamp Act, 1957.A bench of Justice Hrishikesh Roy and Justice SVN Bhatti extracted the steps to be followed as per Sections 33, 34, 35, 37, and 39 of the Act in the following manner:[Note: In Karnataka, District Registrar acts as the Deputy Commissioner of Stamps.]Section 33 provides the impounding of instruments that are insufficiently or improperly stamped, preventing parties from withdrawing such documents once they are notified about the requirement to pay proper stamp duty and penalties.A party relying on an insufficiently stamped instrument can either:Pay the required duty and penalty directly under Section 34.Apply under Section 39 to the District Registrar/Deputy Commissioner to determine and collect the deficient stamp duty and penalty. After payment, the impounded instrument is released and can be used as evidence.If a party chooses to send the instrument to the Deputy Commissioner to collect the deficit stamp duty and penalty, the court has no option but to send the document to the Deputy Commissioner. However, this choice must be made by the party before the court invokes Section 34.Section 34 bars the use of insufficiently stamped instruments in evidence until the deficient stamp duty and penalty are paid. The authority collecting the deficit has no discretion but to levy a penalty of ten times the deficit.Section 35 provides that once an insufficiently stamped instrument is admitted into evidence under Section 34, its admission cannot be challenged.Section 37 - Dealing with Impounded Instruments:After the deficit duty and penalty are paid, the court has to forward it to the Deputy Commissioner or District Registrar.If a case does not fall under Sections 34 or 36 (admission of improperly stamped instruments), the impounding authority must send the original document to the Deputy Commissioner.Once a party complies by paying the required stamp duty and penalty under Sections 34 or 39, the legal objection related to insufficient stamping under Section 33 is removed, allowing the document to be admitted into evidence without further objections under the Stamp Act.Under Section 39, the Deputy Commissioner or District Registrar is responsible for stamping impounded instruments and has discretion in levying penalties, which can extend up to ten times the deficient duty but only in extreme cases.After fulfilling all requirements, including payment of duty and penalties, the document complies with the Act's requirements. The scheme allows a party to directly approach the District Registrar, pay the duty and penalty, and then present the document to the court, removing any objections under Sections 33 or 34.The judgement sets out these steps in paragraph 21, which reads thus –“21. As per the steps taken under Sections 33, 34, 35, 37, and 39 under Chapter IV of the Act, the position in law is well-established, and axiomatic by the letter of law and precedents of this Court. However, there are a few misgivings in the sequence of its application. For the benefit of practice and procedure, we sum up the steps as follows. 21.1. Section 33 of the Act is titled examination and impounding of instruments. The object of the provision is to disable persons from withdrawing the instruments produced by them on being told that proper stamp duty and penalty should be paid. 21.1.1. The person who intends to rely on an insufficiently/improperly stamped instrument has option to submit to the scope of Section 34 of the Act, pay duty and penalty. The party also has the option to directly move an application under Section 39 of the Act before the District Registrar and have the deficit stamp duty and the penalty as may be imposed collected. In either of the cases, after the deficit stamp duty and the penalty are paid, the impounding effected under Section 35 of the Act is released and the instrument available to the party for relying as evidence. In the event, a party prefers to have the document sent to the deputy commissioner for collecting the deficit stamp duty and penalty, the Court/Every Person has no option except to send the document to the District Registrar. The caveat to the above is that, before the Court/Every Person exercises the jurisdiction under Section 34 of the Act, the option must be exercised by a party. 21.2. Section 34 of the Act is titled instruments not duly stamped inadmissible in evidence. This provision bars the admission of an instrument in evidence unless adequate stamp duty and the penalty are paid. Every person so authorised to collect deficit stamp duty and penalty has no discretion except to levy and collect ten times the penalty of deficit stamp duty.21.3. Section 35 of the Act is titled admission of instrument where not to be questioned. Section 35 prohibits questioning the admission of an insufficiently stamped instrument in evidence. 21.4. Section 37...

Supreme Court Explains Procedure For Admitting Insufficiently Stamped Instruments Under Karnataka Stamp Act, 1957

Amisha Shrivastava

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Supreme Court Explains Procedure For Admitting Insufficiently Stamped Instruments Under Karnataka Stamp Act, 1957

Amisha Shrivastava

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