No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
Provided that
(a) any such instrument shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees , or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees , of a sum equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt if stamped would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it;
(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);
(e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Government, or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.
Legal Commentary & Landmark Judgments: Section 35
Section 35 of the Indian Stamp Act, 1899 enacts an absolute statutory embargo declaring that instruments not duly stamped are inadmissible in evidence and cannot be acted upon for any purpose, subject to curative impounding and penalty provisions.
The 7-Judge Constitution Bench ruling in *In Re Interplay* restored sanity to commercial arbitration and litigation: an unstamped contract is not non-existent or void in law; it is merely inadmissible in evidence until cured. Litigants must either pay the deficit stamp duty along with the mandatory 10x penalty under the proviso to Section 35 before the court, or have the document sent to the Collector under Section 38 for adjudication.