Therefore, it follows from the
authoritative pronouncements of this Court and
also the High Court of Assam referred above,
"promissory note" which is payable otherwise than
on demand not duly stamped as required by
ScheduleI Article 49(b) of Indian Stamp Act,
1899, is inadmissible in evidence. Same cannot be
received in evidence even on payment of deficit
stamp duty and penalty. The defect that,
promissory note is not duly stamped or
inadequately stamped, cannot be cured in view of
the proviso (a) to Section 35 of the Indian Stamp
Act, 1899, as held by this Court in the case of
M/s. Wolstenholme International Ltd., (supra).
Therefore, this Court is of the opinion that, the
view taken by the Cooperative
Court, Nanded i.e.
trial Court, is the correct view.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.9317 OF 2011
Shiva Sahakari Up Jal Sinchan Sanstha Ltd. Vs The Nanded District CentralCoop.
CORAM: S.S. SHINDE, J.
PRONOUNCED ON :25/07/2012
Rule. Rule made returnable forthwith. By
consent heard finally. This writ petition takes
exception to the judgment and order dated 29th
August, 2011 passed by the Maharashtra State Cooperative
Appellate Court, Mumbai, Bench
Aurangabad, in Appeal No. 26 of 2010.
2. It is the case of the petitioner that,
the petitioner is a registered society and is
established to lift water from river by way of
lift irrigation. The respondent No.1 is the
District Central Cooperative
Bank and the
respondent No. 2 is the branch of the said bank.
. The petitioner society applied for loan
of Rs.11,94,000/to
the respondent No.1 bank,
through the respondent No.2. The respondent No. 1
sanctioned loan with thirteen yearly instalments
3 wp9317.11
with interest @ 13% p.a. for 12 years period for
repayment, on condition of executing promissory
notes, by the present petitioner.
. The petitioner society then paid initial
instalment and then amount towards the price of
sugar cane was forwarded to the bank by the sugar
factory, where the sugar cane was supplied. It is
further case of the petitioner that, after some
period, the respondent bank itself has gone to the
stage of liquidation and some dispute arose about
the repayment of loan.
. The respondent Nos. 1 and 2 then filed
Dispute NO. CC/156/2005 under Section 91 of the
Maharashtra Cooperative
Societies Act, 1960, for
recovery of the loan amount. In the said Dispute,
the bank has claimed that, the opponents have
executed promissory notes to the extent of
respondent to the bank or its nominee. These
promissory notes were filed in the Cooperative
Court at Nanded.
. The opponents i.e. present petitioner and
respondent Nos. 3 to 5 appeared and filed their
written statement. The opponents have admitted the
fact of obtaining loan, but disputed that, there
was any default and also that, the amount is
wrongly calculated in the Dispute. The parties
went for the trial with these pleadings. The
disputant led evidence and tried to rely upon the
documents, promissory notes and bond papers. It
is the case of the petitioner that, admittedly
those documents are not at all stamped. The
petitioner and other opponents raised objection
for exhibiting the documents. The disputant,
therefore, filed an application dated 2nd March,
2009, thereby seeking permission to affix stamp by
impounding the documents. The opponents submitted
their objection to the said application by
objection dated 18th April, 2009, and prayed for
rejection of the application of the disputant.
. It was the contention of the opponents that,
under Section 33 of the Bombay Stamp Act, 1958,
there is no provision for impounding the
promissory notes for payment of stamp duty. On
the contrary, as per Indian Stamp Act, 1899, there
is prohibition in respect of admissibility of bill
of exchange or promissory notes, which are not
duly stamped. It is the case of the petitioner
that, in the present case, it is not even case of
the deficit stamp of due stamp duty, but no stamp
is affixed on any of the promissory notes and
those documents are not at all admissible in
evidence.
3. The trial Court heard both the sides and
by order dated 13th July, 2009,rejected the
application Exhibit68
filed by the original
disputant.
. The disputant bank i.e. the respondent
Nos. 1 and 2 herein, preferred appeal before the
Maharashtra State Cooperative
Appellate Court,
Aurangabad on 5th October, 2009. The said appeal
is registered and numbered as Appeal No. 26 of
2010. The Cooperative
appellate Court heard the
matter finally and by judgment and order dated 29th
August, 2011, allowed the appeal and directed the
trial Court to exhibit the document and set aside
the order passed by the trial Court. Being
aggrieved by the said judgment and order of the
Cooperate
Appellate Court, Aurangabad dated 29th
August, 2011, this writ petition is filed by the
petitioner.
4. The learned Counsel appearing for the
petitioner submits that, the Cooperative
appellate Court has completely lost sight of the
provisions of Section 33 of the Indian Stamp Act,
1899. The Cooperative
appellate Court has
committed serious error of law by holding that,
the promissory note is not at all required to be
stamped. It is further submitted that, the
Cooperative
appellate Court has committed error
of law while applying the provisions of Section 11
of the Indian Stamp Act, 1899, and wrongly held
that, promissory note is not required to be
stamped. It is submitted that, the Cooperative
appellate Court ought to have appreciated that,
the promissory note is the basic and only
instrument promising the payment on demand and it
is not an ordinary piece of paper and the same is
in fact an agreement for repayment, hence, unless
it is duly stamped, it cannot be read in evidence.
The findings recorded by the Cooperative
appellate Court are, in fact, perverse, holding
that, the promissory notes are not required to be
stamped. It is further submitted that, if sch
document is allowed to be read in evidence, it
will be contrary to the provisions of Indian Stamp
Act and Evidence Act. It is submitted that, entire
proceedings are required to be dismissed for want
of proving necessary documents.
. The learned Counsel invited my attention
to the judgments of this Court in the case of M/s.
Wolstenholme International Ltd. vs. Twin Stars
Industrial Corporation and others, reported in AIR
8 wp9317.11
2001 Bombay. 409 and in particular paragraph10
of
the said judgment and submitted that, under
proviso (a) to Section 35, a power is given to the
officer concerned, to admit the instrument in
evidence on the payment of a duty and penalty.
This proviso to the said section does not apply
inter alia to bill of exchange or promissory note.
In other words, Legislature has made exception so
as to provide the power to admit in evidence an
instrument upon the payment of duty and penalty
would not be applicable to a Bill of Exchange, a
promissory note or an instrument not chargeable to
duty exceeding 10 paise. It is submitted that,
when the disputant presented promissory notes in
the evidence, same were not stamped and in view of
the proviso to section 35(a) of the Indian Stamp
Act, 1899, the power to admit in evidence an
instrument upon the payment of duty and penalty,
is not applicable to bill of exchange, promissory
note or instrument not chargeable to duty
exceeding 10 paise. Therefore, according to the
Counsel for the petitioner, when promissory notes
were tendered in the evidence, being not stamped,
should have been returned to the disputant. It is
submitted that, the Cooperative
Court has rightly
held that, said promissory notes cannot be read in
evidence. However, the Cooperative
appellate
Court on erroneous interpretation of the relevant
provisions held that, the said promissory notes
can be read in evidence and direction is given to
the Cooperative
Court to exhibit the document and
read it in evidence. Therefore, according to the
learned Counsel for the petitioner, this writ
petition deserves to be allowed.
5. On the other hand, the learned Counsel
appearing for the respondents submitted that, the
Cooperative
Appellate Court, after considering
the relevant provisions of the Bombay Stamp Act,
1958, has rightly accepted the contention of the
disputant and directed the Cooperative
Court to
exhibit the promissory notes and read the same in
evidence. It is submitted that, the Cooperative
Court has wrongly rejected the application at
Exhibit68
for impounding the promissory notes by
affixing stamp duty. The learned Counsel further
submits that, the Cooperative
Court did not
consider the provisions of Section 34 of the
Bombay Stamp Act, by which the document can be
impounded by allowing the parties, to affix the
proper stamp. It is submitted that, there is
power under Section 34 of the Bombay Stamp Act to
impound the document, however, the Cooperative
Court has wrongly rejected the application of the
original respondent Nos. 1 and 2. It is submitted
that, Cooperative
appellate Court has rightly
considered the provisions of Bombay Stamp Act and
Indian Stamp Act, and came to the conclusion that,
the Act does not provide that, the promissory
notes are required to be duly stamped and
objection taken by the appellant in cross
examination, to exhibit the promissory notes, is
not legal and valid. It is submitted that, there
is no any provision under the Bombay Stamp Act or
Indian Stamp Act that, the promissory notes
executed by the borrower in favour of the bank
should be stamped. It is further submitted that,
there are huge dues against the petitioner and
with the intention to prolong the legal recovery,
the petitioner has raised objection before the
trial Court not to exhibit the promissory note.
6. I have given anxious consideration to the
submissions of the Counsel appearing for the
parties. With the able assistance of the Counsel
for the parties, I have perused the writ petition,
annexures thereto, other documents brought to the
notice of this Court and also relevant provisions
of the Bombay Stamp Act, and also Indian Stamp
Act, 1899 and the provisions of the Negotiable
Instruments Act, 1881 and the judgments cited by
the Counsel appearing for the parties. Upon
careful perusal of the order of the trial Court
below Exhibit68,
it appears that, the trial Court
after appreciating the contentions held that,
promissory note which is tendered in evidence by
the disputant bank is not admissible in evidence
since it is not stamped and further said defect
cannot be cured by sending the document for
impounding or levying appropriate stamp duty in
view of proviso (a) to Section 35 of the Indian
Stamp Act, 1899.
7. The order of the trial Court was
challenged before the Maharashtra State Cooperative
Appellate Court, Mumbai, Bench
Aurangabad. The Cooperative
appellate Court
framed as many as four points for its
consideration/determination. The first point is,
whether the promissory note is required to be duly
stamped as per Bombay Stamp Act?. The said point
is answered in the negative. The second point is,
whether the order dated 13.07.09, passed "Below
Exhibit68"
by the learned Judge, Coop.
Court,
Nanded in dispute bearing no. 156/05 is legal &
valid?. The second point is answered in the
negative and it is held that, interference in the
order of the trial Court is called for and
accordingly, set aside the order dated 13.07.09
passed "Below Exh.68" in Dispute bearing No.
156/02 and directed the trial Court to exhibit the
documents and read the same in the evidence. While
allowing the appeal, the Cooperative
appellate
Court relied upon the provisions of Bombay Stamp
Act and has taken a view that, subsection
(b) of
Section 11 of the Indian Stamp Act, 1899, provides
bills of exchange and promissory note drawn or
made out of India may be stamped, however, the
said provision is not mandatory. The Cooperative
appellate Court reached to the conclusion that,
the promissory note, if drawn out of India, then
it is required to be stamped. Thus, the provision
does not provides that, promissory note is
required to be duly stamped.
8. Upon careful perusal of the judgment of
the Cooperate
appellate Court, it appears that,
the Cooperative
appellate Court has not
considered that, "promissory note" is covered
under the Indian Stamp Act, 1899. Subsection
22
of Section 2 of the Indian Stamp Act, 1899 defines
"promissory note" means a promissory note as
defined by the Negotiable Instruments Act, 1881;It
also includes a note promising the payment of any
sum of money out of any particular fund which may
or may not be available, or upon any condition or
contingency which may or may not be performed or
happen".
. Under Section 4 of Chapter II of the
Negotiable Instruments Act, 1881 (26 of 1881),
"promissory note" is defined, which reads thus ;
"promissory note" is an instrument in writing (not
being a banknote
or a currencynote)
containing
an unconditional undertaking, signed by the maker,
to pay a certain sum of money only to, or to the
order of, a certain person, or to the bearer of
the instrument."
. Therefore, it appears to this Court that,
the subject "promissory note" is covered under the
Indian Stamp Act, 1899.
9. Whether the promissory note payable
otherwise than on demand not duly stamped as
required by ScheduleI,
Article 49(b) of Indian
Stamp Act, is admissible in evidence or not?. The
said question felt for consideration of this Court
in the case of Kallappa Pundalik Reddi vs.
Laxmibai Dattoba Vellaram and others reported in
1994 Mh.L.J. 1839. In the said judgment, in the
facts of that case, this Court has taken a view
that, promissory note was not one payable on
demand but was payable otherwise than on demand
and was inadmissible in evidence as it was not
stamped as required by Article 49(b) of the
ScheduleI
of the Indian Stamp Act. Section 35 of
the Indian Stamp Act contains an absolute
prohibition in respect of nonadmissibility
of
bills of exchange or promissory notes which are
not duly stamped. The document could not be
received in evidence even on payment of deficit
stamp duty and penalty.
. In the case of Jatindra Mohan Deb Laskar
vs. Khara Singh and others reported in AIR 1964
Assam 138, the question, whether insufficiently
stamped promissory note, is admissible in evidence
or not, has been considered by the High Court of
Assam and view is taken that, where a promissory
note is insufficiently stamped, it is inadmissible
in evidence for any purpose, that is to say, such
a document should neither be received in evidence
nor acted upon. Hence a suit based upon
insufficiently stamped promissory note is liable
to be dismissed.
10. This Court in the case of M/s.
Wolstenholme International Ltd., (supra), had
occasion to interpret proviso (a) to Section 35 of
the Indian Stamp Act, 1899 and in paragraph10
of
the said judgment, this Court has taken a view
that, the Legislature has made an exception so as
to provide that the power to admit in evidence an
instrument upon the payment of duty and penalty
would not be applicable to a Bill of Exchange, a
promissory note or an instrument not chargeable to
duty exceeding 10 paise. In paragraph10
of the
said judgment, this Court held ; "Therefore,
whereas an instrument which is chargeable with
duty can be admitted in evidence by a person
having by law or consent of parties authority to
receive evidence, upon the payment of duty and
penalty, as the case may be, this would not apply
to the excepted categories of instruments
specified in proviso (a) to Section 35; Similarly,
the power of the Collector impounding an
instrument under Section 37 or receiving an
instrument sent to him under subsection
(2) of
Section 38 to certify the instrument upon the
payment of proper duty or penalty is not attracted
to an instrument falling in the excepted category.
The view which I take is fortified by a Judgment
of a learned single Judge of this Court, D.R.
Dhanuka, J. in Kaliappa Pundlik Reddi vs. Laxmibai
Dattoba Vellaram, reported in 1994 Mah.L.J. 1839.
A similar view was taken by a Division Bench of
the Madras High Court in Thenappa Chettiar vs.
Andiyappa Chettiar. AIR 1971 Mad. 290."
18 wp9317.11
11. Therefore, it follows from the
authoritative pronouncements of this Court and
also the High Court of Assam referred above,
"promissory note" which is payable otherwise than
on demand not duly stamped as required by
ScheduleI
Article 49(b) of Indian Stamp Act,
1899, is inadmissible in evidence. Same cannot be
received in evidence even on payment of deficit
stamp duty and penalty. The defect that,
promissory note is not duly stamped or
inadequately stamped, cannot be cured in view of
the proviso (a) to Section 35 of the Indian Stamp
Act, 1899, as held by this Court in the case of
M/s. Wolstenholme International Ltd., (supra).
Therefore, this Court is of the opinion that, the
view taken by the Cooperative
Court, Nanded i.e.
trial Court, is the correct view. The view taken
by the Cooperative
appellate Court is not in
consonance with the relevant legal provisions and
also authoritative pronouncements of this Court in
the judgments cited supra. Therefore, the
impugned judgment and order of the Cooperative
19 wp9317.11
appellate Court cannot sustain in law, therefore
same is quashed and set aside. The order below
Exhibit68
passed by the Judge of the Cooperative
Court, Nanded in Dispute No. CC/156/2005 is upheld
and stands confirmed.
12. The writ petition is allowed to the above
extent, same stands disposed of. Rule made
absolute on above terms.
sd/[
S.S. SHINDE, J.]
sut/JULY12
Print Page
authoritative pronouncements of this Court and
also the High Court of Assam referred above,
"promissory note" which is payable otherwise than
on demand not duly stamped as required by
ScheduleI Article 49(b) of Indian Stamp Act,
1899, is inadmissible in evidence. Same cannot be
received in evidence even on payment of deficit
stamp duty and penalty. The defect that,
promissory note is not duly stamped or
inadequately stamped, cannot be cured in view of
the proviso (a) to Section 35 of the Indian Stamp
Act, 1899, as held by this Court in the case of
M/s. Wolstenholme International Ltd., (supra).
Therefore, this Court is of the opinion that, the
view taken by the Cooperative
Court, Nanded i.e.
trial Court, is the correct view.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.9317 OF 2011
Shiva Sahakari Up Jal Sinchan Sanstha Ltd. Vs The Nanded District CentralCoop.
CORAM: S.S. SHINDE, J.
PRONOUNCED ON :25/07/2012
Rule. Rule made returnable forthwith. By
consent heard finally. This writ petition takes
exception to the judgment and order dated 29th
August, 2011 passed by the Maharashtra State Cooperative
Appellate Court, Mumbai, Bench
Aurangabad, in Appeal No. 26 of 2010.
2. It is the case of the petitioner that,
the petitioner is a registered society and is
established to lift water from river by way of
lift irrigation. The respondent No.1 is the
District Central Cooperative
Bank and the
respondent No. 2 is the branch of the said bank.
. The petitioner society applied for loan
of Rs.11,94,000/to
the respondent No.1 bank,
through the respondent No.2. The respondent No. 1
sanctioned loan with thirteen yearly instalments
3 wp9317.11
with interest @ 13% p.a. for 12 years period for
repayment, on condition of executing promissory
notes, by the present petitioner.
. The petitioner society then paid initial
instalment and then amount towards the price of
sugar cane was forwarded to the bank by the sugar
factory, where the sugar cane was supplied. It is
further case of the petitioner that, after some
period, the respondent bank itself has gone to the
stage of liquidation and some dispute arose about
the repayment of loan.
. The respondent Nos. 1 and 2 then filed
Dispute NO. CC/156/2005 under Section 91 of the
Maharashtra Cooperative
Societies Act, 1960, for
recovery of the loan amount. In the said Dispute,
the bank has claimed that, the opponents have
executed promissory notes to the extent of
respondent to the bank or its nominee. These
promissory notes were filed in the Cooperative
Court at Nanded.
. The opponents i.e. present petitioner and
respondent Nos. 3 to 5 appeared and filed their
written statement. The opponents have admitted the
fact of obtaining loan, but disputed that, there
was any default and also that, the amount is
wrongly calculated in the Dispute. The parties
went for the trial with these pleadings. The
disputant led evidence and tried to rely upon the
documents, promissory notes and bond papers. It
is the case of the petitioner that, admittedly
those documents are not at all stamped. The
petitioner and other opponents raised objection
for exhibiting the documents. The disputant,
therefore, filed an application dated 2nd March,
2009, thereby seeking permission to affix stamp by
impounding the documents. The opponents submitted
their objection to the said application by
objection dated 18th April, 2009, and prayed for
rejection of the application of the disputant.
. It was the contention of the opponents that,
under Section 33 of the Bombay Stamp Act, 1958,
there is no provision for impounding the
promissory notes for payment of stamp duty. On
the contrary, as per Indian Stamp Act, 1899, there
is prohibition in respect of admissibility of bill
of exchange or promissory notes, which are not
duly stamped. It is the case of the petitioner
that, in the present case, it is not even case of
the deficit stamp of due stamp duty, but no stamp
is affixed on any of the promissory notes and
those documents are not at all admissible in
evidence.
3. The trial Court heard both the sides and
by order dated 13th July, 2009,rejected the
application Exhibit68
filed by the original
disputant.
. The disputant bank i.e. the respondent
Nos. 1 and 2 herein, preferred appeal before the
Maharashtra State Cooperative
Appellate Court,
Aurangabad on 5th October, 2009. The said appeal
is registered and numbered as Appeal No. 26 of
2010. The Cooperative
appellate Court heard the
matter finally and by judgment and order dated 29th
August, 2011, allowed the appeal and directed the
trial Court to exhibit the document and set aside
the order passed by the trial Court. Being
aggrieved by the said judgment and order of the
Cooperate
Appellate Court, Aurangabad dated 29th
August, 2011, this writ petition is filed by the
petitioner.
4. The learned Counsel appearing for the
petitioner submits that, the Cooperative
appellate Court has completely lost sight of the
provisions of Section 33 of the Indian Stamp Act,
1899. The Cooperative
appellate Court has
committed serious error of law by holding that,
the promissory note is not at all required to be
stamped. It is further submitted that, the
Cooperative
appellate Court has committed error
of law while applying the provisions of Section 11
of the Indian Stamp Act, 1899, and wrongly held
that, promissory note is not required to be
stamped. It is submitted that, the Cooperative
appellate Court ought to have appreciated that,
the promissory note is the basic and only
instrument promising the payment on demand and it
is not an ordinary piece of paper and the same is
in fact an agreement for repayment, hence, unless
it is duly stamped, it cannot be read in evidence.
The findings recorded by the Cooperative
appellate Court are, in fact, perverse, holding
that, the promissory notes are not required to be
stamped. It is further submitted that, if sch
document is allowed to be read in evidence, it
will be contrary to the provisions of Indian Stamp
Act and Evidence Act. It is submitted that, entire
proceedings are required to be dismissed for want
of proving necessary documents.
. The learned Counsel invited my attention
to the judgments of this Court in the case of M/s.
Wolstenholme International Ltd. vs. Twin Stars
Industrial Corporation and others, reported in AIR
8 wp9317.11
2001 Bombay. 409 and in particular paragraph10
of
the said judgment and submitted that, under
proviso (a) to Section 35, a power is given to the
officer concerned, to admit the instrument in
evidence on the payment of a duty and penalty.
This proviso to the said section does not apply
inter alia to bill of exchange or promissory note.
In other words, Legislature has made exception so
as to provide the power to admit in evidence an
instrument upon the payment of duty and penalty
would not be applicable to a Bill of Exchange, a
promissory note or an instrument not chargeable to
duty exceeding 10 paise. It is submitted that,
when the disputant presented promissory notes in
the evidence, same were not stamped and in view of
the proviso to section 35(a) of the Indian Stamp
Act, 1899, the power to admit in evidence an
instrument upon the payment of duty and penalty,
is not applicable to bill of exchange, promissory
note or instrument not chargeable to duty
exceeding 10 paise. Therefore, according to the
Counsel for the petitioner, when promissory notes
were tendered in the evidence, being not stamped,
should have been returned to the disputant. It is
submitted that, the Cooperative
Court has rightly
held that, said promissory notes cannot be read in
evidence. However, the Cooperative
appellate
Court on erroneous interpretation of the relevant
provisions held that, the said promissory notes
can be read in evidence and direction is given to
the Cooperative
Court to exhibit the document and
read it in evidence. Therefore, according to the
learned Counsel for the petitioner, this writ
petition deserves to be allowed.
5. On the other hand, the learned Counsel
appearing for the respondents submitted that, the
Cooperative
Appellate Court, after considering
the relevant provisions of the Bombay Stamp Act,
1958, has rightly accepted the contention of the
disputant and directed the Cooperative
Court to
exhibit the promissory notes and read the same in
evidence. It is submitted that, the Cooperative
Court has wrongly rejected the application at
Exhibit68
for impounding the promissory notes by
affixing stamp duty. The learned Counsel further
submits that, the Cooperative
Court did not
consider the provisions of Section 34 of the
Bombay Stamp Act, by which the document can be
impounded by allowing the parties, to affix the
proper stamp. It is submitted that, there is
power under Section 34 of the Bombay Stamp Act to
impound the document, however, the Cooperative
Court has wrongly rejected the application of the
original respondent Nos. 1 and 2. It is submitted
that, Cooperative
appellate Court has rightly
considered the provisions of Bombay Stamp Act and
Indian Stamp Act, and came to the conclusion that,
the Act does not provide that, the promissory
notes are required to be duly stamped and
objection taken by the appellant in cross
examination, to exhibit the promissory notes, is
not legal and valid. It is submitted that, there
is no any provision under the Bombay Stamp Act or
Indian Stamp Act that, the promissory notes
executed by the borrower in favour of the bank
should be stamped. It is further submitted that,
there are huge dues against the petitioner and
with the intention to prolong the legal recovery,
the petitioner has raised objection before the
trial Court not to exhibit the promissory note.
6. I have given anxious consideration to the
submissions of the Counsel appearing for the
parties. With the able assistance of the Counsel
for the parties, I have perused the writ petition,
annexures thereto, other documents brought to the
notice of this Court and also relevant provisions
of the Bombay Stamp Act, and also Indian Stamp
Act, 1899 and the provisions of the Negotiable
Instruments Act, 1881 and the judgments cited by
the Counsel appearing for the parties. Upon
careful perusal of the order of the trial Court
below Exhibit68,
it appears that, the trial Court
after appreciating the contentions held that,
promissory note which is tendered in evidence by
the disputant bank is not admissible in evidence
since it is not stamped and further said defect
cannot be cured by sending the document for
impounding or levying appropriate stamp duty in
view of proviso (a) to Section 35 of the Indian
Stamp Act, 1899.
7. The order of the trial Court was
challenged before the Maharashtra State Cooperative
Appellate Court, Mumbai, Bench
Aurangabad. The Cooperative
appellate Court
framed as many as four points for its
consideration/determination. The first point is,
whether the promissory note is required to be duly
stamped as per Bombay Stamp Act?. The said point
is answered in the negative. The second point is,
whether the order dated 13.07.09, passed "Below
Exhibit68"
by the learned Judge, Coop.
Court,
Nanded in dispute bearing no. 156/05 is legal &
valid?. The second point is answered in the
negative and it is held that, interference in the
order of the trial Court is called for and
accordingly, set aside the order dated 13.07.09
passed "Below Exh.68" in Dispute bearing No.
156/02 and directed the trial Court to exhibit the
documents and read the same in the evidence. While
allowing the appeal, the Cooperative
appellate
Court relied upon the provisions of Bombay Stamp
Act and has taken a view that, subsection
(b) of
Section 11 of the Indian Stamp Act, 1899, provides
bills of exchange and promissory note drawn or
made out of India may be stamped, however, the
said provision is not mandatory. The Cooperative
appellate Court reached to the conclusion that,
the promissory note, if drawn out of India, then
it is required to be stamped. Thus, the provision
does not provides that, promissory note is
required to be duly stamped.
8. Upon careful perusal of the judgment of
the Cooperate
appellate Court, it appears that,
the Cooperative
appellate Court has not
considered that, "promissory note" is covered
under the Indian Stamp Act, 1899. Subsection
22
of Section 2 of the Indian Stamp Act, 1899 defines
"promissory note" means a promissory note as
defined by the Negotiable Instruments Act, 1881;It
also includes a note promising the payment of any
sum of money out of any particular fund which may
or may not be available, or upon any condition or
contingency which may or may not be performed or
happen".
. Under Section 4 of Chapter II of the
Negotiable Instruments Act, 1881 (26 of 1881),
"promissory note" is defined, which reads thus ;
"promissory note" is an instrument in writing (not
being a banknote
or a currencynote)
containing
an unconditional undertaking, signed by the maker,
to pay a certain sum of money only to, or to the
order of, a certain person, or to the bearer of
the instrument."
. Therefore, it appears to this Court that,
the subject "promissory note" is covered under the
Indian Stamp Act, 1899.
9. Whether the promissory note payable
otherwise than on demand not duly stamped as
required by ScheduleI,
Article 49(b) of Indian
Stamp Act, is admissible in evidence or not?. The
said question felt for consideration of this Court
in the case of Kallappa Pundalik Reddi vs.
Laxmibai Dattoba Vellaram and others reported in
1994 Mh.L.J. 1839. In the said judgment, in the
facts of that case, this Court has taken a view
that, promissory note was not one payable on
demand but was payable otherwise than on demand
and was inadmissible in evidence as it was not
stamped as required by Article 49(b) of the
ScheduleI
of the Indian Stamp Act. Section 35 of
the Indian Stamp Act contains an absolute
prohibition in respect of nonadmissibility
of
bills of exchange or promissory notes which are
not duly stamped. The document could not be
received in evidence even on payment of deficit
stamp duty and penalty.
. In the case of Jatindra Mohan Deb Laskar
vs. Khara Singh and others reported in AIR 1964
Assam 138, the question, whether insufficiently
stamped promissory note, is admissible in evidence
or not, has been considered by the High Court of
Assam and view is taken that, where a promissory
note is insufficiently stamped, it is inadmissible
in evidence for any purpose, that is to say, such
a document should neither be received in evidence
nor acted upon. Hence a suit based upon
insufficiently stamped promissory note is liable
to be dismissed.
10. This Court in the case of M/s.
Wolstenholme International Ltd., (supra), had
occasion to interpret proviso (a) to Section 35 of
the Indian Stamp Act, 1899 and in paragraph10
of
the said judgment, this Court has taken a view
that, the Legislature has made an exception so as
to provide that the power to admit in evidence an
instrument upon the payment of duty and penalty
would not be applicable to a Bill of Exchange, a
promissory note or an instrument not chargeable to
duty exceeding 10 paise. In paragraph10
of the
said judgment, this Court held ; "Therefore,
whereas an instrument which is chargeable with
duty can be admitted in evidence by a person
having by law or consent of parties authority to
receive evidence, upon the payment of duty and
penalty, as the case may be, this would not apply
to the excepted categories of instruments
specified in proviso (a) to Section 35; Similarly,
the power of the Collector impounding an
instrument under Section 37 or receiving an
instrument sent to him under subsection
(2) of
Section 38 to certify the instrument upon the
payment of proper duty or penalty is not attracted
to an instrument falling in the excepted category.
The view which I take is fortified by a Judgment
of a learned single Judge of this Court, D.R.
Dhanuka, J. in Kaliappa Pundlik Reddi vs. Laxmibai
Dattoba Vellaram, reported in 1994 Mah.L.J. 1839.
A similar view was taken by a Division Bench of
the Madras High Court in Thenappa Chettiar vs.
Andiyappa Chettiar. AIR 1971 Mad. 290."
18 wp9317.11
11. Therefore, it follows from the
authoritative pronouncements of this Court and
also the High Court of Assam referred above,
"promissory note" which is payable otherwise than
on demand not duly stamped as required by
ScheduleI
Article 49(b) of Indian Stamp Act,
1899, is inadmissible in evidence. Same cannot be
received in evidence even on payment of deficit
stamp duty and penalty. The defect that,
promissory note is not duly stamped or
inadequately stamped, cannot be cured in view of
the proviso (a) to Section 35 of the Indian Stamp
Act, 1899, as held by this Court in the case of
M/s. Wolstenholme International Ltd., (supra).
Therefore, this Court is of the opinion that, the
view taken by the Cooperative
Court, Nanded i.e.
trial Court, is the correct view. The view taken
by the Cooperative
appellate Court is not in
consonance with the relevant legal provisions and
also authoritative pronouncements of this Court in
the judgments cited supra. Therefore, the
impugned judgment and order of the Cooperative
19 wp9317.11
appellate Court cannot sustain in law, therefore
same is quashed and set aside. The order below
Exhibit68
passed by the Judge of the Cooperative
Court, Nanded in Dispute No. CC/156/2005 is upheld
and stands confirmed.
12. The writ petition is allowed to the above
extent, same stands disposed of. Rule made
absolute on above terms.
sd/[
S.S. SHINDE, J.]
sut/JULY12
No comments:
Post a Comment