Punjab-Haryana High Court
Kapur Singh (Deceased By L.Rs) vs Dalbara Singh on 24 September, 1996
Equivalent citations: AIR1997P&H141
Author: R.L. Anand
Bench: R.L. Anand
ORDER A.L. Bahri, J.
1. One of the questions debated in this case is as to whether a promissory note executed in the year 1972 requires to be stamped with "Refugee Relief Additional Stamp. There are two decisions of this Court on the subject. In Jagmali Singh v. Gajju Singh, 1978 Rev LR 131, it was held by Tewatia, J. that such a document does not require "Refugee Relief" stamp in view of S.3-B of the Stamp Act. The said decision was later on followed in R.S.A. No. 1565 of 1978, Walaiti Ram v. Harnek Singh decided on September 3, 1990, by G. R. Majithia, J. With great respect to the Judges dealing with the aforesaid two cases I beg to differ with the view expressed therein.
2. Section 3A of the Stamp Act, as amended by the Central Act No. 4 of 1971, requires that promissory note must bear the "Refugee Relief stamp of ten paise (additional duly). Promissory note is entered in the Union List 1 at Item No.91, 7th Schedule attached to the Constitution and is thus a Central subject. The Central Government was competent to enact S. 3-A providing additional duty (Refugee Relief) stamp to be paid on instruments covered by several items mentioned therein which also includes Art. 49 of Schedule 1 attached to the Stamp Act relating to promissory note. Subsequently Punjab Government enacted S. 3-B of the Stamps Act under President Act 24 of 1971 as under:--
"3-B. Instruments chargeable with additional duty:--
(1) Every instrument chargeable with duty under S. 3 read with Schedule 1-A other than the instruments mentioned in Articles Nos. 13, 14, 27, 37, 47, 49, 52, 53 or 62(a) shall, in addition to such duty, be chargeable with a duty of ten paise.
(2) The additional duty with which any instrument is chargeable under sub-sec. (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps bearing the inscription "Refugee Relief whether with or without any other design, picture or inscription.
(3) Except as otherwise provided in sub-sec. (2), the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under sub-sec. (1) in respect of the instruments referred to therein as they apply in relation to the duty chargeable under S. 3 in respect of those instruments."
A bare perusal of the aforesaid section makes it quite clear that the State Legislature was not legislating on the subject of promissory note covered by Item No. 49 of the Schedule attached to the Stamp Act to be charged with additional duty (Refugee Relief). To say that by legislating S.3-B the State Government has exempted the payment of stamp duty on the promissory note is not correct. Section 3B enacted for Punjab does not apply to the promissory note and it is S. 3-A as enacted by the Central Act which is applicable to the promissory notes covered by Article 49 to be charged with additional duty (Refugee Relief).
3. For the reasons stated above, the papers of this case may be laid before Hon'ble the Chief Justice for referring the aforesaid question for decision to the larger Bench.
S.S. Sudhalkar, J.
4. This matter has been placed before us to decide the following question referred by a learned single Judge:
"Whether the promissory note executed in the year 1972 requires to be stamped with a 'Refugee Relief' additional stamp?"
In his reference order dated November 16, 1990, A.L. Bahri, J. took notice of the judgment of D.S. Tewatia, J., in Jamail Singh v. Gajju Singh, 1978 Rev LR 131, as well as tbe judgment dated September 3, 1990 passed by G. R. Majithia, J., in R.S.A. No. 1565 of 1978 (Walaiti Ram v. Harnek Singh) in which the two learned single Judges have held that document like promissory note does not require 'Refugee Relief' stamp in view of S. 3-B of the Indian Stamp Act, 1899 (for short "the Act"). Bahri, J. also noticed the provisions of Ss. 3-A and 3-B of 1899 Act and observed that the State Legislature was not legislating on the subject of promissory note covered by Item No. 49 of the Schedule to the Act of 1899 and, therefore, the State Government cannot be said to have exempted the promissory note from payment of stamp duty. Bahri, J. further observed that S. 3-B added by the Punjab Amendment does not apply to the promissory note and, therefore, promissory note was required to be stamped with 'Refugee Relief stamp.
5. A brief reference to the facts is necessary to decide the question referred by the learned single Judge. Kapur Singh (plaintiff-appellant) filed suit against the defendant-respondent for recovery of Rs. 6,000/-. The basis of the suit is a pronote executed by the defendant as also receipt issued by him in favour of the plaintiff. The defendant-respondent resisted the suit and one of the picas raised by him was that the pronote and receipt were insufficiently stamped and were inadmissible in evidence. The trial Court framed 7 issues of which issue No. 4 is "Whether the pronote/ receipt in question are understamped and are inadmissible in evidence and if that is so, what is its effect?" The trial Court decreed the suit on 31-10-1977 but issue No. 4 was decided against the plaintiff. The learned trial Court held that the pronote was required to be stamped with 'Refugee Relief stamp and in the absence of the stamp it was inadmissible in evidence. Though the appellate Court reversed the judgment and decree, on issue No. 4 it agreed with the finding recorded by the trial Court regarding inadmissibility of the pronote and the receipt on the ground that the documents are insufficiently stamped.
6. Section 3-A has been inserted in the Act by Amending Act No. 44 of 1971 and the same has become effective from 15-11-1971. Section 3-B has been incorporated in the Act by the Indian Stamp (Punjab Amendment) Act, 1971 and it is applicable within the territory of Punjab. These provisions read as under:--
"3-A. 1. Every instrument chargeable with duty under S. 3 read with Articles Nos. 13, 14, 27, 37, 49, 52, 53 or 62(a) of Schedule shall in addition to such duty be chargeable with a duty of 10 paise.
2. The additional duty with which any instrument is chargeable under sub-sec. (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps bearing the inscription 'Refugee Relief' whether with or without any design, picture or inscription.
3. Except as otherwise provided in subsection (2) the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under sub-section (1) in respect of the instruments refers to therein as they apply in relation to the duty chargeable under S. 3 in respect of those instruments.
3-B. Instruments chargeable with additional duty:
(1) Every instrument chargeable with duty under S. 3 read with Schedule 1-A other than the instruments mentioned in Articles Nos. 13, 14, 27, 37, 47, 49, 52, 53 or 62(a) shall in addition to such duty, be chargeable with a duty of ten paise.
(2) The additional duty with which any instrument is chargeable under sub-sec. (1) shall be paid and such payment shall be indicated on such instrument by means of adhesive stamps bearing the inscription "Refugee Relief whether with or without any other design, picture or inscription.
(3) Except as otherwise provided in sub-sec. (2), the provisions of this Act shall, so far as may be, apply in relation to the additional duty chargeable under sub-sec. (1) in respect of the instruments referred to therein as they apply in relation to the duty chargeable under S. 3 in respect of those instruments."
We may also reproduce Article 246 of the Constitution, Entry 91 of the List 1 and Entry 63 of List 2 of the Seventh Schedule. The same are as under:--
"Article 246. Subject matter of laws made by Parliament and by the Legislatures of States.--
(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List 1 in the Senventh Schedule (in this Constitution referred to as the "Union List").
(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause(1), the legislature of any State 35 *** also, have power to make laws with respect to any of the matters enumerated in List 3 in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").
(3) Subject to clauses (1) and (2), the Legislature of any State 35 *** has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List 2 in the Seventh Schedule (in this Constitution referred to as the "State List").
(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included 36 (in a State) notwithstanding that such matter is a matter enumerated in the State List.
Entry9l of List 1:
Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letter of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.
Entry 63 of List 2:
Rates of stamp duty in respect of documents other than those specified in the provisions of List 1 with regard to rates of stamp duty."
7. Article 246(1) begins with a non obstante clause and lays down that Parliament shall have exclusive power to make laws with respect to the matter enumerated in List 1 (Union List). By virtue of Art. 246(2), the Parliament as well as the State Legislature are empowered to make laws with respect of any of the matters enumerated in List 3 (Concurrent List) and in terms of Art. 246(3), the State Legislatures have the exclusive power to make laws for their respective States or any part thereof with respect to any of the matters enumerated in List 2 (State List). Residue power vests with the Parliament by virtue of Art. 246(4). Article 254 deals with the contingencies in which there is a inconsistency between the laws made by the Parliament and the laws made by the legislatures of the States. Clause(1) of Art. 254 declares that the law enacted by the Parliament which it is competent to enact or any provisions of the existing law with respect to the matters enumerated in the Concurrent List shall prevail as against the law made by the Legislature of a State and to the extent of repugnancy the State law shall be void. Only in respect of the matters enumerated in Concurrent List, the legisalture of a State can enact a law and such law shall prevail in that State in case the same has received assent of the President.
8. Entry 91 of the Union List deals with the rates of stamp duty in respect of bills of exchange cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. Entry 63 of the List 2 (State List) relates to the rates of stamp duty in respect of documents other than those specified in List 1 (Union List). It is, therefore, crystal clear that the Parliament has been vested with the exclusive power to enact law regarding the rates of stamp duty in respect of promissory notes. Therefore, S.3-B enacted by the Punjab Amendment Act, 1971 will have to be read in such a manner that it does not tread in the field occupied by List 1. In fact a bare reading of S. 3-B makes it clear that the State Legislature was not enacting law on the subject of promissory note which is covered by Item No. 49 of the Schedule attached to the Stamp Act. The use of expression "other than the instruments mentioned in Ss. 13, 14, 27, 37, 47, 49, 52, 53 or 62(a) clearly shows that Punjab taw does not deal with Stamp Duty on promissory notes."
9. In Jagmail Singh v. Gajju Singh (1978 Rev LR 131) (supra) D. S. Tewatia, J. considered the scope of S. 3-B and Art. 49 of the Act and held: "a perusal of provisions of S. 3-B of the Stamp Act would reveal that it expressly exempted instruments covered by Art. 49 from the purview of the provisions of S. 3-B, Art. 49 refers to the promissory notes and a pronote is also a promissory note. So, it has to be held that the promissory notes was not to bear the "Refugee Stamp". That means that the "Refugee Stamps" borne "by the pronote was unnecessary and by virtue of its remaining uncancelled, it can merely be said that the pronote can at best be considered to be not bearing the stamp which it otherwise was not required to bear. Thus a pronote otherwise bearing the requisite stamp duty cancelled, has to be considered as duly stamped, and, therefore, to be exhibited in evidence.
10. In his judgment in Walaiti Ram v. Harnek Singh (supra), Majithia, J. simply followed the view expressed by Tewatia, J. in Jagmail Singh's case (1978 Rev LR 131) (supra).
11. With great respect, the view-taken by Tewatia, J. is clearly erroneous. There is nothing in S. 3-B to indicate that it grants exemption to any particular instrument from the payment of stamp duty. Rather what Sec. 3-B does is to impose a duty of ten paise on the instruments which are not covered by Articles Nos. 13, 14, 27, 37, 47, 49, 52, 53 and 62(a) mentioned in the Schedule. This provision is intended to impose additional duty on documents which may not be subject to such duty under S.3-A. Similarly the view taken by Majithia, J. in Walaiti Ram v. Harnek Singh (supra) does not represent the correct position of law.
12. We, therefore, hold that the promissory note is required to be stamped with "Refugee Relief stamp under S. 3-A of the Act.
13. Now the file of the case be placed before the concerned single Bench for decision on other points.
R.L. Anand, J.
14. Unsuccessful plaintiff Kapur Singh has filed the present R.S.A. and it has been directed against the judgment and decree dated 15-6-1978 passed by the Court of Additional District Judge, Bathinda, who reversed the judgment and decree dated 31-10-1977 passed by Senior Sub-Judge, Bathinda, and dismissed the suit of the plaintiff-appellant Kapur Singh, who died during the pendency of this appeal on 13-11-1979 and his legal representatives mentioned in Civil Miscellaneous No. 1652-C of 1980 were brought on , record.
15. The brief facts of the case are that Kapur Singh plaintiff (deceased) filed a money suit for the recovery of Rs. 6,000/-, i.e., Rs.4,700/- principal amount and Rs. 1,300/- as interest drawn at the rate of 2 per cent, per month on the allegations that on 29-12-1972 Dalbara Singh defendant borrowed a sum of Rs.4,700/- as principal amount from him, Bhim Chand and Jarnail Singh. The defendant also agreed to pay interest at the rate of Rs. 2 per cent, per month on the principal amount of Rs. 4,700/- and it was also agreed upon by the defendant that he would return the amount of the loan along with interest on demand. On the same day the defendant executed a pronote and a receipt by way of additional security for the loan advanced by the plaintiff. In spite of repeated demands made by the plaintiff, the defendant failed to pay the loan amount along with interest. Hence the suit.
16. The suit was contested by the defendant who asserted that he never borrowed the amount from the plaintiff nor executed any pronote or receipt in his favour, as alleged. Moreover the alleged pronote is insufficiently stamped and as such is not admissible in evidence. The plaintiff is a money-lender but he does not possess the requisite licence under the Money Lending Act and, therefore, the suit is not maintainable. The plea of limitation was also taken by the defendant, who finally prayed for the dismissal of the suit.
17. The pleadings of the parties led to the framing of the following issues by the trial Court :--
1. Whether on 29-12-1972 Dalbara Singh-defendant borrowed Rs. 4,700/- from Kapur Singh-plaintiff and agreed to pay interest thereon? If so, at what rate?
2. Whether the defendant executed the pronote/receipt in question in favour of the plaintiff?
3. If issue No. 2 is proved whether the pronote/receipt in question are without consideration?
4. Whether pronote/receipt in question are under-stamped and are inadmissible in evidence? If so, to what effect?
5. Whether the plaintiff is a money-lender and does not possess a licence for doing the money-lending business?
6. Whether the suit is within limitation?
7. Relief.
After the conclusion of the trial, the suit was decreed by the trial Court and a money decree for a sum of Rs. 6,000/- with costs was passed in favour of the plaintiff and against the defendant. The trial Court held that though the pronote was not sufficiently stamped, yet it was executed by way of collateral security for the repayment of the loan and, therefore, the plaintiff was entitled to the amount.
18. The defendant filed the first appeal and vide judgment and decree dated 15-6-1978 the Court of Additional District Judge, Bathinda, reversed the judgment and decree of the trial Court and dismissed the suit of the plaintiff-respondent Kapur Singh. The operative part of the judgment of the First Appellate Court is contained in para No. 6 of the judgment, which is reproduced as follows :--
"Law on this point is well settled and brooks of no contradiction that where the loan is advanced simultaneously with the execution of the promissory note and forms part of the same transaction and the pronote is executed in full discharge of the loan and contains substantially all the terms of the contract of loan between the parties then in that case if the pronote is found inadmissible in evidence under S. 35, the plaintiff cannot fell back upon any independent cause of action to recover the loan and prove the same by independent evidence for the simple reason that there is no cause of action independent of and apart from the promissory note. Where all the terms of contract are embodied in the pronote other evidence cannot be led in view of the bar imposed by Section 91 of the Evidence Act, 1872, (See Ghulam Moham-mad Labroo v. Habib Alia, AIR 1966 J&K 127; Kanhai Lal v. Brij Nandan, AIR 1952 All 509; T.S. Srinivasa Godwa v. Siddiah, AIR 1971 Mysore 144, on this point). Coming now to the facts of the present case, the advance of the loan by Kapur Singh plaintiff-respondent to Dalbara Singh defendant-appellant and the execution of the pronote Ex.P-1 and receipt Ex.P-2 by Dalbara Singh in Kapur Singh's favour were simultaneous and contemporaneous events. In fact according to Kapur Singh-plaintiff as PW-3 the pronote and the receipt were executed 5/10 minutes after the advance of the loan. A look at pronote Ex.P. 1 would show that it embodies all the terms of the contract i.e. the loan transaction in dispute. In my view the Court below erred in coming to the startling conclusion in the circumstances that the pronote was no more than a collateral security. This in fact is not true and the suit of Kapur Singh plaintiff-respondent could not be decreed against the defendant-appellant falling back on the original debt, because as already noted the transaction merges into pronote and pro-note becomes basis of transaction and if the pronote is not properly stamped as in this case and is inadmissible in evidence under Section 35 of the Indian Stamp Act, 1899 then the suit must fail. No other point has been urged before me."
Aggrieved by the judgment and decree passed by the first appellate Court, Kapur Singh filed the present appeal, which is being disposed of only with the assistance of the learned counsel for the appellant, who in spite of his best efforts could not improve the facts of his client.
19. Earlier this appeal came up for hearing before the learned single Judge, who formulated a question as under:--
"Whether the promissory note executed in the year 1972 requires to be stamped with a 'Refugee Relief' additional stamp?"
The matter was referred to a larger Bench, who answered the reference in the affirmative on 19-3-1996 holding that promissory note was required to be stamped with "Refugee Relief stamp under Sec. 3(A) of the Stamp Act.
20. Learned counsel appearing on behalf of the appellant submitted that though the pronote' (P1) and the receipt (P2) are inadmissible due to not properly stamped, yet the suit of the plaintiff can be decreed on the basis of the original cause of action, i.e., the loan received and not paid by the defendant-respondent.
21. The solitary argument which was advanced by the learned counsel for the appellant has been considered by me with the help of the record and I find it without any substance and devoid of any merit. The earlier case set up by the plaintiff was that the pronote (P1) and receipt (P2) were executed by way of collateral security, but this contention if appreciated with the help of evidence, then there will be only conclusion that the loan advanced to the defendant on 29-12-1972 and simultaneously pronote (P1) and receipt (P2) were executed and these two documents were not executed by way of collateral security as alleged by the plaintiff. Secondly, it is well settled that no new case can be made out by the plaintiff himself when it is not pleaded by him in the plaint. A perusal of the plaint would show that it was never averred by the plaintiff that the amount was advanced earlier to 29-12-1972 or that in consideration of the said advancement of the loan, the defendant executed the pronote and the receipt on 29-12-1972. At this stage it is not permissible for the plaintiff to urge before me that the suit could be decreed on the basis of consideration receipt. The oral evidence which has been led by the plaintiff in the trial Court practically becomes inadmissible in view of Ss. 90 and 91 of the Indian Evidence Act because all the terms of the loan had been incorporated in the pronote itself, which is inadmissible due to its insufficiently stamped and cannot be taken into consideration under S. 35 of the Stamp Act.
22. No other point was urged before me.
23. Resultantly, I affirm the judgment and decree of the first appellate Court.
24. The net result is that the appeal is devoid of any merit and the same is hereby dismissed leaving the parties to bear their own costs.
25. Appeal dismissed.