Report No. 67
Chapter 10
Stamps and the Mode of Using Them-Sections 11-16
10.1. Section 11.-
The instruments which "may be stamped" with adhesive stamps are enumerated in section 11. These are-
"(a) instruments chargeable with a duty not exceeding ten paise, except parts of bills of exchange payable otherwise than on demand and drawn in sets;
(b) bill of exchange drawn or made out of India, and promissory notes so drawn;
(c) entry as an advocate, vakil or attorney on the roll of a High Court;
(d) notarial acts; and
(e) transfers by endorsement of shares in any incorporated company or other body corporate."
10.2. Section 11 and the use of the word "may".-
We begin with opening line of the section, which says-"the following instruments may be stamped with adhesive stamps". It has been held1 that the use of adhesive stamps under this section is permissive and not obligatory, so that if an impressed stamp is available and suitable, it can be used instead of an adhesive stamp. In our opinion, it is desirable that this interpretation should be codified, so that the section is made self-contained. This could be achieved by inserting an Explanation to the above effect.
1. (a) Kalyan Singh v. Bhawar Singh, 1965 ILR 15 Raj 231. (b)Soni Dutt v. Abdul Rashid, AIR 1868 Raj 45.
10.3. Sections 11(a) and 11(b).-
In clause (a), the amount ten naya paise should now be increased to twenty (see Article 53). As to clause (b), it has been held1 that the words "drawn or made out of India" govern the entire clause and are not confined to promissory notes. This is not, at first sight, apparent from the section, and it would, therefore, be useful to re-frame clause (b) as follows, so as to bring out its true scope:
"(b) bills of exchange drawn or made out of India, and promissory notes so drawn or made."
1. Devati v. Ramakrishniah, 1880 ILR 2 Mad 173 (174) jcase on section 10(b), 1879 Actj.
10.4. Section 11(c) to be deleted.-
Section 11(c) provides that entry as an advocate vakil or attorney on the roll of a High Court may be stamped with an adhesive stamp. We are going to recommend deletion of the charging article on such instruments.1 We, therefore, recommend that section 11(c) should be deleted. The remaining clauses need no change.
1. Article 30, infra.
10.4A. Recommendation.-
In the light of the above discussion, our recommendation is to revise section- 11-as under:
"11. The following instruments may be stamped with adhesive stamps, namely
(a) instruments chargeable with a duty not exceeding twenty paise, except parts of hills of exchange payable otherwise than on demand and drawn in sets;
(b) bills of exchange drawn or made out of India, and promissory notes so drawn or made;
(c) [is omitted.]
(d) notarial acts; and
(e) transfers by endorsements of shares in any incorporated company or other body corporate."
Explanation.-To be added as recommended.
10.5. Section 12.-
Section 12 deals with the important topic of cancellation of adhesive stamps. Under sub-section (1), clause (a), whoever affixes any adhesive stamp to any instrument chargeable with duty which has been executed by any person shall, when affixing such stamp, "cancel the same so that it cannot be used again."
Clause (b) of the sub-section enacts that whoever executes any instrument on any paper bearing an adhesive stamp shall, at the time of execution, unless such stamp has been already cancelled in the manner aforesaid, cancel the same so that it cannot be used again. Under sub-section (2), any instrument bearing an adhesive stamp which has not been cancelled so that it cannot be used again, shall, so far as such stamp is concerned, be deemed to be unstamped. The mode of cancellation is indicated in greater detail by sub-section (3). It provides that the person required by sub-section (1) to cancel an adhesive stamp may cancel it by writing on or across the stamp his name or initials or the name or initials of his firm with the true date of his so writing, "or in any other effectual manner".
10.6. Principle.-
The principle underlying the section is fairly clear. As was observed in a Bombay case1
"The Stamp Act of 1899, (clause 3 of section 12) points out as a guide how the cancellation may be effected the law being that a used stamp cannot be used again-the object of the legislature in making cancellation obligatory is that the used stamp. should bear on it some effective mark to show that it has been used."
The principle was further explained in a Lahore case2 in these words:
"The principle underlying section 12 is that the possibility of a stamp affixed to an instrument being used again should be precluded."
1. Virabhadrapn bin Adharshapa v. Bhimaji Balaji Saraff, (1904) 6 Born LR 436: ILR 28 Born 432 (Chandavarhar & Aston JJ.).
2. Sohan Lal Nihal Chand v. Raghunath Singh, AIR 1934 Lab 606 (607) (Shadi Lal C.J. & Rangi Lal J.).
10.7. Section 12(3).-
The application of sub-section (3), however, is not totally free from difficulty. The first part of the sub-section (3) indicates one mode of cancellation as sufficient, namely, the writing on the stamp of the executant's name or initial and the true date. But the sub-section does not lay down1 any special manner which must be rigidly followed in every case.
1. G.A. Heven v. Sultan Khan, AIR 1936 Oudh 176 (Srivastava and Nanavutty, JJ.).
10.8. Modes of cancellation.-
Where the cancellation is by inscribing on the stamp the executant's name or initial and true date, as provided in the section, there is no difficulty. As to the other methods of cancellation of stamp, indicated in sub-section (3) by the words "or in any other effectual manner", the question often arises whether the method employed is sufficient to prevent the stamp from being used again. Thus, the Allahabad High Court has held1 that the degree of cancellation required is not such as to make it absolutely impossible for a fraud to be committed; and, it has, accordingly, held that the stamp was effectually cancelled when a single horizontal line was drawn across it. Similarly, where signature without date was written across, it was held as effetive2 cancellation. In another case3, the signature of the executant made by the scribe on the adhesive stamp under direction of the illiterate executor, was regarded as effective cancellation. Drawing lines in different directions and extended on the paper, were held to be an effective cancellation in an Allahabad case.4
1. Mahadeo Kori v. Sheorj Rain Tell, 1919 ILR 41 All 169 (180, 181, 182) (Piggott and Walsh, JJ•)•
2. Kirpa Rain v. Baru Mal, 3 All LJ 326.
3. Thakari Mallah v. Ram Tahal Tewari, AIR 1931 All 57(1) (Niamutullah, J.).
4. Mohammad Amir Mirza Beg v. Babu Kedar Nath, 15 IC 202 (All).
10.9. Parallel lines.-
In this context, parallel lines create problems. The Bombay High Court, in as earlier case1, held that two parallel lines drawn across a stamp means no effective cancellation in another Bombay case2, a small part of the first letter of the executant's signature, consisting of a slightly curved line, appeared on a stamp, and this was held not to effect such a cancellation of the stamp as was provided by section 11, of the Stamp Act, 1879. But the earlier view has been criticised in a later Bombay case.3
The Lahore High Court has held that drawing diagonal lines across the face of the adhesive stamp was effective cancellation.4 In another Lahore case,5 drawing a line across the stamp was treated as effectual cancellation, since the intention to cancel was clear from what had been done. But, drawing a line across the stamp in a manner which leaves the stamp capable of being used a second time6 was not regarded as an effective cancellation. The Oudh view was that signatures of the executant, if run across the whole stamp, was effective7 cancellation. But if there are several adhesive stamps which make up the required stamp, all such stamps should be cancelled, and on failure to do so, the instrument should be deemed8 unstamped under section 12(2), as regards the uncancelled stamps. According to the Andhra Pradesh High Court,9 the drawing of two long parallel lines is sufficient to effectively cancel three stamps. These decisions reveal a good deal of controversy.
1. Virabhadra Din Adrashapa v. Bhimaji Balaji Saraff, 1904 ILR 28 Born 452.
2. See Tata Iron & Steel Co. (in re:), 1926 AIR 1928 Born 80: 30 Born LR 197 (216) (Crimp, J.).
3. See also (1908) 108 PR 1908.
4. Mela Rain v. Brij Lal, AIR 1920 Lah 374 (Broadway J.), following Mohd. Amir, (1912) 15 IC 202.
5. Kishori Lal Banarsi Das v. Ram Lal Tek Chand, AIR 1921 Lah 120 (DB).
6. Hafiz Allah Baksh v. Dost Mohammad, AIR 1935 Lah 716 (Addison and Sale, JJ.).
7. G.A. Heven v. Sultan Khan, AIR 1936 Oudh 176 (Srivastava and Nanavatty, JJ.).
8. Babu Lal v. Durga Prasad, AIR 1940 Oudh 308 (Radhakrisna, J.).
9. (a) Sundersanam v. Venkatarato, AIR 1963 AP 442 (444, 445), paras. 13 and 19, (Anantarayaa Ayer, J.). (b)Narayan v. Sarojini Devi, AIR 1963 AP 378 (379), para. 4 (Narasimham, J.).
10.10. English Law.-
Under the English Stamp Act, 1891 (54 and 55 Vict., c. 39), section 8 of which is in similar terms,1 it has been held that the writing of the name or the date alone or other marks such as lines or cross-mark on the stamp, is sufficient cancellation.2
1. Section 8, Stamp Act, 1891 (English).
2. M. Mullen v. Alfred Hickman Steamship Ltd., (1902) 17 LJ Ch 766 (767).
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