Business Contract_Stamping

 A contract to start with under the Indian contract act is very much binding on the parties and yes it does serve as a very essential requisite for any Transaction. Therefore Yes contracts are very strong base on which the entire transaction rests acts as a very good evidence.Stamping is compulsory for any contract .Agreement paper that is ledger paper to be used for agreement also known as legal paper which is green in colour...

The main focus of the quarry is whther stamping is necessary in making agreements or not and further whether the agreements executed on white papers/letter heads of the companies are legally enforceable or not?

My firm opinion is that there is no legal obligation to execute the agreement on the stamped paper rather it can be got executed on simple paper/letter-head of the company/employer also. There is no scope to treat such agreement as invalid. This is extra precaution on the part of both the parties to the contract/agreement to make it more acceptable if they execute the agreement on stamp paper.. there are various pronouncements which provide due wieghtage to the agreements executed on letter head of the companies.

Hi All,

The charging section (Section 3) of the Indian Stamp Act, 1899, provides that Instruments (Sec 14) indicated in the Schedule to the Act shall be chargeable with proper duty unless exempted in proviso to the Section. Schedule I to the Act vide item 5 provides for 'Agreement or Memorandum of Agreement' to mean to include all types of agreements generally falling under the purview of Sec. 2(14). This view is confirmed by the value of stamp duty provided in sub-item (c) of Item 5 (ie. if not otherwise provided for).

Section 36 of the Stamp Act provides that:

     

" 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 "

In the case laws that I am acquainted with or aware of, a document not stamped has been taken as evidence only when the instrument is a collateral security, as secondary evidence. I request Members to please provide details of cases contrary to it.

In the case of a Services contract by a Company, the agreement itself should summarize the deal between the parties and validity of its enforceability. If it is not properly stamped as provided supra, what can be the basis of contention that the instrument is admissible unless proper stamp along with penalty is paid as provided in the Act ?

Request your inputs.

Rajiv

Dear Friends

A contract more so a business contract in writing on letter heads or even by electronic media (after the IT Act) is legal and valid so long as it meets the requirements of a valid contract. The stamping Act is a mere revenue llegislation and prescribes that certain documents have to be necessarily stamped in order to make them as admissible evidence. States have their own schedules of documents that require stamping. I understand that in Maharashtra there was a move to make it obligatory to get the business contracts stamped. I am not sure whether the same has been passed since there was a strong opposition for the above move. Otherwise a business contarct is valid and not necessarily be on a stamp paper

J.KUMAR

Hyderabad