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Report No. 67

17.41. Section 37-Introductory.-

Section 37 empowers the State Government to make rules providing that where an instrument bears a stamp of sufficient amount but of improper description, the instrument may, on payment of the duty with which the same is chargeable, be certified to be duly stamped; any instrument so certified shall then be deemed to have been duly stamped as from the date of its execution. The object of the section is to enable instruments bearing stamp of improper description to be validated without payment of penalty, the assumption being that the party has not been guilty of an attempt to defraud government revenue. The validation is done by the Collector under the Rules. The section does not mention the authority that can validate the instrument, and leaves it to the rules.

17.42. Duty not to be leviable and concession mandatory.-

We are of the view that the concession should be mandatory, and that no duty be chargeable. We may mention that many replies' to our questionnaire agree with this view.

1. Q. 48.

17.43. Meaning of word "stamp of improper description."-

Several points require discussion, with reference to the section 37. First, on the question whether the words "stamp of improper description" include also stamps appropriate to a purpose outside the Stamp Act (such as, a court fee stamp or a postage stamp), there was previously some obscurity. The Allahabad High Court, in a case1 in which a postage stamp was used, held that these words are not to be interpreted as including a description of stamp appropriate for purposes outside the Stamp Act, and must be confined to a stamp which is used for the purpose of denoting the Stamp duty chargeable on an instrument. Thus, according to the Allahabad High Court, a postage stamp used for an acknowledgement cannot amount to a "stamp of improper description", but should be regarded as not a stamp at all within the meaning of the Act and the rules. In the judgment, there were observations that even a court-fee stamp would not fall within the section.

1. Reference under the Stamp Act, 1901 ILR 23 All 213 (Postage stamp).

17.44. But this view, at least as regards court-fee stamps, must be taken as overruled by the Privy Council,1 which has held that it is not correct to say that the section has no reference to any stamp except a revenue stamp pure and simple. The Privy Council case involved a revenue stamp surcharged "court fee", and this was held to be a stamp of improper description within the meaning of the section. Even a postal, forest or telegraph stamp, which is totally outside the purpose of the Stamp Act, has been regarded as covered by the section.2

1. Ma Pa May v. S.R.M.M.A. Chettiar (Firm), AIR 1929 PC 279 (282).

2. (1911) 10 IC 702 (Nagpur), cited in Ranjit Singh v. Behramji, AIR 1957 MB 181 (182), para. 5, (Chaturvedi, J.).

17.45. Amendment needed to cover another stamp.-

In our opinion it would be useful to amend the section, so as to incorporate the wider judicial construction of the phrase "stamp of improper description". We may note that many replies to our Questionnaire favour such an amendment.1

1. Q. 47

17. 46. Effect of certificate.-

The second point concerns the relationship of section 37 with section 35. In an Andhra Pradesh case,1 a promissory note on an impressed stamp, though certified by the Collector under section 37, was nevertheless held to be outside the scope of section 37. The reason given was, that the exception to the proviso to section 35 was a bar to the admissibility of the note, and that the certificate under section 37 could not prevail against the specific provisions of section 35, proviso. With great respect, section 37 does not necessitate such a narrow view of the scope of the section. If the certificate cures the defect in stamp, it should be taken as curing it for all purposes.

1. Eranna v. Madappa, AIR 1963 AP 457 distinguished in Anoop Chard v. Nathmal, AIR 1965 Raj 114.

17.47. Amendment needed to override section 35, proviso.-

We are of the view that having regard to the beneficial object of section 37, it should be made clear that it will override the proviso to section 35. Such a course has been favoured1 by most of the replies to our Questionnaire.

1. Q. 48.

17.48. No need to cover cases of stamps of lesser amount.-

We note that section 37 is confined to instruments bearing sufficient stamp. Should it be extended to instruments bearing stamp of wrong description but of lesser amount than that chargeable?

We have considered this aspect, but are not inclined to recommend a change.

17.48A. Recommendation to revise section 37.- In the light of the above discussion we recommend the following re-draft:

Revised section 37

37(1). Where an instrument bears a stamp of sufficient amount but of in proper description, the instrument shall, without payment again of the duty with which the same is chargeable be certified to be duly stamped, subject to such rules as the State Government may make as to the procedure for the grant of such certificates.

(2) Any instrument so certified shall then be deemed to have been duly stamped as from the date of its execution, notwithstanding, anything to the contrary contained in section 35 or in any other section.

Explanation.-For the purposes of this section, a stamp used for indicating the court fees or postage paid is also a stamp of improper description. In making this recommendation, we are conscious that the constitutional scheme for the distribution of the proceeds of taxes is not identical in regard to court-fees and non-judicial stamps and postage stamps. We presume that the Central Government will have no objection to the proposed validation of instruments bearing court-fee stamps.

Indian Stamp Act, 1899 Back

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