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Validity of stamp paper beyond 6 months

(Querist) 10 April 2009 This query is : Resolved 
The Bank had used stamp paper dated 28/10/1998 for fabrication of letter of guarantee dated 22/09/2000. In fact the cost of Rs.20/- of the said stamp paper was debited to the account of the principal borrower on 14/01/1999 when the facility was sanctioned.I need the clarification on the following lines.

1. What is the validity of such stale stamp paper (franking done)?

2. Is this illegality or irregularity?

3. If this is illegality, can it be admitted as evidence in the court of law by the Bank particularly in view of the specifc bar u/s. 34 of the Bombay Stamp Act, 1958?

4. If this is irregularity, how and at what point of time can it be rectified?

5. Can it be rectified after the said document is filed in the Court as evidence?

An early response would be highly appreciated.
Manish Singh (Expert) 10 April 2009
if the stamp ws issued on 28-10-98 and was used on 22-9-2000, then the said document has no binding effect as being void since in MH, the validity for stapm papers is six months.
Kishor Satwick (Querist) 10 April 2009
Dear Mr Manish Singh

But can it be subjected to impounding by paying stamp duty and penalty as may be adjudicated after the same is produced in the court as evidence? As per the present schem of the Bombay Stamp Act, the deficient stamp duty can be rectified by paying the dificient duty along with penalty by following due procedure under the Act. However, in case of an blatantly illegal document like this, can it be impounded and regularised by paying stamp duty after it is filed as evidence? If it is possbile, what is the relevance of section 34 of the Bombay Stamp Act?
Manish Singh (Expert) 10 April 2009
if the same had no legal binding force ab intio nothing can correct this. this was not a valid legal document.
Kishor Satwick (Querist) 10 April 2009
In the instant case, DRT has asked the Bank to get the said document impounded for payment of fresh stamp duty and has passed the order for issuance of Recovery Ceritficate on satisfaction of this condition. Is it not bizarre and absurd? Prima facie this is in total variance of section 34 of the Bombay Stamp Act. Has the Court discretion to admit such void-ab-initio document and then advise the Bank to get it impounded and validated? That is why I have asked about the relevance of section 34. DRT is writing new laws.

Kindly offer your coments on these new lines. Kindly keep the status of this query 'open' as I would like to receive valuable comments of other esteemed members of profession.
Manish Singh (Expert) 10 April 2009
DRt has no jurisdction to decide whether the document is valid or not?
cite some SC judgment in DRT.
sanjay singh thakur (Expert) 10 April 2009
Dear Kishor
I fully agree with Mr. Manish.
Kishor Satwick (Querist) 10 April 2009
Dear Mr. Manish

Would be tankful to you if you could help with some citation of SC or Bom HC judgment in this regard.

adv. rajeev ( rajoo ) (Expert) 11 April 2009
According to me the validity of the stamp paper is 3 years from the date of purchase.
J. P. Shah (Expert) 11 April 2009
Manish Singh (Expert) 14 April 2009
if any particular state stamp act is silent about the validity of a stamp paper then there exits no time limit to use stamp paper.
Mr. Vardali, how you persumed the validity to be three years, do have any authority in this regard. we are not supposed to put forth our assumption here at the expert section. if you are sure then only you should write down anything.
Kishor Satwick (Querist) 14 April 2009
Mr Manish is right. Under the Bombay Stamp Act, the validity of stamp paper is 6 months. My query is under the said Act and not any other stamp act. Hence, Mr Vardali's answer is quite irrelevant.

Dear Mr Manish, can you site some case law on the issue. I tried to find. But could not succeed.
Hiralal Das (Expert) 14 April 2009
I agree with Mr. Singh.
Manish Singh (Expert) 17 April 2009
Dear Mr. Satwick,
firsly you should quote the section of the act which binds the validity upto 6 months since when there exits express provisions in law, we are bound to follow the same.
anther thing that you may go to civil court to challenge the validity of the said document.
adv. rajeev ( rajoo ) (Expert) 15 May 2009
But in our state validity of the stamp paper is 3 years from the date of purchase.
A V Vishal (Expert) 17 May 2009
Dear friends,
Hope the judgements will put all doubts to rest.

I have come across this Supreme Court judgement regarding validity of stamp paper hope it is useful.

Dated : 19/02/2008

Case : Thiruvengada Pillai Vs Navaneethammal and Anr.

Judgment Text is reproduced herein below:

HELD: 1.1. The Stamp Act, 1899 nowhere prescribes any expiry date for use of a stamp paper. Section 54 merely provides that a person possessing a stamp paper for which he has no immediate use (which is not spoiled or rendered unfit or useless), can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months next preceding the date on which it was so surrendered. The stipulation of the period of six months prescribed in Section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper. Section 54 does not require the person who has purchased a stamp paper, to use it within six months. Therefore, there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution, being used for a document. [Para 11] [36-A-D]

Supreme Court pronounced judgement dated 19/02/2008 in the case of Thiruvengada Pillai Vs Navaneethammal and Anr, THE STAMP PAPERS DO NOT HAVE ANY EXPIRY PERIOD.

Citation: Thiruvengada Pillai Vs Navaneethammal and Anr.
Kishor Satwick (Querist) 17 May 2009
Dear Mr Vishal

The cited SC judgment is under Indian Stamp Act, 1899. My query is under the provisions of the Bombay Stamp Act, 1958; which is applicable in the State of Maharahstra. Hence the said judgment is not applicable in the instant case.
A V Vishal (Expert) 17 May 2009

I have cited the above case law,since, your original query is silent about the jurisdiction and secondly you requested SC judgement.
A V Vishal (Expert) 17 May 2009

Further, under the Bombay Stamp Act, the validity of the Stamp paper is for 6 months only
PJANARDHANA REDDY (Expert) 06 December 2011
Manish Singh (Expert) 18 February 2013
Subject to other questions in my reverts, I would like to mention hereby that I have opined wrongly on teh validity of the documents even made on expired documents since even if a document is deficient in stamp duty, the same may be rectified after paying teh requisite stamp duty with penalty as per the directions of the court, and once duly stamped, teh said document becomes an admissible evidence.
prabhakar singh (Expert) 18 February 2013
Attention is invited that Section 52-B, Bombay stamps Act states that the stamps which are not used within a period of 6 months or for which no allowance/refund has been claimed shall be rendered INVALID after 6 months.

To me it means that if the document is proved to have been really executed between parties on such an Invalid stamp paper then logical equitable consequence would be that it was executed on a plain paper with no duty paid and in such a case it's impounding,and adjudication of duty and penalty can cure the Irregularity because it is the use of the stamp that has been told invalid,that means no duty paid at all,not paying stamp duty is irregularity and a curing mechanism is there in the Act it self which is a complete comprehensive code for which we do not need to look into else where.

BUT in case it is possible to prove by cogent evidence that the Bank had a such a plain signed stamp paper of other party in it's custody on some misrepresentation and used the same for fabricating this document(the so called letter of guarantee) THEN THE TABLE SHALL GET TURNED AGAINST THE BANK,as then the document can not be said to have been executed by party who merely signed a plain stamp paper on 28/10/1998 and bank fabricated the same as a letter of guarantee on 22/09/2000.THERE CAN NOT BE VALID EXECUTION THEN AND CAN NOT BE ENFORCED AGAINST THE PARTY EVEN IF IT GETS IMPOUNDED AND DUTY AND PENALTY GETS ADJUDICATED AND PAID.THAT ALL WOULD BE SIMPLY MAKING IT ADMISSIBLE ON RECORD FOR SCRUTINY IN LIGHT OF EVIDENCE ADDUCED BY PARTIES.

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