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Khirodnath Gountia Vs. Arjun Panda - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtOrissa High Court
Decided On
Case NumberCivil Revn. No. 380 of 1970
Judge
Reported inAIR1972Ori95; 37(1971)CLT972
ActsNegotiable Instruments Act, 1881 - Sections 4
AppellantKhirodnath Gountia
RespondentArjun Panda
Appellant AdvocateS.C. Mohapatra and ;B. Nayak, Advs.
Respondent AdvocateA.K. Rao, Adv.
DispositionRevision allowed
Cases Referred(Mohd. Akbar Khan v. Attar Singh
Excerpt:
.....section 173 is necessary. [new india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - 1000/-undertaking to pay by the following chaitra purnima the principal along with interest and in evidence of the transaction had executed a receipt in spite of repeated demands the defendant failed to pay. but before we examine the decisions we think it proper to analyse the document itself first to ascertain which of the conditions referred to above are satisfied. therefore, the first requisite is satisfied. therefore, the second requisite is also satisfied. as..........and we hold with the defendant the document shall not be admissible in evidence because the proper stamp payable on the promissory note would be 15 paise and it admittedly bears a stamp of 10 paise only. the first proviso of section 35 of the stamp act would stand in the way of the document being admitted into evidence.5. mr. mohapatra for the petitioner and mr. rao who appears for the defendant amicus curiae do not want us to hold the document to be a bond. the dispute is between two rival contentions -- mr. rao for the plaintiff contending that it is a receipt and mr, mohapatra for the defendant contending that it is a promissory note. we shall therefore, not examine whether the document is a bond though the learned munsif had taken that view. a promissory note has been defined in.....
Judgment:

R.N. Misra, J.

1. This is an application of the defendant under Section 155. Civil P. C. When it came up for hearing before his Lordship the Chief Justice, he directed that this revision application be heard by a Division Bench. That is how the matter is before us.

2. The plaintiff-opposite party filed Money Suit No. 8/31 of 1968 in the court of the learned Subordinate Judge. Bargarh, asking for recovery of a sum of Rs. 1000/-. In paragraph 1 of the plaint the plaintiff stated that on 5-2-1965 the defendant incurred a loan of Rs. 1000/-undertaking to pay by the following Chaitra Purnima the principal along with Interest and in evidence of the transaction had executed a receipt In spite of repeated demands the defendant failed to pay. Therefore, the suit was instituted. The suit was transferred to the Munsif for trial.

3. During trial dispute was raised by the defendant when the plaintiff wanted the document dated 8-2-1965 to be received in evidence. The defendant took the stand that the document was a promissory note and as it had not been properly stamped it could not be received in evidence in view of the provisions of Section 35 of the Stamp Act. The learned Munsif examined the matter and held that the document was a bond within the meaning of Section 2(5)(a) of the Stamp Act. and repelled the contention of the defendant that it was a promissory note. This revision is directed against that decision of the learned Munsif dated 27-8-1970.

4. As we have already indicated the plaintiff's stand in the plaint was thatthe document was a receipt. The learned Munsif has held it to be a bond and the defendant wants us to hold that it is a promissory note. If the document turns out to be a receipt it has been duly stamped. If the conclusion of the trial court is upheld, as a bond it has to be impounded and can be received in evidence. If it ultimately turns out to be a promissory note and we hold with the defendant the document shall not be admissible in evidence because the proper stamp payable on the promissory note would be 15 paise and it admittedly bears a stamp of 10 paise only. The first proviso of Section 35 of the Stamp Act would stand in the way of the document being admitted into evidence.

5. Mr. Mohapatra for the petitioner and Mr. Rao who appears for the defendant amicus curiae do not want us to hold the document to be a bond. The dispute is between two rival contentions -- Mr. Rao for the plaintiff contending that it is a receipt and Mr, Mohapatra for the defendant contending that it is a promissory note. We shall therefore, not examine whether the document is a bond though the learned Munsif had taken that view. A promissory note has been defined in Section 2(22) of the Stamp Act to mean '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 which may or may not be performed or happen.' As the definition in this Act adopts the definition in the Negotiable Instruments Act we will have to look into Section 4 of the Statute. Under Section 4 a promissory note is said to be

'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'

Mr. Mohapatra contends that he does not want the wider definition under Section 2(22) of the Stamp Act and claims that by reference to Section 4 of the Negotiable Instruments Act the document under consideration becomes a promissory note. On analysis the requisites indicated in Section 4 of the Negotiable Instruments Act in order to make a document a promissory note are these:--

(1) It must be in writing and signed by the maker;

(2) It must contain an unconditional undertaking to pay a certain sum of money only and nothing more;

(3) It must be payable on demand or at a fixed or determinable future time;

(4) It must be payable to or to the order of a specified person or to the bearer.

There is unanimity of judicial opinion that in addition to the above requirements the instrument must be such as to show the intention to make a promissory note. Several cases have been placed before us by the learned counsel on either side. But before we examine the decisions we think it proper to analyse the document itself first to ascertain which of the conditions referred to above are satisfied.

Admittedly the document is in writing and has been signed by the maker. Therefore, the first requisite is satisfied. It also contains an unconditional promise to pay a definite sum to a certain payee. Therefore, the second requisite is also satisfied. There is no dispute between the learned counsel that the amount is payable at any time before the following Chaitra Purnima. As such the third condition is also satisfied. There is however, serious dispute that the document does not have provision for negotiability and as such cannot be a promissory note. This aspect of the matter would require independent examination. It may be pertinent to note that the document in the last sentence shows that it is a handnote and the defendant states that he has executed the band-note as evidence of the loan transaction. Mr. Rao agrees that a handnote, in ordinary parlance means a promissory note. Therefore, in the document itself there is indication that it was passed on by the defendant to the plaintiff as a promissory note. So far as the intention of the parties is concerned this statement in the handnote itself seems to be not only relevant and germane, but somewhat conclusive to show that at the point of time when the document was executed parties intended it to be a promissory note. The only dispute which requires a detailed examination is want of negotiability, Mr. Mohapatra does not contend that even if a document is not negotiable it would become a promissory note. But he seeks to emphasise on the fact that a promissory note may be negotiable even if there is no indication in the document itself. For this contention of his he relies upon the first explanation to Section 13 of the Negotiable Instruments Act. It provides:

'A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to particular person, and does not contain Words prohibiting transfer or indicating an intention that it shall not be transferable.'

Mr. Mohaptra, therefore, contends that as there is no bar against transfer-ability in the document, even in the absence of a clear stipulation of negotiability it is negotiable. He relies in support of his proposition on the decision in AIR 1968 Madh Pra 4 (Kadori-lal v. Sukhlal). AIR 1957 Raj 360 (Gopaldas v. Ramdeo), AIR 1962 Raj 68 (FB) (Nanga v. Dhannalal), and AIR 1969 Ker 189 (A.K. Hameed v. Appukutti). On the other hand. Mr. Rao contends that no advantage of Section 13, Explanation (i) of the Negotiable Instruments Act can be taken in assuming negotiability of the document in the absence of express words making it negotiable. The definition under Section 2(22) of the Stamp Act refers to the Negotiable Instruments Act of 1881 and does not refer to the amendment of Section 13 in 1919. Therefore, to determine whether a document is negotiable and so a promissory note, we have to confine ourselves to the provisions of the Negotiable Instruments Act as it stood in 1881 and assistance of Section 13. Explanation (i) cannot be taken. In support of this proposition of his he relies upon the decisions in AIR 1962 Pat 325 (Ram Narayan v. Ram Chandra), AIR 1959 All 583 (SB) (Mohd. Mustafa Ali Khan v. Raj Rajeshwari Devi). AIR 1959 Andh Pra 653 (Ramakistiah v. Yellappa), and AIR 1966 Andh Pra 215 (State Bank, Hyderabad v. Ran-ganath). The two decisions of 1959 -- one of the Allahabad High Court and the other of the Andhra Pradesh High Court are Full Bench decisions. We have analysed the decisions cited at the Bar on both sides. We are however, not impressed by the stand taken by Mr. Rao. Their Lordships of the Judicial Committee in AIR 1936 PC 171 (Mohd. Akbar Khan v. Attar Singh) were considering a document of 1917, that is, prior to the amendment of 1919. While dealing with the negotiability of the document Lord Atkin in the pronouncement of the Board stated:

'Having heard the discussion their Lordships have come to the conclusion that the document was not a promissory note. The Indian Stamp Act does not suffer from the defect of the English Stamp Act in ignoring the definitions in the Bills of Exchange Act, 1882, and enacting a definition of its own. 'promissory note' as defined by Section 2(22) and by that sub-section 'Promissory Note' means a promissory note as defined by the Negotiable Instruments Act, 1881. By the latter Act, Section 4(a) 'promissory note' is an instrument in writing (not being a bank note or acurrency 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. There follow illustrations lettered (a) to (h) of which three only need be set out.

A signs instruments in the following terms:

(a) I promise to pay B or order Rs. 500.

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

(c) Mr. B. IOU Rs. 1000/-.

The instruments respectively marked (a) and (b) are promissory notes. The instruments respectively marked (c) are not promissory notes.

It is necessary to refer to Section 13:

'A negotiable instrument means a promissory note ..... payable eitherto order or to bearer.'

Explanation.-- A promissory note... .. is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not convey words prohibiting transfer or indicating an intention that it shall not be transferable.

The instrument in question in this case is according to the authorised translation in the following terms:

May God protect us. This (one) receipt is hereby executed by Bhai Hira Singh Attar Singh Kharbanda, resident of Hoti for Rs. 43,900/- (forty three thousand and nine hundred rupees) half of which amount conies to twenty one thousand nine hundred and fifty, received from the firm of Lala Duni Chand Lala Hari Chand Sethi for and on behalf of Goptain Mahommad Akbar Khan of Hoti. This amount to be payable after 2 (two) years. Interest at the rate of Rs. 5.4.0 (Rupees five annas four) per cent per year to be charged. Dated this 20th day of Chetra (first month of Hindu Calender year) Sam-bat 1974 corresponding to 1st April 1917 .....

If this document is otherwise within the definition of a promissory note, it would seem that it must be negotiable, for there appear to be no words prohibiting transfer or indicating an intention that it should not be transferable. It must be admitted that it would be a somewhat unusual visitor in the accustomed circles of negotiable paper.'

Having held that it was negotiable their Lordships, however, found that the document did not contain any undertaking to pay and therefore, in their Lordships' view it was not a promissory note. In view of the aforesaid decision of their Lordships of the Privy Council we do not think the reasoning adopted in the four decisions cited by Mr. Rao, can be accepted. The document in question before their Lordships of the Judicial Committee was of the year 1917. It contained no clear terms of negotiability, but it did not have any restrictive clause. Their Lordships brought in the concept of Section 13 of the Negotiable Instruments Act to test the document. Firstly the document was prior to the amendment of 1919 and secondly in view of the reasoning adopted in the decisions cited by Mr. Rao assistance of Section 13 Explanation (i) was not in-vokable. Yet the Judicial Committee did both and held that if it was otherwise a promissory note it was negotiable.

6. Illustration (b) under Section 4 of the Negotiable Instruments Act is statutory. We may reproduce it again:

'I acknowledge myself to be indebted to B in Rs. 1000/-, to be paid on demand, for value received.'

This is a statutory illustration of a promissory note. Mr. Rao concedes that in the illustration negotiability has not been indicated. This illustration stands unamended from 1881. Though not clearly indicated as one of the reasons for the view adopted by their Lordships of the Judicial Committee in the aforesaid case this illustration has been cited in the judgment possibly to justify the conclusion. The Judicial Committee in AIR 1916 PC 242 (Md. Syedol Arif-fin v. Y. O. Gark) have in clear terms stated that a statutory illustration cannot be ordinarily ignored and full importance has to be given to the same. In the circumstances the aforesaid illustration appended to Section 4 of the Negotiable Instruments Act should be accepted as offering the proper guideline in the matter. A similar view has been taken by a Division Bench of the Madhya Pradesh High Court in AIR 1968 Madh Pra 4 (already referred to). A Full Bench of the Rajasthan High Court in AIR 1962 Raj 68 (already referred to) also took a similar view. In view of what we have said above, we would hold that in the absence of any bar of negotiability in the impugned document it shall be presumed to be negotiable. Since that was the only objection against holding the document to be a promissory note and as for the reasons already indicated we overrule that objection; the impugned document must be treated to be a promissory note.

7. Mr. Rao had contended that it was a receipt. This document is not a receipt because it has an unconditional undertaking to pay and satisfies all the requisites of a promissory note.We agree that the name given to a document is not the determinative feature for deciding the nature of the document. Even if the plaintiff calls it a receipt in the plaint we find it difficult to hold that it is a receipt. We adopt the reasons indicated in AIR 1957 Raj 360 to repel the contention of Mr. Rao that the impugned document is a receipt. To add by reiteration the defendant had passed it on as a hand-note, that is, a promissory note. So the parties at the time when the document was accepted had not intended it to be a receipt.

8. Our conclusion, therefore, is that the document is a promissory note and not a receipt. As we have already said as a promissory note it is not adequately stamped. The impugned order of the learned Munsif is vacated. This document shall be treated as a promissory note and shall not be admissible under the provisions of Section 35 of the Stamp Act for the purposes of the suit. The learned Trial Judge is directed to dispose of the suit in accordance with law. The Civil Revision is allowed. There was no appearance for the opposite party, we, therefore, award no costs. We record our appreciation of the services rendered by Mr. A.K. Rao, Advocate, who appeared before us amicus curiae.

Das, J.

9. I agree.


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