Term Loan/Cash Credit/Working Capital- STAMP DUTY IMPLICATIONS

Issues involved with respect to stamp duty under Stamp Act, 1899 (herein after the Act)-

1.     What is the stamp duty payable on a term loan/cash credit/working capital loan agreement under the Indian Stamp Act 1899 (the Act)?

2.     What is the stamp duty payable on a Hypothecation Agreement?

3.     What is the stamp duty payable on a Escrow Agreement?

4.     What is the stamp duty payable on a mortgage deed or Memorandum of entry?

The Legal Provisions involved-

Section 4- Several instruments used in single transaction of sale, mortgage or settlement-

1.     Where, in the case of any sale, mortgage or settlement, several instruments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule 4[I-A], for the conveyance, mortgage or settlement, and each of the other instruments shall be chargeable with a duty of 5[two rupees] instead of duty (if any) prescribed for it in that Schedule.

2.     The parties may determine for themselves which of the instruments so employed shall, for the purposes of sub-section (1), be deemed to be the principal instrument.

Provided that the duty chargeable on the instrument so determined shall be the highest duty which would be chargeable in respect of any of the said instruments employed.

Section 5- Instruments relating to several distinct matters -Any instrument comprising, or relating to several distinct matters shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under this Act.

Section 6- Instruments coming within several description in Schedule I-Subject to the provisions of the last preceding section, an instrument so framed as to come within two or more descriptions in Scehdule I, shall, where the duties chargeable thereunder are different, be chargeable only with the highest of such duties.

Provided that nothing in this Act contained shall render chargeable with duty execeeding one rupee a counterpart or duplicate of any instrument chargeable with duty and in respect of which the proper duty has been paid.  

The position of Law on the point-

 In case of Santdas Moolchand Jhangiani vs. Sheodayal Gurudasmal Massand (AIR 1971 Bom 237) the Bombay High Court observed as follows:

The distinction between Sections 4, 5 and 6 of the Indian Stamp Act, 1899, which correspond in terms to Sections 4, 5 and 6 of the Bombay Stamp Act, 1958, has been brought out in the judgment of the Supreme Court in the case of Board of Revenue v. A. P. Benthall, AIR 1956 SC 85. It is observed in the said judgment that the object and scope of Sections 4 to 6 are not the same. Section 4 deals with a single transaction completed in several instruments, and Section 6 with a single transaction which might be viewed as falling under more than one category, whereas Section 5 applies only when the instrument comprises more than one transaction, and it is immaterial for this purpose whether those transactions are of the same category or of different categories. The test laid down by the Supreme Court is that in order to attract the application of Section 5, the whole question is whether the instrument comprises more than one transaction.

Application u/s 4 of the Act-

U/s 4 of stamp Act such instruments are dealt which though deal with single transaction but take several instruments to complete. But there are several requirements to be complied with to bring a transaction under the ambit of section 4, they are;

(a)   More than one instrument must be employed for completing the transaction;

(b)  Several instruments are employed to complete the same transaction;

(c)   The transaction must be either of sale, mortgage, or settlement.

A term loan agreement does not fall within these categories i.e either sale, settlement or mortgage; therefore there shall be no application of section 4 here in this document.

Application of section 5

The expression “Distinct Matters” connotes distinct transaction. The term Distinct Matters mean the matters of different kinds such as agreement for service and a lease. Similarly where a document under consideration is both an agreement for dissolution of a partnership and a bond, it is chargeable under Section 5 with aggregate duty with which two such separate instruments would be chargeable

Distinct Matters would be comprised in an instrument, if different transactions are sought to be evidenced by the same deed.Two matters are considered to be distinct if one of them is subsidiary to another contained in the same document; the test being whether one is incidental and accessory to another; they should contain distinct matter and not distinct contracts (Radha Govind Sen v. Ram Brahma Mandal, AIR 1936 Cal 814).

Application of Section 6-

Section 6 of the Act pertains to instruments coming with in several descriptions in Schedule I and the stamp duty being paid on that description which attracts the highest stamp duty. In case of Board of Revenue v. A. P. Benthall, AIR 1956 SC 85  the Court quite clearly clarified the position of law on the point which is that section 6 deals with a transaction which might be viewed as coming under more than one description as provided under Schedule I of the Act. Therefore if an instrument creates a right over an property by way of lease for the loan advanced and at the same time requires the lessor to pay some rent every month with a lock in period of 2 years i.e the property has to be utilised by lessor for at least 2 years, the nature of the instrument is both of a lease and a bond, therefore should be charged under section 6 of the Act.

Therefore:

(1)  Section 4 shall not come under this scenario as its application is limited to transactions comprising either settlement, sale, or mortgage which is not the case in term loan/cash credit/working capital loan agreement.

(2)  Section 6 starts with opening lines “subject to provision of last preceding section” i.e section 5, it talks about different descriptions that may come into effect if the matters are not “distinct matters” as provided in section 5 of the Act.

STAMP DUTY RATES FOR TERM LOAN IN NEW DELHI-

S.NO.	LEGAL ANTECEDENT	DUTY CHARGED	PROVISION
1.	Personal Guarantee	Same as Agreement i.e  INR 50	Article 5(c)
2.	Indemnity	Same as security Bond INR. 100	Article 34
3.	Apart from above an additional stamp duty will be paid on Principal Loan Agreement	INR 50	Article 5(c)

Thus, considering that a term loan agreement contains clauses on Indemnity (same as Security Bond u/a 34), Personal Guarantee(same as Agreement u/a 5), Security which are essential for the purpose of availing a term loan therefore these matters are subsidiary/incidental/ accessory to other and according to this reasoning, a term loan agreement should be levied with a stamp duty which is aggregate amount of duties with which these separate instruments are charged in accordance with section 5 of the Act.

Hypothecation-

The hypothecation is neither governed by any statue nor there is any law governing the same directly or indirectly. Hypothecation is understood in mercantile world as creation of charge on movables in favour of hypothecatee by hypothecator where possession of goods will remain with hypothecator. The hypothecator can be in possession of goods hypothecated and enjoy the same without causing any damage to the rights of the hypothecatee.

The courts in India have held that hypothecation not accompanied by possession confers good title upon person in whose favour it is made and law recognises the transaction as security and equity gives effect to it (Punjab National Bank v. Union of India (1983) 53 Comp Cas 542). Hypothecation Agreement needs not to be registered.

Pledge & Hypothecation-

The distinction between pledge and Hypothecation is that of possession, the hypothecate can be in possession of goods and movables hypothecated without causing any damage to the rights of Hypothecatee whereas in Pledge the pawner has to transfer the possession of movables to pawnee.

The hypothecation therefore is jus in re that is right in a thing without possession of the same, since it is charged for movables, its character for the purpose of stamp duty is more like that of a Pledge.

Meaning of Attestation:

According to Transfer of Property Act, 1882 Section 3 (interpretation clause) attested means:

"attested", in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgement of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary

The Stamp Act 1899 in the state of Delhi (NCR) provides for exemption when it comes to levy of stamp duty on Hypothecation Agreement; which provides exemption U/A 6 of the Act a exemption from paying any stamp duty on an Hypothecation Agreement if it’s not attested. Therefore, Banks can choose not to get such instrument attested in order to save the stamp duty.

Therefore  -

(1)       Hypothecation agreement if attested is charged according to Article 6(Agreement relating to deposit of title Deeds, Pawn or Pledge) of Stamp Act 1899, however if a hypothecation agreement is unattested no stamp duty needs to be levied on the same.

(2)       For the same reasoning under the Bombay Stamp Act 1958, the stamp duty levied on a hypothecation agreement is levied under Article 6 of Bombay Act which is in pari materia to the Stamp Act 1899.

1.	Hypothecation(creation of security) (a)   If attested	0.5% of amount secured by such deed.	Article no. 6(a) schedule IA Indian stamp (Delhi Amendment) Act,
	(b)  If unattested	NIL	Exemption to Article 6 of the Act.

Escrow Account Agreement-

The nature of an Escrow Account agreement is that of an “Agreement” provided under Article 5 of the Act. It is because of the following reasons-

If an instrument contains certain covenant breach of which would attract damage, and such damage has to be fixed by Court of law than it is necessarily an Agreement and therefore shall be charged under Article 5 of the Act, in a case where the damage is fixed and the party obliged to pay money has to pay an ascertained amount, than the instrument shall fall in the category of a Bond under the Act; reference can be drawn from many judgments of Indian High Courts namely-

(i)              ILR 1969(1) Punj 529,

(ii)            The Bengal Paper Mills Co. Ltd. vs The Collector Of Calcutta And Ors (AIR 1976 Cal 416)

Escrow Account Agreement-

1.

Escrow Account Agreement

Same as Agreement Rs. 50

Article 5(c)

Mortgage Deed or Memorandum of Entry - Mortgage Deed if not done by deposit of title deed is charged as 3%.of the consideration amount.

By Memorandum of Entry, one enter into a Declaration with the Bank that one has handed over the original set of documents of its property for mortgaging the same as security for the loan. Creation of a mortgage by a Memorandum of Entry would attract a stamp duty.

1.	Mortgage Deed	3% according to Article 23 same as Conveyance as given in Article 40 of the Act.
2.	Memorandum of Entry .	Rs. 100 as given in Article 57(b).

what are "have made" rights under United States Law?

QUERIES:

(i)               What are “have made” rights under United States Law?

(ii)             What is the definition of term “use” as per the New York State Trademark Law? Does it include right to get the goods manufactured from a third party by a licensee or it only means use of trademark by the licensee for the purpose of sale and marketing of the Products?

LEGAL PROVISIONS

General Business Laws Article 24- Trade Marks, Service Marks And Business Reputation

(a) The term "trademark" as used herein means any word, name, symbol, or device or any combination thereof used by a person to identify and distinguish the goods of such person, including a unique product, from those manufactured and sold by others, and to indicate the source of the goods, even if that source is unknown.

(h) The term "use" means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For the purposes of this article, a mark shall be deemed to be in use

(1) on goods when it is placed in any manner on the goods or other containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and the goods are sold or transported in commerce in this state, and

(2) on services when it is used or displayed in the sale or advertising of services and the services are rendered in this state.

360-k. Infringement. Subject to the provisions of this section, any person who shall: (a) use, without the consent of the registrant, any reproduction, counterfeit, copy, or colorable imitation of a mark registered under this article in connection with the sale, distribution, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive as to the source of origin of such goods or services; or (b) reproduce, counterfeit, copy or colorably imitate any such mark and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in connection with the sale or other distribution in this state of such goods or services; shall be liable in a civil action by the registrant for any and all of the remedies provided in section three hundred sixty-l of this article, except that under this subdivision the registrant shall not be entitled to recover profits or damages unless the acts have been committed with the intent to cause confusion or mistake or to deceive.

§ 360-m. Remedies.

Any owner of a mark registered under this article may proceed by suit to enjoin the manufacture, use, display or sale of any counterfeits or imitations thereof and any court of competent jurisdiction may grant injunctions to restrain such manufacture, use, display or sale as may be by the said court deemed just and reasonable, and may require the defendants to pay to such owner all profits derived from and/or all damages suffered by reason of such wrongful manufacture, use, display or sale; and such court may also order that any such counterfeits or imitations in the possession or under the control of any defendant in such case be delivered to an officer of the court, or to the complainant, to be destroyed. The court, in its discretion, may enter judgment for an amount not to exceed three times such profits and damages and/or reasonable attorneys' fees of the prevailing party in such cases where the court finds the other party committed such wrongful acts with knowledge or in bad faith or otherwise as according to the circumstances of this case. The enumeration of any right or remedy herein shall not affect a registrant's right to prosecute under the penal law.

DISCUSSION                                                                                                                              

The United States Court of Appeals for the Federal Circuit in the matter of Corebrace LLC vs. Star Seismic LLC on May 22, 2009, while determining the licensee’s rights in a license to make, use and sell the patented product, held that the licensee’s right to make, use and sell the patented product inherently includes the right to get it made by a third party, absent a clear indication of intent to the contrary. The court held that a license to produce, use and sell “is not restricted to production by the licensee personally or use by him personally or sales by him personally. It permits him to employ others to assist him in the production, and in the use and in the sale of invention. Nor need he take any personal part in the production”.

However, the court has made it clear that in the event, terms of the license clearly articulate the exclusion of “have made” rights, then the license to make, use and sell the patented product is restricted and a licensee cannot get it made by a third party.

APPLICATION OF THIS JUDGEMENT TO THE NEW YORK TRADEMARK LAW IS NOT APPOSITE.

As per the definition clause, the term "trademark" means any word, name, symbol, or device or any combination thereof used by a person to identify and distinguish the goods of such person, including a unique product, from those manufactured and sold by others, and to indicate the source of the goods, even if that source is unknown.

It is clear that a trade mark is a mark used by a person to identify and distinguish the goods of ‘such person’. ‘Such person’ here means the owner of the goods. In other words, a trademark can be used only for identifying and distinguishing the goods manufactured by the owner or its licensee and not the goods manufactured by a third party.  

As per article 24, General Business Article, the term “use” means the bonafide use of a mark in the ordinary course of trade.

Section 360K on infringement provides that any person who shall use without the consent of the registrant, any reproduction, counterfeit, copy or colourable imitation of a mark registered under this article in connection with the sale, distribution, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive as to the source of origin of such goods or services shall be liable for a civil action.

It is submitted that the definition of infringement can be divided into following essential parts:

Any person

(i)               Use without the consent of registrant a mark

(ii)             in connection with sale, distribution, offering for sale or advertising of any goods

(iii)           such use is likely to cause confusion or mistake or deceive

(iv)            as to the source of origin of such goods or services.

is liable for civil action.

Though the condition no. (ii) talks of offering for sale or advertising of ‘any’ goods, however, the condition no. (iv) restrict the definition of goods to the “source of origin” of such goods, meaning thereby that a licensee with the consent of the registrant can sell the goods with the mark subject to the satisfaction of the fourth condition i.e. the use should not be in a manner so as to deceive or confuse or mistake about the source of origin. In other words “source of origin” here when read in conjunction with definition of trademark means the “owner”.

Therefore, if a licensee uses a trademark on the goods manufactured by the third party, there is bound to be confusion and deceive amongst the consumers about the source of origin, such confusion can be a result of performance or change in color of the Product. Moreover, selling of a product manufactured by a third party with the trade mark of the Licensor itself amount to deceiving and passing off. 

Attention is also invited to the language used in section 360-m, Remedies, which provides that any owner of a mark registered under this article may proceed by suit to enjoin the manufacture, use, display or sale of any counterfeits or imitations thereof and any court of competent jurisdiction may grant injunctions to restrain such manufacture, use, display or sale as may be by the said court deemed just and reasonable, and may require the defendants to pay to such owner all profits derived from and/or all damages suffered by reason of such wrongful manufacture, use, display or sale; and such court may also order that any such counterfeits or imitations in the possession or under the control of any defendant in such case be delivered to an officer of the court, or to the complainant, to be destroyed.

It is clear from this clause that manufacture and use have different connotation and “use” does not inherently include manufacturing or producing itself or by third parties.

A combined reading definition, infringement and remedies clause makes it crystal clear that under the Trademark law license to “use” the trademark does not include manufacturing of product from a third party.  

DEFICIENT STAMP DUTY- PROCEDURE UNDER STAMP ACT, 1899

In the stamp Act, 1899 there are two stages where a case of deficient stamp duty arises-

(i)               When at the stage of execution of the instrument.

(ii)             When at the stage of civil suit proceedings.

         

The first stage is covered by section 31 of the Act where it states as follows:

I.         WHEN AT THE STAGE OF INSTRUMENT

Legal Provisions:

17. Instruments executed in India

All instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution.

31. Adjudication as to proper stamp-.

            (1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than [fifty naye paise] as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable. 

(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly:

Provided that-

(a)   no evidence furnished in pursuance of this section shall be used against any person in any civil proceedings except in an inquiry as to the duty with which the instrument to which it relates is chargeable; and

(b)   every person by whom any such evidence is furnished shall, on payment of the full duty with which the instrument to which it relates is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.

32. Certificate by Collector –

1)     When an instrument brought to the Collector under section 31, is, in his opinion, one of a description chargeable with duty, and--

(a)    the Collector determines that it is already fully stamped, or

(b)    the duty determined by the Collector under section 31, or such a sum as, with the      duty already paid in respect of the instrument, is equal to the duty so determined, has been paid, the Collector shall certify by endorsement on such instrument that the full duty (stating the amount) with which it is chargeable has been paid.

2)     When such instrument is, in his opinion, not chargeable with duty, the Collector shall certify in manner aforesaid that such instrument is not so chargeable.

3)     Any instrument upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be; and, if chargeable with duty, shall be receivable in evidence or otherwise, and may be acted upon and registered as if it had been originally duly stamped:

Provided that nothing in this section shall authorise the Collector to endorse—

(a)    any instrument executed or first executed in 1*[India] and brought to him after the expiration of one month from the date of its execution or first execution, as the case may be;

(b)    any instrument executed or first executed out of 1*[India] and brought to him after the expiration of three months after it has been first received in 1*[India]; or

(c)     any instrument chargeable 2*[with a duty not exceeding ten naye paise] or any bill of exchange or promissory note, when brought to him, after the drawing or execution thereof, on paper not duly stamped

DISCUSSION-

The section covers both the stages of the instrument i.e whether executed or not and whether stamped or not. After taking the due fee prescribed under this section the Collector shall provide his adjudication as to the proper duty.

Adjudication can be claimed in respect of any instrument, whether executed or not. The collector may require for adjudication an abstract of the instrument along with affidavit or any other instrument to enable him to determine the proper duty. The collector is alone authorized to decide as to the duty chargeable under this section and his decision is final or he may also refer the case to Chief Controlling Revenue Authority u/s 66 of the Act.

No penalty for insufficient stamping, beyond the deficient duty and the adjudication fee is leviable when the document is unstamped or insufficiently stamped and is taken to collector u/s 31.

U/s 32(Proviso a) there is provision for Certificate of Collector the collector shall endorse the instrument by a certificate that a full duty with which an amount is chargeable is duly stamped and paid or the instrument is already duly stamped with requisite amount of duty. After receiving the endorsement u/s 32 for an instrument brought to the collector u/s 31 the instrument can be relied as evidence or may be acted upon for registration

Provided, that any such instrument shall only be considered for endorsement only if the same has been brought to the collector within one month after from the date of its first execution.

Where section 17 of the Act provides that an instrument chargeable with duty and executed by any person in India shall be stamped before or at the time of its execution then it is best to apply u/s 31 before the execution of such instrument and thereafter a certificate u/s 32 should be sought by the applicant

Once a matter is sent for adjudication u/s 31 and 32 of the Act and endorsement is issued, the instrument shall be treated as duly stamped.

However, the Hon’ble Supreme Court in the case of Government of Uttar Pradesh v. Mohd. Amir Ahmad Khan (AIR 1961 SC 787) decided as follows:

“The scheme of the Act shows that where a person is simply seeking the opinion of the Collector as to the proper duty in regard to an instrument, he approaches him under s. 31. If it is properly stamped and the person executing the document wants to proceed with effectuating the document or using it for the purposes of evidence, he is to make up the duty and under s. 32 the Collector will then make an endorsement and the instrument will be treated as if it was duly stamped from the very beginning. But if he does not want to proceed any further than seeking the determination of the duty payable then no consequence will follow and an executed document(beyond time limit) is in the same position as an instrument which is unexecuted and unstamped and after the determination of the duty the Collector becomes functus officio and the provisions of s. 33 have no application. The provisions of that section are a subsequent stage when something more than mere asking of the opinion of the Collector is to be done.”

Therefore nothing prohibits the person seeking an opinion for the proper stamp duty on an instrument from applying to the collector u/s 31 of the Act.

CONCLUSION

Therefore, it is advisable to always apply under section 31 for the adjudication and payment of deficient stamp duty because in such case the penalty chargeable u/s 38 shall not be charged provided the same has been brought to Collector within one month from the date of execution of the instrument.

II.        WHEN AT THE STAGE OF CIVIL SUIT PROCEEDINGS

Legal Provisions Involved

33. Examination and impounding of instruments-

(1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument, so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in ³[India] when such instrument was executed or first executed :

            Provided that-

nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI, of the Code of Criminal Procedure, 1898

40.       Collector’s power to stamp instruments impounded. - (1) When the Collector impounds any instrument under section 33, or receives any instrument sent to him under section38, sub-section (2), not being an instrument chargeable ²[with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, ³[or acknowledgement or delivery order], he shall adopt the following procedure :-

(a) if he is of opinion that such instrument is duly stamped or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable, as the case may be :

(b) if he is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of five rupees; or, if he thinks fit ¹[an amount not exceeding] ten times the amount of the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees :

Provided that, when such instrument has been impounded only because it has been written in contravention of section 13 or section 14, the Collector may, if he thinks fit, remit the whole penalty prescribed by this section.

(2) Every certificate under clause (a) of sub-section (1) shall, for the purposes of this Act, be conclusive evidence of the matter stated therein.

(3) Where an instrument has been sent to the Collector under section 38, sub-section (2), the Collector shall, when he has dealt with it as provided by this section return it to the impounding officer.

DISCUSSION-

The Hon’ble Supreme Court in the case of Government of Uttar Pradesh v. Mohd. Amir Ahmad Khan (AIR 1961 SC 787) observed:

“Section 33 empowers every person in charge of a public office before whom an instrument chargeable with duty is produced or comes in the performance of his functions to impound the instrument if it is not duly stamped. When an instrument is presented to the Collector under s. 31 for determination of duty it cannot be said that it "is produced or comes in the performance of his functions" as contemplated by S. 33. These words refer firstly to production before judicial or other officers performing judicial functions as evidence of any fact to be proved, and secondly refer to other officers who have to perform any function in regard to those instruments when they come before them, e.g., registration”

“Section 33 of the Act to means "that production of the instrument concerned in evidence or for the purpose of placing reliance upon it by one party or the other."

Chapter IV of the Act which deals with instruments not duly stamped and which contains as. 33 to 48, provides for impounding of documents, how the impounded documents are to be dealt with, Collector's powers to stamp instruments impounded and how the duties and penalties are to be recovered.

CONCLUSION

The stage of section 33 commences (i) after expiry of one month from date of execution of document; or (2) when the document is relied upon as evidence. The subsequent section for impounding (s.35) and for penalty (s.38) operates only at this stage. Whereas at section 40 the jurisdiction to adjudicate upon proper stamp duty and charge penalty for the same lies with the concerned collector.

Therefore, the Stamp Act, 1899 suffers from this narrow statutory scheme limited by the time of one month where a person if is inclined to make good his instrument by paying the deficit amount of duty to government, can do so only after giving the penalty for the same, subsequent to impoundment.