Report No. 67
Though cancellation is a question of fact, it appears to be desirable to make some specific provision in, the section about a particular mode of it-cancellation by drawing a line across the stamp, so as to avoid such controversies as have been referred to above.1
We, therefore, recommend that in section 12(3), before the words "or in any other effectual manner", the words "or by drawing a line across the stamp or", should be added, for this purpose. We may state that the suggested amendment has been generally favoured by the replies received to our Questionnaire.2
1. Para. 10.9, supra.
2. Question 28-section 12.
10.12. Section 13-Instruments stamped with impressed stamps how to be written.-
So far we were concerned with adhesive stamps. As to impressed stamps, section 13 provides that every instrument written upon paper stamped with an impressed stamp shall be written in such manner that the stamp may appear on the face of the instrument and cannot be used for or applied to any other instrument. The principal object of the section is to protect the revenue, and to avoid the frauds which may be facilitated if the instrument is written in such manner that the stamp can be used for purposes of another instrument when so desired. This general rule is sound enough. But, in applying what is enacted in the section, certain problems have arisen in practice.
10.13. Writing on the reverse.-
The first question that has arisen relates to the point whether the reverse of the stamp paper could be used. The section itself does not say that only one side may be written upon; and the Bombay High Court1 has held that the reverse of the stamp paper can also be used. In the Bombay case, the document commenced on the reverse of the side on which the stamp was impressed, and terminated on the side impressed with the stamp. It was observed that the stamp was not, in any way, defaced, nor was the paper so written as to admit of the stamp being used again. On these facts, the High Court held the document was properly stamped.2 A Government notification prohibiting writing on the reverse of an impressed stamp paper was noted, but it had been issued after the bond in question, and it was not, therefore, material.
This prohibition (imposed by the notification) referred to above, was withdrawn in 1881, but in 1882 a rule was made which provided that when a single sheet is found insufficient to admit of the entire instrument being written on the side of the paper which bears the stamp, so much plain paper may be sub-joined as may be necessary for the complete writing of the instrument, provided that in every such case the side which bears the stamp must be covered by a substantial part of this instrument before any part of the instrument can be written on the plain paper joined to such sheet. With reference to this rule also, the Madras High Court held,3 that it was an enabling rule, authorising the use of plain paper; but, it did not prohibit writing on the reverse side.
1. Doylat Rain v. Vitho Radhoji, 1879 ILR 5 Boni 188 (195, 197).
2. At that time, section 12 of the Stamp Act of 1879, was the relevant provision.
3. Reference regarding Stamp Act, 1880 ILR 7 Mad 176 (Full Bench).
10.14. One would think that since the controversy as to writing on the reverse of the paper had arisen more than once, the rule on the subject would have been revised to make the position more liberal. However, when the rules were revised in 1925, no such clarification was made, and the rule now in force1 is silent on the subject of writing on the reverse. Indirectly rule 7(2) disallows it. We are of the view that it is desirable to make the section specific on the subject, and to allow writing on the reverse by an express provision.
1. Rule 7, Indian Stamp Rules, 1925 (infra).
10.15. Rule 7.-
The following rule of the Stamp Rules, to which we have already made a reference, raises a few other que-kions:
"7. Provision where single sheet of paper is insufficient.-(1) Where two or more sheets of paper on which stamps are engraved or embossed are used to make up the amount of duty chargeable in respect of any instrument, a portion of such instrument shall be written on each sheet so used.
(2) Where a single sheet of paper, not being paper bearing an impressed hundi-stamp, is insufficient to admit of the entire instrument being written on the side of the paper which bears the stamp, so much plain paper may be subjoined thereto as may be necessary for the complete writing of such instrument:
Provided that in every such case a substantial part of the instrument shall be written on the sheet which bears the stamp before any part is written on the plain paper subjoined."
10.16. Use of Plain papers.-
We have already referred to the question of writing on the reverse of the stamp paper. Then, there is another matter which requires attention. Section 13 itself does not give any guidance as to the use of plain paper, but the rule1 provides that where the single sheet is insufficient, a plain paper may be subjoined, but in every such case a substantial part of the instrument shall be written on the sheet which bears the stamp before any part is written on the plain paper subjoined. It may be noted that rule 5(e) of the Rules made under the Stamp Act of 1879 contained a further proviso, namely, "that the part of the instrument written on the plain paper must be attested by the signatures or marks of all persons executing the document and witnesses to the same." This part of the rule was, however, held to be ultra vires, as going beyond the parent Act,2 as it imposed a more stringent requirement than the Act, and, ultimately, it was rescinded by notification in 1891. Here again, it appears to be desirable to provide specifically that it is not necessary that the plain paper should be signed by the parties. This will make the position explicit on the subject.
1. Para. 10.15, supra.
2. Reference on the Stamp Act, 1884 ILR 8 Mad 532 (540).
10.17. More than one stamp paper.-
We now come to the situation of use of more than one stamp papers. The section is, again, silent as to this, but the matter is dealt with by the same rule, that is to say, rule 7 of the Indian Stamp Rules.1 In substance, the rule provides that a part of the instrument must be written on each sheet so used, the idea being that the stamp paper should not be used for writing any other instrument. An instrument offending against the rule would not be duly stamped. Now, this may be a good rule in general, but, in practice, some difficulties arise because one single stamped sheet denoting the entire duty is often not available, so that, although the text of the instrument is a short one, it has to be spread out over a number of stamp papers in order to comply with the section, as read with the rule. The requirement that the instrument must appear on each of the attached stamp papers, if taken literally, is not convenient, in the case to which we have referred above.
1. Pam. 10.15, supra.
10.18. No doubt, the public has found a way out by adopting the practice of making a suitable endorsement on the attached paper, but the attached paper does not contain any "substantial matter" relating to the transaction and, therefore, its validity is in doubt. In general, in'the case of instruments stamped with impressed stamps, the number of stamps which may be used can be regulated by rule.1 But it appears to be desirable to provide that the text need not appear on each stamped sheet, and that an endorsement stating that the stamped paper is attached to another stamped paper containing the text, will do.
1. Sottion 10(2)(b).
10.19. Need for change.-
It would be convenient if the section is made self-contained, as far as possible, on the points discussed above, to that the citizen may clearly know from the Act the position in this respect. It is for this reason that we recommend an amendment of the section, to be presently mentioned. We may state that principle of suggested scheme has been favoured by many of the replies received to our Questionnaire.1
1. Q. 29-section 13.
10.20. Recommendation to revise section 13.-
Our recommendation in the light of what we have stated above is that section 13 should be revised as follows:-
"13. Every instrument written upon paper stamped with an impressed stamp shall be written in such manner that the stamp may appear on the face or reverse of the instrument and cannot be used for or applied to any other instrument.
Explanation 1.-Where two or more sheets of paper stamped with impressed stamps are used to make up the amount of duty chargeable in respect of any instrument, either a portion of such instrument shall be written on each sheet so used, or the sheet on which no such portion is written shall be signed by the executant or one of the executants, with an endorsement indicating that the sheet is attached to another sheet on which the instrument is written.
Explanation 2.-Where a single sheet of paper, not being paper bearing an impressed hundi-stamp, is insufficient to admit of the entire instrument being written on the stamped paper, so much plain paper may be sub joined thereto as may be necessary for completing the writing of such instrument, provided a substantial part of the instrument is written on the sheet which bears the stamp before any part is written on the plain paper sub-joined, but the fact that the plain paper is not signed by the executants shall not render the instrument not duly stamped.".