Alagappa Chetti vs A.L.A.L.N. Narayanan Chettiar

Sundaram Chetty, J.—In this second appeal, two questions have been raised and argued before ma. The first question is whether the suit

document, Ex. B, which has been admitted in evidence by both the Courts below as a hundi, is to be taken as sufficiently stamped and should be

admitted in evidence and acted upon. The second question is whether this document is supported by consideration, or in other words, whether

there is any legal consideration for it.

As regards the admissibility of this document, it has to be stated that the wording of the document is such as would bring it, either under the

category of a promissory note or under a bill of exchange which includes a hundi. The lower appellate Court says that this document is worded in

the way in which hundis are usually written. That seems to be the view of the first Court also. There is however nodoubt that this document comes

also within the definition of a promissory note. At best, it may be said that this is an ambiguous document, as it can be construed either as a

promissory note or a bill of exchange. In such a case Section 17, Negotiable Instruments Act, provides that the holder may at his election treat it as

either, and the instrument shall be thenceforward treated accordingly. The holder in the present case has elected to treat it as a hundi and on that

basis filed this suit. If it is to be treated as a hundi, there is no question of insufficiency of stamp, and we must hold that the document has been duly

stamped. If by reason of Section 17, this document should be treated by the Court as a hundi for all purposes, there is no difficulty whatever. But it

is contended by Mr. 3. Varadachariar for the appellant that this instrument can be treated as a hundi by reason of Section 17 of the said Act or the

purposes of that Act alone and not for the purposes of the Stamp Act. This contention, if approved, would deprive the holder of the benefit

conferred upon him by Section 17. The right of election given to him is a privilege which he must have the full advantage of, and that benefit should

not be taken away by anything contained in the Stamp Act. It would be reasonable to read Section 17, Negotiable Instruments Act, as a proviso

to Section 6, Stamp Act.

Assuming that that section is not to be affected by the provisions of Section 17, Negotiable Instruments Act, we have to see how the position in

this case would be. As I have already said, this document is capable of being construed as a promissory note or as a bill of exchange. That being

so, u/s 6, Stamp Act, it will be chargeable with the higher duty leviable on a promissory note. A stamp duty of 4 annas would be payable as a

promissiory note, but it bears only a one anna stamp which would be sufficient, if it is a hundi payable on demand. If Section 6, Stamp Act, is to

govern the present case, a difficulty arises in the matter of admitting this document in evidence. Being a promissory note, it cannot be admitted in

evidence even by levying the deficient stamp duty and penalty by reason of Section 35, Stamp Act. But reliance is placed on the wording of

Section 36, Stamp Act, by Mr. Patanjali Sastri for the respondent and it is contended that once this instrument has been admitted in evidence by

the Court below, such an admission shall not be called in question at any subsequent stage of the suit, on the ground that the instrument has not

been duly stamped. Section 35 states that no instrument chargeable with duty shall be admitted in evidence for any purpose or shall be acted upon,

unless such instrument is duly stamped. The question is, whether the wording of Section 36 is comprehensive enough to include in the term

admission"" the necessary consequences of such admission. It is argued for the appellant, that the appellate Court, by reason of Section 36 is

precluded only from questioning the admission of such an instrument by the lower Court, but is at liberty not to act upon it, if it should hold that the

document was not duly stamped. Reference was made to Sub-section (2), Section 42, Stamp Act, which deals with the effect of the endorsement

on an instrument in respect of which stamp duty and penalty have been levied.

Once the instrument is so endorsed shall become admissible in evidence and may be acted upon as if it had been duly stamped from the

beginning. That section has no application to the present case as no duty and penalty have been levied by the lower Court. What the lower Court

did was to treat it as an instrument duly stamped and to admit it in evidence and act upon it. The interpretation of Section 36 as contended for by

Mr. S. Varadachariar seems to be a very narrow one. The result of such an interpretation would to be render an instrument admitted in evidence

by the lower Court, of no further use whatever to the party at any later stage of the suit. The expression ""acting upon an instrument"" does not

merely indicate the passing of a decree upon such a document. If the Court admits a document in evidence, such document can be made use of by

the Court as a piece of evidence in order to come to a conclusion upon an issue in the case or it can be considered for the purpose of

understanding the evidence itself in the case. If the admission in evidence by the lower Court can alone bo free from question by the appellate

Court u/s 36 the document once admitted in evidence by the first Court would be practically a dead letter and be of no use whatever to the party

who wanted to rely upon it. It is difficult to infer that such would have been the intention of the legislature, when it stated that such admission of an

instrument in evidence shall not be called in question at any subsequent stage of the same suit. If such a document happens to be the basis for a

suit, the passing of a decree would be one of the modes of acting upon it. The observations of Richardson, J., in the decision reported in Rang Lal

Kalooram v. Kedar Nath Kesriwal AIR 1921 Cal. 613, appear to be germane to the present case.

The learned Judge observes that once an instrument is admitted in evidence in any proceeding u/s 35, Stamp Act, it is available in that

proceeding for all purposes as if it had been properly stamped at the outset and that proceeding will go through to a valid termination and cannot

afterwards be challenged for want of jurisdiction by reason of noncompliance with the Stamp Act. If such an interpretation is not adopted, the

purpose with which Section 36 Stamp Act, was enacted would run the risk of being nullified. The view of Richardson, J., in the said case was also

adopted in a later decision of the Calcutta High Court in Joyman Bewa v. Easin Sarkar AIR 1926 Cal. 877

On a comparison of the wording of Section 42(2) with that of Section 36, it is urged by the learned advocate for the appellant that a distinction

between the admission of a document in evidence and the acting upon such a document was recognized by the legislature. I agree that such a

distinction does exist, but the question now is whether the wording of Section 36 can be reasonably construed in the manner set forth above. I am

clearly of the opinion that once a document has been admitted in evidence by the lower Court u/s 35, such admission cannot be questioned at any

later stage of the same suit or proceeding on the ground that the instrument has not been duly stamped and the natural consequences of that

admission which has become final must also follow. The appellate Court cannot say that though it has been marked as an exhibit in the case, it

would not look into it and would not make use of it in the appreciation of the evidence or would not allow a decree to be passed on such a

document. Even if Section 6, Stamp Act,, should be held to govern this case, the provisions of Section 36 of the Act preclude this Court from

refusing to Act upon this document. In any view therefore the contention that the suit document is not duly stamped and therefore cannot be acted

upon by this Court cannot prevail. (The judgment then proceeded to consider the finding as to the consideration and concluded). I am not inclined

to differ from the concurrent finding of both the Courts below that the suit hundi is supported by proper consideration. The second appeal

therefore fails and is dismissed with costs.