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Pukhraj Surana Vs. Jawerchand and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberFirst Appeal No. 1 of 1953
Judge
Reported inAIR1957Raj47
ActsCode of Civil Procedure (CPC) , 1908 - Order 41, Rule 23; Stamp Act, 1899 - Sections 35 and 36; Marwar Stamp Act, 1947 - Sections 35; Evidence Act, 1872 - Sections 58, 91 and 115; Stamp Act, 1914
AppellantPukhraj Surana
RespondentJawerchand and ors.
Appellant Advocate Sumerchand, Adv.
Respondent Advocate Shivlal Porwal, Adv.
DispositionAppeal allowed
Cases ReferredIn Sohan Lal Nihal Chand v. Raghu Nath Singh
Excerpt:
.....of documents which bore oneanna stamp or which were negotiable instruments like hundis. by the marwar stamp law of 1947, an instrument chargeable with the duty of an anna or half an anna or a negotiable instrument like a hundi could not be admitted, on payment of duty and penalty, vide section 35, proviso (a) of the marwar stamp act (no. the first is whether duty and penalty could be realized on these hundis after the marwar stamp law of 1914 had been repealed by the marwar stamp act of 1947. we are clearly of opinion that the question of admissibility of a document is a matter of procedure, and the law applicable must be the law in force at the time the document is sought to be admitted. (2) was barred by section 36. we are clearly of opinion that on these facts the so called..........the stamp act.14. we may here mention that these hundis were executed in december, 1946, when the marwar stamp act of 1914 was in force. that law was different from the indian stamp act in as much as section 11 of that law provided that duty and penalty could be charged even in cases of documents which bore oneanna stamp or which were negotiable instruments like hundis. this suit was filed in january, 1949, and the plaintiffs apparently acting on the law of 1914 paid duty and penalty along with the plaint when they put in the hundis.the trial court, however, seems to have lost sight of the fact that in 1947 a new stamp act had come into force in the former state of marwar, & that law changed the provision in the marwar stamp act of 1914, and was in the same terms as the indian stamp.....
Judgment:

Wanchoo C. J.

1. This is an appeal by Pukhraj Surana defendant against the judgment and 'decree of the District Judge, Jodhpur, decreeing the suit brought by the plaintiffs respondents against the defendant appellant.

2. The case of the plaintiffs was that they were carrying on business under the name and style of Chandulal Kushalchand at Bombay. The plaintiffs used to work as commission agent for the defendant who was the manager of his joint family, and was carrying on the business of the joint family. As a result of these dealings between the plaintiffs and the defendant, a certain sum of money was due to the plaintiffs.

The defendant, in order to pay off in part the amount due from him to the plaintiffs, executed two Mudatti Hundis on Mangsar Sudi 8th St. 2003 for atotal sum of Rs. 35,000/-. One of these Hundis was for Rs. 20,000/- payable 61 days after date, while the other was for Rs. 15,000/- payable 121 days after date. The plaintiffs endorsed the Hundis in favour of Raghunathmal Bank and asked the Hank to credit the money to their account as and when the Hundis were honoured. The Bank presented the Hundis on the respective dates of the maturity to the defendant, but they were dishonoured.

Consequently, the Bank returned the Hundis to the plaintiffs who asked the defendant to pay the amount of the Hundis. The defendant, however, refused to do so, and consequently the plaintiffs filed the suit for Rs. 39,815/- including principal and interest at the rate of 6% per annum.

3. The suit was resisted by the defendant. It was admitted that there were transactions between the defendant and the plaintiffs; but it was said that no amount was due from the defendant to the plaintiffs. The defendant also admitted that the two Hundis were drawn by him, but his ease was that they were drawn for purchasing gold in future, and as the plaintiffs did not supply the gold the Hundis were not honoured. The defendant thus set up the case of want of consideration.

It was also urged that the Hundis were not stamped according to law, and as such they were inadmissible in evidence being unstamped, and could not be acted upon. It was further said that as no notice of dishonour had been given, the suit could not be maintained. Lastly, it was said that the endorsement on the Hundis by Shivlal was of no legal effect as he had no authority to do.

4. Three issues were framed on the basis of this defence, which are as below-

1. Whether the Hundis, the basis of the suit, were without consideration?

2. Whether the two Hundies, the basis of the suit, being unstamped were inadmissible in evidence?

3. Whether the plaintiffs did not give notice of dishonour of these Hundis, and, therefore, this suit was not maintainable?

There was a fourth issue relating to relief. No issue was framed on the question of the authority of Shivlal to endorse the Hundis.

5. The trial court held that the Hundis were without consideration. The issue relating to notice of dishonour was not pressed, & was therefore decided against the defendant. The issue relating to the admissibility of the Hundis were decided in favour of the plaintiffs on the ground that as the Hundis had been admitted at an earlier stage in the suit, it was not open to the defendant to challenge their admissibility in view of Section 36 of the Stamp Act. In consequence, the plaintiffs' suit was decreed in full with costs and interest pendente lite and future at 6% per annum.

6. In the present appeal, learned counsel for the appellant has not pressed the issue about consideration. He has only raised two points before us. In the first place, it has been contended that the court below should have framed an issue as to the authority of Shivlal to endorse the Hundis and should have decided that point, and as that was not done, the suit should be remanded for further evidence.

It is urged that unless the authority of Shivlal to endorse the Hundis in favour of Raghunathmal Bank is proved, Raghunathmal Bank would have no authority to present the Hundis and collect the amount. The second point that is urged is that the court below was wrong in applying Section 36 of the Stamp Act, and in holding that the question of inadmissibility of the Hundis could not be gone into as the Hundis had been admitted at an earlier stage in the suit.

It is urged that there was an issue on this point, and that issue should have been decided, and the fact that an exhibit number was put on each Hundi was merely for the purpose of identification, and, in any case, the alleged admission of the Hundis was by pure mistake.

7. We propose therefore to decide only these two points which were argued before us.

8. Point No. 1. We shall first consider whether the suit should be remanded after framing an issue as to the authority of Shivlal to endorse the Hundi in favour of Raghunathmal Bank. It is true that this point was raised in the written statement which was filed in May, 1949, but when issues were framed in July, 1949, no care was taken by the defendant who would be interested in the framing of an issue on this point to see that a proper issue was framed.

We further find that an application was made by the defendant on the 24-8-1949, for amending the issues. In this application, the defendant made two prayers, namely (1) that the issue as to consideration should be amended and made more specific, and (2) that no issues had been framed as regards the facts mentioned in paras 1, 3 & 5 of the additional grounds in the written statement, and that issues should be framed with respect of those, grounds also.

9. This application came up for consideration on the 14-9-1949, and an additional issue based on paragraph 3 of the additional grounds was framed, but it is clear that even at that time the defendant did not take care to see that an issue was framed on the basis of additional ground No. 5 relating to Shivlal's authority. It further appears that amendment of issue No. 1 by making it more specific was also not pressed.

It is also clear that the prayer for framing an issue on additional ground No. 1 was practically given up. In this appeal, the defendant makes a grievance only about non-framing of an issue about additional ground No. 5, and not about other matters about which the lower court made no amendment in the issues in spite of the application of the 24-8-1949. It seems to us in the circumstances that really the defendant gave up his other prayers for amendment on the 14th of September, and that is why only one issue based on additional ground No. 3 was framed on that day.

10. In these circumstances, we are of opinion that the defendant is not entitled to ask us to remand the suit for framing an issue based on additional ground No. 5, when he apparently did not press this matter even after his application of the 24-8-1949.

11. We may further add that there is evidence to show that Shivalal had authority to endorse the Hundis on behalf of the plaintiffs. That evidence is certainly not of the best, but that may be due to the fact that there was no issue on this point. If there had been an issue on this point, the plaintiffs might have produced better evidence. In this connection, we refer to the statement of Shivlal. He had come with Jawer Chand, plaintiff No. 1, to Jodhpur, to settle accounts with the defendant.

He is the son of Hazarimal, plaintiff No. 2. He says that the accounts were gone into, and thereafter Rs. 40,000/- were paid in cash, and these two Hundis for Rs 35,000/- were drawn in their favour. He also says that the endorsements on both these Hundis relating to their transfer to the Bank were written by him at the instance of Jawerchand who was with him at the time. In these circumstances, it must be held that the endorsement by Shivlal was with the authority of the plaintiffs.

Our attention was drawn to the statement of Shivlal in cross-examination, where he had said that he got no power of attorney to endorse these Hundis. But nothing has been shown to us which makes it necessary that a person must have power of attorney before he can endorse Hundis on behalf of a firm, in which, his father is a partner, and which is done at the instance of another partner of the firm. This point must therefore be decided against the defendant appellant

12. We now come to the point relating to the Hundis being inadmissible in evidence, & not capable of being acted upon as they are unstamped. The facts in this connection are these. In reply to the plaint, the defendant filed a written statement in which he raised the plea that the Hundis had not been stamped according to law, and were therefore inadmissible in evidence. Thereupon, an issue was framed on the 11-7-1949, on this point in these terms--

'Whether the two Hundis, the basis of the suit, being unstamped, were inadmissible in evidence?'

When evidence, however, began on the 3-1-1950, the defendant's first witness, who was giving evidence on the issue of consideration, had to refer to these Hundis in order to prove that they were without consideration. These Hundis were then marked as Exs. P 1 and P 2 on the 3-1-1950, and the usual endorsement was put on them on that day with the words 'admitted in evidence' and signed by the Judge.

These Hundis were thereafter refered to by other witnesses as Exs. P1 and P2. The statement of D. W. 1 Somchand in this matter is this. 'I can identify those Hundis. I have seen Ex. P. 1 and Ex. P. 2. These are the same Hundis.' It may be mentioned that the execution of the Hundis was not denied by the defendant, and so they had not to be formally proved.

13. When arguments came to be heard on the issue relating to the inadmissibility of the Hundis, it was urged on behalf of the plaintiffs that as those Hundis had been admitted in evidence, it was not open to the court to reject them from evidence on the ground that they had not been duly stamped.

The trial court in this connection relied on certain authorities under Section 36 of the Stamp Act, and held that as those Hundis were admitted in evidence on the 3-1-1950, they could not be rejected from evidence thereafter. It, therefore, refused to decide issue No. 2 relating to the admissibility of the Hundis on the merits, and decided it in favour of the plaintiffs under the provisions of Section 36 of the Stamp Act.

14. We may here mention that these Hundis were executed in December, 1946, when the Marwar Stamp Act of 1914 was in force. That law was different from the Indian Stamp Act in as much as Section 11 of that law provided that duty and penalty could be charged even in cases of documents which bore oneanna stamp or which were negotiable instruments like Hundis. This suit was filed in January, 1949, and the plaintiffs apparently acting on the law of 1914 paid duty and penalty along with the plaint when they put in the Hundis.

The trial court, however, seems to have lost sight of the fact that in 1947 a new Stamp Act had come into force in the former State of Marwar, & that law changed the provision in the Marwar Stamp Act of 1914, and was in the same terms as the Indian Stamp Act. By the Marwar Stamp Law of 1947, an instrument chargeable with the duty of an anna or half an anna or a negotiable instrument like a Hundi could not be admitted, on payment of duty and penalty, vide Section 35, proviso (a) of the Marwar Stamp Act (No. XV) of 1947, which is in the same terms as Section 35, proviso (a) of the Indian Stamp Act.

15. Two questions, therefore, arise for decision. The first is whether duty and penalty could be realized on these Hundis after the Marwar Stamp law of 1914 had been repealed by the Marwar Stamp Act of 1947. We are clearly of opinion that the question of admissibility of a document is a matter of procedure, and the law applicable must be the law in force at the time the document is sought to be admitted.

Therefore, Section 35, proviso (a) of the Marwar Stamp Law of 1947 applied, and it would not be right to apply Section 11 of the Marwar Stamp Law of 1914, and make these documents admissible by charging duty and penalty. We may in this connection refer to our decision in Ratan Lal v. Dau Das ILR 1953-3 Raj 833: (AIR 1954 Raj 173) (A). We have held there that a procedural provision will apply retrospectively in all matters arising after the procedure came into force, even though the transactions, in connection with which that procedure has to be applied, took place before the procedural law came into force.

We may also in this connection refer to Nundun Misser v. Mt. Chittur Buttee 21 Suth WR 446 (B) in which it was held that even where a document was executed before a date when Act XVIII of 1869 came into force, it could only be admitted in evidence under the conditions prescribed under the Act of 1869 if it was unstamped. Though, therefore, in this case the Hundies were executed when the Marwar Stamp Act of 1914 was in force, they could only be admitted in evidence in 1949 according to the provisions of the Marwar Stamp Act of 1947 relating to unstamped documents.

The Hundis in this case, therefore, could not be admitted in evidence in view of the clear provisions of Section 35, proviso (a) of the Marwar Stamp Act of 1947 on payment of duty and penalty. The fact, therefore, that duty and penalty were paid in this case is of no consequence.

16. Then we come to the second question, namely whether the so-called admission of these two documents on the 3-1-1950, bars the decision of issue No. (2) relating to their admissibility in view of Section 36 of the Stamp Act. A similar matter came up for consideration in Ratanlal's case (A).

We then reviewed a large number of authorities, and came to the conclusion that once an instrument has been admitted in evidence either after judicial determination of the issue relating thereto where such issue has been raised, or because no objection was taken to its admissibility, but not by pure mistake, such admission cannot be called in question at anystage of the same suit or proceeding on the ground ofinsufficiency, of stamp.

A number of authorities have been cited before us it the bar, but we do not think it necessary to review them once again after our decision in Ratanlal's case to which we adhere. What falls for consideration in this case is whether the so called admission on the 3-1-1950, bars the calling in question of the admission of these Hundis when the case came to be argued before the court later,

17. To decide this question let us review the facts. There was an objection as to the admissibility of these Hundis, and that objection was taken in the written statement by the defendant An issue was framed based on that objection on the 11-7-1949. That issue has never been decided on the merits. What happened was that on the 3-1-1950, when the first witness for the defendant began giving evidence these Hundis were referred to, for purposes of identification, as Exs. P1 and P2.

But unfortunately, the court, when putting the endorsement on Exs. P1 and P2 rioted the words 'admitted in evidence', and signed it. It is because of those words in the endorsement that it was urged later at the time of arguments that the two Hundis had been admitted, and further consideration of their admissibility under issue No. (2) was barred by Section 36. We are clearly of opinion that on these facts the so called admission of these two Hundis was a pure mistake.

The court should not have forgotten that there was an issue as to the admissibility of these Hundis; but it seems that that fact was overlooked, and the Hundis were marked Exs. P1 and P2, and the court signed below the words 'admitted in evidence'. This in our opinion, was a case of admission by pure mistake, and as decided in Ratanalal's case (A), an admission by pure mistake cannot rule out the consideration of the admissibility of a document at a later stage.

18. It was urged that it was the duty of thedefendant's counsel, when these documents werereferred to as Exs. P1 and P2, to object, and bringissue No. (2) to the notice of the court, and that in asmuch as this was not done we must assume that thatissue was being waived by the defendant. We arenot prepared to accept this contention. The issuewas there, and there was no waiver of that issue atany stage. All that happened, in our opinion, wasthat these documents were marked Exs. P1 and P2for purposes of identification.

In this connection, we particularly refer to thestatement of the first witness Somchand D. W. 1 whosaid that he could identify those Hundis, and that hehad seen Exs. P1 and P2, and that they were the sameHundis. This marking, in our opinion, was purely foridentification, but by mistake the court signed on theendorsement under the words 'admitted in evidence'.In these circumstances, the trial court was not right in not deciding issue No. (2) on the merits.

19. As the trial court has not decided issue No.2 on the merits, and Section 36 does not bar our considering the question of admissibility, we propose to decide that issue on the merits. It is enough to say that it is not disputed by the plaintiffs that the two Hundis required stamp under the Marwar law as it was when they were executed in December, 1946. This admission is clear from the fact that the plaintiffspaid duty and penalty for the admission of these documents along with the plaint.

Unfortunately for the plaintiff's however the Marwar Stamp Act of 1947 was in force when the plaintwas filed, and these Hundis being bills of exchangecould not be admitted in evidence on payment ofduty and penalty in view of Section 35, proviso (a) of theMarwar Stamp Act of 1947. We are, therefore, clearly of opinion that these two Hundis are inadmissiblein evidence. Once these Hundis go out from therecord, the suit must fail because it is based on theseHundies only.

20. It was urged on behalf of the plaintiffs that as the defendant admitted execution of the Hundis, no question of their admission arose, and therefore the suit should be decreed. Reliance in this connection was placed on Section 58 of the Evidence Act and two cases of the Madras High Court, namely Alimane Sahiba v. Subbaraudu (AIR 1932 Mad 693) (C), and Ponnusami Chettiar v. Kailasm Chettiar AIR 1947 Mad 422 (D).

Section 58 provides that no fact need be proved in any proceeding which the parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands or which, by any rule of pleading in force at the time they are deemed to have admitted by their pleadings. This section only dispenses, with the necessity of proof. The argument is that there was no necessity of proving these Hundis as their execution was admitted, and therefore their admissibility or inadmissibility was on no consequence.

Section 35 of the Stamp Act, however, not only makes instruments, which do not bear the requisite stamp, inadmissible, but also incapable of being acted upon by the court. In the two Madras cases cited above AIR 1932 Mad 693 (C) and AIR 1947 Mad 422 (D), this aspect of Section 35 was lost sight of, and it was held that as the documents, which were unstamped, did not require proof, their admissibility or otherwise was immaterial. The question, however, in this case is whether the Hundis, which were the basis of the suit, could be acted upon.

Section 35 makes them, not only inadmissible, but also incapable of being acted upon. Once therefore it is held that they do not bear the requisite stamp, they not only become inadmissible, but also cannot be acted upon. This aspect of the matter was pointed out in another Madras case, Achutaramana v. Jagannadham AIR 1933 Mad 117(E) and the decision in the earlier Madras case (C) was not followed.

21. In Chenbasapa v. Lakshman Ramchandra ILR 18 Bom 369 (E) it was held that a Hundi was acted upon where a decree was passed on it, whether proved or admitted, and that the Court could not give effect to it in either case. That was a case where Hundis, which were unstamped and thereby inadmissible in evidence, were acted upon by the judge who decreed the claim holding that the defendants' admissions in their written statement rendered it unnecessary to put the Hundis in evidence.

22. In Sohan Lal Nihal Chand v. Raghu Nath Singh AIR 1934 Lah 606 (G) it was held that 'a decree cannot be passed on the basis of a pro-note which is inadmissible in evidence even if the defendant admits his liability on it.'

23. In Mulla's Stamp Act (5th Edn.), 106, the learned author summarised the law thus after referring to a number of authorities--

For the same reason, when a suit is brought upon an instrument which is not duly stamped tile admission of the contents of the instrument made by the defendant in his written statement does not avail the plaintiff.'

24. We are, therefore, of opinion that the fact that the defendant admitted the execution of the Hundis would not entitle the plaintiffs to get a decree upon the basis of them, because that would amount to acting on the Hundis, which do not bear requisite stamp, and this is what Section 35 definitely forbids.

25. We, therefore, allow the appeal, set aside that judgment and decree of the court below, and dismiss the plaintiffs suit. As, however, the defendant has succeeded on a technical plea, we order parties to bear their own costs throughout.


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