Andhra High Court
ORDER S. Ananda Reddy, J.
1. This revision petition is at the instance of the plaintiff. He filed the suit - OS No. 30 of 1998 on the file of the Principal Junior Civil Judge, Vizianagaram for recovery of a sum of No. 9,500/- stating that the respondents/defendant borrowed the said amount and executed a promissory note agreeing to repay the said amount on demand with interest at the rate of 24% per annum, but failed to pay the same. When the petitioner/plaintiff sought to mark the suit pro-note, the respondent/ defendant objected for the same on the ground that it was not properly stamped, and therefore, it is not admissible in evidence. Admittedly, the suit document was executed on a non-judicial stamp paper worth No. 5-00. The learned Junior Civil Judge accepted the objection raised by the defendant and held that the plaintiff is not entitled to mark the disputed document as an exhibit on his behalf. Hence, the present revision by the plaintiff.
2. The contention of the petitioner/ plaintiff is that the Court below has committed an error in not properly considering the relevant provisions and appreciating the contention of the petitioner and in refusing to mark the disputed document.
3. On the other hand, the Counsel for the respondent/defendant supported the impugned order and relied upon a judgment of this Court in Dinne Erranna v. Modappa, (1963) II An.WR 198, which was referred to and relied upon by the Court below.
4. Heard the learned Counsel for the petitioner and the learned Counsel for the respondent and considered the material on record.
5. Before considering the nature of the disputed document, it would be appropriate to refer to the relevant provisions of the Indian Stamp Act (hereinafter referred to as 'the Act') and the rules made thereudner:-
Section 2(22) 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.
As per Section 2(11) of the Act 'duly stamped', as applied to an instrument, means 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 India.
As per Section 2(13) 'impressed stamp' includes - (a) labels affixed and impressed by the proper officer; and (b) stamps embossed or engraved on stamped paper.
Section 10 deals with the mode of payment of duties, except as otherwise expressly provided in this Act, all duties with which any instruments are chargeable shall be paid, and such payment shall be indicated on such instruments, by means of stamps.
Section 11 of the Act deals with the use of adhesive stamps. The following instruments may be stamped with adhesive stamps, namely:
(a) instruments chargeable with a duty not exceeding ten naye paise except parts of bills of exchange payable otherwise than on demand and drawn in sets;
(b) bills of exchange and promissory notes drawn or made out of India;
(c) entry as an advocate, vakil or attorney on the roll of a High Court;
(d) notarial acts; and
(e) transfers by endorsement of shares in any incorporated company or other body corporate.
Section 35 deals with 'instruments not duly stamped inadmissible in evidence, etc. However, in certain cases though they were initially insufficiently stamped, they are admissible in evidence subject to the payment of deficit stamp duty as well as the penalty payable. But however, under the proviso, the following documents are excepted, such as instrument chargeable with duty not exceeding 10 naye paise only, a bill of exchange, or a promissory note.
6. Similarly, Rule 3 of the Indian Stamp Rules, 1925 gives the description of stamps. As per the said rule, all duties with which any instrument is chargeable shall be paid and such payment shall be indicated on such instrument by means of stamps issued by the Government for the purpose of the Act, and a stamp, which by any word or words on the face of it is appropriated to any particular kind of instrument, shall not be used for an instrument of any other kind. The said rule also makes it clear that there are two kinds of stamps, indicating the payment of duty with which the instruments are chargeable, namely (i) impressed stamps, and (ii) adhesive stamps.
Rule 5 provides how a promissory note is to be executed, according to which a promissory note or a bill of exchange shall, except as provided by Section 11 or by Rules 13 and 17, be written on paper on which a stamp of the proper value, with or without the word 'hundi' has been engraved or embossed.
Rule 13 refers to the use of adhesive stamps on certain instruments. This rule enumerates the instruments, which may be stamped with adhesive stamps, namely (i) bill of exchange payable otherwise than on demand, and drawn in sets, when the amount of duty does not exceed 10 naye paise for each part of the set. (The other part of the rule is hot relevant).
Rule 17 provides for the use of special adhesive stamps when the documents, like bill of exchange, cheques and promissory notes drawn or made out of India with stamps bearing the word 'foreign bill'.
Rule 18 provides that when an instrument bears a stamp of proper amount but on improper description, the Collector may, on payment of the requisite duty, certify by an endorsement that it is duly stamped.
Similarly, Article 49 of the Schedule to the Act provides how a promissory note is to be stamped i.e., value of the stamp.
7. The contention of the plaintiff is that the provisions of Section 11 refer the word 'may', which gives the option to use adhesive stamps as referred to therein. Further, the term duly stamped did not put any restrictions as to the type of stamps to be used with reterence to any particular type of instrument. Therefore, a promissory note, executed on an impressed stamp of not less than the proper amount of stamp duty payable, should be considered as a valid document/promissory note. Therefore, the view expressed by the Trial Court is not in accordance with law. The learned Junior Civil Judge referred to and relied upon a judgment of this Court in Dinne Erranna v. Modappa (supra). In that case a learned Single Judge of this Court was considering the validity of a document as promissory note in terms of the provisions of Sections 35 and 37 of the Act. In that case, the disputed document, which is stated to be a promissory note, was not duly stamped. But, however, it was certified to be duly stamped by the Collector, and claimed by the plaintiff that it is a valid document. The claim of the plaintiff was that even though the document was not properly stomped, but as it was certified by the Collector having been duly stamped, it is admissible in evidence. Though the said claim was accepted by the learned District Munsif, but was reversed by this Court, observing that:
"Proviso (a) to Section 35 expressly forbids the Collector to validate an unstamped promissory note, and therefore, the order of the Collector validating such an instrument cannot have any legal effect."
But in that case, the claim of the plaintiff was that the document was validated under Section 37 of the Act, which empowers the State Government to make the rules providing that where an instrument bears a stamp of sufficient amount but of improper description, it may, on payment of the duty with which the same is chargeable, be certified to be duly stamped, and any instrument so certified shall then be deemed to have been duly stamped as from the date of its execution. But such validation, as found by the learned Single Judge of this Court, shall not be applicable to the documents specified, under the proviso to Section 35, which includes promissory note.
8. This issue was also considered by a learned Judge of this Court in P. Krishna Murthy and others v. Munilal, 1978 LS 40 (AP). In that case, the defendants raised objections as to the admissibility of the promissory notes on the ground that they were not properly stamped. The suit promissory notes for No. 5,000/- each were stamped with three adhesive stamps of 10 paise each. The learned Single Judge referring to the provisions of Section 11 of the Act held that there is no prohibition contained in Section 11 that adhesive stamps shall not be used in any instruments other than those mentioned in Clauses (a) to (e) of Section 11. This Court also referred to the words 'may be stamped' contained in Section 11, which indicates the permissive character of the stamps to be used in execution of the promissory notes. This Court, thus, upheld the view of the lower Court.
9. This issue was also considered by a learned Single Judge of the Madras High Court in P. Moorthy v. A.R. Kothandaraman, . In that case, the promissory note in question was executed on an impressed stamp paper of the value of No. 1-50 paise. Though the defendant disputed the validity of the promissory note and admissibility of the said document on the ground that it was not duly stamped, the Small Causes Court rejected the said objection. But, however, the said finding was reversed by the new Trial Bench of the Court of Small Causes, which was assailed in the revision before the Madras High Court. The learned Single Judge, after referring to the provisions of Sections 10 and 11 of the Act, as well as the relevant rules, held that a promissory note can be stamped either with adhesive stamps or engrossed on a stamp paper of the proper value.
10. In G. Hanumanthapa v. S. Bala Rangaiah, , a learned Single Judge of the Karnataka High Court had also an occasion to consider this issue as to the proper stamp duty payable on the promissory notes. The learned Judge though held that a promissory note not executed on duly stamped paper is inadmissible in evidence, but, however, noted that a pro-note written on impressed stamp paper of requisite value must be held as duly stamped.
11. In view of the above position of the rules as well as the decisions referred, to, there is no prohibition as to the execution of a promissory note on an impressed stamp paper. What is required for a valid promissory note is that it should be stamped properly, as provided under the Act and the Rules. Section 10 of the Act refers the mode of duties to be paid. As per this provision, except as otherwise expressly provided in the Act, all duties with which any instrument chargeable shall be payable and such payment shall be indicated on such instruments by means of stamps. Further, as already referred to Section 11, where the word 'may' used, is indicative of the choice for the executant of the document. A promissory note executed using impressed stamp paper or adhesive stamps are equally valid and admissible in evidence, provided that they are stamped with requisite value.
12. In view of the above, as the disputed document is admittedly executed on an impressed stamp paper of the value of No. 5-00, which is more than the requisite value, it should be treated as a valid document executed with the requisite stamp duty, as provided under the Act and the Rules.
13. Therefore, the impugned order is set aside, and the matter is restored to the file of the lower Court with a direction to receive the disputed document and mark the same as an exhibit on behalf of the plaintiff and proceed with the suit in accordance with law.
14. Accordingly, the revision petition is allowed. No costs
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