Madras High Court
Monickam vs Ramakrishnan on 14 March, 2007
Author: S.Rajeswaran
Bench: S.Rajeswaran
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 14/03/2007 CORAM THE HONOURABLE MR.JUSTICE S.RAJESWARAN C.R.P.PD.(MD).No.985 of 2006 and M.P.(MD).No.1 of 2006 Monickam ... Petitioner Vs. Ramakrishnan ... Respondent Prayer Petition filed under Article 227 of the Constitution of India against the order dated 02.08.2006 made in I.A.No.511 of 2006 in O.S.No.731 of 2004 on the file of the Principal District Munsif Court, Nagercoil. !For Petitioner : Mr. D. Rajagopal ^For Respondents : Mr. T. Arul :ORDER
The plaintiff in O.S.No.731 of 2004 is the Revision petitioner before this Court. He is aggrieved by the order of the trial Court dated 02.08.06 made in I.A.No.511 of 2006 filed by the respondent herein to reject the promissory note on the basis of which the suit was laid by the plaintiff.
2. The plaintiff filed O.S.No.731 of 2004 for the recovery of a sum of Rs.50,000/- with interest by contending that the defendant borrowed a sum of Rs.50,000/- and executed a promissory note to repay the same on demand.
3. The defendant filed I.A.No.511 of 2006 for the aforesaid relief by contending that the suit promissory note is not payable on demand and therefore it is an inadmissible document for want of stamp duty.
4. The trial Court after going through the promissory note filed in O.S.No.731 of 2004 found that it is not a promissory note on demand and therefore the same is inadmissible in evidence for want of stamp duty.
5. Heard the learned counsel for the petitioner and the learned counsel for the respondent. I have also gone through the documents and the Judgements referred to by them in support of their submissions.
6. The Learned Counsel for the Petitioner submitted that the suit document is not a document which comes with in the provision of Article 49(b) of the stamp Act.
7. Per Contra, the learned counsel for the respondent submitted that a mere reading of the promissory note will make it very clear that the said promissory note is not payable on demand and supported the order of the trial Court.
8. Before considering the facts of the case, let me consider the decision which are relevant for our purpose, relied on by the parties to cullout the legal principles involved therein.
9. In 2005(1) L.W.187 (S. Ameer Vs. M/s.Vivek Enterprises, rep. By its Sole Proprietor) a Division Bench of this Court after going through the promissory note involved in that case found that the promissory note is payable otherwise than on demand and held that the Stamp duty payable is the same duty as that of bill of exchange. The Division Bench after finding that the promissory note is insufficiently stamped held that S.35 of the Stamp Act prohibits admission of the document since it is not a duly stamped. The relevant portions are as under:
"Para 13. The amount due on the Promissory Note may be payable on demand or payable after a certain period. The amount on the Impugned Document is not payable immediately on demand; but was made payable before 01.06.1986, i.e., no immediate demand could be made since the Defendant has the time to pay till 01.06.1986. Since the amount is not immediately payable on demand, but payable otherwise than on demand, the learned trial Judge found that the document falls under Cla.(b) of Art.49 of Sch.I of the Stamp Act. The correctness of this finding is very much assailed by the Appellant/Plaintiff contending that the trial Court erred in finding that the amount on the document is payable otherwise than on demand.
Para 14. Art.49 of Sch.I of the Stamp Act is as follows:-
49. Promissory Note as defined by S.2(22)--
(a) When payable on demand --
(i) When the amount or value does not exceed Rs.250; (Ten Paise)
(ii) When the amount or value exceeds Rs.250 but does not exceed Rs.1,000; (Fifteen paise)
(iii) in any other case; (Twenty-Five Paise)
(b) When payable otherwise than on demand - The same duty as a Bill of Exchange (No,13) for the same amount payable otherwise than on demand).
The definition of Promissory Note under the Stamp Act is wider than that of S.4 of N.I.Act. In this case, the amount is not payable immediately on demand; but payable before 01.06.1986 since the amount is payable otherwise than on demand. The document is chargeable with higher duty i.e., Stamp Duty is payable under Art.49 (b) of Sch.I of the Stamp Act.
Para 15. Under Art.49(b) of Stamp Act for the instrument "when payable otherwise than on demand", the Stamp Duty is payable as "the same duty as a Bill of Exchange (No.13) for the same amount payable otherwise than on demand". Art.13 of the Stamp Act deals with Bill of Exchange. As per Art.13, for a Bill of Exchange, Stamp Duty is payable as indicated therein for the time slab. In the instant case, the amount is payable within one year period. For this case, Art.13(ii) of Stamp Act is relevant to be quoted.
13. Bill exchange, as defined by S.2 (2) not being a bond, bank note or currency-note.
(a) (Omitted)
(b) where payable otherwise than on demand--
(i)...
(ii) Where payable more than three months but not more than six months after date or sight-- if the amount of the bill or note does not exceed Rs.500; (Two rupees fifty paise) if it exceeds Rs.500 but does not exceed Rs.1,000; (Five rupees) and for every additional Rs.1,000 or part thereof in excess of Rs.1,000;
(Five rupees) In this case, since the amount is payable otherwise than on demand, the Stamp Duty payable is the same duty as a Bill of Exchange (Art.13 (ii))for the amount payable. To make it clear, on the amount of Rs.50,000/- the Stamp Duty of Rs.2,455/- (Rs.5/- Plus Rs.2,450/-) ought to have been calculated as per Art.13(ii) of the Stamp Act. Obviously, the Impugned Document is executed in the paper affixed with 40 Paise Revenue Stamp. The Impugned Document is not sufficiently stamped. The learned trial Judge has rightly found that the document is covered under Cla.(b) (ii) of Art.13 of the Stamp Act and that the document is insufficiently stamped.
Para 16. Since the document is insufficiently stamped, the same cannot be admitted in evidence. S.35 of the Stamp Act prohibits admission of any such document in evidence. Under S.35 of the Stamp Act, an instrument shall not be admitted in evidence "unless such instrument is duly stamped". The Act clearly imposes upon the Court the duty of seeing in every case whether an instrument presented before it is duly stamped or, not. "Duly stamped" is defined in the Act to be "stamped in accordance with the law in force when such instrument is executed or first executed". The Act lays down that "all instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution". If an instrument is not so stamped, clearly it is not stamped according to the Act and cannot be held therefore to be duly stamped. As demonstrated earlier, the impugned document not being duly stamped as per Art.13(ii) of Stamp Act but only executed with revenue stamp of 40 Paise cannot be admitted in evidence. S.35 would be an embargo to admit the document. The learned trial Judge has rightly found that S.35 prohibits admission of the suit document since it is not duly stamped.
10. In 84 L.W.185 (Thenappa Chettiar V. Andiyappa Chettiar), a Division Bench of this Court held as follows in Page 187.
"It will be seen that the Article divides promissory note into two categories
(i) when payable on demand and; (ii) when payable otherwise than on demand.
Only if it is payable on demand 25 paise stamp would be the proper stamp. If it is payable otherwise than on demand, the duty leviable would be that on a Bill of Exchange for Rs.15,000 and the promissory note would be insufficiently stamped. Under Sec.35 of the Stamp Act, it cannot be validated by payment of the deficit duty or penalty, in view of the provisio thereto. If, therefore, the document falls under Art, 49(b), it would be totally inadmissible in evidence.
11. In 2006(3)L.W 926 (B. Rajamanickam S/O.M.Balakrishnan Vs. R. Rathinambal, W/O.T.S.Subramanian), this Court held as follows:
"Para 5. In the context of the settled proposition of law, we have to consider the Plaint document No.1, which reads as follows:
"Received From Thirumathi R.Rathinambal W/o.P.S.Subramaniam D.No.6 Pavadi St. 11 T.Gode. The sum of Rupees Eight thousand Only as a Deposit repayable after 6 months with interest at the rate of 24% percent per annum the interest being payable half yearly or quarterly."
"This document plainly is a receipt for money containing the terms on which it is to be repaid. There is no unconditional undertaking to pay, which is the essential requirement of the promissory note as defined under Section 4 of the Negotiable Instruments Act. Being primarily a receipt, even if coupled with promise to pay, it is not a promissory note. Even if it is improperly stamped, it can be admitted on payment of the required amount to make up such duty together with penalty as stipulated in the proviso to Section 35 of the Indian Stamp Act."
12. In 2006(2) CTC 474 (R. Ravindran Vs. M. Rajamanickam), this Court held as follows:
"Para 7. The question to be considered is whether the instruments are promissory notes for the purpose of the Stamp Act. "Promissory note" is defined under Section 2)22_ of the Stamp Act as one defined by the Negotiable Instruments Act, 1881. Section 4 of the Negotiable Instruments Act defines "Promissory note"
thus:
"A "promissory note" is an instrument in writing (not being a bank-note or a currency-note) 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."
Paragraph 2 of Section 5 of the Negotiable Instruments Act is relevant and reads thus:
"A promise or order to pay is not "conditional" within the meaning of this Section and Section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain."
Para 8. A combined reading of the above provisions makes it clear that though the amount in instrument is payable within a period of six months,l it cannot be said that the payment is conditional within the meaning of Section 4 of the Negotiable Instruments Act. The plaint documents 1 and 2 contain an unconditional undertaking to pay and therefore they are promissory notes within the definition of the Negotiable Instruments Act. Since time for payment was specified, it cannot be said that they are payable on demand and when payable otherwise than on demand,l the documents fall under Article 49(b) of Schedule I to the Stamp Act and the proper stamp duty to be paid would be the same duty as a bill of exchange for the same amount payable otherwise than on demand. The value of the Plaint documents is Rs.2 lakhs each and the stamp duty to be paid is five rupees for the first one thousand rupees and for every additional Rs.1000 or part thereof in excess of Rs.1,000 is five rupees each. Hence there is no proper stamp duty for Plaint documents 1 and 2.
Para 9. The Division Bench of this Court in the decision, referred to above, constructed a document, which is similar to the present ones and concluded that the document contained an unconditional undertaking to pay and therefore it is a promissory note and since it specified two years period for repayment it is payable otherwise than on demand and falls under Article 49(b) of Schedule I of Stamp Act and as the document was insufficiently stamped, in view of the Proviso to Section 35 of the Stamp Act, it would be inadmissible for any purpose. The above decision is squarely applicable to the facts of the present case.
Para 10. The Plaint documents 1 and 2 are promissory notes payable otherwise than on demand and there is no proper stamp duty. In view of the proviso to Section 35 of the Stamp Act, those documents cannot be validated by payment of penalty and the documents are inadmissible in evidence for any purpose."
13. In the light of the above decisions, now let me consider whether the promissory note involved in the present case is payable on demand or not?
14. The promissory note dated 11.07.2003 filed along with the plaint reads as follows:
gpuhkprhp nehl;L :U:gha; 50000/-
"11.07.2003k; jpajp ehfh;nfhtpy; lt[z; rhe;jhd;brl;otpis bghpaehlhh; bjUtpy; 49/26k; ek;gh; tPl;oy; trpf;Fk; gyntrk; ehlhh; kfd; gp.khzpf;fk; mth;fs; bgaUf;F. i\ rhe;jhd;brl;otpis rnfhjuh; bjUtpy; 58k; ek;gh; tPl;oy; trpf;Fk; fhrpRthkpehlhh; mth;fs; kfd; nf.uhkfpU\;zd; vGjpf; bfhLj;j gpuhkprhp nehl;L. vd;dbtd;why;> vd;Dila brhe;j mtrpak; epkpj;jk; jq;fs; trk; ,d;W buhf;fk; fldhf thq;fpd U:gha; 50000/- Ik;gjhapuKk; ,d;W buhf;fk; bgw;Wbfhz;lgoahy; ,d;WKjy; MW khjq;fSf;Fs; mry; U:gha; 50000/- Ik;gjhapuj;ija[k; tl;oapy;yhky; jq;fSf;nfh jq;fspd; mDkjp bgw;w egh;fSf;nfh njitg;gl;L nfl;Fk;nghJ je;J jPh;j;J ,e;j gpuhkprhp nehl;il jpUk;g bgw;Wf;bfhs;ntd;."
The recitals in the above promissory note is more or less on the same lines as recited in the promissory note involved in 84 L.W.185 (cited supra) and in that context the Division Bench held that it is a promissory note payable otherwise than on demand and therefore falls under Clause (b) of Article 49 of Schedule 1 to the Stamp act and there is no sufficient stamp and in view of the proviso to Sec.35 of the Stamp Act, the document cannot be validated by payment of penalty and the document will be inadmissible for any purpose. The relevant portions are as under:
The relevant portion of the document may now be quoted:
"ehd; jq;fs; bfhGk;g[ "M.rp" filapy; ,Ue;j gzj;ij vd; brhe;j bjhHpy; bra;tjw;fhf Vw;bfdnt buhf;fk; bgw;Wbfhz;l U:1500 f;Fk; khjk; 1 f;F U:.100 f;F 0.20 tl;o tPjk; 2 tUl jtizf;F nky; jq;fs; ntz;Lk;nghJ jq;fSf;fhtJ jq;fs; Mh;lh; bgw;w egh;fSf;fhtJ Toa tl;oa[k; KjYk; brYj;jp ,e;j gpuhkprhp nehl;il jpUk;g bgw;Wf;bfhs;ntdhft[k;."
15. Therefore I am of the considered view that the promissory note dated 11.07.2003 is a promissory note payable otherwise than on demand and as rightly held by the trial Court, it falls under Clause (b) of Article 49 of schedule 1 to the stamp Act and the same is inadmissible in evidence.
16. I am in agreement with the order dated 02.08.2006 made in I.A.511 of 2006 and the same is hereby confirmed.
17. In the result, the Civil Revision Petition dismissed. No Cost. Consequently connected M.P. is also dismissed.
To The Principal District Munsif Court, Nagercoil.