1. The suit out of which this appeal arises was brought by the plaintiff for the recovery of money lent with interest. As regards one portion of the claim the plaintiff did not profess to support it by documentary evidence. At the hearing he offered to be bound by the defendant's statement on oath. When thus examined, the defendant, although he had denied all liability in his written statement, admitted having borrowed a sum of Rs. 125 on a certain date. The first court accordingly passed a decree for this sum, with interest by way of damages, and dismissed the rest of the claim, In respect of the portion of the claim thus dismissed the plaintiff tendered in evidence a certain document described as a sarkhat. One of the matters in controversy which has not yet been tried out is the date on which this document was executed, there being a discrepancy between the year of execution as stated in the first part of the document and that stated in a later portion of the same. The defendant's case was that he had in fact incurred the liability referred to in this paper and had written his signature, and other words importing acknowledgment, upon the paper produced, but that this liability had been subsequently discharged by him. The learned Munsif, however, did not try out the case on this basis. It is a little difficult to understand how he purported to deal with this document described as a sarkhat. He must at one stage at least have treated the said paper as evidence in the case, for he examined the defendant Mahadeo upon it and recorded his admission as to his signature and other words in the Hindi character appearing thereon. In the end, however, he came to the conclusion that the document was not admissible in evidence at all. He did this upon an objection taken by the defendant regarding the cancellation of the adhesive stamp of one anna which appears on the face of the document. Referring to the provisions of Section 12 of the Indian Stamp Act (No. II of 1899), he held that there had been no effective cancellation of this stamp, and it followed as a consequence that the document must be treated as not stamped at all. The document itself in its turn be regarded as a mere acknowledgment of the debt, within the meaning of those words as used in Article 1 of the first schedule to the Stamp Act aforesaid. On this view the document was chargeable with a stamp duty of one anna, and, if the learned Munsif was right in treating it as virtually unstamped, this was a defect which could not be cured by the imposition of any penalty. Having thus rejected the document as inadmissible, the learned Munsif went on to hold that the claim in respect of the debt therein referred to was not proved, and upon this he dismissed this part of the claim He got rid of the defendant's admission of liability by accepting the defendant's statement in its entirety, according to which the written acknowledgment had been given on the earlier of the two dates appearing on the face of the document, with the result that the suit on the date on which it was filed would have been barred by limitation. The learned District Judge in appeal has held that the document in question is not a mere acknowledgment of a debt. It is that undoubtedly; but it contains, over and above the said acknowledgment, a note as to the rate of interest to be payable hereafter on the debt thus acknowledged. The learned District Judge holds that this amounts to a stipulation to pay interest at the specified rate, within the meaning of the proviso to Article 1 of the first schedule already referred to. He holds, therefore, that the document, besides being an acknowledgment of a debt, is a memorandum of an agreement within the meaning of Article 5 of the schedule, and is therefore liable to pay a stamp duty of eight annas. He has ordered the duty and penalty to be levied and the document to be admitted in evidence subject to payment of the same. In consequence of this order the learned District Judge observes that there has been no real trial on the merits in respect of this part of the claim, the real question in issue being whether the debt was contracted, or formally acknowledged by the defendant, on the earlier or on the later of the two dates appearing on the face of the disputed document. It is certainly open to argument whether, on this view of the case, the learned District Judge would not have complied more strictly with the provisions of the Code of Civil Procedure by remitting an issue for the determination of the first court, and then finally disposing of the appeal in accordance with the finding which might be arrived at on the issue so remitted. The learned District Judge, however, has preferred to deal with the case, on the basis that the claim, so far as it related to the sum referred to in the sarhhat, had been disposed of by the first court upon a preliminary point, and he has passed an order of remand under Order XLI, Rule 23, of the Code of Civil Procedure. The appeal before us is against this order of remand, and as no exception is taken in the memorandum of appeal to the particular procedure adopted by the District Judge it does not seem necessary for us to raise any question on the point. The points argued before us are two: first, whether the document in question is a mere acknowledgment of a debt, falling under Article 1 of the first schedule to the Indian Stamp Act, or is also a memorandum of an agreement, liable to a duty of eight annas under Article 5 of the same schedule; secondly, whether or not the adhesive stamp of one anna on this document has been effectually cancelled within the meaning of Section 12 of the same Act. On the first of these points a number of authorities were cited to us, It may be remarked at once that all authorities anterior in date to the passing of Act No. II of 1899 require to be reconsidered in the light of the proviso to Article 1 of the first schedule which was added by the enactment aforesaid. I would also remark further that, when all is said and done, each reported decision must be considered strictly with reference to its own circumstances and the precise terms of the particular document under consideration by the court. There are decisions of at least of two High Courts, since the passing of Act No. II of 1899, which lend a great deal of support to the view taken by the learned District Judge. The cases arc Laxumibai v. Ganesh Raghunath (1900) I.L.R. 25 Bom., 373 and Mulchand Lala v. Kashibullav Biswas (1907) I.L.R., 35 Calc., 111. Each of these decisions seems to turn upon the view that a memorandum of the rate of interest to be payable in future, when appended to an acknowledgment of debt over the signature of the debtor, for the express purpose of being used hereafter as evidence of an agreement to pay interest at the particular rate so specified, must be regarded as involving a stipulation to pay interest within the meaning of the proviso to Article 1 of the schedule, so as to make the document a memorandum of an agreement within the meaning of Article 5 of the same schedule. If the matter came before this Court absolutely as res integra, I should feel no hesitation in expressing my own agreement with these decisions. There are, however, two cases of this Court upon which considerable stress has been laid on the other side. These are Udit Upadhya v. Bhawani Din (1904) I.L.R., 27 All., 84 and Dulmha Kunwar v. Mahadeo Prasad (1906) I.L.R. 28. A11., 436. The documents dealt with by the learned Judges of this Court in the second of these two cases were so differently worded from the one now before us that it is doubtful how far the decision in that case throws any light on the question under consideration. The case was a peculiar one and the learned Judges based their decision upon a variety of circumstances, of which the question of the admissibility of the two documents concerned was only one, The conclusion which they came to, as a matter of fact, was that the documents in question were not liable to stamp duty at all; and in the present case, of course if we found it possible to take the same view regarding the sarhhat now under consideration, the only result would be that we should affirm the order of remand. The earlier of the two Allahabad cases bears a closer resemblance to the one now before us. Taking the decision as a whole, I think it may be said that the learned Judges regarded the question as one not free from difficulty, but had formed so strong an opinion in favour of the plaintiff's case on the merits that they were most reluctant to come to any decision which would have the result of excluding from the consideration of the court the document upon which the said plaintiff relied. Moreover, the contention raised before them on behalf of the defendants respondents was that the said document fell within the definition of a promissory note, and this was the contention which was repelled by the learned Judges in their decision. The question whether it amounted to a memorandum of an agreement, within the meaning of Article 5 of the first schedule, does not seem to have been discussed or considered. It has been pressed upon us on behalf of the appellant in this case that a practice has grown up in these provinces, perhaps in consequence of the two decisions above referred to, of appending a memorandum as to the rate of interest payable to acknowledgments of liability signed by the debtor, and treating such documents as mere acknowledgments liable to no more than a stamp duty of one anna. There may be some force in this contention, and I feel that we ought to be reluctant to disturb any settled practice which may have grown up under previous decisions of this Court, At the same time, as a mere question of law considered with reference to the wording of Articles 1 and 5 of the schedule already referred to, I am bound to say that the document which we are now considering does in my opinion contain a stipulation to pay interest at the rate therein specified within the meaning of the proviso to the first of these articles, and does amount to a memorandum of an agreement to pay interest at the said rate within the meaning of the fifth article.
2. For myself, however, I should prefer to base my decision upon a clear finding that there has been an effective cancellation of the one anna adhesive stamp on this document within the meaning of Section 12 of Act No. II of 1899. A similar question came before a bench of the Oudh Court of which I was a member (Mohammad Amir Mirza Beg v. Babu Kedar Nath (1912) 15 Oudh Cases, 58. Mr. Lindsay and I concurred in holding that the stamp produced before us, which had been cancelled by having three lines drawn across it in different directions, each of the said lines extending more or less beyond the edges of the stamp on to the paper on which the document was written, had been cancelled in a sufficiently effectual manner to satisfy the provisions of Section 12 of Act No. II of 1899. We noticed at the time that there was a decision of the Bombay High Court in a different sense, namely a case reported in Virbhadrapa v. Bhimaji (1904) I.L.R., 28 Bom., 432. But we regarded the two cases as to some extent distinguishable, and as a matter of authority we preferred to follow a decision of the Chief Court of the Punjab to which reference is made in our reported judgment. The question whether a particular adhesive stamp has or has not been cancelled in a sufficiently effectual manner, so that it cannot be used again, is one which must obviously be considered with reference to the facts of each particular case. In the case now before us the defendant appellant has written his name close to the stamp on its left hand side, He has then continued the line which forms the upper portion of the writing in the Hindi character across the face of the stamp, and immediately against the right hand edge thereof has continued his writing by the insertion of words of formal acknowledgment. In all probability the only reason why he did not write across the face of the stamp was that he regarded it as unlucky, or improper, to deface the Royal image by such writing. That he intended to effect a definite cancellation of the stamp seems to me beyond question, and also that both parties at the time regarded the cancellation as sufficient. It seems to me impossible to treat the words of Section 12 of the Indian Stamp Act as requiring such a degree of cancellation as would make it physically impossible for any dishonest person to make hereafter a fraudulent use of the stamp label. It must be a matter of common knowledge that, even the system of cancellation prescribed under the orders of the Government for court-fee labels affixed to records and papers filed in the course of civil litigation, has been defeated by fraudulent practices entered into by collusion with members of the record-room staff; yet it could not) be suggested that the system of punching prescribed by the Government orders for such labels was not prima facie an adequate cancellation of the stamp within the meaning of the law. I think a matter of this sort should be dealt with in a fair and equitable spirit and with a presumption in favour of honest dealing rather than of a deliberate intention to lay the basis for a subsequent fraud on the revenue. In my opinion the stamp on the document now before us has been sufficiently cancelled within the meaning of the law, and the question upon which the two courts below have differed does not strictly arise for determination. Under the circumstances of the case, no objection having been taken by the plaintiff, and the order of the District Judge having presumably been complied with so far as the plaintiff is concerned, I think the proper course for us is simply to dismiss this appeal, and I would do so accordingly with costs.
3. I entirely agree. As the matter has been so fully discussed I propose to add a word or two on both points In my opinion this document is plainly a memorandum of agreement within the terms of Article 5 of the schedule to the Stamp Act and any other view is almost unarguable. It is true that it contains an acknowledgment of liability for a definite sum but it also contains a term to pay interest thereon, involving future liability. I agree witch the view taken in the cases of Mulchand Lala v. Kashibullav Biswas (1907) I.L.R., 85 Calc., 111, and Enatullah Biswas v. Gajaruddi Biswas (1907) 11 C.W.N., 1122, each of which bears a similarity to this case, Without venturing to differ from the view taken in Udit Upadhya v. Bhawani Din (1904) I.L.R., 27 All., 84, I note that the Chief Justice in that case described the document in the following language: 'To us it appears to be nothing more than a mere memorandum or note drawn up between the parties as to a transaction which had just been settled between them.' That is a description of a memorandum of agreement and would have brought the document within Article 5 if the point had been taken, I agree with my brother that it would appear from the report in I.L.R., 27 All., 84, that the point was not present to the CHIEF JUSTICE'S mind. On the other point I agree entirely with my brother PIGOTT'S judgment in Oudh Cases, Mohammad Amir Mirza Beg v. Babu Kedar Nath (1912) 15 Oudh Cases, 58. All that a court has to look at, in my judgment, under Section 12 is whether the adhesive stamp has been in any effectual manner cancelled so that it cannot be used again. I think that means so that it cannot lawfully or conscientiously be used again. My brother has pointed out in a passage which I cannot do better than quote: 'It is difficult to see how any one without destroying an adhesive stamp altogether can so cancel it as to make it absolutely impossible for an expert forger to remove the mark and make use of it elsewhere.' It is not everybody who can write with success upon a recently affixed adhesive stamp, A stamp may be almost entirely defaced by accidentally upsetting ink all over it. That would not be a cancellation. On the other hand a line deliberately drawn through it with the object of cancelling it is in my opinion as effectual a cancellation as writing part of a signature or of a date upon it. It is the method adopted by some banks for cancelling the name on a cheque which has been paid. In this case the writer chose to sign his name on one side of the stamp, to add certain requisite particulars on the other side of the stamp and to unite the two pieces of writing by a continuous line drawn across the stamp. I think that was an effectual cancellation, and I agree with the Oudh case that whether the requirement of the law as to the cancellation of the stamp has or has not been sufficiently met is a question to be determined upon examination of the document in each particular case. The result in this case is that the plaintiff must treat this document as covered by Article 5 and pay the additional duty.
4. We dismiss this appeal with costs.