Madras High Court
R. Kannusamy vs V.V.K. Samy And Co., Singapore And Ors. on 2 May, 1988
Equivalent citations: AIR1988MAD336, AIR 1988 MADRAS 336, (1988) 101 MADLW 552
ORDER
1. The second defendant in O.S. 36 of 1985, who is also the,defendant in O.S. 37 of 1985, Additional District Judge's court of Pondicherry at Karaikkal, is the petiti.,,)ner in these civil revision petitions. In O.S. 36 of 1985, the first respondent in C.R.P. 4456 of 1937 prayed for the recovery of a sum of Rs. 6,80,228-22 with subsequent interest and costs against the petitioner and three others (respondents 2 to 4 in C.R.P. 4456 of 1987) on the basis of an instrument styled as a promissory note dated 12-1-1984 executed in favour of V. V. K. Samy outside India. Similarly O.S.- 37 of 1985, the respondent in C.R.P. 4457 of 1987 prayed for the recovery of a sum of Rs. 7,33,106-07 with subsequent interestand costsagainstthe petitioner therein on th* basis of an instrument dated 12-1-1984 settled against asa promissory note executed in favourof V. V. K. Samy outside India. For the purposes of these civil revision petitions, it is not necessary to notice in extenso. the defences raised by the petitioners in the two suits instituted by the first respondent in C.R.P. 4455 of 1987 and the respondent in C.R.P. 4457 of 1987 (hereinafter referred to as the respondent). When the instruments, on the basis of which, the suits had been instituted,. were sought to be marked during the course of trial of the suits, through P.W. I in the box, an objection was raised by the petitioner herein that the instruments sued upon are not promissory notes and that they have also not been properly stamped and therefore they are inadmissible inevidence. Tbe court below overruled the objections so raised on behalf of the petitioner and it is the correctness of this order that is challenged in these revisions.
2. The first contention of the. learnedcounsel for the petitioner is that the instruments, on the basis of which, the suits had been instituted, are not promissory notes. On the other hand, learned counsel for the respondent submitted, drawing attention to Ss. 4 and 5 of the Negotiable InstrumentsAct (hereinafter referred to is the Act) that the instruments sued upon fulfil the requirements of a promissory note and therefore, the 6 objection that the instruments sued upon are not promissory notes, cannot be countenanced.
3. Before proceeding to consider the rival contentions thus raised, it would be necessary to refer to the definition of a promissory note, as found in S. 4 of the Act. A promissory note has been defined as an instrument in writing (not being a Bank note or currency note containing an unconditional .undertaking signed by the maker to pay a certain s um of money only to, or to the order of, a certain person or to the bearer of the instrument S. 5 provides that a promise t6 pay is not conditional within the meaning of S. 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 occurrence of a specified .eve pit, which, according to the ordinary w1pectation of mankind, is certain to happen, although the time of its happening inay be uncertain. In the light of the aforesaid provisions, the terms of the instruments, on the basis of which the suits had been instituted, h4ve to be considered.
4. Apart from the fact that there is a difference in the number of executants and the amount, the recitals in both, the instruments are practically the same. No doubt, the preamble portion of the instruments sued upon refers to the goods sold and delivered to the executants by the respondent and the amount. However, what is important is the recital to the effect that the executants or the executant, as the case maybe, have or has undertaken and promised to pay the respondent the amount-. of 88072 Dollars and 94941.39 Dollars respectively. Thus, the petitioner has unconditionally undertaken to pay the respon4ont the amounts mentioned therein, which are certain. There is no dispute that these instruments have been signed by the petitioarr in these civil revision'petitions. Thus, the instruments in question ,are in writing and do contain an unconditional und*taking to pay the respondent a certain sum of money and have also been signed by the exfcutants. However, there is a recital in the instruments to the effect that it was subject to'certain terms and conditions. They are, that the amounts mentioned in the instruments should be paid on or before 30-10-1984, and 30-6-1984, respeuively, with interest on the amounts mentioned in the instruments, at 12 per cent per annum payable from 30-10-1982 and 1-11-1982, till the date of payment and that the courts of the Republic of Seychelles, Singapore and India shall have jurisdiction for actions taken on the promissory notes.
4A. Whether the aforesaid terms and conditions would in any manner affect the unconditional undertaking to pay, found in the instruments, may now be considered. The first so-called condition fixes a time for payment as 30-10-1984 in one case and -1984in the other. This~does not inany manner affect the undertaking contained in the instruments to pay the amount. The provision regarding the payment of interest also does not have any bearing upon the undertaking as well as the promise to pay the amounts mentioned in the instruments. The further provision regarding the jurisdiction of the courts, cannot also in any manner detract from the unconditional nature of the undertaking contained in the instruments to pay an ascertained certain sum of money to the respondent. Though from the recita s found in the instruments sued upon, it may appear as if the undertaking and promise to pay found therein, is subject to certain other terms and conditions, it is not reallysof or the other terms do not really in any manner affect the undertaking as well as the promise to pay embodied in the instruments, but only provide for a time limit for payment, payment of interest and the jurisdiction of the Courts. where actions may be commenced. They do not in any manner affect the clear undertaking and promise found incorporated in the instrument in the words 'I hereby undertake and promise to pay to V.V.K. Samy. the sum of Dollars'. The preamble portion referred to already merely sets out the basis for arrivingat the amount mentioned in the instruments and ~even if the preamble portion of the instruments sued upon can be construed-as an Ackqowledgment ofindebtedness by the execittants in favour of the respondent, _yet,-wheh taken along with the other recitals found in the instrument it is clearly seen that the instruments purport to acknowledge the undebtedness by the executants and at the same time contain a clear undertaking as well as a promise to pay the respondent the amount mentioned therein. To -such position, in my view Illustration (b) to S. 4 of the Act would apply and, he instruments issued upon would nevertheless be promissory notes, despite the preamble portion setting' out not only the basis on which the amounts have been arrived at, but also containing an acknowledgment thereof, for there is a clear undertaking and promise to pay the amounts mentioned, and that undertaking or promise is not in any manner made conditional upon anything' else. The so-called conditions mentioned, as noticed already, relate only to the time of payment, payment of interest and the place of suing and they do not affect the undertaking as well as the promise embodied in the Instruments. The circumstances that time for payment has been fixed as 30-101984 and 30-6-1984 also would not in any manner render the unconditional undertaking in the instruments any the less unconditional. By the terms incorporated in the instrum6rits.Llie time'for payment of the amounts bad. been expressed to be before the lapse of acertain period and that period was certain to expire in the course of ordinary expectation and thus. the fixation of time for payment, would not render the instruments sued upon any the less promissory notes, as defined in S. 4 of the Act. It will also be useful in this connection to refer to the decision in The nappa ChettiaT v. Aq4iAppa Chettiart , where the question arose whether a provision in a promissory note expressed to be payable on the lapse of a certain period, would make the promise as well as the undertaking to pay conditional within the meaning of S. 4 of the Act. In that case under the terms of the instrument sued upon, the promisor agreed to repay the amount after two years and the question arose whether an instrument containing such a provision, would be a promissory note, and if so whether it would b e payable otherwise than on demand. While holding that despite the stipulation regarding time for payment, the instrument would be a promissory note, though payable otherwise than on demand, even within the extended definition of a promissory not under S. 2(22) of the stamp Act, the division Bench pointed out that it could be so, both under S. 4 of the Act as well as under S. 2(22) of the Stamp Act and Ss. 4 and 5 of the Negotiable instruments Act, observed as follows- -
"Though the amount is payable only after two years, it cannot be said that payment is conditional within the meaning of S. 4. The document contains an unconditional undertaking. Therefore, it is a promissory note within the definition of the Negotiable Instruments Act. Therefore, it is also a promissory note under S. 2(22) of the Stamp Act."
Referring to S. 19 of the,Act, the Division Bench pointed out that - it will follow by necessary implication that, if time for payment is specified, it cannot be said to be payable on demand and therefore the instrument may require to be stamped in accordance with Art. 49(b) of the Stamp Act, as one payable otherwise than on demand. The first contention of the learned counsel for the petitioner that the instruments sued upon are not promissory notes cannot therefore be accepted.
5. Learned counsel for the petitioner next contended that the instruments sued upon, have been executed outside India and are payable otherwise than on demand and that they should be properly stamped as promissory notes as defined in S. 2(22) of the Stamp Act and cannot be admitted in evidence without being properly stamped' under Art. 49(b) of the Stamp Act. On the other hand, learned counsel for the respondent submitted that the instruments sued upon had been duly executed, stamped according to the law prevailing at the place of execution of the instrument and since the promisee himself had instituted the suits for the recovery of the amounts due under the instruments, there is no need for stamping the instruments in accordance with the Stamp .A:4 in view of S. 19 of the Stamp Act.
6. There is no dispute that the instruments sued upon were executed outside India and hadalsob6tn properly stamped in accorddnce , with the law applicable thereto at the place of execution. It has earlier been seen that under the terms of the instruments sued upon, the amounts were payable on or before the dates specified there in. This, according to the learned counsel for the petitioner, would make the instrument, even if they are promissory notes, payable otherwise than on demand requiring stamping under Art. 49(b)of the Stamp Act. However, it is seen from Sec. 19 of the Stamp Act, that the first holder in India of a promissory note drawn or made out of India, shall, before he endorses, transfers or otherwise negotiates the same in India, affix there to the proper stamp and cancel the same. This provision applies only in respect of the first holder. Proviso (a) to S. 19 also deals with a case where the promissory note comes into the hands of any holder in India. In this case, it has to beremembered that the respondent, who is himself the promisee, has instituted the suits for the recovery of the amounts due under the promissory notes, properly stamped. outside India. In such a situation, there is noquestion of endorsement, transfer or negotiation by the first holder in India and therefore, there is no obligation to affix proper stamp and cancel the same. That this is so, been laid down by several decisions. Ln Griffin v. Weatherby (1868) 3 QB 753, anacdon was brought for recovery of money onthe basis of a foreign bill of exchange drawn in the Isle of Man payable in Shrewsbury. England, and it did not require a stamp as a foreign bill, except when presented for payment or endorsed or transferred orotherwise negotiated in the United Kingdom and it was held that as it had nix been dealt with in any one of the aforesaid ways. it was ,admissible in evidence without stamp. InSimulu Ebrahim Rowthean v. Abdul Rahiman Mahomed (1898).8 Mad LJ 182 Shephard O.C. J. held, that as the plaintiff had notendorsed, transferred or otherwise negotiated the promissory note sued upon beforepresenting the instrument into court, the obligation to affix stamp had not arisen. In Mohamed Rowthan v. Mohamed Husin Rowthan (1899) ILR 22 Mad 337cossidering the propriety of the dismissal of the sjuit onthe ground that the promissory note suedupon cannot be received in evidence, as it was not duly stamped and could not also bestamped on payment of penalty or be admitted in evidence under S. 34 of the Stamp Act, aDivision Bench of this Court pointed out thetas the holder had not endorsed, transferredor otherwise negotiated the instrument in British India, the obligation to stamp the promissory note had not arisen and Sec. 34 washb bar to its admission in evidence. In so holding, the Division Bench approved thedecision of the Queen's Bench in Griffin v.Weatherby (1868) 3 QB 753, and SimuluEbrahim Rowthan v. Abdul RahimanMohamed (1898) 8 Mad U 182. In KunbiCoya Haji v. Panikka Vittil Assan -Boya 36Mad U 188: (AIR 1919 Mad 104) a suit was aid on promissory notes executed at Meccain favour of the plaintiff; but the trial judge ruled that they were inadmissible in evidence.Seshagiri lyer J. p6int6d out that if a documents valid according to the law of the place, where it was executed, it can ordinarily besued upon in India without affixing any Indian stamp on the document and that it is not necessary to affix British stamp on documents executed outside the British India, unless it be for the purposes of acceptance endorsement, payment transfer or negotiation and therefore the order rejecting the promissory notes as inadmissible in evidence could not be sustained. In SivsubramaniaThevan v. Kalankarayan Konar (1941) 2 MadIJ 301 : (AIR 1941 Mad 868), Mockett J.accepted that so far as a promissory note isconcerned, stamping and cancelling would be required only before transfer or endorsement. It was also further held that there was an endorsement in favour of the plaintiff without affixing the proper stamps and a cancellation thereof. It is in that view, the order of the court below holding that the promissory note is inadmissible in evidence was upheld. But that however will have no application on the facts of this case * InRattanchand v. Kharaitiram , a similar question arose and afterconsidering the decisions referred to above,it was pointed out that where a promissorynote is executed outside India, it is notinadmissible in evidence, if a suit is broughtto enforce the liability created by thepromissory note and the requirement of stamp under S. 19 of the Stamp Act,arises%%henihe first holder in British India does any one of the things, viz, presentation for acceptance or for payment, or endorses, transfers or otherwise negotiates it in British India, and when none of these things was done, the promissory note did not require British stamping. It was further pointed out that when the promissory note executed outside British India was brought into India by the promisee himself and an acknowledgment under S. 20 of the Limitation Act had been obtained and thereafter, the suit was laid by the promisee, there was no need for stamping. It is not disputed that in this case the promisee himselt had instituted the suit and that there is no endorsement, transfer or negotiation by the respondent and the occasion for affixing proper stamps and their cancellation did not arise and therefore the objection regarding & inadmissibility of the promissory note in evidence was rightly overruled by the court below., For the aforesaid reasons, the civil revision petitions fail and are dismissed with costs.
7. Petitions dismissed.