(1) (a) Whoever affixes any adhesive stamp to any instrument chargeable with duty which has been executed by any person shall, when affixing such stamp, cancel the same so that it cannot be used again; and
(b) whoever executes any instrument on any paper bearing an adhesive stamp shall, at the time of execution, unless such stamp has been already cancelled in manner aforesaid, cancel the same so that it cannot be used again.
(2) Any instrument bearing an adhesive stamp which has not been cancelled so that it cannot be used again, shall, so far as such stamp is concerned, be deemed to be unstamped.
(3) The person required by sub-section (1) to cancel an adhesive stamp may cancel it by writing on or across the stamp his name or initials or the name or initials of his firm with the true date of his so writing, or in any other effectual manner.
Legal Commentary & Landmark Judgments: Section 12
Section 12 of the Indian Stamp Act, 1899 prescribes the mandatory procedure for the cancellation of adhesive stamps, enacting that an uncanceled adhesive stamp renders the instrument deemed to be unstamped.
Sub-section (2) enacts a severe legal consequence: any instrument bearing an adhesive stamp which has not been canceled in the manner aforesaid shall, so far as such stamp is concerned, 'be deemed to be unstamped'. Sub-section (3) explains that cancellation may be effected by writing one's name or initials across the stamp, or by signing across it, or in any other effectual manner rendering reuse impossible.
Cancellation of revenue stamps is a frequent trap in promissory note, receipt, and share transfer litigations. An adhesive stamp left pristine or blank is legally non-existent under Section 12(2). Drawing a line, signing across, or dating over the stamp is essential to preserve admissibility.