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Firm Chuni Lal Tukki Mal Vs. Firm Mukat Lal Ram Chandra and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 138 of 1962
Judge
Reported inAIR1968All164
ActsStamp Act, 1899 - Sections 2(5) and 35; Transfer of Property Act, 1882 - Sections 8
AppellantFirm Chuni Lal Tukki Mal
RespondentFirm Mukat Lal Ram Chandra and ors.
Appellant AdvocateJagdish Sarup, Adv.
Respondent AdvocateRadha Krishna, ;M.C. Agarwala and ;Ambika Prasad, Advs.
DispositionAppeal allowed
Excerpt:
(i) civil - promissory note - sections 2(5) and 35 of stamp act, 1899 - promissory note or acknowledgment is mentioned in the court as a document was not stamped properly - held, appeal allowed on the grounds that document in suit expressed acknowledgment of liability to pay and it is not promissory note defined by negotiable instrument act, 1881 or stamp act, 1899. (ii) civil - agreement - section 8 of transfer of property act, 1882 - document in suit is an acknowledgment of liability to pay - where two interpretation about the promissory note the court should support the one which will help to advance the cause of justice. - - 1 and 2 these transactions resulted in certain profits to the plaintiff and on 28th december 1952 there was an accounting between the parties in which the..........the short point for decision in this appeal is as to whether the document in suit is a promissory note or acknowledgement of liability with an agreement to pay.2. brief facts giving rise to the present appeal are that firm chunni lal tukki mal who are the appellants in the present appeal filed the suit against another firm mukat lal ram chandra on the allegation that the plaintiff's firm was a ioint hindu family firm carrying on business in grain in eazar puranagani at sikandarabad and the defendants' firm also carried on business in grain, gur etc. at sikandarabad district bulandshahr it was alleged that the defendant no. 2 a branch firm of defendant no. 1 carried on business at ghaziabad, meerut. it was alleged that the defendant ram chandra and one deceased mukat lal were the.....
Judgment:

S.N. Singh, J.

1. The short point for decision in this appeal is as to whether the document in suit is a promissory note or acknowledgement of liability with an agreement to pay.

2. Brief facts giving rise to the present appeal are that firm Chunni Lal Tukki Mal who are the appellants in the present appeal filed the suit against another firm Mukat Lal Ram Chandra on the allegation that the plaintiff's firm was a ioint Hindu family firm carrying on business in grain in Eazar Puranagani at Sikandarabad and the defendants' firm also carried on business in grain, Gur etc. at Sikandarabad district Bulandshahr It was alleged that the defendant No. 2 a branch firm of defendant No. 1 carried on business at Ghaziabad, Meerut. It was alleged that the defendant Ram Chandra and one deceased Mukat Lal were the partners of the above mentioned firms and the defendants Ratan Lal and Rameshwar Dayal carried on the business of the firm Ratan Lal Rameshwar Daval at Ghaziabad. Meerut, for and on behalf of defendant No. 1 and that the plaintiff carried on its business in forward delivery transactions in Gur and other commodities through the commission agencies of the defendants Nos. 1 and 2 These transactions resulted in certain profits to the plaintiff and on 28th December 1952 there was an accounting between the parties in which the defendants Ratan Lal and Rameshwar Daval accepted the liability on their behalf as well as on behalf of other defendants to the extent of Rs 35447/8/9 and agreed to pay the same in six monthly instalment of Rs. 1800/-each the first instalment falling due on 30th June 1953 This agreement was reduced to writing and since the defendants did not pay the instalments as agreed hence the suit for the recovery of the instalments due at the date of suit. Interest at the rate of Rs 6/-per annum was also claimed

3. The claim of the plaintiff firm was contested by the defendants. Firm Mukat Lal Ram Chandra defendant No. 1. Mukat Lal defendant No. 3 and Ram Chandra defendant No. 4 filed one written statement while Ratan Lal Rameshwar Daval filed another written statement. Defendants Nos. 1, 3 and 4 who filed the first written statement asserted that no money was outstanding against the contesting defendants payable to the plaintiff nor was there any accounting or agreement between them and the plaintiff nor did they accept any money payable from them. It was further denied that defendants Ratan Lal Rameshwar Dayal had any authority from them to accept any liability on their behalf hence they were not bound by any agreement or acceptance of liability by Ratan Lal Rameshwar Dayal defendants. The suit was alleged to be barred by time. It was further alleged that the document relied upon by the plaintiff was a promissory note and being deficiently stamped could not be made the basis of the suit.

4. The other written statement filed by defendants Ratan Lal Rameshwar Dayal mainly contested on the ground that the document relied on by the plaintiff was got executed by them under undue influence, threat and pressure It was alleged that in fact no accounting at all had taken place nor any amount was found due against them and in favour of the plaintiff They joined hands with the other defendants in denying that they had any authority to execute any promissory note for the firm defendant No. 2. They also pleaded that the document relied on by the plaintiff being a promissory note and being deficiently stamped could not form the basis of the suit.

5. On the pleadings of the parties trial court framed necessary issues and decided most of the issues in favour of the plaintiff, but having found that the document in dispute was a promissory note and being deficiently stamped was inadmissible in evidence as such dismissed the suit

6. The plaintiff preferred an appeal before the lower appellate court and before the lower appellate court the main point urged was whether the document relied on by the plaintiff was promissory note or an acknowledgment with an agreement to pay. It was submitted that in case the lower appellate court agreed with the views of the trial court on this point the appeal was bound to fail and in case the decision of the lower appellate court on this point was in favour of the plaintiff further point which would call for decision by the lower appellate court would be as to whether Ratan Lal and Rameshwar Daval had the authority to execute the document on behalf of the defendants Nos. 1 and 2 The lower appellate court decided the first point against the plaintiff and did not decide the second point. It was only mentioned that the second point had already been decided by the trial court in favour of the plaintiff as such in case this Court disagrees with the views of the two courts below on the main controversy in dispute the case has to go back for decision on the point or points left undecided by lower appellate court

7. Aggrieved by the concurrent decisions of the two courts below the plaintiff has come up in appeal to this Court and the main point as already mentioned above is as to whether the document in suit is a promissory note or acknowledgment of liability with an agreement to pay I have heard the learned counsel for the parties at great length and having heard them I am of opinion that the two courts below have erred in construing the document in suit. In my opinion the document in suit is clearly an acknowledgement of liability with an agreement to pay. Before I proceed to discuss the above point it will be pertinent to mention here that the plaintiffs deposited the deficiency in stamp alongwith penalty treating the document as an agreement and the same was accepted by the trial court without prejudice to the rights of the parties.

8. In order to decide the point in controversy it is necessary to reproduce the relevant portion of the document which requires interpretation by this Court. The document in suit is in the form of a letter and the opening words of that document read as follows.

'Sri patri Chunni Lal Tukki Mal yog likhi Ghaziabad se ti Ratan Rameshwar Dayal ki Ram Ram banchana. Hisab ap ka is bhanti hai.'

Thereafter a detailed account credit as well as debt side has been given. After having given the credit as well as debit side the document states on the right side as Col-lows:

'35447/8/9 (Paintis hazar char sau saita is rupaye ath ane nau pai) dene baqi rahe Pauh Sudi 12 sambat 2009.'

'Jiske dene ki tafsil kama ki tarf di hai.'

Below this writing four annas stamp was affixed and over this it was written Sri Ratan Lal Rameshwar Dayal baqalam Ratan Lal 28-12-52. Thereafter it is written 'Das-tkhat Ratan Lal Rameshwar Dayal baqalam Rameshwar Dayal 28-12-52'. Again on the left side it is written 'Rs. 35447/8/9 dene baki rahe jo baghair vayaj is bhanti denee.' Thereafter followed the instalments of Rs. 1800/- mentioned on this side and the various dates on which those instalments were to be paid.

9. It has been argued on behalf of the appellant that if we read the document on the right wherein the four annas stamp had affixed it would show that the writings on the stamp clearly expressed an acknowledgment of liability although there may be such an implied promise to pay it cannot be said that this portion of the document is promissory note. It was submitted that the two courts below have wrongly emphasised the writing to the left which was only specification as to how the acknowledged liability will be discharged. The learned counsel referred to the amended provision of the U. P. Stamp Act XXVIII of 1952 and argued that at the time when this document was executed an acknowledgement had to be stamped with four annas stamp and as the parties who were business men and knew the law treating the document as an acknowledgement of liability affixed the requisite stamp on the document which clearly expressed the intention of the parties to the document It was further submitted that the document itself is in a form of a letter wherein there is no express promise to pay. Evidence of the parties was also placed before this Court and it was submitted that neither party termed this document as a pronote. The defendants denied the execution of the document whereas the plaintiff asserted that he treated the document as an acknowledgement. Learned coun-sel also relied on Mohammad Akbar Khan v. Attar Singh, AIR 1936 P.C. 171 and Lala Karam Chand v. Firm Mian Mir Ahmad Aziz Ahmad and submitted that one of the test of the promissory note is its negotiability. The form in which the document had been written shows that the document was not intended to be a negotiable instrument. He further relied on a decision of the Saurashtra High Court Keshavji Thakershi v. Narshi Ramii, AIR 1954 Sau 52. This case fully supports the contention put forth by the learned counsel for the appellant. Apart from these submissions the learned counsel also submitted that he could fall back on the original transaction and placed reliance on Major Mistri v. Mt. Binda Debi : AIR1946All126 .

10. As against these submissions of the learned counsel for the appellant, the learned counsel for the respondents drew my attention to Ram Ratan v. Parma Nand and submitted that even if the plaintiff is allowed to fall back on the original transaction the suit instituted was clearly barred by time on the original transaction. For as soon as the document is held a promissory note it cannot be used in evidence for any purpose with the result that the writing cannot be used as an acknowledgement and if the writing is not utilised as an acknowledgement the claim would be barred by time. This part of the argument of the learned counsel for the respondents has force and has to be accepted. If the document is held to be a promissory note then in view of the authority cited by the learned counsel the writing cannot be utilised as an acknowledgement and will not in any way benefit the plaintiff appellant.

11. So far as the main point is concerned, it was submitted on behalf of the respondents that originally an acknowledgement could be stamped by an one anna stamp and the amendment which was made in the year 1952 just before the time when the document came into existence could not be accepted to be in the knowledge of the parties Therefore, by affixing four annas stamp the intention of the parties appeared to be that they treated this document to be a promissory note on demand and affixed four annas stamp. But since document shows that this was not a promissory note of demand but a promissory note to be paid by instalments the document was deficiently stamped. Further reliance was placed by the learned counsel on three decisions of this Court, Lakhmi Das v. Lakho Ram : AIR1935All410 , Bibbo v. Gokaran Singh : AIR1937All101 and Sushil Chandra Chaturvedi v. Wali-Ullah : AIR1941All158 .

12. In the first case : AIR1935All410 it was observed that where a document set out the amount due to the plaintiff from the deceased father of the executants and then stated that the amount will be paid in four instalments on the date fixed, in four years with interest at 1 p. c. per month, it would be promissory note. In the second case : AIR1937All101 the document which was involved for interpretation was as follows;

'My dear Kanahiya Lal.

Whereas Rs. 5300/- have been found due from me on account of a promissory note dated 20-12-22 executed by Mukat Singh, on the back thereof payment endorsed in my handwriting, I promise to pay the said amount due to you together with interest at the rate of 1 p.c. per month within three months.

Sd. Mukat Singh.'

In the third case : AIR1941All158 the document involved for interpretation read as follows:

'Abdul Hamid Mohammad Saeed r/o mauza Almora whereas with regard to glass of Hanuman Glass Works, account is due from us we, therefore, acknowledge and promise to pay on demand Rs. 1781/-with interest at 2 per cent per mensem.'

This document was held to be a promissory note.

13. These three cases were also relied on by the lower appellate court in coming to the conclusion that the document in suit was promissory note. The decision cited by the learned counsel for the respondents do support his contention to a great extent, but on a review of the authorities cited by the parties I have no hesitation in holding that the document in suit is an acknowledgement of liability with an agreement to pay. The tenor of the document is similar to the one found in AIR 1954 Sau 52 and . In the Privy Council case the document read as follows:

''Received from you this day.. . .a cheque for Rs. . . . .The amount would be repaid with interest thereon at the rate of. ... per cent. Time ten months. The principal amount will be paid with interest after ten months from this day.'

In this case it was held that the document was never intended to be negotiable instrument and thus was not a promissory note. One of the. principal test for determining document is its negotiability The wav in which this document in suit has been expressed in the form of a letter clearly shows that it was not intended to be negotiable. There were no less than 19 instalments ranging between 30th June 1953 to 31st December 1962 to fall due on various dates. Such a document could not have been intended to be negotiable. Thus it lacks one of the principal tests of a promissory note. Moreover the writing wherein the four annas stamp had been fixed clearly showed that there was no unconditional promise to pay. It only showed the manner of payment. The document was merely an acknowledgement containing the terms on which the amount was to be paid. It was primarily an acknowledgement of liability showing how the executants agreed to discharge the same The main test in such cases is to determine the intention of the parties with reference to the document in suit along with the surrounding circumstances.

I agree with the submission of the learned counsel for the appellant that the parties did not intend to execute any pro-note in this case: thus this test is also lacking. The cases cited by the learned counsel for the respondents to my mind are distinguishable. In all those cases there was an unconditional undertaking to pay and the documents also fulfilled the test of negotiability. I am further of opinion that in cases where two interpretations are possible courts should lean towards such an interpretation which would advance the cause of justice; as such disagreeing with the views of the two courts below I hold that the document in suit expressed acknowledgement of liability with an agreement to pay and is not a promissory note as defined in the Negotiable Instruments Act or the Stamp Act. Since I have disagreed with the views of the two courts below on the main point and the lower appellate court has not decided all the points in controversy the case has to he remended.

19. Accordingly this appeal succeeds,the judgments of the two courts below holding the document in suit to be a promissorynote are set aside and the case is sent backto the lower appellate court with a direction to readmit the appeal to its originalnumber and decide the appeal treating thedocument to be acknowledgement of theliability with an agreement to pay and nota promissory note. The cost of this Courtwill be easy and the costs of the two courtsbelow will abide the result of the decisionto be given by the lower appellate court.


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