Stamping of documents under stamp acts of India
Pursuant to the Indian Stamp Act, 1899 (“Stamp Act”), the state and the central government have powers to impose stamp duty in accordance with the Act on the respective instruments as per the subject matters listed in seventh schedule (Article 246 - Subject-matter of laws made by Parliament and by the Legislatures of States) of the Constitution of India.
The Stamp Act along with respective state stamp acts require an instrument (eg. a contract or a deed or a declaration) to be stamped per schedule(s) of the Act. Per Section 35 of the Stamp Act, the instruments which are duly
stamped are inadmissible as evidence in a court of law. The payment of stamp duty in India can be done via electronic payment or by procuring stamp papers from government's treasury department.
In case of an instruments executed out of the
territorial boundaries of the state, the Stamp Act mandates the instruments to be stamped within specific months of the same has been received in the respective state. For example, per Section 18 of the
Maharashtra Stamp Act, every instrument chargeable
with duty executed only out of this State may be stamped within three months
after it has been first received in this State.
In the case of SMS
Tea Estates Pvt. Ltd. Vs. Chandmari Tea Co. Pvt.Ltd.[1],
Hon'ble Supreme Court at paragraph 12 has commented on the procedure to be adopted where the
arbitration clause is contained in a document which is not registered (but
compulsorily registrable) and which is not duly stamped in the state it has been recieved. Hon'ble Supreme Court in
this respect has held that; (i) The court should, before admitting any document
into evidence or acting upon such document, examine whether the
instrument/document is duly stamped and whether it is an instrument which is
compulsorily registrable, (ii) If the document is found to be not duly stamped,
Section 35 of Stamp Act bars the said document being acted upon. Consequently,
even the arbitration clause therein cannot be acted upon. The court should then
proceed to impound the document under section 33 of the Stamp Act and follow
the procedure under section 35 and 38 of the Stamp Act, (iii) If the document
is found to be duly stamped, or if the deficit stamp duty and penalty is paid,
either before the Court or before the Collector (as contemplated in section 35
or 40 of the Stamp Act), and the defect with reference to deficit stamp is
cured, the court may treat the document as duly stamped, and (iv) Once the
document is found to be duly stamped, the court shall proceed to consider
whether the document is compulsorily registrable. If the document is found to
be not compulsorily registrable, the court can act upon the arbitration agreement,
without any impediment.
In M/S.
Win-N-Quiz Company Limited vs The Authorized Officer, Bank of Baroda[2],
Hon'ble Bombay high court has held that irrespective of the fact that the instrument was executed in West Bengal, since the instrument creating mortgage over the
immovable property situated in Mumbai has come in before the courts in Mumbai, the
instrument is liable to be stamped by payment of stamp duty per Section 3(1)(b) of the
Bombay Stamp Act, 1958. The court further held that the debt recovery tribunal at the first instance was
correct in impounding the instrument in accordance with Sections 33 and 34 of
the Bombay Stamp Act, 1958.
Stamping of
documents vis-à-vis Registrar of Companies (“RoC”) filing
While executing
the transaction documents (eg. secured or unsecured loans or debenture
trust deed for bonds issuance) parties to the transaction generally prefer to execute the transaction
documents in a state where they have better arbitrage in
respect of stamp duty implication on such document type.
For perfection of charge / security interest on the assets of the companies, section 77 of the Companies Act, 2013 (“Companies Act”) read along with Rule 4(2) chapter VI of The Companies (Registration of Charges) Rules,
2014 ("Charge Rules"), requires every company is required to file
particulars of charge with RoC in form CHG-1 (CHG-9 for security created to secure debentures). Pursuant to the Rule 4 and 5 of
the Charge Rules read
with MCA notification no. G.S.R. 832 (E) dated 3 November 2015 the RoCs and regional
directorates thereunder of the respective state and union territory shall have
territorial jurisdiction over that respective state and union territory.
In accordance
with section 398 of the Companies Act, the form filings with RoC can be done in
electronic form and pursuant to the Section 402 of the Companies Act, the
provisions of the Information Technology Act, 2000 (“IT Act”) relating
to the electronic records, including the manner and format in which the
electronic records shall be filed, in so far as they are not inconsistent with the
Companies Act, shall apply for the records in electronic form
as applicable to filing of applications, documents,
inspection reports, etc., in electronic form.
The rule 7 of the Companies (Registration of Charges) Rules, 2014 specifies that every application, financial statement, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document or any notice, or any communication or intimation required to be filed or delivered or served under the Companies Act, 2013 and rules made there under, shall be filed or delivered or served in computer readable electronic form, in portable document format (pdf) or in such other format as has been specified in any rule or form in respect of such application or form or document or declaration to the Registrar through the portal maintained by the Central Government on its web-site or through any other website notified by the Central Government.
The concern which may arises when, for a company having its registered office in
Mumbai, Maharashtra, being one of the party to the loan agreement and a deed of
hypothecation executed in the state of Delhi, and upon such execution files a from CHG-1 with electronically attached duly stamped deed of
hypothecation to the RoC Mumbai.
In this case the company’s registered office is
in the state of Maharashtra and therefore RoC Mumbai has a territorial
jurisdiction over the company having registered office in Maharashtra. Therefore, when the company does an electronic submission of any
instrument with RoC of the particular state but executes an instrument in some
other state where a physical copy of the instrument is kept, the query which may arise is - whether an
electronic submission of the instrument with RoC will amount to an instrument entering into that state where RoC has a territorial jurisdiction, if
yes, what will the stamp duty implication in that scenario ?
Receipt of
electronic record under IT Act
Section 13(3) (Time
and Place of Despatch and Receipt of Electronic Record) under Chapter IV (Attribution,
Acknowledgment and Despatch of Electronic Records) of the IT Act state - save as otherwise agreed to between the originator and the addressee, an
electronic record is deemed to be despatched at the place where the originator
has his place of business, and is deemed to be received at the place where the
addressee has his place of business.
In the case of
M/s. P.R. Transport Agency v. Union of India[3],
a division bench of Hon'ble Allahabad high court held that, the acceptance of the
tender, communicated by by e-mail from respondents i.e. Union government of India to the
petitioner i.e. M/s. P.R. Transport Agency (which is an electronic
record in accordance with the provision of the IT Act), will be deemed to
be received by the petitioner at Varanasi / Chandauli, Uttar Pradesh which are the
only two places where the petitioner has his place of business and Section 2(b) of
the IT Act defines term ‘addressee’ as a person who is intended by the
originator to receive the electronic record but does not include any
intermediary.
Conclusion
In view of the above and upon carefully reading the provisions of the Companies Act and the IT Act together, it can be deduced that any submission of an electronic record with the RoC of the particular state or union territory will be regarded as dispatch of an electronic record from the company to the RoC of the state of union territory where the company is registered and therefore the document has entered the concerned state of RoC.
It may also be noted chances of arising such conflict are high in case where such document is submitted as an evidence in court of law and the court thinks fit to impound the document because an inadequate stamping amount as been paid comparing to what concerned state stamp act has provide for.
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