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Judgment
Patanjali Sastri, J.—This appeal arises out of a suit to enforce a mortgage bond executed on 30th March, 1937, by one Y.A. RM.
Veerappa Chetti in favour of the plaintiff-respondent.
One Y.A.A.R. Veerappa Chetti (who will be referred to as the deceased Veerappa Chetti) died without issue on the 12th March, 1937. Y.A.
RM. Veerappa Chetti who was a near pangali of the deceased Veerappa Chetti instituted a suit for recovery of the properties pertaining to the
estate of the deceased Veerappa from the defendant, appellant herein, who claimed to be the adopted son of the deceased Veerappa. The suit
was filed soon after the death of the deceased Veerappa, but as the claimant Veerappa did not have sufficient funds for the conduct of the litigation
he sought to assistance of the respondent who agreed to advance Rs. 10,000 in the first instance and further sums later on if required and in
pursuance of that agreement the claimant Veerappa executed the suit mortgage Ex. P-I in favour of the respondent for Rs. 10,000 mortgaging all
the properties pertaining to the estate of the deceased Veerappa, though the title thereto was then under dispute. Ex. P-I provided that if any
amount over and above the sum of Rs. 10,000 for which it was executed was required for the litigation and if Veerappa made a request for such
further advance, the properties mortgaged shall be a security for the amounts thus additionally advanced and the interest thereon. The suit (O.S.
No. 67 of 1937 on the file of the Subordinate Judge of Devakottai) in which the respondent also joined as a co-plaintiff was dismissed by the trial
Court which found the adoption to be true. The plaintiff thereupon preferred an appeal to this Court (A.S. No. 83 of 1940). The claimant
Veerappa, however, died before the appeal was heard leaving the respondent on record as the sole appellant. When that appeal was part heard,
the parties, that is, the present respondent and the appellant, compromised the matter, the appellant admitting the liability of the estate of the
deceased Veerappa Chetti under the mortgage of 30th March, 1937 and the respondent for his part admitting the appellant''s title to that estate on
the footing of a valid adoption. There was a stipulation that in any suit that might be instituted "" the only plea open to the respondent (that is present
appellant) is to be about the amount due under the mortgage, no other plea being open to him."" (Ex. P-20). A decree was passed in terms of the
compromise on the 15th December, 1942, (Ex. P-23). As the amount was not paid in accordance with the terms decreed, the respondent brought
the present suit on 21st October, 1943, to enforce the mortgage Ex. P-I, claiming that in addition to the Rs. 10,000 specified in the deed, he had
advanced from time to time Rs. 75107-13-3 and that both these sums with interest amounted to Rs. 29,541-7-3 as on the date of the plaint. The
sum of Rs. 7,107-13-3 though alleged to have been advanced before the compromise Ex. P-20 was not then agreed upon as payable to the
respondent under the mortgage and the appellant, acting on the reservation, in the compromise, of disputes regarding the amount due under the
bond, denied his liability to pay the amount and the interest thereon.
As the stipulation in the mortgage deed regarding further advances did not specify any amount, the respondent, before instituting the suit, applied
to the Revenue Divisional Officer, Devakottai, empowered to act as '' Gollector,'' on 31st July, 1943, for adjudication as to the proper stamp duty
payable on the instrument as a whole. The application has not been exhibited in the case, but there is no serious dispute that the additional amount
for which the mortgage was sought to be enforced was mentioned before the Collector. On 13th August, 1943, the Collector adjudged that the
document was chargeable with a duty of Rs. 75-12-0 under Articles 33 and 4 (c) of Schedule i-A of the Stamp Act as amended in Madras. The
document having already borne stamps of the value of Rs. 75 which is the proper duty chargeable on Rs. 10 000, the Collector levied the deficit
duty of As. 12 with a penalty of Rs. 7-8-0 from the respondent and a certificate to that effect was endorsed on the bond Ex. P-I. It was on the
bond thus certified that the suit has been brought.
Various pleas were raised in defence but it is not necessary for the purpose of this appeal to refer to all of them as only three points have been
argued, by the appellant''s learned Counsel, Mr. Sampath Aiyangar. He contended firstly, that u/s 26 of the Indian Stamp Act, 1899, the
respondent is precluded from claiming under Ex. P-I any sum beyond the amount for which the stamp duty paid on the bond would, at the date of
the execution, have been sufficient, that is, beyond Rs. 10,000, as Rs. 75-12-0 would be sufficient to cover a mortgage for that amount only;
secondly, that the Court below was wrong in holding that the appellant was not an agriculturist entitled to the benefits of the Madras Agriculturists
Relief Act, 1938; and lastly that the appellant was entitled to relief under the Usurious Loans Act as amended in Madras. We will deal with these
points in the same order.
Before dealing with the first contention it will be convenient to call attention to the relevant provisions of the Indian Stamp Act so far as they are
material here.
Section 26:
Where the amount or value of the subject-matter of any instrument chargeable with ad valorerti duty, cannot be, or (in the case of an instrument
executed before the commencement of this Act) could not have been ascertained at the date of its execution or first execution, nothing shall be
claimable under such instrument more than the highest amount or value for which, if stated in an instrument of the same description, the stamp
actually used, would, at the date of such execution have been sufficient.
* * * * * *
Provided also that, where proceedings have been taken in respect of an instrument u/s 31 or 41, the amount certified by the Collector shall be
deemed to be the stamp actually used at the date of execution.
Section 31(1):
When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector and the person bringing it
applies to have the opinion of that officer as to the duty (if any) with which it is chargeable and pays a fee of such amount (not exceeding five
rupees and not less than eight annas) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his
judgment, the instrument is chargeable.
Section 32(1) :
When an instrument brought to the Collector u/s 31, is, in his opinion, one of a description chargeable with duty and
* * * * * *
Section 32(3) :?
Any instrument upon which an endorsement has been made under this section shall be deemed to be duly stamped... and if chargeable with duty,
shall be receivable in evidence or otherwise and may be acted upon and registered as if it had been originally duly stamped.
Provided that nothing in this section shall authorise the Collector to endorse--
(a) any instrument executed or first executed in British India and brought to him after the expiration of one month from the date of its execution or
first execution, as the case may be;
* * * * * *
Section 33(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, chargeabl 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.
Section 40(1):
* * * * * *
When the Collector impounds any instrument u/s 33... he shall adopt the following procedure:
* * * * * *
(b) if he is of opinion that such instrument is chargeable with duty and is riot duly stamped, he shall require the payment of the proper duty or the
amount required to make up the same together with a penalty of five rupees or, if he thinks fit, an amount not exceeding ten times the ""amount of
the proper duty or of the deficient portion thereof, whether such amount exceeds or falls short of five rupees.
* * * * * *
Section 42 (I):
When the duty and penalty (if any) leviable in respect of any instrument have been paid u/s 35, Section 40 or Section 41, the person admitting such
instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the
proper duty and penalty (stating the amount of each) have been levied in respect thereof and the name and residence of the person paying them.
(2) Every instrument so endorsed shall thereupon be admissible in evidence and may be registered and acted upon and authenticated as if it had
been duly stamped....
* * * * * *
The expression ''duly stamped'' is defined in Section 2(11) as meaning that the instrument bears an adhesive or impressed stamp of not less than
the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in British India.
Mr. Sampath Aiyangar has raised a number of questions as to the interpretation of these provisions with a view to show that Section 26 applies
to the case notwithstanding the Collector''s certificate endorsed on Ex. P-I and precludes the Court from passing a decree for any sum in excess of
Rs. 10,000. He argues that the Collector had no jurisdiction to entertain the respondent''s application for adjudication of the proper stamp duty for
Ex. P-I u/s 31, as the document was brought to him more than six years after its execution and that the certificate endorsed by him on the bond
was void and inoperative. He relies upon the proviso to Section 32 which requires that the instrument on which an endorsement of the Collector''s
adjudication is sought should be brought within one month after its execution. It is said that Sections 31 and 32 contained in Chapter III form one
integrated procedure for adjudication as to stamps and that the time-limit referred to in proviso (a) to Section 32 governs applications made u/s 31.
We are unable to agree with this view. Section 31 provides no time-limit for an application to the Collector for adjudication as to the proper stamp
duty payable in respect of an instrument. There is nothing in the section to prevent a person from resorting to the Collector for an adjudication as to
the proper stamp even after the expiry of one month from the date of its execution. If the instrument is brought to the Collector within one month of
its execution, the applicant would be entitled to have the Collector''s certificate endorsed on the instrument on payment of the deficit duty, if any,
but without having to pay any penalty. But if he seeks the Collector''s adjudication beyond the time-limit specified in Section 32, the Collector has,
u/s 33, to impound the instrument and proceed u/s 40 to decide whether the instrument is duly stamped and to require the payment of the
additional duty chargeable in respect of the instrument together with the prescribed penalty in case he is of opinion that it is not duly stamped. On
payment of such duty and penalty a certificate that the proper duty and penalty have been paid has to be endorsed u/s 42 of the instrument which
becomes thereupon admissible in evidence and may be acted upon as if it had been duly stamped. It is under this procedure that the Collector must
be taken to have dealt with Ex. P-1, for it is significant that he levied a penalty which he had no power to do u/s 32. We are accordingly of opinion
that the Collector had jurisdiction to adjudicate as to the proper stamp duty payable in respect of Ex. P-I although it was not presented within one
month of its execution and that, as a result of the certificate endorsed by him on the bond, it can be acted Upon as if it had been duly stamped.
Even so, argues Mr. Sampath Aiyangar, Section 26 applies in full force and precludes the Court from passing decree for more than Rs.
10,000, as the only effect of the Collector''s certificate is, according to the second proviso to that section, that the amount certified by him shall be
deemed to be the stamp actually used at the date of the execution. But even assuming that Ex. P-I had been originally stamped with a stamp of the
value of Rs. 75-12-0, no more than Rs. 10000 could, it is said, be claimed on the bond as that would be "" the highest amount or value for which, if
stated in an instrument of the same description, the stamp actually used would, at the date of such execution, have been sufficient."" Learned
Counsel contends that the view taken by the Collector who treated Ex. P-I as a mortgage for Rs. 10,000 and an agreement as to the sums to be
advanced later, chargeable with a duty of Rs. 75 in respect of the mortgage and As. 12 in respect of an agreement is erroneous, as the definition of
a "" mortgage deed "" in Section 2(17) includes an instrument whereby properties are mortgaged for money to be advanced by way of loan. Ex. P-1
should accordingly have been treated as a mortgage for Rs. 17,107-13-3 and the stamp duty payable should have been fixed on that basis, as the
whole sum had been advanced before the respondent applied for adjudication as to the proper stamp; but the Collector not having done so and a
stamp duty of only Rs. 75-12-0 having been paid as certified by the Collector, the instrument cannot, it is clamied, operate as a mortgage for more
than Rs. 10,000 having regard to the provisions of Section 26. This contention cannot be accepted, as it overlooks the provisions of Section 42(2)
that, when an instrument originally not sufficiently stamped is certified as duly stamped by a person duly authorised in that behalf on payment of the
deficit duty as determined by him with or without a penalty as the case may be, it may be acted upon "" as if it had been duly stamped,"" which
means that the instrument bears a stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with law
for the time being in force. In other words, the instrument, when certified as aforesaid, becomes effective and enforceable. In an analogous case
where royalties payable in a mining lease were estimated for the purpose of stamp duty at an average annual value of Rs. 2,000 instead of at Rs.
20,000 so as to entitle the lessor under the first proviso to Section 26 to claim the whole amount of the royalty whatever it may be, but a suit was
brought to recover a sum in excess of the estimated annual value, the Patna High Court decided that u/s 35 the plaintiff was entitled, on payment of
the deficit duty payable on the amount claimed and the penalty prescribed, to enforce his contract to the full amount of royalty payable under the
lease (Kumar Braj Mohan Singh v. Lachmi Narain Agarwala (1920) 5 Pat. L.J. 660 and the decision was approved by their Lordships of the
Privy'' Council in Lachmi Narayan Agarwala v. Braja Mohan Sing (1924) 47 M.L.J. 300: L.R 51 IndAp 332 : ILR 4 Pat 34 (P.C). In the same
reasoning, the adoption of a similar procedure by the Collector u/s 31 read with Section 33, Section 40 and Section 42 resulting in a certificate that
the instrument is duly stamped must have the effect of excluding the operation of Section 26. As pointed out by the Patna High Court, the object of
the Stamp Act is not to alter the terms of the bargain between the parties but to protect the revenue by excluding proof of the bargain by an
instrument not duly stamped. It would be a strange result if, after securing from the officer duly empowered in that behalf an adjudication as to the
proper stamp duty payable on an instrument and getting it certified as duly stamped on payment of the deficit duty and penalty as determined by
that officer, a person were to find himself barred, for no fault of his, from enforcing his full claim according to the terms of the instrument. We are
therefore of opinion that the respondent is entitled to a decree for the full amount of Rs. 17,107-13-3, provided of course, the claim is otherwise
sustainable.
Turning next to the appellant''s contention under the Madras"" Agriculturists'' Relief Act, 1938, the Court below has refused relief to the
appellant on the ground that he is disqualified from claiming the benefits of the Act by reason of proviso (C) to Section 3 (ii) of that Act. This
disqualification turns on the appellant having been assessed under the Madras Local Boards Act within two years immediately preceding the 1st
October, 1937, to property or house-tax in respect of buildings or lands of the aggregate annual rental value of Rs. 600 or more. The appellant
complains that the Court below allowed this point to be raised at a very late stage after the trial and arguments were concluded and judgment was
reserved. It appears from the B diary that after the case was closed on 1st August, 1944, the learned Judge allowed the respondent on 7th August,
1944, to file an affidavit along with Exs, P-27 and P-27 (a) which are extracts from the house-tax Demand Register of the Puduval Panchayat
Board and a certificate granted by the executive officer of the Board respectively, purporting to show that the properties included in the mortgage
Ex. P-i were assessed to house-tax on the basis of a rental value exceeding Rs. 600. It would appear that the learned Judge after allowing the
respondent to file these documents gave an opportunity to the appellant to rebut these documents and also called for a report on the point from the
Receiver who had been appointed in O.S. No. 67 of 1937 and was in management of the properties involved in, that suit. The appellant adduced
no rebutting evidence but filed a "" memorandum of objections "" stating inter alia that he did not admit that the properties referred to in Exs.. P-27
and P-27 (a) belonged to the estate of deceased Veerappa. In these circumstances it is contended by Mr. Sampath Aiyangar that the appellant
was not afforded by the learned Subordinate Judge sufficient opportunity to rebut the documents newly filed and that the learned Judge further
erred in throwing upon the appellant the burden of establishing that he was an agriculturist, alth6ugh the appellant was admittedly the owner of the
mortgaged properties which included agricultural lands. As regards the question of onus, it does appear that the learned Judge has overlooked the
decision of this Court in Periasami Pillai Vs. Sivathia Pillai, , where it has been held that although the initial burden to prove that he is an agriculturist
as defined in the Act lies on the debtor, when he proves that he owns a saleable interest in any agricultural land of the kind mentioned in Section 3
(ii) the burden shifts on to the creditor to prove that the debtor is disqualified, under one or the other of the provisos to Section 3 (ii), from claiming
the status of an agriculturist. It is suggested for the appellant that two of the items comprised in the mortgage which are shown to have been
assessed under Exs. P-27 and P-27 (a) did not really belong to the estate of the deceased Veerappa, but were wrongly included in the suit
mortgage which was executed by the claimant Veerappa and that was why they were not included in the schedule to the plaint in O.S. No. 67 of
1937. The respondents'' learned Counsel, however, submits that the schedule was not exhaustive as shown by the allegations made in that plaint
and that, in any case, being a near pangali of the deceased Veerappa, the appellant owns a share in his own right as a member of his natural family
in the properties described in the schedule in which the deceased Veerappa was entitled to a joint interest with others. It is pointed out that, so far
as item 1 of that schedule was concerned the appellant clearly admitted that he was entitled to a share in his own right. The respondents'' learned
Counsel has also urged that although the burden of showing that the appellant came within proviso (c) may rest upon the respondent, still, inasmuch
as the appellant made no attempt to show that the deceased Veerappa was not the owner of the two items which he now says do not form part of
his estate, the finding of the lower Court should not be disturbed. After giving due weight to all these considerations, we consider that the disposal
of this question by the Court below is not satisfactory. The appellant''s liability for a large amount turns on that question and it should have been
properly raised by the respondent during the trial so as to give the appellant an adequate opportunity to repel his alleged disqualification under
proviso (c) to Section 3 (II) the burden of proving which clearly lay on the respondent in the circumstances of the case. We are of opinion that the
Court below should be called upon to submit a clear finding on the question (i) whether items 8 and 9 in the schedule to the mortgage deed, Ex. P-i
form part of the deceased Veerappa''s estate, (ii) whether the appellant was entitled to any and what property in his own right as a member of his
natural family; and (III) whether he was assessed to property tax in the relevant years.
It only remains to deal with the appellant''s claim for reduction of interests under the provisions of the Usurious Loans Act, 1918, as amended
by the Usurious Loans (Madras Amendment) Act 1936. The amendment provides inter alia that in in the case of loans to agriculturist, if compound
interest is charged, the Court shall presume that the interest is excessive. Mr. Sampath Aiyangar claims that his client is an agriculturist and
therefore the compound interest at 15 annas per mensem provided in Ex. P-1 should be presumed to be excessive and simple interest at a lower
rate should be decreed. It has been held by this Court in K. Venkanna Chettiar and Sons by Managing Partner, K.V. Muthukrishna Chettiar Vs.
K.K. Shaik Muhammad Rowther and Another, that an agriculturist within the meaning of this Act is one who follows the calling of agriculture. Mr.
Sampath Aiyangar suggests that, though a Nattukottai Ghetti, the appellant was following the calling of agriculture as he was not carrying on any
money-lending business. It is, on the other hand, pointed out for the respondent that in an affidavit filed by the appellant in I.A. No. 350 of 1944
dated 12th July, 1944, he described himself "" as a money-lender by profession."" This description by the appellant of his own calling concludes the
point against him, especially as there is no reliable evidence to show that he was following the calling of agriculture. Mr. Sampath Aiyangar finally
suggested that, even apart from the claim to reduction based on the Madras Amendment, the contract rate which works out at 11.5 per cent, per
annum is excessive. There is, however, no evidence to prove it. The Court below which is more familiar with the conditions of the local money-
market has allowed that rate as not being excessive and we are not disposed to interfere with its conclusion on the point.
The case will be remitted to the lower Court for submission of its finding on the points already mentioned. The finding will be submitted within
two months of the receipt of this order. The parties will have liberty to adduce fresh evidence on the points. Ten days for objection.