Kapur Singh vs Dalbara Singh

R.L. Anand, J.—(16.11.1990)-One of the questions debated in this case is as to whether a promissory note executed in the year 1972 requires to be stamped with "Refugee Relief Additional Stamp. There arc two decisions of this Court on the subject. In Jagmail Singh v. Gajju Singh 1978 Revenue Law Reporter 134 it was held by Tewatia, J. that such a document docs not require "Refugee Relief'' stamp in view of Section 3-B of the Stamp Act. The said decision was later on followed in R.S.A. No. 1565 of 1978 Walaiti Ram v. Harnek Singh decided on September 3, 1990, by G.R. Majithia, J. With great respect to the Judges dealing with the aforesaid two cases, I beg to differ with the view expressed therein.

Section 3-A of the Stamp Act, as amended by the Central Act No. 4 of 1971, requires that promissory note must bear the "Refugee Relief stamp of ten paise (additional duty). Promissory note is entered in the Union List I at item No. 91, 7th Schedule attached to the Constitution and is thus a Central subject. The Central Government was competent to enact Section 3-A providing additional duty (Refugee Relief) Stamp to be paid on instruments covered by several items mentioned therein which also includes Article 49 of Schedule I attached to the Stamp Act relating to promissory note. Subsequently, Punjab Government enacted Section 3-B of the Stamps Act under President Act 24 of 1971 as under:

3-B. Instruments chargeable with additional duty:

(1) Every instrument chargeable with duty u/s 3 read with Schedule 1-A other than the instruments mentioned in Article Nos. 13, 14, 27, 37,47, 49, 52, 53 or 62(a) shall, in addition to such duty, be chargeable with a duty of ten paise.

(2) The additional duty with which any instrument is chargeable under Sub-section (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps bearing the inscription "Refugee Relief whether with or without any other design, picture of inscription.

(3) Except as otherwise provided in Sub-section (2), the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under Sub-section (1) in respect of the instruments referred to therein as they apply in relation to the duty chargeable u/s 3 in respect of those instruments.

A bare perusal of the aforesaid section makes it quite clear that the Stale Legislature was not legislating on the subject of promissory note covered by item No. 49 of the Schedule attached to the Stamp Act to be charged with additional duty (Refugee Relief). To say that by legislating Section 3-B the State Government had exempted the payment of stamp duty on the promissory note is not correct. Section 3-B enacted for Punjab does not apply to the promissory note and it is Section 3-A as enacted by the Central Act which is applicable to the promissory notes covered by Article 49 to be charged with additional duty (Refugee Relief).

For the reasons stated above, the papers of this case may be laid before Hon''ble the Chief Justice for referring the aforesaid question for decision to the larger Bench.

JUDGMENT

By D.B. (S.S. Sudhalkar & G.S. Singhvi, JJ.)

S.S. Sudhalkar, J. (19.3.1996)

This matter has been placed before us to decide the following question referred by a learned Single Judge:

Whether the promissory note executed in the year 1972 requires to be stamped with a "Refugee Relief additional stamp?

In his reference order dated November 16, 1990, A.L. Bahri, J. took notice of the judgment of D.S. Tewatia, J. in Jagmail Singh v. Gajju Singh 1978 Revenue Law Reporter 131 as well as the judgment dated September 3, 1990 passed by G.R. Majithia, J. in R.S.A. No. 1665 of 1978 (Walaiti Ram v. Harnek Singh) in which the two learned Single Judges have held that document like promissory note does not require ''Refugee Relief stamp in view of Section 3 (B) of the Indian Stamp Act, 1899 (for short the Act'') Bahri, J. also noticed the provisions of Section 3(A) and 3(B) of 1899 Act and observed that the State Legislature was not legislating on the subject of promissory note covered by item No. 49 of the Schedule to the act of 1899 and, therefore, the State Government cannot be said to have exempted the promissory note from payment of stamp duty. Bahri, J. further observed that Section 3(B) added by the Punjab Amendment does not apply to the promissory note and, therefore, promissory note was required to be stamped with ''Refugee Relief stamp.

A brief reference to the facts is necessary to decide the question referred by the learned Single Judge. Kapur Singh (Plaintiff-Appellant) filed suit against the Defendant-Respondent for recovery of Rs. 6,000/-. The basis of the suit is pronote executed by the Defendant as also receipt issued by him in favour of the Plaintiff. The Defendant-Respondent resisted the suit and one of the pleas raised by him was that the pronote and receipt were insufficiently stamped and were inadmissible in evidence. The trial Court framed 7 issues of which issue No. 4 is: "Whether the pronote/receipt in question are understamped and are inadmissible in evidence and if that is so, what is its effect?" The trial Court decreed the suit on 31.10. 1977 but issue No. 4 was decided against the Plaintiff. The learned trial Court held that the pronote was required to be stamped with Refugee Relief stamp and in the absence of the stamp it was inadmissible in evidence. Though the appellate Court reversed the judgment and decree, on issue No. 4 it agreed with the finding recorded by the trail Court regarding inadmissibility of the pronote and the receipt on the ground that the documents are insufficiently stamped.

Section 3(A) has been inserted in the act by Amending Act No. 44 of 1971 and the same has become effective from 15.11.1971 Section 3(B) has been incorporated in the Act by the Indian Stamp (Punjab Amendment) Act, 1971 and it is applicable within the territory of Punjab. These provisions read as under:

3A1. Every instrument chargeable with duty u/s 3 read with Articles Nos. 13, 14, 27, 37, 49, 52, 53 or 62(a) of Schedule shall in addition to such duty be chargeable with a duty of 10 paise.

The additional duty with which any instrument is chargeable under Sub-section (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps bearing the inscription ''Refugee Relief whether with or without any design, picture or inscription.

Except as otherwise provided in Sub-section 2, the provisions of this Act shall also far as may be apply in relation to the additional duty chargeable under Sub-section 1 in respect of the instruments referred to therein as they apply in relation to the duty chargeable u/s 3 in respect of those instruments.

3-B. Instruments chargeable with additional duty:

(1) Every instrument chargeable with duty u/s 3 read with Schedule 1-A other than the instruments mentioned in Articles Nos. 13, 14, 27, 37, 47, 19, 52 or 62(a) shall in addition to such duty, be chargeable with a duty of ten paise.

(2) The additional duty with which any instrument is chargeable under Sub-section (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps hearing the inscription "Refugee Relief whether with or without any other design, picture of inscription.

(3) Except as otherwise provided in Sub-section (2), the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under Sub-section (1) in respect of the instruments referred to therein as they apply in relation to the duty chargeable u/s 3 in respect of those instruments

We may also reproduce Article 246 of the Constitution, entry 91 of the List I and entry 63 of List II of the seventh schedule. The same are as under:

Article 246. Subject matter of laws made by Parliament and by the Legislature of States:

(1) Notwithstanding anything in Clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in list I in the Seventh Schedule (in this Constitution referred to as the "Union List").

(2) Notwithstanding anything in Clause (3), Parliament, and, subject to Clause (1), the Legislature of any State 35 * * * also, have power to make laws with respect to. any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").

(3) Subject to Clauses (1) and (2), the Legislature of any State 35 * * * has exclusive power to make laws with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List:).

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included 36 (in a State) notwithstanding that such matter is a matter enumerated in the State List.

Entry 91 of List:

Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.

Entry 63 of List II:

Rates of tamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.

Article 246(1) begins with a non-obstante clause and lays down that Parliament shall have exclusive power to make laws with respect to the matters enumerated in List I (Union List). By virtue of Article 246(2), the Parliament as well as the State Legislature are empowered to make laws with respect to any of the matters enumerated in List III (Concurrent List) and in terms of Article 246(3), the State Legislature have the exclusive power to make laws for their respective States or any part thereof with respect to any of the matters enumerated in List II (State List). Residue power vests with the Parliament by virtue of Article 246(4). Article 254 deals with the contingencies in which there is an inconsistency between the laws made by the Parliament and the laws made by the legislatures of the States. Clause I of Article 254 declares that the law enacted by the Parliament which it is competent to enact or any provision of the existing law with respect to the matters enumerated in the Concurrent List shall prevail as against the law made by the Legislature of a State and to the extent of repugnancy, the State law shall be void. Only in respect of the matters enumerated in Concurrent List, the legislature of a State can enact a law and such law shall prevail in that State in case the same has received assent of the President.

Entry 91 of the Union List deals with the rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. Entry 63 of the List II (State List) relates to the rats of stamp duty in respect of documents other than those specified in List I (Union List). It is, therefore, crystal clear that the Parliament has been vested with the exclusive power to enact law regarding the rates of stamp duty in respect of promissory notes. Therefore, Section 3-B enacted by the Punjab Amendment Act, 1971 will have to be read in such a manner that it does not treat in the field occupied by List I. In feet a bare reading of Section 3(B) makes it clear that the State legislature was not enacting law on the subject of promissory note which is covered by Item No. 49 of the Schedule attached to the Stamp Act. The use of expression "other than the instruments, mentioned in Sections 13, 14, 27, 37, 47, 49, 52, 53 or 62(a)" clearly shows that Punjab law does not deal with Stamp duty on promissory notes. ,

In Jagmail Singh v. Gajju Singh (supra) D.S. Tewatia, J. considered the scope of Section 3(b) and Article 49 of the Act and held "a perusal of provisions of Section 3-B of the Stamp Act would reveal that it expressly exempted instruments covered by Article 49 from the purview of the provisions of Section 3-B. Article 49 refers to the promissory notes and a pronote is also a promissory note. So, it has to be held that the promissory note was not to bear the "refugee stamp". That means that the "Refugee Stamps''" borne by the pronote was unnecessary and by virtue of its remaining uncancelled it can merely be said that the pronote can at best be considered to be not bearing the stamp which it otherwise was not required to bear. Thus a pronote otherwise bearing the requisite stamp duty cancelled, has to be considered as duly stamped, and, therefore, to be exhibited in evidence.

In his judgment in Walaiti Ram v. Harnek Singh (supra), Majithia, J. simply followed the view expressed by Tewatia, J. in Jagmail Singh''s case (supra).

With great respect, the view taken by Tewatia, J. is clearly erroneous. There is nothing in Section 3 (b) to indicate that it grants exemption to any particular instrument from the payment of stamp duty. Rather that Section 3(B) does is to impose a duty of ten paise on the instruments which are not covered by Article Nos. 13, 14, 27, 37, 47, 49, 52, 53 and 62(a) mentioned in the Schedule. This provision is intended to impose additional duty on documents which may not be subject to such duty u/s 3(a). Similarly the view taken by Majithia, J. in Walaiti Ram v. Harnek Singh (supra) does not represent the correct position of law.

We, therefore, hold that the promissory note is required to be stamped with "Refugee Relief stamp u/s 3(A) of the Act.

Now the file of the case be placed before the concerned Single Bench for decision on other points.