SUPREME COURT VERDICT ON ADMISSIBILITY OF UNSTAMPED DOCUMENTS AS SECONDARY EVIDENCE
INTRODUCTION
A two-Judge Bench of the Supreme Court comprising of Justice Abhay S. Oka and Justice Sanjay Karol has passed an Order dated 29.11.2023 in Vijay Vs. Union of India and Ors. in Civil Appeal No. 4910 of 2023 and quashed the Order passed by the Review Court and the High Court of Madhya Pradesh stating that the document produced as secondary evidence by the Plaintiff-Appellant was not chargeable with stamp duty at the time of its execution and hence, there was no bar against its admissibility as secondary evidence in a Suit for Specific Performance of Contract.
FACTS
i) The Plaintiff-Appellant, Mr. Vijay, and the Defendant-Respondent No. 2, Dr. Mrunaldevi Puar, entered into Agreement to Sell on 04.02.1988 and as per which, the Plaintiff-Appellant was allegedly put in possession by the Defendant-Respondent No. 2. When the Defendant- Respondent No. 2 denied the existence of the Agreement, the Plaintiff-Appellant filed a Suit for Specific Performance of the Contract before the Ld. 4th Additional District Judge, Madhya Pradesh.
ii) The Plaintiff-Appellant, after filing the Suit before the Ld. 4th Additional District Judge, moved an Application to file a copy of the Agreement to Sell, among other documents as secondary evidence.
iii) That, initially the said Application was allowed by the Ld. 4th Additional District Judge vide Order dated 17.07.2001. But when the Defendant- Respondent No. 2 sought review for the said Order dated 17.07.2001, the Ld. 19th Additional District Judge (“Review Court”), in Civil Suit No. 46/A/03, vide Order dated 16.12.2003, reviewed the said Order and held that the secondary evidence of the Agreement to Sell could not be allowed as it was not executed on a proper stamp paper, and was barred under Section 35 of the Indian Stamp Act, 1899 (“Stamp Act”) (Instruments not duly stamped inadmissible in evidence, etc.).
iv) Aggrieved by the Review Court Order dated 16.12.2003, the Plaintiff-Appellant filed a Writ Petition, P. No. 741/2004 before the High Court of Madhya Pradesh.
v) Subsequently, the High Court of Madhya Pradesh, vide Order dated 30.11.2009, upheld the validity of Section 35 of the Indian Stamp Act, 1899 and the Order of the Review Court.
vi) Aggrieved by the High Court Order dated 30.11.2009, the Plaintiff-Appellant filed Civil Appeal No. 4910 of 2023 before the Supreme Court.
SUPREME COURT ANALYSIS
The Apex Court, vide Order dated 29.11.2023, made the following observations:
(1) The Supreme Court observed that 3 issues arose out of the present Appeal;
(A) Whether the bar of admissibility created by Section 35 of the Indian Stamp Act 1899 applies to the Agreement to Sell dated 04.02.1988 executed by the parties?
(B) Can a copy of a document be adduced as secondary evidence when the original instrument is not in possession of the party?
(C) Whether the decision of the Supreme Court in Jupadi Kesava Rao v. Pulavarthi Venkata Subha Rao (1971) 1 SCC 545 will be binding and applicable in the facts of the present case, as held by both the Courts below?
(2) The Apex Court observed in respect of Section 35 of the Stamp Act that it is evident from a bare perusal of the section that it prohibits admission in evidence of instruments that are chargeable with duty unless they are “duly stamped.”
(3) Further, it is required to be considered as to when the document will become chargeable with duty i.e., during its execution or when it is produced before the Court. The crucial date which determines the law in force is the date of execution of the instrument, and the stamp duty is to be charged with reference to the date of execution and not the date of adjudication or the date of presentation and registration of the document.
(4) The Apex Court observed that the sub-issue that the Supreme Court was confronting was whether the Agreement to Sell, handing over possession prior to the amendment to the Stamp Act brought in the year 1989 or 1990, was a conveyance to be covered in Article 23 of Schedule IA of the Stamp Act (conveyances) as existing on the date of the Agreement and on this aspect, only a casual amendment was brought in 1990 i.e., prior to the transaction in question.
(5) The Bench further relied on Lamp and Industries Pvt. Ltd. v. State of Haryana (2012) 1 SCC 656 in considering the scope of an agreement to sell wherein the Three Judge Bench of the Supreme Court held that:
“18. It is thus clear that a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title, or interest in an immovable property can be transferred.
19. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the T.P. Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the T.P. Act). According to the T.P. Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the T.P. Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter.”
(6) The Supreme Court observed that now, in many states, amendments were brought in to the Stamp Act, whereby agreements of sale acknowledging delivery of possession are charged with the same duty as leviable on conveyance.
(7) That the question before the Apex Court was if the Court can retrospectively read the Explanation added vide M.P. Act 22 of 1990 so as to apply to the Agreement to Sell executed on 04.02.1988. The Court observed that the mere description of a provision as an “Explanation” or “clarification” does not determine its actual effect.
(8) The Bench relied on the judgment of Govind Das vs. ITO (1976) 1 SCC906 wherein the Supreme Court held that:
“11. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule, as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts, is that “all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective” and if the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.”
(9) The Apex Court applying the above-mentioned principle to the present case, observed that, the Explanation inserted in Article 23 of Schedule I-A contained in the Act creates a new obligation for the party and, therefore, cannot be given retrospective application. Thus, it will not affect the agreement(s) executed prior to such amendments.
(10 )The Bench stated that the object of the Stamp Act is to collect proper stamp duty on an instrument or conveyance on which such stamp duty is payable. Section 35 of the Stamp Duty Act is a provision to cater for the instruments not being properly stamped and, hence, not being admissible in evidence. A document not duly stamped cannot be admitted for any purposes. To impose the bar of admissibility provided under this section, the following twin conditions are required to be fulfilled: A) Instrument must be chargeable with duty; B) It is not duly stamped.
(11) The Apex Court therefore on the first issue held that if the documents sought to be admitted are not chargeable with duty, Section 35 has no application. Since the Agreement was dated 04.02.1988 in the present case, i.e. prior to the 1990 Amendment, hence, the instrument was not chargeable with duty. Therefore, when such documents are not required to be stamped, then any bar against admissibility as secondary evidence, cannot be imposed on the ground of it being not duly stamped.
(12) The Supreme Court on the other two issues observed that the Plaintiff-Appellant claimed in the Application that after executing the document, the Defendant- Respondent No. 2 kept the original copy, and a photocopy of the same was given to the Plaintiff-Appellant. However, as per the averments made in the Application, the Defendant- Respondent No. 2 had stated in an affidavit that the documents were not with her but with her counsel. As the Plaintiff-Appellant did not have the original copy of the Agreement, he had submitted a photocopy of the same as secondary evidence.
(13) The Apex Court laid down the following principles for examining the admissibility of the secondary evidence: a) Law requires the best evidence to be given first, that is, primary evidence; b) Section 63 of the Evidence Act provides a list of the kinds of documents that can be produced as secondary evidence, which is admissible only in the absence of primary evidence; c)If the original document is available, it has to be produced and proved in the manner prescribed for primary evidence. So long as the best evidence is within the possession or can be produced or can be reached, no inferior proof could be given; d) A party must endeavor to adduce primary evidence of the contents, and only in exceptional cases will secondary evidence be admissible. The exceptions are designed to provide relief when a party is genuinely unable to produce the original through no fault of that party; e) When the non-availability of a document is sufficiently and properly explained, then the secondary evidence can be allowed; f) Secondary evidence could be given when the party cannot produce the original document for any reason not arising from his default or neglect; g) When the copies are produced in the absence of the original document, they become good secondary evidence. Still, there must be foundational evidence that the alleged copy is a true copy of the original; h) Before producing secondary evidence of the contents of a document, the non-production of the original must be accounted for in a manner that can bring it within one or other of the cases provided for in the section; i) Mere production and marking of a document as an exhibit by the Court cannot be held to be due proof of its contents.23 It has to be proved in accordance with the law.
(14) The Supreme Court also stated a reading of Section 65 (a) of the Evidence Act which says; a) Secondary evidence can be presented as a substitute when the original document/ primary evidence is in the possession of the opposing party or held by a third party; b) Such a person refuses to produce the document even after due notice; c) It must be ensured that the alleged copy is a true copy of the original.
(15) The Apex Court after applying the constituents of Section 65 (a) of the Evidence Act to the present facts observed that the exact status of the documents in question could not be ascertained as one party claimed that the other had the said document and the other has allegedly stated that it was with her counsel. As the original documents could not be recovered from her counsel, the presentation of the secondary evidence could be allowed if other requirements were complied with.
(16) The Supreme Court, pertaining to secondary evidence and unstamped/insufficiently stamped documents, relied on the case Jupudi Kesava Rao (supra) wherein it dealt with an issue i.e., whether reception of secondary evidence of a written agreement to grant a lease is barred by the provisions of Sections 35 and 36 of the Stamp Act and answered it in affirmative:
“12. The Indian Evidence Act, however, does not purport to deal with the admissibility of documents in evidence which require to be stamped under the provisions of the Indian Stamp Act. ……
13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfil the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. “Instrument is defined in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for the inclusion of a copy of a document as an instrument for the purpose of the Stamp Act. If Section 35 only deals with original instruments and not copies, Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its benefit.”
(17) Thus, if a document that is required to be stamped is not sufficiently stamped, then the position of law is well settled that a copy of such document as secondary evidence cannot be adduced. The present facts, however, differ.
(18) The Supreme Court held that, the Review Court and the High Court relied on Jupadi Kesva Rao (supra) to hold that the Plaintiff-Appellant cannot lead the secondary evidence as the document sought to be produced needed to be duly stamped. Although, Jupadi Kesva Rao (supra) case is distinguishable on the facts that the document which the Court was concerned was chargeable with duty, but in the present case, such was not the case, as the document produced was one which was not chargeable with the duty at the time of execution i.e., 04.02.1988. Thus, there being a material difference, the principle of law held in Jupadi Kesva Rao (supra) case, correct as it may be, would not apply to the instant case.
CONCLUSION
The Apex Court in the issues raised in the present case held that:
(A) The documents in question were not required to be stamped at the relevant period to attract the bar of Section 35 of the Stamp Act.
(B) A copy of a document can be adduced as secondary evidence if other legal requirements are complied with.
(C) As the material facts of the present case are different from that of Jupadi Kesva Rao (supra), the said judgement is not binding in the present case.
As such, the Supreme Court, allowed the Appeal and consequently, the Order dated 16.12.2003 passed by the Review Court in Civil Suit No. 46/A/03 as affirmed by the High Court of Madhya Pradesh vide Order dated 30.11.2009 in W.P 741/2004 were quashed and set aside and further, the Order dated 17.07.2001 passed by the was restored.
Kartik Khandekar
Associate
The Indian Lawyer