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Pandit Sushil Chander Chaturvedi Vs. Wali Ullah and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking ;Civil
CourtAllahabad
Decided On
Reported inAIR1941All158
AppellantPandit Sushil Chander Chaturvedi
RespondentWali Ullah and ors.
Excerpt:
.....of instruments like receipt, agreement and memorandum which were treated by the parties not as promissory notes and which recorded a different kind of transaction altogether; the instruments before their lordships in the two cases referred to above were clearly receipts and those receipts were not intended by the parties to be treated as promissory notes. in our view, the main question in each case is to consider not whether the instrument is negotiable or not, though ordinarily negotiability of an instrument is a good test to determine whether a document is a promissory note or not; 16. in our view by the description given of the payee in the promissory note under consideration the plaintiff was clearly intended to be described and the description is sufficient for the purposes of..........that after this meeting on 14th february 1933 there were no further transactions between the parties. parties having met on 14th february 1933, and having examined the accounts came to the conclusion that rs. 1781 was due from the defendants to the plaintiff and a document was executed on that day in the language which we have quoted above. on this document a stamp of as. 3-6 was put in. it will be noted that the stamp required for a receipt or acknowledgment is only one anna. having regard to the value of the promissory note the correct stamp should be of four annas, but in our opinion it was a mere oversight not to put in a stamp of as. 4 and in using a stamp of as. 3-6 the intention of the parties undoubtedly was to treat the document as a promissory note. in the plaint itself.....
Judgment:

Dar, J.

1. The plaintiff-appellant Pandit Shushil Chander Chaturvedi is the proprietor of a business known as Hanuman Glass Works at Firozabad in the district of Agra. The defendants are a Mahomedan family resident of Armara close to Mrozabad in Agra district. Defendants 1 and 2, Wali Ullah and Niamat Ullah, are own brothers and defendants 3 to 6 are their nephews being sons of their deceased brother Abdul Hamid. There was a fourth brother Said also who died before the institution of the suit out of which this appeal has arisen. According to the plaintiff the defendants are partners in three firms called Md. Said Abdul Hamid, Naimat Ullah Farid Uddin and Zahiruddin Gulam Ahmad. In the year 1930 on various dates these firms purchased certain glassware from the plaintiff and in the year 1931 a small sum of Rs. 5-8-0 was advanced by the plaintiff to these firms. In 1933, according to the plaintiff, accounts were made up of what was due to the plaintiff from these firms and it was found that the firms were liable to him for a sum of Rs. 1781 on accounts. The plaintiff alleges that on 14th February 1933 Wali 'Ullah, defendant l, acting on behalf of all the partners and on behalf of the firms mentioned above, executed a document which has been described in the plaint as a note of hand by which a liability for Rs. 1781 was acknowledged and a promise was made to pay it on demand with 2 per cent, monthly interest. This document has been filed in the case, out of which this appeal has arisen and a little later we will give a translation of it.

2. In 1936 the plaintiff commenced the action out of which this appeal has arisen for recovery of Rs. 3000 odd principal and interest on the basis of the document mentioned above. In the plaint the transactions of 1930 and 1931 made between the plaintiff and the three firms were described, the accounting which took place between the parties in February 1933 was set out and it was further stated that with reference to the accounting a note of hand was given to the plaintiff by the defendants and which we have referred to above. The suit was contested by the defendants and they raised separate defences. One of the defences was that the defendants were not partners of the firms and they were not liable at all to the plaintiff for the amount claimed. The second defence was that the interest claimed was excessive and there were other defences which it is necessary to mention in detail, but one defence which was common to all the defendants was that the claim was barred by limitation. The trial Court came to the conclusion that the claim was barred by limitation. It also found that the alleged partnership was not established; on the question of interest, it recorded no finding and it also left some other pleas in defence undecided. The plaintiff took the matter in appeal before the District Judge of Agra and the learned civil Judge who decided the appeal has affirmed the judgment of the trial Court on the preliminary ground that the claim was barred by limitation. He has left undecided other matters which were in controversy in the case. The matter is now here before us in second appeal, and the only question for consideration in the case is whether or not the findings of the Court below on the question of limitation are justified.

3. The transactions between the plaintiff and the defendants took place in 1930 excepting a cash transaction of Rs. 5-8-0 which took place in 1931. The suit was instituted in 1936 and the suit being one for recovery of money as price of goods would be obviously barred by limitation unless time could be saved by some acknowledgment or by some fresh cause of action. The plaintiff relies upon the document dated 14th February 1933 mentioned above as saving that time. He calls it as a document of acknowledgment and if that be so his case will be within time. We may mention here that even if this document be accepted in plaintiff's favour the question of limitation would remain to be considered with reference to other defendants who did not execute the document. Now, this is an aspect of the matter which we are not considering for the time being. Both the Courts below have taken the view that the document of 14th February 1933 is a promissory note and not a mere acknowledgment and as it contains a stamp of annas 3 pies 6, whereas under the provisions of the Stamp Act it should have contained a stamp of annas 4 it is deficiently stamped and under the provisions of the Stamp Act it is wholly inadmissible in evidence and cannot be examined even for the purpose of extracting an acknowledgment out of it. If this document be accepted as a promissory note then it is not disputed that the conclusion arrived at by the Courts below is correct and the sole question for consideration in this case is whether or not the document can or should be regarded as a promissory note. It will be convenient at this stage to give a translation of this document. Unfortunately there is no authorized translation before us. Mr. Banerji who appears for the respondents has given to us a free translation which is as follows:

We, Abdul Hamid-Mohammad Said, residents of M. Armora promise to pay on demand with interest at 2 per cont. per mensem to firm Hanumaa Glass Works the sum of Rs. 1781 due from us as per accounts regarding glass.

4. We have made a more literal translation for ourselves and it may be stated as follows:

Abdul Hamid Mohammad Said residents of mauza Ainjara - 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.

5. In the Stamp Act (2 of 1899) there is a definition of 'promissory note' which is as follows:

'Promissory note' means a promissory note as defined by the Negotiable Instruments Act, 1881.

It also includes a note promising the payment ot any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen.

6. The definition of 'promissory note' given in the Negotiable Instruments Act (26 of 1881) referred to in the Stamp Act is as follows:

A 'promissory note' is an instrument in writing (not being a bank-note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

7. Then follow certain illustrations and among them illustrations (b) and (f) are as follows:

(b) I acknowledge myself to be indebted to B in Rs. 1000, to be paid on demand, for value received.

(f) I promise to pay B Rs. 500 seven days after my marriage with C.

8. According to Section 4, Negotiable Instruments Act, the document in illus. (b) is a promissory note and the document in illus. (f) is not a promissory note. But if we look to the definition given of promissory note in Section 2(22), Stamp Act, we find that the expression promissory note will also include a note promising the payment of any sum of money upon any condition or contingency which may or may not be performed or happen. According to the plain language of the twc statutes it is obvious that a document which contains a promise to pay on a contingency will not be treated as a promissory note for the purposes of the Negotiable Instruments Act but it may be regarded as such for the purposes of Stamp Act.

9. We have quoted the terms of the statute. It remains now to examine the language of the document in terms of the statute. The document before us clearly acknowledges indebtedness to the extent of Rs. 1781. It contains a promise to pay that sum on demand and therefore on the face of it satisfies the conditions laid down in the statute to make it a promissory note. It is I true there is a reference in the document to payment of interest of 2 per cent, per mensem. It is also true that there is a reference in the document that under accounts the sum which was acknowledged was due. In our judgment these are not vital matters in the document. The surrounding circumstances also favour the conclusion that the document was regarded by the parties as a promissory note.

10. Certain sale transactions had taken place in the year 1930, the last of which a cash transaction was in 1931. In the beginning of 1933 the parties met, and settled accounts. It is common ground that after this meeting on 14th February 1933 there were no further transactions between the parties. Parties having met on 14th February 1933, and having examined the accounts came to the conclusion that Rs. 1781 was due from the defendants to the plaintiff and a document was executed on that day in the language which we have quoted above. On this document a stamp of As. 3-6 was put in. It will be noted that the stamp required for a receipt or acknowledgment is only one anna. Having regard to the value of the promissory note the correct stamp should be of four annas, but in our opinion it was a mere oversight not to put in a stamp of As. 4 and in using a stamp of As. 3-6 the intention of the parties undoubtedly was to treat the document as a promissory note. In the plaint itself the plaintiff has described the document as a promissory note. In our judgment, the true view of the transactions is that on 14th February 1933 the parties closed their accounts finally. They found that Rs. 1781 was due to the plaintiff from the defendants. The defendants were not in a position to liquidate this demand and in order to satisfy it they executed a document by which the defendants unconditionally undertook to pay the amount on demand and until the amount was paid, to pay interest of 2 per cent, per mensem. It was the intention of the parties that the accounts should be finally closed and henceforward the document which we are considering should be taken as a record of a loan transaction carrying interest between the parties. It is not suggested that this document was a receipt of any kind. The only other alternative is that it may have been a pure and simple acknowledgment or it may have been a promissory note. In the schedules of the Stamp Act acknowledgment is described in Schedule 1, Article 1 and it says:

acknowledgment of a debt exceeding twenty rupees in amount or value, written or signed by, or on behalf of, a debtor in order to supply evidence of such debt in any book (other than a banker's pass book) or on a separate piece of paper when such book or paper is left in the creditor's possession:

provided that such acknowledgment does not contain any promise to pay the debt or any stipulation to pay interest or to deliver any goods or other property.

11. It may be said that this is not an exhaustive definition of acknowledgment and we agree, but the fact remains that the document which we are construing contains an (express promise to pay. It is great deal more than mere acknowledgment and it will be a question of fact in each case whether a particular document is to be regarded as an acknowledgment or promise, and in order to decide this question it will have to be seen what was the primary intention of the (parties and what were the real characteristics of the document. We regard in this particular case the reference to account as matters of no primary importance; and we think that in its true characteristics the document was a promissory note within the meaning of the statute. Both the Courts below have relied upon a decision of this Court in Mt. Bibbo v. Gokaran Singh : AIR1937All101 , in treating this document as a promissory note. No doubt in a certain way the case does support the view which the Courts below have taken of the document, but no useful purpose will be served by examining the language of the document in that case and comparing it with the present case. Bach case has to be considered on the language of the document which is employed in it.

12. Mr. M.L. Chaturvedi the learned Counsel for the appellant contends that in order to decide whether a particular document is or is not a promissory note it has to be shown that it is negotiable. Further, he contends that promissory notes must be in the form of a commercial document which can be easily negotiated in markets. Lastly he contends that it must contain an unconditional undertaking to pay and his argument is that in this particular document there is no unconditional undertaking to pay and the liability to payment depended upon the validity of accounts which could be challenged by the persons who had made them. For these contentions, he has relied on the authority of two recent cases of their Lordships of the Privy Council in Md. Akbar Khan v. Attar Singh ('36) 23 A.I.R. 1936 P.C. 171 and Karam Chand v. Mir Ahamad Aziz Ahmad . We do not think that either of these two cases support the argument of Mr. Chaturvedi in the form in which he has put it. The earlier of these two cases was a case in which a deposit was made by the plaintiff with the defendants of a very large sum of money and on the date when the deposit was made a document was passed by the defendants in favour of the plaintiff which was called a receipt and which bore a one anna stamp - the stamp which is requisite for a receipt - and which was in the following words:

This receipt is hereby executed by Bhai Hira Singh Attar Singh Kharbanda, residents of Hoti for Rs. 43,900 half of which amount comes to Rs. 21,930 received from the firm of Lal DuniLala Hari Ohand Sethi for and on behalf of Capt. Mohammad Akbar Khan of Hoti. This amount to be payable after two years. Interest at the rate of. Rs. 5-4-0 per cent, per year to be charged.

Dated this 20th day of Chetar Sambat 1974 corresponding to 1st April 1917.

Stamp has been, duly affixed.

13. With reference to this document their Lordships observe as follows:

Their Lordships prefer to decide this point on the broad ground that such a document as this is not and could not be intended to be brought within a definition relating to documents which are to be negotiable instruments. Such documents must come into existence for the purpose only of recording an agreement to pay money and nothing more, though of course they may stats the consideration. Receipts and agreements generally are not intended to be negotiable, and serious embarrassment would be caused in commerce if the negotiable net were cast too wide. This document plainly is a receipt for money containing the terms on which it is to be repaid. It is not without significance that the defendants who drew it, and who were experienced money-lenders did not draw it on paper with an impressed stamp as they would have had to if the document were a promissory note, and that they affixed a stamp which is sufficient if the document is a simple receipt. Being primarily a receipt even if coupled with a promise to pay it is not a promissory note.

14. In the later case in Karam Chand v. Mir Ahmad Aziz Ahamad the document was more or less in the same form. The document which is now before us is wholly distinguishable from the document before their Lordships of the Privy Council. We have already stated above the circumstances in which the present document came into existence and we have already pointed out above that it cannot possibly be regarded as a receipt or a mere acknowledgment. On these two grounds alone it is wholly distinguishable from the case which was before their Lordships of the Privy Council. Under the provisions of the Indian Stamp Act a promissory note, the payment of which depends upon a contingency is permissible, whereas under the provisions of the Negotiable Instruments Act it is not and, as we have said above, there may be instruments which may not be regarded as promissory notes for the purposes of the Negotiable Instruments Act but may be regarded as such for the purposes of the Indian Stamp Act. In this country after the closing of account and in acknowledgment of liability which arises thereunder, often documents are passed which are variously called sarkhats or promissory notes. Many of these documents are in-artistically drawn and it may not be possible to regard them strictly as mercantile documents. Very often, in practice, such instruments are not negotiated. We do not, however, think that their Lordships Intended to cast any doubt upon the validity of such instruments as promissory notes in the two cases mentioned above.

15. It was further contended that the law as stated in Mt. Bibbo v. Gokaran Singh : AIR1937All101 , and cases of that kind, may now be taken as overruled if not expressly by necessary implication as a result of the pronouncement of their Lordships of the Privy Council in the two cases mentioned above. It is true that their Lordships in those two judgments have disapproved of certain cases decided by Indian High Courts. But those were cases, we take it, in which instruments under consideration were neither in name nor in substance promissory notes; they were cases of instruments like receipt, agreement and memorandum which were treated by the parties not as promissory notes and which recorded a different kind of transaction altogether; cases in which along with an acknowledgment of debt and a promise to pay there were other covenants also and simply because there happened to be in those documents a recital of acknowledgment of debt and a promise to pay, they were held by Courts in India to be promissory notes. Their Lordships in their judgment approvingly refer to an English case of the Court of appeal, Mortgage Insurance Corporation Ltd. v. Commissioners of Inland Revenue (1888) 21 Q.B.D. 352, in which a statement of existence of debt with a promise to pay according to a transaction of insurance was held not to be a promissory note and they disapprovingly refer to an Indian case in Manick Chund v. Jamoona Doss ('82) 8 Cal. 645 in which a similar statement in a sale transaction was held to be a promissory note. The instruments before their Lordships in the two cases referred to above were clearly receipts and those receipts were not intended by the parties to be treated as promissory notes. In our view, the main question in each case is to consider not whether the instrument is negotiable or not, though ordinarily negotiability of an instrument is a good test to determine whether a document is a promissory note or not; but to consider whether in substance and in primary intention of the parties the document was or was not a promissory note and whether it contained necessary recitals or whether it was intended to record a different kind of transaction altogether. In our view the law laid down in Mt. Bibbo v. Gokaran Singh : AIR1937All101 is not in any way affected by the two pronouncements of their Lordships mentioned above. There remains to notice two other arguments of Mr. Chaturvedi. He contends that the reference to the pre-existing accounts in the promissory note makes the liability stated therein to be a contingent one. We do not agree with this contention. In our view, the reference to account was with a view to state the consideration of the promissory note and such a statement of consideration does not make the liability in the promissory note a contingent one, nor does it make the instrument any the less a promissory note. It is further contended that the promissory note was not in favour of a person 'certain' within the meaning of the statute. This point was not raised in the Courts below and is not noticed in their judgment but we have permitted it to be. canvassed and in our view there is no substance in this contention either. The. promissory note is in the name of the Glass. Works which is a trading name of the plaintiff. The transactions between the parties took place under that trading name and Section 5, Negotiable Instruments Act, provides as follows:

The person to whom it is clear that the direction is given or that payment is to be made may be a 'certain person', within the meaning of this section and Section 4, although he is misnamed or designated by description only.

16. In our view by the description given of the payee in the promissory note under consideration the plaintiff was clearly intended to be described and the description is sufficient for the purposes of identification. The appeal therefore fails and is dismissed with costs.


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