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Govind Singh Vs. Bijay Bahadur Singh - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported in121Ind.Cas.108
AppellantGovind Singh
RespondentBijay Bahadur Singh
Cases ReferredMuhammad Abid Hussain Khan v. Bhagwan Das
Excerpt:
promissory note - execution of receipt by maker--note insufficiently stamped--suit on implied promise contained in receipt, maintainability of--acknowledgment, whether implies promise to pay--renewal of note, whether constitutes fresh loan--plaintiff, whether entitled to recover interest. - - 513. was declared to be no longer good law in view of the dictum of their lordships of the privy council in the case already referred to. the learned judges observed that 'it is clearly not a mere acknowledgment of a statute barred debt because the defendant in it admits the receipt in cash of the sum of rs. the defendant must take good his undertaking......as the foundation of claim to enforce liability acknowledged thereunder.3. the acknowledgment of a debt implies a promise to pay. such an acknowledgment is required to bear a stamp of one anna under schedule i, article 1, of the stamp act. where there is an express promise to pay the document cannot operate as an acknowledgment, but should be stamped as a bond. in so far, therefore, as a document contains a mere admission of liability, a stamp of one anna is quite sufficient; but, in so far as it may contain a promise to pay, it will be inadmissible, being a bond to that extent. the receipt before us, as i construe it, is a clear acknowledgment of the defendant beiug a debtor to the plaintiff to the extent of rs. 349 under a pro note, dated the 6th of january, 1925, which, of course, has.....
Judgment:

Niamatullah, J.

1. The plaintiff-applicant brought the suit, out of which this revision has arisen, for recovery of Rs. 506-60 alleged to be due under a pro-note, dated the 6th of January, 1925, executed by the defendant. The plaint recites that, in consequence of the defendant's fraudulent conduct, a stamp of only one anna was affixed on the pro note which, on that account, is inadmissible in evidence, and that the plaintiff claims to recover on foot of the loan transaction independently of the pro-note which he relies on for a collateral purpose. The plaint, as drawn up, is more capable of the interpretation that, according to the plaintiff, the loan had been advanced on the 6th of January, 1925, though it is not altogether inconsistent with the case that the pro-note was executed in lieu of an old debt. The plaintiff started to establish the case of cash consideration having been paid on the execution of the pro-note referred to but his own witnesses, under the circumstances which it is not necessary to go into, gave away that case and disclosed, what has been found by the Court below, that a pro-note had been executed by the defendant in favour of the plaintiff in 1923 and that, in lieu of the principal and interest due under that pro-note, the fresh loan transaction of 1925 was entered into between the parties. We must, therefore, accept, for the purpose of this case, as found by the Court below, that the defendant was indebted to the plaintiff for a sum of Rs. 349, and that his claim for that amount was within time on the 6th of January, 1925, when a fresh pro-note was executed. A receipt of even' date was also executed by the defendant and was duly attested by two witnesses. The lower Court (Small Cause Court at Allahabad) dismissed the suit on the ground that the claim to recover the debt due under the pro-note of 1923 was barred at the date of the present suit, which was brought on the 5th of January, 1928, and that limitation was not saved by any acknowledgment of that debt inasmuch as the pro-note, dated the 6th of January 1925, contained no acknowledgment of the debt of 1923 but of a debt supposed to have been advanced on the 6th of January, 1925.

2. I am of opinion that the plaintiff-applicant is entitled to succeed as regards the principal debt at least on the strength of the acknowledgment contained in the re-receipt dated the 6th of January, 1925. I ignore the pro-note altogether for want of proper stamp. There can, in my opinion, be no question as regards the admissibility of the receipt in proof of an acknowledgment, not as saving limitation for the older debt of 1923, but as the foundation of claim to enforce liability acknowledged thereunder.

3. The acknowledgment of a debt implies a promise to pay. Such an acknowledgment is required to bear a stamp of one anna under Schedule I, Article 1, of the Stamp Act. Where there is an express promise to pay the document cannot operate as an acknowledgment, but should be stamped as a bond. In so far, therefore, as a document contains a mere admission of liability, a stamp of one anna is quite sufficient; but, in so far as it may contain a promise to pay, it will be inadmissible, being a bond to that extent. The receipt before us, as I construe it, is a clear acknowledgment of the defendant beiug a debtor to the plaintiff to the extent of Rs. 349 under a pro note, dated the 6th of January, 1925, which, of course, has to be ignored as a piece of evidence. The receipt is to the effect that Bijay Bahadur Singh, the defendant, borrowed Rs. 349 under a pro-note, dated the 6th of January, 1925, at Re. 1-4 per cent, per mensem. The portion of the receipt relating to the interest amounts to an agreement to pay interest, and is to that extent, inadmissible for want of proper stamp duty, as if it were a bond; but the stamp of one anna, which is affixed to the receipt, would cover the pther part of the receipt which acknowledges the loan of Rs. 349.

4. The next question is whether an acknowledgment, clear and unconditional, can itself be the foundation of an action. I think that the answer must be in the affirmative. In Kalka Singh v. Paras Ram 22 C. 434 at p. 444 : 22 L.A. 68 : 5 M.L.J. 14 : Rafique and Jackson's P.C.J. 137 : 6 Sar.P.C.J. 545 (P.C.) their Lordships of the Privy Council observed, in a case in which the facts were different and in which the acknowledgment was held to be of no avail that 'although an unqualified admission of a debt no doubt implies a promise to pay it, their Lordships are not prepared to hold that that is necessarily so where there is an express promise to pay in a pariticular manner. It must depend on the construction of the instrument in each case; and their Lordships think in the present ease that the admission of the debt, by which the obligation is prefaced in the bonds of 1877 and 1879, does not import an unqualified or unconditional promise to pay, but is referable to the particular obligation, or (in other words) is introduced for the purpose only of fixing the amount for which the obligation is given, and which the obligor agrees to pay in the stipulated manner and not otherwise.' In a later case: Maniram v. Seth Rupchand 33 C. 1047 : 8 Bom.L.R. 501 : 4 C.L.J. 94 : 10 C.W.N. 874 : 1 M.L.T. 199 : 3 A.L.J. 525 : 16 M.L.J. 300;2 N.L.R.130 : 33 I.A. 165 (P.C.). in which their Lordships were concerned with an acknowledgment saving limitation under Section 19 of the Limitation Act, they have discussed in detail the implications arising out of an unconditional acknowledgment of a liability. They said that 'an unconditional acknowledgment has always been held to imply a promise to pay, because that is the natural inference, if nothing is said to the contrary. It is what every honest man would mean to do'. At one place in their judgment their Lordships say that they 'can see no reason for drawing any distinction in this respect between the English and the Indian Law.' In Chunilal Ratanehand v. Laxman Govind 63 Ind. Cas. 923 : 46 B. 24 : 23 Bom.L.R. 606 : A.I.R. 1922 Bom. 183 in which a suit was based on a mere acknowledgment which contained no promise to pay, the learned Chief Justice referred to the Observations of their Lordships of the Privy Council made in Maniram v. Seth Rupchand 33 C. 1047 : 8 Bom.L.R. 501 : 4 C.L.J. 94 : 10 C.W.N. 874 : 1 M.L.T. 199 : 3 A.L.J. 525 : 16 M.L.J. 300;2 N.L.R.130 : 33 I.A. 165 (P.C.). and held that 'if, then the acknowledgment, which in this case was made before the limitation period expired, implies an unconditional promise to pay, I can see no reason why it should not form the basis of a suit.' Decision of the Bombay High Court to the contrary, reported as Shankar v. Mukta 22 B. 513. was declared to be no longer good law in view of the dictum of their Lordships of the Privy Council in the case already referred to. It was pointed out by the learned Judges that the older case of their Court proceeded on the principle of stare rdecisis, though the view of the Chief Justice expressed in Shankar v. Mukta 22 B. 513. quoted at length was in conformity with their own.

5. The Full Bench case of Kanhaya Lal v. Stowell 3 A.581(F.B.) is also quite in point. A document relied on in that case could not be admitted in evidence as a promissory note though it bore a one anna stamp. It was treated as an acknowledgment which could not be the basis of a suit.

6. The case before us is free from the complication which existed in other cases in which acknowledgments duly signed and stamped had been made after the debts acknowledged had become time-barred. In that class of cases an acknowledgment not fulfilling the requirements of Section 25 of the Contract Act, as regards agreement to pay time-barred debts, was not given effect to: see, for instance, Gobind Das v. Sarju Das 30 A.268 : 5 A.L.J. 274 : A.W.N. (1908)129.

7. Another question which was discussed before us related to the language of the receipt not being applicable to facts found by the Court below, namely, that the sum due under the pro-note of l923 and not cash consideration formed the subject of the subsequent transaction on the 6th of January, 1925. The defendant seems to be on the horns of a dilemma. He cannot admit that the receipt of the 6th of January, 1925, related to any sum advanced on that date. It follows that it must be taken to refer, as found by the Court below, to the sum that had been advanced two years earlier, in 1923. It seems to me that, under the circumstances of the case, this matter is not of real importance. When two persons agree that the old debt be taken to be paid up and the rights and liabilities be taken to rest on a new footing, the transaction properly analyse is tantamount to the old debt being paid and, at the same time, re-advanced to the debtor. The fact that money did not physically change hands is of no legal consequence. In the case of Muhammad Abid Hussain Khan v. Bhagwan Das 5 Ind. Cas. 418. a Bench of this Court had the occasion to consider the nature of almost a similar transaction. In that case a sarkhat acknowledging a loan of Rs. 5,750 of which only Rs. 250 represented cash consideration and the remaining Rs. 5,500 was due under an old loan transaction, was in question. The learned Judges observed that 'it is clearly not a mere acknowledgment of a statute barred debt because the defendant in it admits the receipt in cash of the sum of Rs. 5,760 and undertakes to pay interest upon that amount at the rate of Rs. per cent, per mensem...It seems to us that this document must properly be treated as a new contrict. It may be that the amount of the old debt was not actually paid and then re-paid, there was no necessity for paying with one hand and taking back with the other but the parties intended that the transaction should be regarded as a new contract to secure the amount specified in it, namely, Rs. 5,750 with interest.' Parties must be taken to have done what they agreed to do and if they contracted, on the understanding that the old debt be taken to be wiped out and a new liability, on terms then agreed, is to come into existence, the Court need not rake up the old transaction except where some express rule of law makes it necessary to do so, for instance, if the acknowledgment of new liability is relied on as an acknowledgment under Section 19, the question may properly be considered as to whether the debt acknowledged had become barred by time so as to exclude the application of Section 19 of the Limitation Act.

8. The plaintiff in this case seeks to enforce the liability incurred on the 6th of January 1925 and I see no reason why he should not be permitted to do so. The defendant must take good his undertaking.implied in his acknowledgment of liability made oil the 6th of January, 1925. In this view the fact that the debt of 1923 was barred by limitation on the date of the present suit is wholly immaterial. Infao it has ceased to exist much earlier on the 6th of January, 1925, when it was replaced by a new transaction of loan.

9. The plaintiff's right to recover interest stands on a somewhat different footing. He can be entitled to recover interest only if the stipulation, contained in the receipt, be admitted in evidence. As ;I have already stated, it cannot be held to be admissible ih evidence for want of the proper stamp duty payable on a bond. Interest by way of damages has not been claimed, and any question with regard to it, if now entertained, may give rise to controversy which it is not desirable to decide in revision. It is doubtful if, under the circumstances of the case, the plaintiff-applicant is entitled to recover interest by way of damages. I would, therefore, refuse to allow any interest to the plaintiff-applicant.

10. For the reasons stated above, I set aside the decree passed by the Court below, and decree the plaintiff's claim to recover the sum of Rs. 349 with interest from the date of suit at the rate of 6% per annum.

11. Sulaiman, J.--I concur in the order proposed. I do not think that ordinarily a person can after having taken a promissory note in an insufficiently stamped paper and a contemporaneous receipt throw the promissory note over-board and make the receipt the basis of his suit. This would be encouraging an evasion of the stamp law. I also think that a receipt is ordinarily an acknowledgment of the receipt of consideration, and unless its contents suggest otherwise it does not imply a promise to pay or even an acknowledgment of an existing liability to pay. If it contains a promise to pay it may itself become insufficiently stamped, if only a stamp of one anna has been affixed on it. But the recitals in the receipt may suggest that the payment of money was by way of loan and that circumstance would necessarily imply a promise to re pay it. In such cases the receipt alone with other oral evidence may be sufficient proof of a debt which is recoverable by suit. In the present case the receipt contains a clear reference to a contemporaneous promissory note. Even though the promissory note itself is inadmissible in evidence still the reference to it indicates to my mind that the payment was by way of loan and not in a way where no repayment would be expected. This justifies the inference that there was a promise to pay. The suit is, therefore, maintainable.

12. Even if the receipt and the inadmissible promissory note were not executed in payment of a cash payment but were in renewal of a previous debt, either that previous debt has been acknowledged afresh or very likely it has been substituted by a new contract including a fresh promise to pay. In either case the plaintiff's claim lies and is within time.

13. By the Court.--The application is allowed, the decree of the Court below is set aside and the plaintiff's claim is decreed for Rs. 349 with proportionate costs pendente lite and future interests at six per cent per annum till realisation.


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