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This article is written by Harsh Jain. Along with holding degrees in LLB, and LLM, Harsh is NET, JRF qualified. Harsh has successfully cleared Rajasthan Judicial Services, Mains Examination, Gujarat Judicial Services pre, SBI specialist officer scale II online exam and many other competitive examinations. Many of his students are posted as ADJs, JMs, MMs, Lecturers, APPs etc. Also, Harsh is pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata. This article discusses the validity of agreements on old stamp paper .

Stamping your agreements is critical for enforceability. Stamp paper Can you buy stamp paper in advance and store it? Sometimes, you may a situation arises that you purchase a stamp paper but due to some reasons, were not able to use them. It is entirely possible that if you need a stamp paper of same value or a value more than the value of that stamp, you may want to use the same stamp instead of wasting more money to buy a new one. Here is everything you need to know about its validity and usage.

Validity and expiry of old stamp paper:

As per Section 54 of the Indian Stamp Act, if you do not have any immediate use of a stamp paper, then you can deposit it back to the collector within six months from the date of purchase and take back your money as a refund after deduction of 10 paise per rupee.

In Thiruvengada Pillai Vs. Navaneethammal & Anr. (see here), it was held by the Supreme Court that a stamp paper, even if it is more than six months old, is valid to be used. Section 54 just bars taking refund after six months of purchase, but it does not restrict the use of such old stamp paper for an agreement. Thus, nothing prohibits you from using it even after years of its purchase. Law does not have any prescribed period of limitation for its validity.

But Maharashtra and Gujarat are the two states which have specific provisions stating that if a stamp is not used or surrendered back within six months of the date of issuing them, they will be treated as expired. Section 52B(b) of The Maharashtra Stamp Act (see here) and Section 52C of Bombay Stamp (Gujarat Amendment) Act, 2016 states that if any stamp has been purchased and it is neither used nor any allowances are claimed on it within a period of six months, it will be treated as invalid.

What to do with an old stamp paper?

If you have an old stamp paper, you can do any of the following:

Deposit back to Collector to get a substantial refund:

If such stamp is not spoiled or rendered unfit or useless and you don’t have any immediate use for it, you can deposit it back to the collector within six months of its purchase. According to the provisions of Section 54 Indian Stamp Act, he will pay back your money to you after deducting 10 Paise per Rupee.

In such situation, you will have to satisfy the Collector that:

  • You purchased them for a bonafide intention to use,
  • you have paid the full price of the stamp.
  • And they were purchased within three months before the date of depositing.
  • If you are a stamp vendor, then Collector may pay you full amount without any deduction.

This provision is also present in several state acts. For example, Section 63 of the Rajasthan Stamp Act, 1998.

This provision may be very beneficial to you if you have purchased stamps costing thousands, lakhs or even crores and due to some reasons, you do not need them immediately. In such cases, you can easily surrender your stamp papers back and get a refund back from the collector.

Use it for a new agreement, but purpose must be same for which you purchased it:

You can use such old stamp paper for a new agreement. But, you must keep in mind that according to Section 29 Indian Stamp Act, stamp vendor makes an entry in the record and on the stamp paper regarding full details of the person buying the stamp and the purpose for which it was purchased. Such stamp paper can be used only for that purpose. For eg., if a stamp paper is purchased for sale deed, then it cannot be used for any purpose other than executing a sale deed.

Such stamp paper can be used in two ways.

For executing a new agreement:

You can use it for executing a new agreement or another purpose for what you had purchased it. If the agreement needs a stamp paper of a higher value, then also such stamp paper can be used by adding another stamp paper (new) for the remaining amount. But if by mistake you use a stamp of lesser value, then also you will be required to deposit the amount of difference only, and if you deposit such amount within the prescribed time, then such stamp cannot be rendered invalid.

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For executing an old agreement:

You can use such stamp paper to execute an agreement which is dated after the date mentioned in stamp paper but was executed before the date of registration. Such kind of old agreement can be executed on such stamp paper. But, if you are doing so just to defraud the government or to deprive it with the duties and penalties as per Indian Stamp act or Registration Act or Any other law in force in India, then you may be penalized.

According to provisions of Section 64 of Indian Stamp Act if you are doing so to defraud the government, or doing any act which is calculated to deprive the government of any duty or penalty under Indian Stamp Act or any other act or law in force in India, you may be penalised for an amount up to five thousand rupees. Similar provisions are present in various state laws to penalize in such cases. For example under Section 75 Rajasthan Stamp Act, for similar kind of activities, you may be imprisoned for up to three years or may also be fined up to twenty-five thousand rupees. You may also be liable under various provisions of IPC. For eg., you may be held liable under Section 465 Indian Penal Code for Forgery, Section 420 Indian Penal Code for cheating and so on.

According to the provisions of Section 25 of The Registration Act, 1908, you may have to pay fine up to 10 times the amount of registration fees for not presenting the document (which is duly executed) for registration. In addition to that, you may have to pay additional fine up to ten times or more according to state-specific laws. For, eg. As per Delhi Registration Rules, 1976, according to Rule 43, you may have to pay fine up to 10 times of the registration fee amount.

Can you execute an agreement of a prior date on a stamp paper which has a new date on it?

Unless it is mandatory to get an agreement registered, as per contract act, Indian Registration Act or any other law in force in India, you are not bound to register documents. But it is possible that you have entered into an oral agreement at the first instance, and after some time you want to get it registered. For that, you will need to execute an agreement of prior date on a stamp paper which is having a new date on it.

According to Indian Contract Act, Section 2(e) “Every promise and every set of promises, forming the consideration for each other, is an agreement.”

According to section 10, every agreement made with free consent, by parties competent to contract, for a lawful consideration, with a lawful object and not expressly declared void by law, is a contract

Section 9 provides that proposal and acceptance of any promise can be made expressly or impliedly.

According to Section 2 and 3 to 10  Indian Contract Act, an agreement can be oral or written. It is not necessary to enter into a written contract. There is no limitation or condition prescribed by Indian Contract Act regarding executing an agreement on stamp paper.

So we can say that if we enter into an oral agreement, we can get it enforced by a court of law in India if we fulfill other conditions required by contract act. Unless an agreement is compulsory to be registered under any law in force in India, you do not have to get it registered. For eg., Section 17 of Indian Registration Act provides for documents for which registration is compulsory.

As generally law considers oral agreements as valid agreements, you can enter into an oral agreement first and then acknowledge it in a later written and registered document. Unless such document is not mandatory to be registered by a provision of any law, it will be completely lawful for you acknowledge an agreement of prior date executed on a stamp with a new date on it without any legal complications. But if you have done anything to defraud the government or to deprive it of any duty or penalty under Indian Stamp Act or any other law, you may get penalized.

What will happen to agreement put on old stamp papers?

As discussed above, agreements put on an old stamp paper are valid. In Thiruvengada Pillai vs. Navaneethammal & Anr. (see here), it was held by the Honorable Supreme Court, that, Indian Stamp Act does not prescribe any expiry date for the use of a stamp paper. The period of 6 months mentioned under Section 54, merely states that if a person is in possession of a stamp paper for which he did not have any immediate use and such stamp is not spoiled or made unfit or useless, he can surrender it to the Collector and get refund for the value of stamp paper after deduction of 10 Paise per Rupee. Section 54 does not compel a person to use a stamp paper within six months of purchase. Therefore, refund of an old stamp paper cannot be taken after six months, but there is no restriction for its use.

Future plans of government

According to the reports published by Business Standard newspaper, Finance Ministry of India is planning to amend a century old Indian Stamp Act, in which stamp papers will come with a validity of only one year. The purpose of such amendment is to stop misuse of stamp papers by preventing people from buying backdated papers to stake their claims on property in future, even when no deal had happened on such date. In addition to this, electronic payment of stamp duty is proposed under the new bill to check the same issue.

They are valid as per current law, but future is doubtful:

Although the use of old stamp paper is valid even after six months of purchasing it, still it is better that you must either deposit it back to collector within six months and get your refund from him or use it as early as possible. It is very risky and costly to use old stamp papers for backdated agreements, but they can be used for new agreement according to current law in force. In future government is planning to limit the validity of stamp papers only up to 1 year. It can remove stamp papers in paper form and introduce e stamp papers to make the process more transparent and prevent loss of revenue to the government. If you still have any old stamp papers kept with you, it is better that you should either use it or surrender it.

 

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Reference:

  1. https://taxguru.in/finance/stamp-papers-are-valid-even-after-six-month-of-purchase.html
  2. http://www.business-standard.com/article/economy-policy/stamp-papers-may-come-with-1-yr-validity-113041200025_1.html
  3. https://indiankanoon.org/doc/14125/
  4. http://delhi.gov.in/wps/wcm/connect/doit_revenue/Revenue/Home/Registration+Acts+and+Rules/
  5. http://taxboard.rajasthan.gov.in/Images/rajasthanstampact_13.pdf
  6. http://bombayhighcourt.nic.in/libweb/acts/1958.60.pdf
  7. http://letspedia.com/validity-stamp-papers/
  8. https://taxguru.in/corporate-law/stamp-paper-validityyes.html
  9. http://www.advocatekhoj.com/library/bareacts/indiancontract/index.php?Title=Indian%20Contract%20Act,%201872
  10. http://www.advocatekhoj.com/library/bareacts/registration/index.php?Title=Registration%20Act,%201908
  11. http://www.theindianlawyer.in/blog/2017/10/31/compulsory-registration-documents-registration-act-1908/

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4 COMMENTS

  1. stamp paper date is 29.02.2012, Document date is 15.02.2012 and registration date is 29.02.2012
    document is settlement deed. is this valid? or other family members can object

  2. Dear Harish sir,

    I have purchased the stamp paper(Stamp duty ESBTR) on 27th july 2018 and just got allotment letter(Dated on 19th March) from MHADA – Maharashtra Housing and Area Development Authority, Resignation officer is not accepting this Stamp duty receipt. can you guide me what is the procedure to use this stamp duty or what are the ways extend its validity.

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