Drafting, Pleadings and Appearances · Laws relating to Drafting and Conveyancing

Impounding of Instruments and Penalty for Unstamped Documents

Updated 11 October 2026 · Fact-checked

An instrument chargeable with duty but not duly stamped cannot be admitted in evidence or acted upon (Section 35). The authority before whom it comes must impound it (Section 33). It can be validated by paying the deficit duty plus penalty, and the Collector then adjudicates and endorses it.

Understand Adjudication, Impounding and Penalties for Unstamped Documents

Stamp duty is a tax on instruments. The Indian Stamp Act, 1899 does not usually make an insufficiently stamped document void. It makes it unusable until the duty is made good. This is the core idea behind this topic.

Section 35 is the bar. An instrument chargeable with duty cannot be admitted in evidence for any purpose, and cannot be acted upon, registered or authenticated, by any person with authority to receive evidence or by any public officer, unless it is duly stamped. The bar is lifted by the proviso: the instrument can be admitted on payment of the duty, or the shortfall, plus a penalty.

Section 33 puts a duty on the person who receives the document. Every person with authority to receive evidence (a court, a tribunal, an arbitrator) and every person in charge of a public office (except a police officer) must impound an instrument chargeable with duty if it appears to him that it is not duly stamped. He must examine it against the law in force when it was executed or first executed. To impound means to take the instrument into custody for the purpose of dealing with it under the Act.

What happens next depends on who impounded it. Under Section 38, if the impounding authority admits the instrument on payment of penalty under Section 35 (or duty under Section 37), he sends the Collector an authenticated copy, a written certificate of the duty and penalty levied, and the money. In every other case he sends the original to the Collector. Under Section 40, the Collector then decides: duly stamped or not chargeable, he endorses accordingly. Otherwise he requires the proper duty or the shortfall plus penalty. This is called adjudication of the instrument for the purposes of this page's procedure.

Finally, Section 42 closes the loop. Once duty and penalty are paid, the person admitting the instrument or the Collector certifies by endorsement the amount of duty and penalty and the name and residence of the payer. The instrument is then admissible, and may be registered, acted upon and authenticated as if duly stamped. States have amended some of these sections, so always say which State's law you are applying if the question names one.

Key rules to remember

Bar on unstamped instruments (Section 35): Chargeable instrument + not duly stamped → not admissible in evidence, not acted upon, registered or authenticated; Applies to any person with authority to receive evidence and to public officers. It is a bar until cured, not a declaration that the document is void.
Central cure under Section 35 proviso (a): Payment = proper duty (or deficit) + penalty of ₹5, or 10 × proper duty (or deficit) if that is more than ₹5; Penalty is the higher of ₹5 and ten times the duty or deficit. In Uttar Pradesh the penalty is ten times the duty or deficient portion, by State amendment.
Collector's power under Section 40(1)(b): Proper duty (or deficit) + penalty of ₹5, or, if he thinks fit, an amount not exceeding 10 × proper duty (or deficit), whether above or below ₹5; The Collector has discretion up to ten times. The court's Section 35 penalty is fixed, the Collector's is a ceiling.
Duty to impound (Section 33): Instrument chargeable with duty, produced before authority, appears not duly stamped → authority shall impound it; Examine against the law in force when the instrument was executed or first executed. Police officers are excluded.
Unstamped receipt (Section 35 proviso (b)): Penalty of ₹1 payable by the person tendering the receipt; Applies where a stamped receipt could have been demanded, an unstamped one was given, and the receipt if stamped would be admissible against the giver.
Correspondence contracts (Section 35 proviso (c)): Contract by two or more letters, any one letter properly stamped → contract deemed duly stamped; Only one letter needs the proper stamp.
Other exceptions (Section 35 proviso (d) and (e)): Criminal Court (other than Chapter XII or XXXVI proceedings of the 1898 Code) → admissible; Government instruments or those bearing Collector's certificate under Section 32 → admissible; Chapter references are to the Code of Criminal Procedure, 1898, as the text reads. Uttar Pradesh substitutes sections 125 to 128 and 145 to 148 of the 1973 Code.
Delivery after endorsement (Section 42): Endorsed instrument is admissible and may be registered and acted upon; where admitted in evidence on duty and penalty under Section 35, it is not delivered before one month from impounding, or while the Collector's certificate of further detention stands; The endorsement states duty, penalty and the name and residence of the payer.
Collector's certificate (Section 40(2)): Certificate under Section 40(1)(a) = conclusive evidence of the matters stated; Covers certifying that the instrument is duly stamped or not chargeable.

How to solve Adjudication, Impounding and Penalties for Unstamped Documents questions

Use this order for any problem or case on an unstamped or deficiently stamped instrument. Each step maps to a section, so your answer reads as provision, analysis, conclusion.

1Identify the instrument and ask whether it is chargeable with duty at all. If not chargeable, Sections 33 and 35 do not bite.
2Find who has it and where it comes: a court, tribunal, arbitrator or public office. These are persons with authority to receive evidence or in charge of a public office, and they must examine it under Section 33.
3Check the stamp against the law in force when the instrument was executed or first executed, and compute any deficit.
4State the consequence under Section 35: no admission in evidence, no acting upon, registration or authentication until duly stamped.
5Check the exceptions: unstamped receipt, correspondence contract, criminal court, Government instrument or Collector's certificate.
6Compute the cure: proper duty or deficit plus penalty under Section 35 proviso (a) if the authority admits it, or the Collector's amount under Section 40 if it is sent to him.
7State the procedure: Section 38 copy, certificate and money, or the original to the Collector, then endorsement under Sections 40 and 42.
8Conclude clearly: admissible and registrable once endorsed, and note any State amendment named in the facts.

Quickest way: Four-line answer frame: Bar, Impound, Pay, Endorse

When to use it: When time is short and the question simply asks about the effect of an unstamped or insufficiently stamped document.

Bar: cite Section 35, not admissible or acted upon unless duly stamped.
Impound: cite Section 33, the authority must impound if it appears not duly stamped.
Pay: duty or deficit plus penalty (₹5 or ten times, whichever is higher, under Section 35; up to ten times before the Collector under Section 40).
Endorse: Section 42 endorsement makes it admissible, registrable and actionable as if duly stamped; add exceptions in one line.

Common mistakes in Adjudication, Impounding and Penalties for Unstamped Documents

Writing that an unstamped document is void
Students mix up inadmissibility with invalidity.
Fix: Say it is inadmissible and cannot be acted upon until the duty and penalty are paid. The defect is curable.
Stating the penalty as a flat ₹5
Students remember only the first figure in the proviso.
Fix: Penalty is ₹5, or ten times the duty or deficit when that exceeds ₹5. Mention that Uttar Pradesh fixes it at ten times by amendment.
Confusing the court's penalty with the Collector's
Both sections use similar numbers.
Fix: Section 35 sets the penalty the admitting authority levies. Section 40 lets the Collector levy up to ten times, whether above or below ₹5, at his discretion.
Forgetting that the person must impound, not just reject
Students focus on admissibility only.
Fix: Quote Section 33: the authority shall impound, then follow Section 38 on sending a copy with certificate and money, or the original, to the Collector.
Missing the exceptions in the proviso
Students learn the general rule and skip the clauses.
Fix: Learn the five provisos: penalty-only for unstamped receipts, correspondence contracts, criminal courts, Government instruments and Collector's certificates.
Ignoring Section 42 endorsement and delivery
Students stop after paying the penalty.
Fix: Finish with the endorsement of duty, penalty and payer details, and note the one-month hold on delivery where Section 35 penalty was paid.

Worked examples

Example 1

A lease deed is produced in a civil court in a suit. The proper duty is ₹40,000, but the deed bears stamps of ₹30,000 only. Advise on admissibility and compute what must be paid to admit it. Assume the central Act text applies.

Show the solution

Provision: Section 35 bars admission of a chargeable instrument that is not duly stamped. Section 33 requires the court to impound it.
Deficit: ₹40,000 − ₹30,000 = ₹10,000.
Penalty: ten times the deficit is 10 × ₹10,000 = ₹1,00,000, which exceeds ₹5, so the penalty is ₹1,00,000.
Total payable to admit under Section 35 proviso (a): deficit ₹10,000 + penalty ₹1,00,000 = ₹1,10,000.
Procedure: the court sends the Collector an authenticated copy, a certificate of duty and penalty levied and the amount (Section 38(1)). It endorses the instrument under Section 42.

Answer: The deed is inadmissible until cured. On payment of ₹1,10,000 (deficit ₹10,000 plus penalty ₹1,00,000) the court may admit it, send the copy, certificate and money to the Collector, and endorse the deed under Section 42. In Uttar Pradesh the penalty also works out to ten times the deficit, so the amount would be the same.

Example 2

Ravi Traders executed an unregistered agreement for sale on stamp paper of insufficient value. It is produced before a Sub-Registrar-level public office for registration. The officer wants to refuse it. What is the position, and what does the Collector do?

Show the solution

Provision: Section 35 says no public officer shall register or act upon an instrument that is not duly stamped. Section 33 requires a person in charge of a public office to impound it if it appears not duly stamped.
Analysis: the officer cannot register it as it stands. He is not just to refuse and return it; he must impound it.
Since he has not admitted it in evidence on penalty, Section 38(2) applies: he sends the original to the Collector.
The Collector under Section 40(1)(b) requires the proper duty or the deficit plus a penalty of ₹5, or, if he thinks fit, an amount up to ten times the duty or deficit.
On payment, an endorsement is made showing the duty, the penalty and the name and residence of the payer (Section 42), and the instrument is returned to the impounding officer (Section 40(3)).
Conclusion: after endorsement, the instrument may be registered and acted upon as if duly stamped, and delivered on application to the person from whom it came.

Answer: The officer must impound the agreement and send the original to the Collector. The Collector collects the deficit duty and a penalty (up to ten times, in his discretion), endorses it, and returns it. After endorsement it can be registered and acted upon as if duly stamped.

Exam tips

Quote section numbers in order: 33 (impound), 35 (bar), 38 (send to Collector), 40 (Collector's power), 42 (endorsement). This gives you a skeleton for any case.
Always compute the penalty with figures when amounts are given. Show the deficit, the ten-times calculation and the total.
Name the exceptions in one line each: unstamped receipt, correspondence contract, criminal court, Government instrument.
Flag State amendments only if the facts name the State, such as Uttar Pradesh on penalty or Uttarakhand on interest on deficit duty.
End with a clear conclusion: admissible, registrable and enforceable after endorsement, not void.

Practice questions from Laws relating to Drafting and Conveyancing

Adjudication, Impounding and Penalties for Unstamped Documents: frequently asked questions

Can an unstamped document be used as evidence in India?

Not until it is duly stamped. Section 35 bars admission of a chargeable instrument that is not duly stamped, but the proviso lets the court admit it on payment of the duty or deficit plus penalty.

What is impounding under the Indian Stamp Act?

Impounding means the authority takes the instrument into custody because it appears not duly stamped. Under Section 33 a court, tribunal or public officer with power to receive evidence must do this, and then deal with it under Sections 35, 38 and 40.

What is the penalty for deficit stamp duty?

Under Section 35 the penalty is ₹5, or ten times the duty or deficit if that exceeds ₹5, along with the duty or deficit. Under Section 40 the Collector may require ₹5, or up to ten times the duty or deficit. Some States, such as Uttar Pradesh, have amended the penalty.

Does the Collector decide whether an instrument is duly stamped?

Yes. Under Section 40 the Collector either certifies that it is duly stamped or not chargeable, or requires the proper duty or deficit plus penalty. His certificate that an instrument is duly stamped or not chargeable is conclusive evidence of what it states.