How to Execute an Agreement Properly: Stamping, Signing, Witnesses and Registration

A well-drafted agreement can still fail at the point of execution. Agreements that are not properly stamped cannot be relied on in court without paying duty and penalty; documents that must be registered and are not, do not affect the property they deal with; and agreements signed by the wrong person, or without authority, may not bind a company at all. These are formalities, but they decide whether the agreement can be enforced.

This article explains the steps in executing an agreement properly: stamping, signing and authority, witnesses, notarisation, registration and electronic execution, with reference to Kerala.

Stamp duty

• Which law: instruments executed in Kerala, or relating to property in Kerala, are chargeable under the Kerala Stamp Act, 1959. The duty depends on the type of instrument (agreement, lease, sale, mortgage, power of attorney, partnership deed, and so on) and, for many, on the value involved.
• When: an instrument executed in Kerala must be stamped before or at the time of execution. An instrument executed outside Kerala and later received in the State must be stamped, or the difference in duty paid, within the time allowed after it is first received.
• How: Kerala has moved to e-stamping. E-stamp papers for non-judicial purposes are issued through authorised vendors using the Registration Department’s system, in place of the earlier physical stamp papers.
• Effect of non-stamping: an instrument that is not duly stamped cannot be admitted in evidence or acted upon until the deficit duty and penalty are paid. The Supreme Court has held (In re Interplay, 2023) that an unstamped or insufficiently stamped agreement is not void; the defect is curable, but it must be cured before the document can be relied on.

Where the same transaction is recorded in several documents, each may attract duty. The classification of the instrument should be checked against the Schedule to the Act before execution, because a document described as a “memorandum of understanding” may in substance be an agreement to sell or a lease.

Signing and authority

• Individuals sign in their own name. Where a person signs for another under a power of attorney, the power of attorney should be valid, properly stamped and, where required, registered, and should cover the act being done.
• Companies act through persons authorised by the board. The authorised signatory should sign with the designation, and a certified copy of the board resolution should be available. Since 2015, a common seal is optional; where the Articles require it, it is affixed as provided.
• LLPs and firms sign through designated partners or partners as provided in the LLP agreement or partnership deed.
• Every page should be initialled, and the last page signed in full, with the date and place of execution stated. Corrections should be initialled by all parties.

Witnesses and attestation

Most commercial agreements are valid without witnesses. Attestation by witnesses is, however, required by law for certain documents, such as mortgages, gifts of immovable property and wills, and is advisable for any important agreement, because witnesses can later prove execution. Witnesses should be adults who are not parties to the agreement, and should write their names and addresses clearly.

Notarisation

Notarisation is not a legal requirement for most agreements, and does not replace stamping or registration. It is useful where the document will be used before authorities or abroad, or where the identity and signature of a party need to be authenticated. Documents for use outside India may also need apostille or consular attestation.

Registration

• Under section 17 of the Registration Act, 1908, documents such as sale deeds, gift deeds, leases of immovable property for more than one year, and other documents creating or transferring an interest in immovable property worth a hundred rupees or more, must be registered.
• In Kerala, registration is done at the Sub Registrar’s office having jurisdiction over the property, with the parties or their attorneys present, and with stamp duty and registration fees paid.
• An unregistered document that requires registration does not affect the immovable property it deals with and cannot ordinarily be received as evidence of the transaction.
• Some documents, such as certain powers of attorney and agreements to sell with possession, should be checked for registration requirements on their facts.

See registering legal agreements.

Electronic execution

• Under the Information Technology Act, 2000, contracts can be formed electronically and signed with electronic signatures, including Aadhaar-based e-signatures and digital signature certificates.
• Electronic execution is not permitted for certain documents listed in the First Schedule to the Act, including negotiable instruments (other than cheques), powers of attorney, trusts, wills, and contracts for the sale or conveyance of immovable property.
• Stamp duty applies to electronically executed agreements in the same way, and e-stamps can be linked to digitally executed documents.

A practical checklist

• Confirm the correct parties and their legal names, addresses and identification
• Confirm the authority of each signatory (board resolution, power of attorney, partnership authority)
• Determine the stamp duty and obtain the e-stamp before signing
• Complete blanks, dates and schedules; initial every page and every correction
• Arrange witnesses where required or desirable
• Register the document where required, within the time allowed
• Keep the original safely, and give each party a signed counterpart

See also drafting business contracts and common mistakes in legal drafting.

Frequently asked questions

Is an agreement on plain paper valid?

The agreement itself may be valid, but if it attracts stamp duty and is not stamped, it cannot be relied on in court until the duty and penalty are paid.

Do all agreements need to be notarised?

No. Notarisation is not generally required, and it does not substitute for stamping or registration.

Can a rental agreement in Kerala be for 11 months to avoid registration?

A lease for less than one year does not require compulsory registration, but it still attracts stamp duty. Leases for more than one year must be registered.

ചുരുക്കം (Summary in Malayalam)

കരാറുകൾ നിയമപരമായി നടപ്പാക്കാൻ കഴിയണമെങ്കിൽ ശരിയായ സ്റ്റാമ്പ് ഡ്യൂട്ടി, അധികാരമുള്ള വ്യക്തിയുടെ ഒപ്പ്, ആവശ്യമുള്ളിടത്ത് സാക്ഷികൾ, രജിസ്ട്രേഷൻ എന്നിവ ഉറപ്പാക്കണം. കേരളത്തിൽ കേരള സ്റ്റാമ്പ് ആക്ട്, 1959 പ്രകാരമാണ് സ്റ്റാമ്പ് ഡ്യൂട്ടി; ഇപ്പോൾ ഇ-സ്റ്റാമ്പ് ആണ് ഉപയോഗിക്കുന്നത്. സ്റ്റാമ്പ് ചെയ്യാത്ത കരാർ അസാധുവല്ലെങ്കിലും പിഴ സഹിതം ഡ്യൂട്ടി അടയ്ക്കാതെ കോടതിയിൽ ഉപയോഗിക്കാൻ കഴിയില്ല. ഒരു വർഷത്തിൽ കൂടുതലുള്ള പാട്ടം, വസ്തു വിൽപ്പന തുടങ്ങിയവ സബ് രജിസ്ട്രാർ ഓഫീസിൽ രജിസ്റ്റർ ചെയ്യണം. കമ്പനികൾക്ക് വേണ്ടി ബോർഡ് അധികാരപ്പെടുത്തിയ വ്യക്തി മാത്രമേ ഒപ്പിടാവൂ.

This article gives a general overview of the execution, stamping and registration of agreements, with reference to Kerala. Stamp duty rates, registration rules and procedures are revised from time to time; for accurate and current requirements, check with the Registration Department, Kerala. The article is not advice on any particular case.