Skip to content


Raj Bahadur Singh Vs. Mahadeo Prasad Halwai - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 44 of 1975
Judge
Reported inAIR1981All58
ActsStamp Act, 1899 - Sections 2(5), 2(22) and 36 - Schedule - Article 49
AppellantRaj Bahadur Singh
RespondentMahadeo Prasad Halwai
Advocates:Bashir Ahmad, Adv.
DispositionAppeal allowed
Excerpt:
.....to pay within three years - held, duty payable on such promissory note would be same as of bond - document inadmissible and suit liable to be dismissed in event of failure. - - on learning this the plaintiff demanded his money but when the defendant failed to pay the same, he had to bring the suit. the trial court believed the evidence of the plaintiff and held that the defendant had miserably failed to prove that despite his acknowledgment and admission in the deed ext. clause (a) clearly takes out a promissory note out of this exception. if this was a document which fulfils the requirement of a promissory note and all those conditions which are necessary for being a bond are not satisfied, the attestation would not make it a bond. according to article 49, a promissory note..........of a specified person; (iii) or to the bearer of the instrument. after considering the promissory note in question it appears to me that all the five conditions are specified in this case. the defendant had promised to pay the ascertained sum. the document uses the expression 'iqrar karta hun'. this is indicative ot the clear promise which had been made by the defendant to the plaintiff. it is settled construction that to find out the true and the correct nature of a document, it must be read as a whole. applying the said rule it appears to me that the document cannot be considered anything else than a promissory note. 12. counsel for the plaintiff, however, urged that the document was a bond. the expression 'bond' has been defined in section 2(5) of the indian stamp act. the definition.....
Judgment:

K.C. Agarwal, J.

1. This is a defendant's appeal arising out of a judgment and decree of the Additional District Judge, Gorakhpur, decreeing the suit for recovery of Rs. 8,600/- together with pendente lite and future interest.

2. The facts are these :

The plaint allegations were that on February 12, 1972 the plaintiff advancedRs. 5,000/- to the defendant in cash who agreed to pay interest at the rate of Rs. 2/- per mensum. He executed an agreement on the same day undertaking not to sell the property mentioned in the agreement and would pay the sum borrowed within three years from 12-2-1969 tailing which the plaintiff would be entitled to realise the aforesaid sum along with interest. The plaintiff alleged that later it transpired that the defendant had only a fractional share in the property and, therefore, could not execute a sale deed in respect of the entire area. On learning this the plaintiff demanded his money but when the defendant failed to pay the same, he had to bring the suit.

3. The suit was contested on the ground that he had not taken any loan of Rs. 5,000/- on February 12, 1969. The defendant alleged that there was a talk between the parties about the execution of a simple mortgage by the defendant in favour of the plaintiff for 1/3 share in plot No. 172 hut since the plaintiff insisted on getting the mortgage of the entire area of plot No. 172, the settlement could not be reached.

4. Upon the pleadings of the parties the trial court framed the following issues:

(1) Whether the defendant did not receive Rs. 5,000/- in lien of the agreement bond (Ex. 1)?

(2) What amount if any, is the plaintiff entitled?

The plaintiff had filed the suit on the basts of Ex. 1 dated 12th February, 1969. This document was filed by him on 20th December, 1972. On that date, the document was presented before the counsel appearing for the defendant for admission. On the document counsel appearing for the defendant made the following endorsement.

'The execution admitted subject topleas.'

It, however, appears that the court exhibited the document as Ext. 1 on the same day. Both the parties thereafter produced evidence in support of their respective cases. The plaintiff gave his own statement. The defendant also entered into the witness box and produced Majid, as D. W. 1. Defendant No. 1 tried to support his theory of the settlement taken by him in the written statement. The trial court believed the evidence of the plaintiff and held that the defendant had miserably failed to prove that despite his acknowledgment and admission in the deed Ext. 1, he did not receive the consideration of Rs. 5,000/-.

5. The trial court did not give any clear finding as to whether the document was an agreement or a bond. The vague finding given by him was:

'I have construed the document Ext. 1 as a simple bond with utmost an agreement to sell some specific immoveable property. The learned Judge found that the question of insufficiency of stamp should have been raised by the defendant before the document was admitted but since it had already been admitted, the plea was not open to the defendant.' Having thus decided the two issues against the defendant the court below decreed the suit. Being aggrieved the defendant filed the present appeal. The first question that was argued by the learned counsel for the defendant was that the document Ext. 1 was a promissory note and as it was insufficiently stamped, the suit was liable to be dismissed. Before I come to discuss the point urged by the teamed counsel for the defendant, it appears appropriate that the question as to whether the point of insufficiency of stamp could be raised by the defendant in the appeal, be disposed of first. I have already noted above that on 20th December, 1972 an endorsement was made by the defendant's counsel that the execution of the document had been admitted 'subject to pleas'.

6. The submission of Mr. G.P. Bhargava, counsel for the plaintiff was that the document having been admitted on 20-12-1972, the defendant had no right to raise the question of sufficiency of the court-fee. In support of his argument he relied on Section 36 of the Stamp Act. Section 36 of the Stamp Act provides that where an instrument has been admitted in evidence, its admissibility was not open to question. To me, however, it appears to be incorrect that Section 36 of the Stamp Act could be applied. On 20th December, 1972 by making the endorsement the defendant had reserved his right to question the validity of the document by raising such pleas as were open to him. The tentative reception of the document did not amount to admission inasmuch as the expression 'admitted in evidence' used in Section 36 of the Stamp Act means that it must have been admitted in evidence as a result of judicial determination. Mere marking the document as Ext. 1 was not sufficient. In fact by making the endorsement 'subject to please' the defendant had reserved his right to question its admissibility. The court had also. not applied its mind to the controversy which could arise for decision and postponed the same. If the court would have applied its mind and overruled the objection of the defendant, that would have been a different matter.

7. In Ram Ratan v. Bajrang Lal : [1978]3SCR963 while in the witness box the plaintiff tendered in evidence a document, an objection was raised by the defendant about its inadmissibility on the ground that it was not properly stamped, the trial court did not decide the controversy and postponed the decision to avoid interruption in the process of recording evidence. The endorsement made by the trial Judge was objected allowed subject to objection'. Later when the question of insufficiency was sought to be raised, an argument was advanced that on account of the prohibition contained in Section 36, the admissibility of the document could not be questioned. The Supreme Court overruled the objection. It found that since the trial court declined to decide the objection on merits, Section 36 could not be resorted to: To the same effect is the position in our case. In this also the Trial Judge did not decide the controversy. The making of endorsement 'subject to pleas' was understood by all concerned that the question of insufficiency of stamp was open to argument. The learned Additional District Judge was, therefore, not right in holding that the plea of insufficiency could not be raised in the suit.

8. In support of his submission Sri G.P. Bhargava, counsel for the plaintiff, relied upon decision of the Supreme Court reported in Javer Chand v. Pukhraj Surana : [1962]2SCR333 . In this case the Supreme Court held that when a document is filed, the question of its admissibility, if raised, should be decided as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. In this connection the Supreme Court observed that once a document has been marked as an exhibit in the case and has been used by the parties, Section 36 of the Stamp Act comes into operation. This case was considered by the Supreme Court in Ram Rattan's case (supra). Relying on the decision of the Supreme Court in Javer Chand's case the Supreme Court observed that where a document had been inadvertently admitted without the court applying its mind as to the question of admissibility, the instrument could not be said to have beenadmitted in evidence with a view to attracting Section 36.

9. Counsel for the plaintiff referred to several other decisions of this Court and other High Courts in support of his interpretation of Section 36. There is no use in multiplying the authorities inasmuch as each one of them is distinguishable on the ground mentioned by me above. The facts of our case are peculiar and not akin to those which were referred to and relied upon by Sri G.P. Bhargava. In tin's respect a reference may be made to Section 35. Under Section 35 a document deficiently stamped is inadmissible. The proviso to this section, however, lays down several exceptions. Clause (a) clearly takes out a promissory note out of this exception. Hence a promissory note cannot be accepted in evidence on payment of stamp duty and penalty.

10. The controversy that was raised was that the document was a promissory note. The plaintiff was not clear in his mind about its true nature. In the plaint the allegations were extremely vague. He mentioned it as Iqrarnama and als (Bashart Bainama). The court below also did not give a clear finding on this controversy but it appears that the view of the court below was that the document was an agreement. Sri G.P. Bhargava, counsel appearing for the plaintiff, however, conceded that he was not in a position to support the finding of the court below. He could not argue that the document was an agreement because the essential requirements to make a document as an agreement were lacking.

11. Sri M.A. Qadir, counsel for the defendant, however, urged that the document was a promissory note and as it was payable on demand, the stamp duty payable was under Article 49(b) of Schedule 1-B of the Stamp Act. The relevant portion of Article is quoted below:--

'1 ROM1SSORY NOTE(as defined by section 2(22),The sameduty as a bond of exchange (no. 13) for the same amount payable Otherwisethan on demand.'(b) whenpayable otherwise than on demand.

A promissory note has been defined in Section 2(22):

'2 (22). 'Promissory note' means a promissory note as defined by the Negotiable Instruments Act, 1881. It also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available or upon any condition or contingency whichmay or may not be performed or happen,'

Section 4 of the Negotiable Instruments Act reads as follows:--

'4. 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 M certain sum of money only to or to the order of a certain person or to the bearer of the instrument.'

In accordance with Section 4, a promissory note is required to fulfil the following conditions;--

(a) it must be in writing and signed by the maker;

(b) it must contain an unconditional promise to pay a sum certain in money only;

(c) it should not be a bank note or currency note;

(d) it must be payable on demand or determinable future time;

(e) it must be payable-

(i) to a specified person;

(ii) or to the order of a specified person;

(iii) or to the bearer of the instrument.

After considering the promissory note in question it appears to me that all the five conditions are specified in this case. The defendant had promised to pay the ascertained sum. The document uses the expression 'IQRAR KARTA HUN'. This is indicative ot the clear promise which had been made by the defendant to the plaintiff. It is settled construction that to find out the true and the correct nature of a document, it must be read as a whole. Applying the said rule it appears to me that the document cannot be considered anything else than a promissory note.

12. Counsel for the plaintiff, however, urged that the document was a bond. The expression 'bond' has been defined in Section 2(5) of the Indian Stamp Act. The definition is as under:--

'(a) any instrument whereby a person obliges himself to pay money to another on condition that the obligation shall be void if a specified act is performed or is not performed, as the case may be:

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested whereby a person obliges himself to deliver grain or other agricultural produce to another.'

After having compared the two definitions and the essentials - required, I amunable to uphold the submission of the plaintiffs learned counsel. Under this document the definition did not indicate any obligation to pay money. It simply contains a promise by which he has undertaken to return the sum of Rs. 5,000/-alorig with interest. Emphasis was, however, laid by the learned counsel for the plaintiff on the fact that since die document had been attested, it should be considered as a bond. It is true, that the document has been attested by two persons but to hold the document to be a 'bond' merely on the basis of attestation is notpossible. If this was a document which fulfils the requirement of a promissory note and all those conditions which are necessary for being a bond are not satisfied, the attestation would not make it a bond. Though attestation of a promissory note is neither required nor prohibited by law, a document which is otherwise a promissory note does not cease to be so merely because it is attested, inasmuch as the document was unilateral and was not bilateral which was necessary for being an agreement.

13. In Alamelu v. P. Rangai Gounder : AIR1945Mad42 a promissory note was executed agreeing to pay within two years the debt and within that tame the promisor could not enforce the debt. The promissory note was, therefore, not one payable on demand. The Madras High Court held that it was stampable according to Article 49 (b). The duty payable on such instrument would be the same as on a bond because it was payable more than one year after the execution of the note. The principle laid down in this case applies to our case fully. In our case also the defendant promised to pay within three years. It would mean that the plaintiff could not demand the payment within three years. It follows that the promissory note was not payable on demand. The definition of promissory note in the Stamp Act is much wider than the Negotiable Instruments Act. According to Article 49, a promissory note like the present promissory note which was payable after three years would come within Article 49. The duty on this promissory note was payable as that on bond. This had not been done, Accordingly this document was inadmissible and the suit was liable to be dismissed. In view of this finding it is not necessary for me to go into the merits of the case.

14. For these reasons the appeal succeeds and is allowed. The Judgment and decree of the court below are setaside and the suit is dismissed but in the circumstances of the case. I direct the parties to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //