Life Insurance Corporation Of India vs Dhanya Kumar Jain And Ors

@JUDGMENT-JUDGMENT

Sanjay S. Agrawal, J

This Appeal has been preferred by the Plaintiff - Life Insurance Corporation of India (hereinafter referred to as the Corporation) under Section 96

of the Code of Civil Procedure, 1908 (for short 'CPC'), questioning the legality and propriety of the judgment and decree dated 30.04.2007 passed by

the 9 th Additional District Judge (FTC), Raipur in Civil Suit No.18-A/2006, whereby the claim has been dismissed holding it to be barred by time. The

parties to this appeal shall be referred hereinafter as per their description before the Court below.

Briefly stated the facts of the case are that Defendants No.1 to 3, the borrowers, have approached the Corporation for the loan amount of

Rs.2,00,000/- (Rupees two lakhs only) for development of the business with regard to their firm known as M/s. Paras Film Exchange. After

considering the same, it was sanctioned by the Corporation under certain terms and conditions, as stipulated in the loan offer letter, dated 14.12.1988

and, a deed of equitable mortgage of immovable property was executed by the Defendants for the security of the said loan amount. According to the

plaintiff, the Defendants have committed defaults in paying the said loan amount and have failed to deposit the same despite issuance of demand

notice, therefore, the Plaintiff - Corporation has been constrained to file the suit in the instant nature for the recovery of sum of Rs.3,01,148/- along

with interest.

While contesting the aforesaid claim, it was pleaded by the Defendants that since the suit for recovery of the said loan amount has been filed

beyond the period of three years from the date of alleged default committed by them for the first time, therefore, it deserves to be dismissed on the

point of limitation.

After considering the evidence led by the parties, it has been held by the trial Court that since the property in question mortgaged by the Defendants

is the government nazul land, therefore, the claim as made, is not maintainable. It held further that in absence of stamp duty, the ""deed of ikrarnama

(Ex.P.29) and the ""memorandum of deposit of title deeds"" (Ex.P.30) cannot be held to be admissible in evidence and observed further that since the

suit for recovery of loan amount has been made beyond the period of three years when the first default for its payment was committed by the

defendants on 28.12.1988, is, therefore, barred by time. In consequence, the claim was dismissed, which has been impugned by way of this appeal.

Shri Mukesh Sharma, learned counsel appearing for the Corporation, submits that the finding of the trial Court holding the claim to be barred by time

is apparently contrary to law. It, however, ought to have seen that since the alleged loan amount was sanctioned subject to creation of equitable

mortgage of immovable property owned by Hindu Undivided Family, therefore, it would be governed by Article 62 of the Indian Limitation Act, 1963

(hereinafter referred to as the Act of 1963), and as such, the claim cannot be held to be barred by time. Further contention of Shri Sharma is that the

trial Court, before holding the said documentary evidence, marked as Ex.P.29 and Ex.P.30, as inadmissible in evidence being unstamped, ought to

have exercised its powers as provided under Sections 33 and 35 of the Indian Stamp Act, 1899 (hereinafter referred to as the Act of 1899). Having

failed to do so, the trial Court has committed a serious illegality in dismissing the claim.

Shri Ranbir Singh Marhas, learned counsel appearing for the Defendants/Respondents has supported the impugned judgment and decree as passed

by the trial Court.

I have heard learned counsel for the parties and perused the entire record carefully.

Undisputedly, a loan amount of Rs.2,00,000/- (Rupees two lakhs only) was sanctioned to the Defendants under M-1 Scheme for development of

business of their firm known as M/s. Paras Film Exchange. It appears that for security of the said loan amount, the Defendants through their 'Karta'

Manoj Kumar, have mortgaged their undivided property situated at Plot No.2/11, Block No.95, Moudahapara, Raipur, as evidenced by para 21 of the

document styled as ""Application For Loan On Mortgage of Property"" (Ex.P.2). The said property, mortgaged as such, was, therefore, admittedly

belonging to their undivided family and, in fact it was not in dispute that it did not belong to them. What is pleaded by the Defendants in their written

statement in this regard is that the signature of said Manoj Kumar has been obtained in blank papers before sanctioning the alleged loan amount by the

Corporation. Meaning thereby, the nature of the said property was not in issue, yet the trial Court has held that it is a government nazul land and

cannot be mortgaged as such by the defendants. The said finding is, therefore, liable to be and is hereby set aside.

It is true that the alleged documentary evidence, i.e., ""deed of ikrarnama"" and ""memorandum of deposit of title deeds,"" marked respectively as

Ex.P.29 and Ex.P.30, are executed in absence of the stamp duty. The Defendants have, therefore, raised an objection regarding its admissibility at the

stage of evidence. However, the trial Court, while taking note of those objections, observed that the same be decided at the time of final hearing and,

ultimately those documentary evidence were held to be inadmissible in evidence. The approach of the trial Court keeping the said objection in

abeyance regarding the admissibility of those documentary evidence instead of deciding the same at that particular stage itself is, therefore,

unacceptable and not sustainable in the eye of law. It is settled principles of law that where a question as to admissibility of any document is raised on

the ground that it has not been stamped, or has not been properly stamped, then it has to be decided immediately when the document is tendered in

evidence, as held by the Supreme Court in the matter of Bipin Shantilal Panchal vs. State of Gujarat and another reported in (2001) 3 SCC 1wherein

it has been held in paragraph 14 as under:

When so recast, the practice which can be a better substitute is this: Whenever an objection is raised during evidence-taking stage regarding the

admissibility of any material or item of oral evidence the trial Court can make a note of such objection and mark the objected document tentatively as

an exhibit in the case (or record the objected part of the oral evidence) subject to such objections to be decided at the last stage in the final judgment.

If the court finds at the final stage that the objection so raised is sustainable the Judge or Magistrate can keep such evidence excluded from

consideration. In our view there is no illegality in adopting such a course. (However, we make it clear that if the objection relates to deficiency of

stamp duty of a document the court has to decide the objection before proceeding further. For all other objections the procedure suggested above can

be followed.)

That apart, before holding the same to be inadmissible in evidence, the trial Court should have resorted to the provisions prescribed mandatorily

under Sections 33 and 35 of the Act of 1899, which read as under:

Examination and impounding of instruments.--- (1) Every person having by law or consent of parties, authority to receive evidence, and every

person in charge of a public office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or

comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same.

(2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain

whether it is stamped with a stamp of the value and description required by the law in force in [India] when such instrument was executed or first

executed:

Provided that---

(a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so

to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code

of Criminal Procedure, 1898 (5 of 1898);

(b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer

as the Court appoints in this behalf.

(3) For the purposes of this section, in cases of doubt----

(a) [the [State Government]] may determine what offices shall be deemed to be public offices; and

(b) [the [State Government]] may determine who shall be deemed to be persons in charge of public offices.

xxxx xxxx xxxx xxxx

Instruments not duly stamped inadmissible in evidence, etc.--- 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 [shall], 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 make 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;

(b) Where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would

be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person

tendering it;

(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the

proper stamp, the contract or agreement shall be deemed to be duly stamped;

(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding

under Chapter XII of Chapter XXXVI of the Code of Criminal Procedure, 1898;

(e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of

[the [Government]], or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.

According to the aforesaid provisions of Section 33, it uses the word ""produced"" in respect of an instrument chargeable to stamp duty, while

Section 35 uses the words ""admitted in evidence"" or ""acted upon"" with regard to an unstamped instrument. Thus, there is a distinction between

production of instrument' and ""its admissibility in evidence"". A combined reading of the aforesaid provisions would, therefore, make it clear that if an

unstamped instrument, which ought to have been duly stamped under the provisions of the Act, comes before Court, the Court shall impound the same

and levy the stamp duty together with its penalty and the document could then be admitted in evidence.

The aforesaid observation of mine is fortified by the principles laid down by the Supreme Court in the matter of Malaysian Airlines Systems BHD

vs. Stic Travels (P) Ltd. reported in (2001) 1 SCC 451 at paragraph 6 as under:

......................... But in case where 3 months have already expired from the date of execution of the document and later on the document is

produced before the court as evidence, it is permissible for the court to impound the document and collect the stamp duty and penalty ....................

Here in the instant matter, as found herein above, both the said instruments (Ex.P.29 and Ex.P.30), which are not duly stamped, as required under

the law, could have not only been impounded by the Court, but could also have been admitted in evidence thereafter upon fulfilling the requirement of

law in exercise of the powers enumerated under the aforesaid provisions.

Having failed to exercise the same even at the time of evidence when an objection was raised in this regard, the trial Court has committed a

serious illegality in holding that both the documents are inadmissible in evidence. The said finding is also liable to be and is hereby set aside.

Since it appears, as observed herein above, that a deed of mortgage of alleged immovable property was executed by the Defendants by depositing

their title deeds for the security of the alleged loan amount, and therefore, the claim would be governed by Article 62 of the Act of 1963, which

provides a period of limitation of 12 years in filing such a suit. The said provision is relevant for the purpose, is reproduced herein as under:

62 To enforce payment Twelve When the money of money secured by years sued for becomes a mortgage or due.

otherwise charged upon immovable property.

Applying the aforesaid provisions to the case in hand wherein the loan amount as sanctioned by the Corporation was secured by virtue of creation

of the said mortgage upon the immovable property, the claim as made, cannot be held to be barred by time.

Consequently, the appeal is allowed and the impugned judgment and decree dated 30.04.2007 passed by the 9 th Additional District Judge (FTC),

Raipur in Civil Suit No.18-A/2006 is hereby set aside and the matter is accordingly remitted back to the Court of 9th Additional District Judge (FTC),

Raipur/concerned Court with a direction to decide the same afresh by following the mandatory provisions prescribed under Sections 33 and 35 of the

Act of 1899 in accordance with law. The parties are directed to remain present before the said Court on 29.07.2020 and the trial Court shall decide

the matter after giving sufficient and reasonable opportunity of hearing to them.

Registry is directed to transmit the entire record forthwith to the concerned Court.

No order as to costs.