Jay Pee Finance Corporation vs Dewan Chand

(1) The issue which I am called upon to determine at this stage is the additional issue which is in these terms :

Whether the suit pronote is insufficiently stamped and as such is inadmissible in evidence ?

(2) For a proper determination of this issue it is necessary to state that the promissory note in question by virtue of which the defendant bound

himself according to the plaintiff to pay Rs. 7,000/ is payable not on demand but eighteen months after the date of execution. According to Article

49 (b) of Schedule 1 of the stamp Act a promissory note payable otherwise than on demand is chargeable with the same stamp duty as a bill of

exchange for the same amount if payable otherwise on demand. This takes us to Article 13 (C) of the Schedule which provides that where the

instrument is payable more than one year after I date or sight it would be chargeable with the same duty as a bond for the same amount. This

further takes us to Article 15 of the Schedule which provides that where the amount or value secured by the bond exceeds Rs. 900/ but does not

exceed Rs. l.000/ the proper stamp duty would be Rs. 13.20 and for every Rs. 5000/ or part thereof in excess of Rs. 100/ the stamp duty

chargeable would be Rs 6.60. Calculating at this rate the proper stamp duty payable on the suit pronote comes to Rs. 92.40. As against this the

pronote is drawn up on an embossed stamp paper of the value of only 25 Paisa. Evidently, therefore, the pronote cannot be said to be duly

stamped.

(3) Let us now see whether the pronote could be admitted in evidence on payment of proper duty and penalty A reference to Proviso (a) to Sec.

35 of the Stamp Act would show that when the instrument is a promissory note which is not duly stamped, it cannot be admitted in evidence even

on payment of proper duty and penalty( As however, the pleadings of the parties specially Paras 2 and 3 of the plaint and of the written statement

show that the suit promissory note does not embody all the terms of the contract and was executed by the defendant as a collateral security in

respect of an agreement of hire purchase executed by the defendant in favour of the plaintiff in connection of the purchase of Bus No. JKA 4607

and the execution of the promissory note is also unequivocally admitted by the defendant, I am of the view that the suit can lie on the debt itself and

the true nature of the transaction can be proved by other evidence.

(4) I am fortified in this view by the Full Bench decision of the Madras High Court in Perumal Chettiar Vs. Kamaksbi Amzal, AIR 1938 Madras

785 where it was held :

''If the promissory embodies all the terms of the contract and the instrument is improperly stamped, no suit on the debt will lie. Sec. 91, Evidence

Act and S i 35, Stamp Act, bar the way but it does not embody all the terms of the contract the true nature of the transaction can be proved; and

where an instrument has been given as collateral security or by conditional payment, a suit on the debt will lie. The fact that the execution of the

promissory note is contemporaneous with the borrowing cannot exclude the possibility of the instrument having been given as collateral security or

by way of conditional payment. Where a suit lies on the debt apart from the instrument, therefore, depends on the circumstances under which the

instrument was executed.

(5) To the same effect are the decisions reported in Chowdsry Punam Chand Hastimal Co. & others Vs. Suga Vasi Venkataswamy, AIR 1972 A.

P. 282 and Jacob and Co. Vs. A. P. Vicumsey and others, AIR 1927 Bern. 437.

(6) It would be also advantageous at this stage to refer to a single bench decision of the Madras High Court in Pounusami Chattiar Vs. Kailasam

Chettiar, AIR 1947 Mad. 422 where Rajamannar J. (as his Lordship then was) observed :

When the fact of an execution of a document is admitted it need not be proved and this would he so even when the document in question is not

admissible on account of any provision of the Stamp Act.

(7) The issue is disposed of accordingly and it is held that the plaintiff is entitled to sue on the original debt and adduce other evidence in support

thereof.

(8) The defendant may now lead his evidence in terms of my order dated August 2, 1974. He shall file a list of witnesses within two weeks from

today and the witnesses cited by him shall be summoned for a date to be fixed by the Deputy Registrar.