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Brij Kishore Rai Vs. Lakhan Tewari - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 145 of 1967
Judge
Reported inAIR1978All314
ActsStamp Act, 1899 - Sections 36; Negotiable Instruments Act, 1881 - Sections 4; Evidence Act, 1872 - Sections 92
AppellantBrij Kishore Rai
RespondentLakhan Tewari
Appellant AdvocateG.C. Dwivedi and ;V.K.S. Chaudhary, Advs.
Respondent AdvocateS.N. Upadhyaya and ;Rama Shanker Pd., Advs.
DispositionAppeal dismissed
Excerpt:
.....a promissory note - must be an express undertaking to pay the amount in the promissory note. (ii) oral evidence - second proviso to section 92 of evidence act, 1872 - mere acknowledgement of debt in a document stamped according to stamp law - cannot be deemed to be a formal document incorporating terms and conditions of borrowing - held, oral evidence regarding terms and conditions of loan and rate of interest to be allowed in respect of such document. - - an appeal filed in the lower appellate court failed and now the defendant has come up in the instant second appeal and in support thereof sri v. he further submitted that in view of section 36 of the stamp act, it was not open to the defendant-appellant to question the admissibility of the document in question on the ground of..........any mention about any interest and it was contended that the plaintiff was not entitled to lead oral evidence on the question of the alleged contractual rate of interest. in this connection, counsel referred to section 92 and its second proviso in the evidence act. 3. sri s.n. upadhyaya, learned counsel for the plaintiff respondent, contended that the document was not a negotiable instrument under the negotiable instruments act. it was either a receipt or an acknowledgment of liability. he further submitted that in view of section 36 of the stamp act, it was not open to the defendant-appellant to question the admissibility of the document in question on the ground of deficiencyof stamp inasmuch as the said document was duly admitted in evidence after the plaintiff-respondent had made.....
Judgment:

M.P. Mehrotra, J.

1. This second appeal arises out of a suit whereby the plaintiff claimed a money decree against the defendant on the ground that the latter had borrowed certain amounts from the former. The plaintiff claimed the principal sum of Rs. 2000 with interest at the rate of 18% per annum. The defence was that there was, in reality, no borrowing and that the document, on which the plaintiff placed reliance, (which has been described as a Sarkhat) was executed by the defendant but with some different purpose and not as evidencing the alleged borrowings set up by the plaintiff. It was also contended that thedocument in question relied on by the plaintiff really amounted to a pronote in law and was inadmissible in evidence on account of deficiency of stamp,

2. The trial court framed the necessary issues, tried the suit and decreed the same. An appeal filed in the lower appellate court failed and now the defendant has come up in the instant second appeal and in support thereof Sri V.K.S. Chaudhary, learned counsel for the defendant-appellant, has raised the following contentions before me:--

(1) His client was entitled to the benefit of U. P. Ordinance No, 13 of 1977. Time was granted to the learned counsel to get the necessary instructions from his client on 29th July, 1977. However, no such application has been moved, as was directed to be filed in case the defendant-appellant wanted to take the aid of the said Ordinance. The learned counsel has conceded before me today that his client is, therefore, not entitled to seek the advantage of the said Ordinance.

(2) it was next contended that the document in question was a pronote and, as such, a negotiable instrument in law. It was also contended that in view of its being a pronote, it was not properly stamped and, therefore, inadmissible in evidence under the Stamp Act. It was also argued that as it was a negotiable instrument therefore, under Section 80 of the Negotiable Instruments Act, the defendant-appellant was not liable to pay interest at more than 6% per annum in view of the fact that the document was silent in regard to the interest.

(3) The third contention was that no interest was payable by the defendant-appellant when the document did not make any mention about any interest and it was contended that the plaintiff was not entitled to lead oral evidence on the question of the alleged contractual rate of interest. In this connection, counsel referred to Section 92 and its second proviso in the Evidence Act.

3. Sri S.N. Upadhyaya, learned counsel for the plaintiff respondent, contended that the document was not a negotiable instrument under the Negotiable Instruments Act. It was either a receipt or an acknowledgment of liability. He further submitted that in view of Section 36 of the Stamp Act, it was not open to the defendant-appellant to question the admissibility of the document in question on the ground of deficiencyof stamp inasmuch as the said document was duly admitted in evidence after the plaintiff-respondent had made good the deficiency in stamp along with the payment of penalty, as required to be done under proviso (a) of Section 35 of the Stamp Act. Counsel relied on Javer Chand v. Pukhraj Surana : [1962]2SCR333 . So far as the payment of interest is concerned it was contended by the counsel for the plaintiff-respondent that the courts below have returned a finding of fact about the agreed rate of interest and the said finding cannot be disturbed in the second appeal, it has also been contended that the oral evidence was rightly admitted on the question of the interest. In my opinion, no interference is called for in the second appeal. In : [1962]2SCR333 (supra), after reproducing Section 36, it was laid down as follows (at pp. 1656-57):--'

'That section is categorical in Its terms that when a document has once been admitted in evidence, such admission cannot be called in question at any stage of the suit or proceeding on the ground that the instrument had not been duly stamped. The only exception recognised by the section is the class of cases contemplated by Section 61, which is not material to the present controversy. Section 36 does not admit of other exceptions. Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence. Once the Court, rightly or wrongly, decides to admit the document in evidence, so far as the parties are concerned, the matter is closed. Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court, The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked Exs. P-1 and P-2 and bore the endorsement 'admitted in evidence' under the signature of the court. It is not, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of itsadmissibility, Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-examination of their witnesses, Section 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid it is not open either to the trial court itself or to a court of appeal or revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction.'

4. The said case related to a Hundi which is a negotiable instrument. Therefore, it seems that irrespective of the nature of the document, if the same has been admitted in evidence, Section 36 will be applicable to such a situation. In this view of the matter, therefore, when the plaintiff paid the penalty and made good the deficiency when called upon to do so and when the document was formally exhibited with exhibit mark No. 1, it should be held that Section 36 of the Stamp Act bars a contention which is now sought to be raised in appeal on the ground of the alleged deficiency in stamp.

5. I also do not agree with the learned counsel that the document in question is a pronote. In Section 4 of the Negotiable Instruments Act, a pronote is defined as follows:--

'4. 'Promissory note'.-- 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.'

6. In Bachan Singh v. Ram Awadh : AIR1949All431 a .Division Bench laid down as follows:--

'In order to find out whether an instrument is a promissory note or not, its terms must 'be examined.

There must be an express undertaking to pay the amount mentioned in the instrument before it can be held to be a promissory note. A mere implied undertaking, by the use of the word 'debt' or 'pronote' in the instrument is not sufficient.'

7. I think this Division Bench is 4 clear answer to the contention which has been raised by the learned counselfor the defendant-appellant who has placed a great deal of reliance on the fact that in the body of the document, the expression 'hand note' has been used. Counsel's contention in short is that coupled with the fact that the executant of the document says that he has borrowed the sum of Rs. 2000 and has used the expression 'hand note', make the document a pronote. The instruments which were considered in : AIR1940All431 (supra) were in these words:--

'(1) I had borrowed a sum of Rs. 42 ...... bearing interest at the rate of annasfour per cent from B...... on 29th March,1939 and have, therefore, executed this pronote.'

'(2) I of my own free will and accord approach M...... and borrowed from himthe sum of Rs. 100...... bearing interestat the rate of annas eight per cent per mensem for the purpose of purchasing bullocks. I have, therefore, executed these few presents by way of a promissory note.'

8. The Division Bench held that the documents were merely acknowledgments of the debts coupled with an agreement to pay interest but they were not promissory notes. In my view, the document before me stands on a lower pedestal than those which were considered by the Division Bench in : AIR1949All431 (supra).

9. So far as the third contention is concerned, Sri Chaudhary has contended that the document in the instant case was a completely formal one and, therefore, under the second proviso to Section 92 of the Evidence Act, the plaintiff-respondent was not entitled to lead oral evidence in respect of the rate of interest. I do not agree. In my opinion, the plaintiff-respondent was entitled to lead evidence under the said proviso inasmuch as the document was completely silent about the question of interest. I do not think that when the second proviso to Section 92 speaks of the degrees of the formalities of a document, it means that every document should be treated to be a formal one in case it is executed on a separate paper and has stamps affixed to it. In my opinion, in the facts of the instant case, the document cannot be treated to be of such formality that oral evidence regarding interest should be held to be shut out. When should a document be held to be of such a degree of formality that oral evidence should be held to be inadmissible, will vary from the facts and circumstances of the case. When a document is such that one may reasonably believe that the entire terms and conditions agreed to between the parties were sought to be put into the document, then oral evidence should not be allowed to creep in because that would be against the intentions of the parties who desired the document to contain the entire evidence of the terms and conditions agreed to. Oral evidence in such a case will tantamount to a non-compliance with Ss, 91 and 92 of the Evidence Act. But where the document is not executed in such a manner and with such a desire that all the terms and conditions agreed to between the parties should be incorporated in the same, then, it would not be in consonance with the intentions of the parties that oral evidence in respect of such terms and conditions, as do not find place in the document, should not be allowed to be led. An absolutely formal document may be held to be one which is made to incorporate all the terms and conditions agreed to between the parties and a less formal document, on the other hand, will be such as may incorporate certain terms and conditions leaving out other terms and conditions to be proved by oral evidence. In my opinion, generally speaking, mere acknowledgment of debt, even though stamped in accordance with the law of stamps, cannot be deemed to be such a formal document as can be said to incorporate all the terms and conditions of the borrowing. It is basically an acknowledgment of liability not mentioning the terms and conditions on which the borrowing was contracted. In that sense, an acknowledgment of debt differs from a formal pronote which undoubtedly incorporates the terms and conditions of the loan, Whether a promissory note must always be held to contain all the, terms and conditions agreed to between the parties may be a question of debts and I am not entering into that question but it seems to me that so far as a mere acknowledgment of debt is concerned, it cannot be held to be such a formal document that the parties should be debarred from leading oral evidence in respect of the terms and conditions of the loan including a term about therate of interest payable on the loan. If this were not so, then whenever an acknowledgment of liability or debt isrelied upon the lender shall be always out of court when he makes an attempt to prove by oral evidence the terms of loan. I do not think the second proviso has to be interpreted in such a manner as to shut out oral evidence in such a case.

10 I, therefore, dismiss this appeal with costs.


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