Jatindra Mohan Deb Laskar vs Khara Singh and others

C.S. Nayudu, J.—The simple point that arises in this revision petition is whether a promissory note which is insufficiently stamped can be relied upon as evidence for any purpose u/s 35 of the Stamp Act. The facts out of which this revision has arisen may be briefly noticed.

The opposite party No. 1 in this petition brought a suit to recover a sum of Rs. 600/- from file petitioner who, according to the plaintiff, had executed a promissory note in favour of the plaintiff''s father for a sum of Rs. 600/-. Opposite party No. 2 was added as defendant No. 2 on the ground that he was a member of the joint family of the petitioner-defendant No. 1. It would appear that on the death of plaintiff''s father, there was a family partition in the family of the plaintiff under, which the debt in favour of the plaintiff''s father fell to the share of the plaintiff, and accordingly the plaintiff demanded payment of the money due thereunder, and the petitioner herein executed the suit document marked as Ex. 1 in the case, in respect of that debt.

The trial court dismissed the plaintiff''s suit on the ground that the suit promissory note was insufficiently stamped and, therefore, could not be relied on for any purpose having regard to the plain language of section 35 of the Stamp Act. On appeal, the Subordinate Judge, Cachar at Silchar, reversed the decision of the Additional Munsif on the ground that although the promissory note was inadmissible in evidence u/s 35 of the Stamp Act, it could nevertheless be used as an acknowledgment of liability of the prior debt, and a decree could, therefore, be given to the plaintiff on that footing. So holding, he decreed the plaintiff''s suit reversing the decision of the Additional Munsif. Hence this revision petition by the first defendant in the suit.

The learned Subordinate Judge relied on a decision of the Nagpur High Court, reported in AIR 1938 294 (Nagpur) wherein it was laid down by a single Judge of that Court that where a promissory note was not properly stamped and was inadmissible in evidence as acknowledgment of debt under Art. 1, Stamp Act by reason of Section 35 of the Stamp Act, is admissible in evidence to prove the fact that the debtor made an admission of liability to pay, apart from any intention of supplying evidence of such debt. It was further held in that case that Section 35 comes into play Only if the document is used as containing within itself any matter which would extend the creditor''s right to recover money; but if the creditor derives his right not from the document itself, as would be the case if it were treated as an acknowledgment under Art. 1, but from the Limitation Act in consequence of the admission of the liability simpliciter contained in that document, Section 35 has no applicability. It is unfortunate that the learned single Judge, who decided this case did not apply his mind to an earlier decision of the same High Court, in the case of AIR 1933 391 (Nagpur) , wherein it was held that it a promissory note is to be inadmissible in evidence because it is insufficiently stamped it must be in admissible in evidence also as a written acknowledgment, and that it is, not correct to say that to use the note as an acknowledgment is to use it for a collateral purpose; on the contrary it is akin to the main purpose of the deed itself, which is an acknowledgment of money either due or paid at the time.

That apart, the learned Subordinate Judge did not take the trouble of examining the subsequent decisions on the point. It is sufficient to refer to the case of Jung Bahadur Ahir and Another Vs. Bansropan Singh and Another, , wherein Fazl Ali C.J. held, referring to the various decisions of different High Courts on the point, that when a document which is primarily a promissory note is insufficiently stamped, it is not admissible in evidence to prove an acknowledgment of liability in order to save limitation in respect of a promissory note previously executed. The learned Chief Justice relied on two decisions--one of the Madras High Court, reported in Penatapati Nageswara Rao Vs. Moka Narayanamurthi and Another, and the other of the Calcutta High Court, reported in Jogendra Chandra Banerji v. Sacheendra Kumar ILR 63 Cal 813. In Penatapati Nageswara Rao Vs. Moka Narayanamurthi and Another, , a Division Bench of the Madras High Court, consisting of Leach C.J. and Varadachariar J., held that an improperly stamped promissory note cannot be admitted if evidence to prove acknowledgment of liability in order to save limitation in respect of promissory notes previously executed.

Mr. Lahiri, the learned Counsel for the opposite party No. 1, invited my attention to a Single Bench decision in the case of Mangala Lakshmappa Vs. Pathala Musud Sahib, , wherein the learned Judge held, dealing with Section 36 of the Stamp Act, that the words of section 36 are perfectly general and are not restricted in their application to such documents only as can be received in evidence on payment of the stamp duty and penalty, and that Section 36 can be applied to instruments which form the very Basis of the claim made, and that the section enacting that "the admission of the instrument shall not be called in question thereafter" necessarily implies that it must also be acted upon. In view of the subsequent decision of the Division Bench of the Madras High Court, which, in my opinion, lays down the correct law, I cannot accept the observations of the learned single Judge in this case. Mr. Lahiri placed reliance on a decision of the Supreme Court in the case of Javer Chand and Others Vs. Pukhraj Surana, . That decision can hardly have any application to the instant case, as the question that the learned Judges of the Supreme Court had to deal with in that case related to the admissibility of a Hundi in respect whereof Stamp duty and Penalty had been collected under the Marwar Stamp Acts, of 1914 and 1947 This is quite different from a promissory note in respect of which the proviso to Section 35 of the Stamp Act applied. It is true that question or objection as to the admissibility of the document should be raised at the earliest instance, as pointed out by their Lordships of the Supreme Court in that case.

Let us examine the legal implications of Sections 35 and 36 of the Stamp Act. Section 35 of the Stamp Act is in the following words:

No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:

Provided that--

(a) any such instrument not being an instrument chargeable with a duty of ten Naya Paise only, or a bill of exchange or promissory note, shall subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to mate up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees of a sum equal to ten times such duty or portion:

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It is clear from the above provision that a promissory note which is insufficiently stamped cannot be impounded and penalty collected as it could be done in respect of other documents. So far as promissory note is concerned, if it is insufficiently stamped, the main portion of Section 35 comes into operation and there is no escaping the application of that section, and under it the promissory note in question could not be used or received in evidence for any purpose. The section prohibits not only the receiving in evidence but also the acting upon that document.

(7) Mr. Lahiri placed reliance on section 36 of the Stamp Act in support of the proposition that once a document is admitted in evidence, all infirmity attaching to it disappears, and section 35 becomes nugatory. It is a proposition too wide to receive acceptance. Section 36 of the Stamp Act is in the following words:

Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.

The difference in the language between section 35 and section 36 as well as the nature of these provisions should be noticed. While section 35 is a substantive provision, section 36 is merely procedural. While section 35 prohibits without any exception or condition to both the reception in evidence as well as to the acting upon on the document, section 36 merely deals with the question of the admission in evidence being called into question. Section 36 does not, obviously deal with the question of receiving or making use of the document as evidence, or with the acting upon that document. The estoppel or the bar contained in section 36 merely operates against the party who had failed to object, whereas section 35 bars not only the party affected but all the parties as well as the Court dealing with the matter. If it were the intention of the legislature that section 36 should render section 35 nugatory, nothing could; have been simpler for the legislature than to have laid down in section 36 that notwithstanding what is in contained in section 35, when the contingency laid down in section 36 comes to exist, section 36 would prevail and section 35 need not be regarded. The very fact that section 36 makes no reference to section 35 or to the bar contained in it to the acting upon the document leads one to the inevitable conclusion that there is no conflict between the two sections. All that section 36 contains is a rule of procedure which prohibits a party who sleeps over his rights, to wake up and raise objection. If a document is marked as an exhibit and found to be insufficiently stamped subsequently, it can be impounded by the Court or by the competent) revenue authorities and penalty levied and recovered. That is why Section 36 refers to section 61, and the two sections should be read together. Section 61 contemplates the levying of the penalty and provides for impounding the document. Obviously, Section 61 could only apply to those documents in respect of which the penalty can be levied u/s 35, and a promissory note is not one of those documents, as the 1st proviso to section 35 expressly excludes a promissory note. It is this reason that necessitates and enjoins, ipso facto, that the suits based on promissory notes which are insufficiently stamped, should be dismissed.

I have, therefore, no hesitation whatsoever in holding that there is no getting away from the scope and operation of section 35 of the Stamp Act in this case, and at any stage of the litigation it would be open to the Court of law to correct the mistakes committed by the courts below, in their failure to apply and to give effect to the provisions of section 35, and the express and unambiguous bar contained therein. A revision proceeding is certainly a proceeding in which such corrective steps could be taken. In this connection reference may usefully be made to the decision of the Privy Council, reported in AIR 1946 51 (Privy Council) which settled the law on the question.

It is contended by Mr. Dam that assuming that the document could be looked Into as evidence as an acknowledgment of that debt and not as a promissory note, as contended by Mr. Lahiri and as decided by the court below, still the suit document could be relied on as an acknowledgment, only, if the debt which it purports to acknowledge is shown to be not barred by limitation on the date of the acknowledgment. It is admitted on both sides that there is no proof on this point. The plaintiff''s plaint is simply vague and does not refer to the date on which the previous promissory note was executed by the defendant no. 1 in favour of the plaintiff''s father. In the circumstances, if the suit can be regarded as a suit not based on the promissory note but based on Exhibit I as a mere acknowledgment of a debt then, it would be obligatory on the part of the plaintiff to satisfy the Court how he would be entitled to a decree on the basis of such an acknowledgment alone. For this purpose he would have to satisfy the Court that there was a pre-existing debt which, is subsisting and which had been acknowledged by this document, and in the absence of any such proof, the plaintiff cannot be entitled to any relief on that basis. But an examination of the plaint shows that the suit was based on the promissory note itself, as the cause of action portion of the plaint recites as follows:

That the cause of, action for the present suit is the non-payment of the money even on the demand of the plaintiff and it has arisen from the date of the written acknowledgment of the debt executed on 4-9-55 and from the different dates of demand within the jurisdiction of this Court.

The plaintiff had not brought in any proof to show that there was a subsisting debt on the date of the suit document (Ex. 1). In any view of the matter, therefore, the plaintiff cannot succeed and would not be entitled to a decree.

In the result, this revision petition must be allowed, and the judgment of the learned Subordinate Judge which is clearly contrary to law, must be set aside.

I accordingly allow this revision, set aside the decree of the learned Subordinate Judge and restore that of the learned Additional Munsif. But, in the entire circumstances of the case, I make no order as to costs.