M/s. Mulji Mehta and Sons and others vs C. Mohan Krishna

This revision petition is filed by the defendants against the order passed in O.S. No. 182 of 1985 on the file of the Principal Subordinate Judge, Rangareddy District at Saroornagar.

The plaintiff had filed the suit to recover an amount of Rs. 2,10,000/- on the foot of eight promissory notes each of the value of Rs. 25,000/-. They were executed by the defendants in favour of M/s. Sugeshan Finance Investment as holders-in-due-course. The defendants contested the suit. They also filed written statements. They disputed the assignment of the pronotes in favour of the plaintiff by M/s. Sugeshan Finance Investment. Issues were framed and trial commenced on 28-11-1994 on which date, PW 1 was examined. The eight pronotes were marked as Exts. A-1 to A-8. When the endorsement on the reverse of the said pro-notes were sought to be marked, the defence counsel raised objections that the endorsements are not transfers, they are assignments of pronotes and, therefore, the plaintiff has to pay the stamp duty and penalty under the Indian Stamp Act. The learned Principal Subordinate Judge, considering the rival contentions and also relying upon some decisions, held that the endorsements are in the form of transfer of debt and not the assignment of debt and as such, they do not require any stamp duty to be paid. Aggrieved by the said order, the present revision petition is filed by the defendants.

The learned counsel for the revision petitioners submitted that on the reverse of the pronotes, the word ''assigned'' is specifically written and that in such a case, it amounts to conveyance and to validate the assignments, stamp duty has to be paid by virtue of S. 130 of the Transfer of Property Act. In support of his contention, he relied on the judgment of the Supreme Court in Smt. Kamala Devi Vs. Seth Takhatmal and Another, , wherein considering the scope of Ss, 94 to 98 of the Indian Evidence Act, the Supreme Court held (at p. 863 of AIR):

"These observations only apply the well settled rule of construction of documents to a surety bond. Sections 94 - 98 of the Indian Evidence Act afford guidance in the construction of documents; they also indicate when and under what circumstances extrinsic evidence could be relied upon in construing the terms of a document. Section 94 of the Evidence Act lays down a rule of interpretation of the language of a document when it is plain and applies accurately to existing facts. It says that evidence may be given to show that it was not meant to apply to such facts. When a court is asked to interpret a document, it looks at its language. If the language is clear and un-ambiguous and applies accurately to existing facts, it shall accept the ordinary meaning, for the duty of the Court is not to delve deep into the intricacies of the human mind to ascertain one''s undisclosed intention, but only to take the meaning of the words used by him, that is to say his expressed intentions. Sometimes when it is said that a Court should look into all the circumstances to find an author''s intention, it is only for the purpose of finding out whether the words apply accurately to existing facts. But if the words are clear in the context of the surroud-ing circumstances, the Court cannot rely on them to attribute to the author, an intention contrary to the plain meaning of the words used in the document. The other sections in the said group of sections deal with ambiguities, peculiarities in expression and the inconsistencies between the written words and the existing facts. In the instant case, no such ambiguity or inconsistency exists as we shall demonstrate presently. The Privy Council''s case was one of ambiguity and the surrounding circumstances gave the clue to find out the real intention of the parties expressed by them."

In view of the above decision of the Supreme Court, the learned counsel submitted that the scope of the word actually used on the reverse of Exs. A-1 to A-8 should be taken in arriving at the true meaning of the word. As the word ''assigned'' was used, it amounts to transfer of actionable claims and it requires stamp duty to validate the assignment by virtue of S. 130 of the Transfer of Property Act.

On the other hand, the learned counsel for the respondent submitted that even though the word ''assigned'' was used on the reverse of Exs. A-1 to A-8, the real intention is only endorsement which falls under S. 16 of the Negotiable Instruments Act. The endorsement on Exs. A-l to A-8 reads as follows :

"assigned to Sri C. Mohan Krishna, Saroornagar or order for valuable consideration received."

There is a clear direction that the promissory notes are transferred to Sri C. Mohan Krishna and also to his order for valuable consideration. In view of this, it should be taken as endorsement even though the word ''assigned'' is used. He further submitted that there cannot be any transfer of promissory note by assignment. Only a debt can be assigned. The promissory notes have endorsements and they are actually endorsed in favour of C. Mohan Krishna, Saroornagar or to his order for valuable considerations. In view of this, the endorsement certainly falls within the purview of S. 16 of the Negotiable Instruments Act. The intention of the parties should be gathered in the context they are used. If pronote amount can be conveyed by means of endorsement, it cannot be taken that they are assigned inviting the payment of stamp duty and penalty. In support of his contention, he relied upon the judgment of the Madras High Court in P.K. Murugan Vs. Vallabhan Kantan Styled Kunhanunni and Another, , wherein it was held as follows (at p. 55 of AIR):

"(8) Under S. 16 Negotiable Instruments Act, if the endorser signs his name only, then the endorsement is said to be "in blank" but where he adds a direction to pay the amount mentioned in the instrument to or, to the order of a specified person, the endorsement is said to be "in full"; and the person so specified is called the "indorsee" of the instrument. Where no specific words are mentioned to denote how the direction to pay should be made out, it has to be said that when in a promissory note the endorser used the word "assign" it should be understood as a direction to pay the amount mentioned in the instrument to or to the order of a specified person. Looked at in this way the authority conferred on the plaintiff to realise the amount can be said to be an "endorsement in full". In Stroud''s Judicial Dictionary,. Vol. 2, the following is the meaning given to the word "endorse":

"Indorsement is that, that is written upon the back of a deed as the condition of an obligation is said to be endorsed for that that is written on the back of the obligation".

(Termes de la Icy)

We cannot say that the Malayalam writing is tantamount to any conveyance or assignment as contemplated in S. 2, sub-s. (10) of the Stamp Act."

I agree with the submissions made by the-learned counsel for the respondent and the ratio of the above judgment. There cannot be any assignment of promissory note though there can be assignment of debt. The intention is gathered from the words actually used in the endorsements on the back of Exs. A-1 to A-8. They indicate that the party intended only to endorse but not assign the amounts covered by the promissory notes. There is no question of transfer of actionable claims attracted by S. 130 of T.P. Act. Therefore, I am of the view that even though the word "assign" is used, the real intention is only endorsement in favour of C. Mohan Krishna, who is the plaintiff.

The lower Court considered all these aspects and rightly came to the conclusion that it is only endorsement and not assignment and the promissory notes do not require any stamp duty for the purpose of admitting them in evidence. The revision petition is dismissed'' but in the circumstances without costs.

Revision dismissed.