Alapati Achutaramanna vs Vasireddi Jagannadham and Another

Krishnan Pandalai, J.—The petitioner''s suit for Rs. 400 and interest thereon was dismissed by the learned District Judge of West Godavari

on the ground that the promissory note sued on was inadmissible in evidence as it bore only one anna stamp instead of two annas stamp and that

the plaintiff''s case which he attempted to make by amendment of the plaint that the loan was given some eight days before the note was not in fact

true. Consequently, according to the learned Judge, the loan and the note being contemporaneous, the suit for the loan was not maintainable

because the note was inadmissible, vide Muthu Sastrigal v. Viswanatha Pandara Sannadhi ILR (1913) 38 Mad. 660 : 26 M.L.J. 19

In this Court, it is contended for the petitioner that the learned Judge failed to see that both the note and the loan were admitted by the

respondent-defendant in his written statement and that consequently by Section 58 of the Indian Evidence Act it was not necessary for the plaintiff-

petitioner to prove either the note or the loan. The written statement of the defendant does contain an express admission of the execution of the

promissory note as well as an implied admission of the receipt of the loan. The petitioner''s contention is that in such cases no question of

admissibility of evidence arises because evidence is dispensed with of facts admitted in the pleadings. For the application of that doctrine to this

class of cases reliance is placed upon the decision of Anantakrishna Aiyar, J., in Alimane Sahiba Vs. Kolisetti Subbarayudu, . In that case, in a suit

on a promissory note the defendant in his pleadings admitted execution of the note but pleaded discharge of the note. The note was produced in

evidence and marked apparently without question but later on the defendant discovered that the stamp on the note had not been cancelled and he

then raised the question that the note was invalid by Section 12 of the Stamp Act. The learned Judge on those facts held that Section 58 of the

Indian Evidence Act applied, and, therefore, no question of admissibility of the note arose at all.

In that sense the note sued on in this case was admitted and no question of admissibility therefore arose. But it is answered that the learned

Judge in Alimane Sahiba Vs. Kolisetti Subbarayudu, did not consider the effect of the language of Section 35 of the Stamp Act which says not

merely that unstamped instruments must not be received in evidence but that they must not be acted upon. It was urged that on the latter part of

this language it has been held in Chenbasapa v. Lakshman Ramchandra ILR (1893) 18 Bom. 369, following the decisions of the Calcutta High

Court, that in spite of waiver of proof by an admission u/s 58 of the Indian Evidence Act, a note or other instrument insufficiently stamped cannot

be acted upon or decree given upon it. I have not been referred to anything to contradict this and I must therefore hold that so far as admission of

the inadmissible note is concerned, Section 58 of the Indian Evidence Act does not avail the petitioner, for in respect of it no decree can be given

on the note as, to do so, would be acting upon the note.

But the petitioner has still another string to his bow, and that is the admission of the loan. It is said that by reason of that admission, to which no

prohibition under the Stamp Act can apply,-proof by the plaintiff of the fact of the loan being waived, he is entitled to a decree because the

decision in Muthu Sastrigal v. Viswanatha Pandara Sannadhi ILR (1913) 38 Mad. 660 : 26 M.L.J. 19 relied upon by the Lower Court for refusing

to give a decree for the loan is based upon the inadmissibility of the proof of a loan which is contemporaneous with an inadmissible note by Section

91 of the Evidence Act. Where, therefore, there is no question of proof, Section 91 does not come into play at all. To this the respondent''s

answer is that the prohibition of a decree on a loan which is contemporaneous with an inadmissible note is not due merely to the difficulty of proof

created by Section 91 of the Indian Evidence Act but something more fundamental, namely, absence of any cause of action independent of the

note. In brief, the respondent''s answer is that where there is a loan and a contemporaneous promissory note which is inadmissible for want of

proper stamp there is no cause of action for the loan independently of the note.

I am not able to say, though there are stray expressions in the judgment of Sadasiva Aiyar, J., in Muthu Sastrigal v. Viswanatha Pandara

Sannadhi ILR (1913) 38 Mad. 660 : 26 M.L.J. 19 capable of that meaning, that this was the real ground of his decision. On the contrary, he does

expressly refer at p. 663 to the ground of the decision in these words:

To import the doctrines laid down in English cases about vague obligations to repay arising out of equity and not out of contract, or about

obligations which can be enforced if the plaintiff skilfully draws up his plaint as one on account for money had and received concealing the real

contract of loan which had been reduced to the form of a document is, it seems to me, merely trying to nullify Section 91 of the Indian Evidence

Act.

And Spencer, J., says practically the same thing. In the decision which was relied upon in that case, Pothi Reddi v. Velayuda Sivan ILR (1886)

10 Mad. 94, the matter is put in similar language at p. 97. There money had been paid in the morning and in the evening a document which was

held to be a promissory note and not properly stamped was exchanged. It being held that the instrument was a promissory note the question arose

whether the plaintiff might be permitted to prove and succeed on the loan. The learned Judges say:

We cannot assent to such a doctrine, and to do so would entirely nullify the provisions of Section 91 of the Indian Evidence Act.

And later

It is a necessary condition to every written contract that the terms should be orally settled before they are reduced to writing, and to hold when

such a contract has been reduced to writing, that a plaintiff can take advantage of the absence of a stamp on the promissory note to sue at once for

the return of money which he may have contracted to lend for a fixed period, would entirely defeat the provisions of Section 91 of the Indian

Evidence Act.

In this case also, the Court founded its decision on Section 91 of the Indian Evidence Act and did not purport to lay down that where there is a

cause of action complete in itself before the giving of the promissory note and independently of it, the plaintiff would not be able to prove it.

The question then is, whether this is a case where substantively the petitioner has an independent cause of action apart from the note. If he has,

the admission of the loan in the written statement is u/s 58 of the Indian Evidence Act sufficient to waive the requirements of further proof and to

enable the petitioner to succeed thereon. But if there is no such cause of action, the mere admission of the fact by the defendant could not give him

a cause of action and that is not a matter cured by Section 58 or any other section of the Indian Evidence Act. On this point, two decisions of the

Calcutta High Court have been cited, one in Sheikh Akbar v. Sheikh Khan ILR (1881) 7 Cal. 256, and the other in Pramatha Nath Sandal v.

Dwarka Nath Dey ILR (1896) 23 Cal. 851. In the earlier case, Garth, C.J., described the two classes of cases, the first in which the plaintiff has a

cause of action independently of the inadmissible instrument and the second where there is no such cause of action. In the ease before him he held

that there was no such independent cause of action. In Pramatha Nath Sandal v. Dwarka Nath Dey ILR (1896) 23 Cal. 851 Sir Comer Petheram,

C.J., and another learned Judge had a case very like the present. The plaintiff had lent Rs. 200 to the defendant and taken a hatchitta which was

held to be a promissory note which should have been stamped with a two-anna stamp but only bore one anna receipt stamp. The Judge of the

Small Cause Court came to the conclusion that the plaintiff had no cause of action independently of the document and the document itself being

inadmissible dismissed the suit. It was held that this dismissal was wrong. The learned Chief Justice said:

The defendant by his written statement admitted that he borrowed Rs. 200 from the plaintiff, and there can be no doubt that an implied contract to

repay money lent always arises from the fact that the money is lent, even though no express promise, either written or verbal, is made to repay it.

Referring to Sheikh Akbar v. Sheikh Khan ILR (1881) 7 Cal. 256, which was cited for the defendant and after setting out a passage from

page 260 thereof, the learned Chief Justice proceeded:

These words, taken alone, may seem to indicate that when a bill or note is taken for a debt the action must be brought upon the bill or note; and

that if for any reason the document is excluded, the action must fail; but a reference to the earlier portion of the judgment shows that such was not

the meaning of the Chief Justice, and that when he spoke of a deposit he did not mean a loan, as he then says where money is lent and a bill or

note given for the loan which is not paid at maturity, the creditor may disregard the note and sue on the original consideration.

I very respectfully adopt these words and think that there is nothing to show that that case is not applicable to the present or similar cases.

This view is as far as I know not against any decision of this Court to which my attention has been drawn and it is in keeping with the English

decisions upon the point and is certainly in consonance with the requirements of substantial justice. For though the defendant contested the suit on

the ground that the note was inadmissible in evidence, he not only admitted the loan in his pleading but had a month before the suit provided for its

payment by executing a mortgage and leaving money with the mortgagee to pay the plaintiff. Holding therefore that the loan sued for was admitted

by the defendant in his pleadings and that therefore no further proof was required, the plaintiff-petitioner was entitled to a decree. The decree of

the learned District Judge is set aside and that of the District Munsif restored. The petitioner will have his costs here and in the District Court.