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Raj (Owner)     18 June 2009

Contract on Company Letter head or Non Judicial Stamp Paper

Hi Friends,

We are a placement service provider and while getting into contract with a company for thier recruitment needs, should we execute the contract on non judicial stamp paper or our company letterhead? What is the difference between the two from legal perspective?

If we use company letterhead, and if the other party breaches the contract, can we take legal action against them? Will the validity be more when we have used non judicial stamp paper to execute the contract?

 

Please let me know your views and if you can point to any relevant literature available for the same, that would be very helpful

Thanks

Raj

 

 

 

 



Learning

 18 Replies

A V Vishal (Advocate)     18 June 2009

Execution on Letter head does not bar for institution of suit in case of breach by either parties to the contract. You can also execute it on a Rs.100 Stamp paper, there is no bar on it also.

P.Elamaran (Law Officer in a CPSU)     19 August 2009

Hi Mr. Raj,

Legally , as per Sec33 of Indian Stamp Act,1899, you have to pay stamp duty on a legal instrument and we cannot and should not evade it specially to be on the safer side of law. The moment you pay stamp duty on a legal instrument, the same immediately gets legal sanctity and weightage in the eye of law and the court of law will treat it a primary evidence whenever a dispute arises between the two parties concerned. Suppose we don't pay sufficent stamp duty, we will be compelled by court to pay a hefty amount as stamp duty including 10 times penalty whenever the document is presented before any court.

N.Ramakrishnan (Advocate/ Senior Partner)     17 September 2009

Dear Mr. Raj,

Mr. Elamaran has summed it up beautifully. The issue is only when you need to legally enforce it in the nature of a contract.

Thanks,

Ramakrishnan, ADV

Sanjay Bansal (Partner)     25 September 2009

In your case you want to execute a Placement Service contract for which legally there is no need to execute it on a Stamp paper. An agreemenet on a simple piece of paper is equally good. Execution of certain type of contracts is necessary on stamp paper (which is infact 'stamp duty' required to be paid to the government for that perticular transaction).  It is perfectly valid and enforceable contract in law.

Adinath@Avinash Patil (advocate)     26 September 2009

All contracs should on valid stamp duty, Otherwise they are not enforceable by law.

If you you execute contract on companies letter head that is illegal & said in not enforceable by law.

srinivas (Practising Lawyer )     10 October 2009

hi

for claiming any relief from the courts the person should come with clean hands and should be law abiding citizen who shall do acts and deeds in accordance with the law of land and coming to subject that dispute in business and contracts are always suspected if you need that law should be helpful to you than you should abide it as per the Indian Stamp act for any transaction the stamp duty is to be paid and i advise you that you shall enter into agreement on non-judicial stamp paper only but not on yours letter head

medappa (legal)     16 October 2009

Hi,

Is it necessary to have employment contracts, between the employer and employee, on stamp paper......... or the company letterhead will do?

medappa (legal)     26 October 2009

Hi,

In many companies, big and small, employment contracts are not on stamp paper but on company letterheads. Are these contracts unenforceable and invalid?

Theja (Lawyer)     31 October 2009

They are valid. Sec. 10 of Contract Act does not say that only a contract exceutd on a stamp paper is valid. However, in the event of any dispute it is better to get it exceuted on a stamp paer. Even, when you excecute a contract on a letter head paper, if u are able to establish the validity of the contract then that is  fine to sign it on that paper.

N.K.Assumi (Advocate)     18 May 2010

I will go with the suggestion of Theja. Requirement of requisite stamp paper arise only at the time of Registration under the Registration Act. Th Contratct Act, nowhere mandates that all the Contract should be in Stamp paper, other wise Oral agreement which is a good agreement and a valid agreement will have no meaning.

Basavaraj (Asst, Manager-Legal)     06 July 2010

I storngly agree with N.K.Assumi, as per the Indian Registration Act all contracts should be stamp paper, and there is no bar or Contracts Act does not bar in prin ting contracts on company letter head. Coming to the court, where contracts printed on white paper on letterhead does not give whitage of the case or does not look legal sancity for those contracts.

Regarding your query:-

We are a placement service provider and while getting into contract with a company for thier recruitment needs, should we execute the contract on non judicial stamp paper or our company letterhead? What is the difference between the two from legal perspective?

Yes you can print recruitment need on your company letterhead-only for emplyoment recruitment.
If you are going to execute a spearate contract to complete your commreircal demands-then you need to execute the contract on non-judiciary stamp paper only.

For more details see The Indian Registration Act- Section 27 to 40.

Regards

 

BASAVARAJ.R 

S. Bharath (Advocate and Arbitrator Formerly Civil Judge)     08 July 2010

The need to stamp an agreement or for that matter, any document has no relevance with registration. Take for example, a will, which can be simply registered, with no stamp duty attracted on it. The Agreement which is the subject matter of discussion attracts Stamp Duty under Article. 5 [j] of the Stamp Act. If it is not stamped, it can be used in court only after paying up penalty as stated by Mr. Elamaran.

G.Padmanabhan (Advocate)     24 July 2010

In the event of a dispute, you might wish for judicial determination of the issue. Even though Indian Contract Act does not require an agreement to be in writing, its proof , in the event of a dispute, in a court is a different issue. For you to be able to use the instrument of agreement as a piece of primary evidence, you need to pay stamp duty. Stamp duties differ from state to state. You may look up the Stamp duty schedules  of your state to know the amount of stamp duty to be paid.  If you are not using non-judicial stamp paper, you may use adhesive labels.  

T.R. Ganesan (Advocate)     10 September 2010

Yes , Basavraj answer is absolutely correct. I agree with his answer.  He has distingushed (1)  the Employment Recruitment contract can be get printed on the letter head of the Company and (2) to meet the reuirement of Commercial Demands ensuring legal sancity the contract shall be in non judicial stamp paper  only.


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