Unregistered exchange deed may be used for collateral proof of possession once stamp duty defects are cured.

An unregistered exchange deed, once impounded and the requisite stamp duty and penalty are paid, may be admitted in evidence because the Section 35 bar under the Indian Stamp Act is then removed. Although such an instrument cannot prove title, Section 49 of the Registration Act allows it to be used for the limited collateral purpose of proving possession. Non-payment of surcharge under the Gram Panchayat Act does not by itself make the document inadmissible, because that Act does not make payment of the surcharge a condition precedent to admissibility and Section 35 cannot be imported by implication.

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Issues: Whether an unregistered exchange deed, after compliance with the stamp-duty requirements, could be received in evidence for the collateral purpose of proving possession, and whether non-payment of surcharge under the Gram Panchayat Act barred its admission.

Analysis: A document which is chargeable to stamp duty cannot be admitted unless the requirements of Section 35 of the Indian Stamp Act are satisfied, but once the instrument is impounded and the duty and penalty are paid, the statutory bar is removed. Although an unregistered document cannot be used to prove title, Section 49 of the Registration Act permits its use for a collateral purpose. The levy of surcharge on transfers of property under the Gram Panchayat Act was held not to attract the exclusionary consequence of Section 35 of the Indian Stamp Act, because the Gram Panchayat Act does not make payment of such surcharge a condition precedent to admissibility. The analogy drawn from the provisions governing municipal transfer duty also supported the view that only the specific provisions made applicable by the local statute could be enforced, and Section 35 could not be imported by implication.

Conclusion: The document was admissible in evidence for the limited collateral purpose of proving possession, and non-payment of surcharge did not render it inadmissible.

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