Citation Codes

Equivalent Citations

citation codes

Judges

Bardwood

Acts

Sections 575 and 590 of the Code of Civil Procedure.
SECTION 34 INDIAN STAMP ACT 1879
Section 34, and under Section 39 of the same Act
Court (Section 578 of the Civil Procedure Code).
Section 578 of the Civil Procedure Code,
SECTION 3 INDIAN STAMP ACT 1879
Section 24, Clause 3, of the Stamp Act
Section 34 of the Stamp Act of 1879
Section 39 of Act XVIII of 1869
Section 37 and Section 38,

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Smart Summary

Structured Summary of the Provided Legal Opinion

Factual and Procedural Background

The suit was brought on three promissory notes which were unstamped at the time the plaint was filed. At the stage when issues were settled a Subordinate Judge levied what he considered to be the proper stamp duties on the instruments (treating them as bonds) and also imposed penalties amounting to ten times the duties, admitting the instruments in evidence accordingly. A successor Subordinate Judge, however, concluded that the instruments were promissory notes (not bonds), that they could legally have been stamped only at the dates of execution, and that the earlier admission under the clause relied upon was improper. He rejected the claim and dismissed the suit. The District Judge reversed that dismissal, holding that clause 3 of Section 34 of the Indian Stamp Act, 1879, prevented reconsideration of the earlier order admitting the instruments. One judge in the appellate panel (Mr Justice Parsons) concurred with affirmance of the District Judge's order; another judge (whose reasoning appears earlier in the text) dissented from that view. Ultimately, a Full Bench (Sargent C.J., Nanabhai, and Jardine, JJ.) heard an appeal under Section 15 of the amended Letters Patent and affirmed the decision and reasoning of Mr Justice Parsons.

Legal Issues Presented

Whether, when a court hearing a suit has admitted a promissory note in evidence after levying and receiving the proper stamp duty and a penalty under the Indian Stamp Act, 1879, a Subordinate Judge who made that admission or his successor in office can, at a later stage of the same suit, question the propriety of that admission and treat the instrument as inadmissible.

Arguments of the Parties

Plaintiff's Position

The plaintiff filed with his plaint an instrument described as a "khata" and caused the instrument to be admitted in evidence by the Subordinate Judge upon payment of the proper duty and penalty under Section 34 and with endorsement under Section 39 of the Stamp Act; the instrument was thereby treated as admissible.

Defendant's Position

The defendant objected in his written statement that the instrument was not duly stamped. After the first Subordinate Judge's endorsement admitting the instrument, the defendant (through the successor Subordinate Judge) contended that the instrument was in law a promissory note and that its admission on payment of duty and penalty had been illegal and could be attacked.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sakalchand Jadavji v. Gulabchand Motichand (Printed Judgment for 1882 p. 29)	Shows that a promissory note, being stamped after execution, cannot be regarded as already "duly stamped."	Used to support the view that instruments that were promissory notes and unstamped at execution could not be retrospectively regarded as "duly stamped."
Khoob Lall v. Jungle Sing, I.L.R. 3 Calc. 787	Held that no appeal lay from an order admitting an instrument in evidence, even where it was argued the instrument was a promissory note illegally admitted on payment of duty and penalty.	Relied upon to support the proposition that an order admitting an instrument in evidence is final between the parties and not appealable on that ground.
Enayetoolah v. Shaikh Meajan, 16 Calc. W.R. Civ. Rul. P. 6	Authority followed in Khoob Lall establishing finality of an order admitting an instrument in evidence.	Cited as a supporting authority in the chain of decisions that admission is not appealable.
Girdhari Das v. Jagan Nath, I.L.R. 3 All. 115	Held that the Collector's endorsement (under the prior Act provision corresponding to present Section 31) could not be objected to even if he had endorsed a promissory note contrary to the Section's provisions.	Used to illustrate that an endorsement admitting an instrument is not open to later challenge on the ground of irregularity.
Mohammed Ewaz v. Birj Lall, L.R. 4 I.A. 166 (Privy Council)	Decision cited for comparison where an irregular proceeding was held to be dealt with so as not to permit later objection.	Referred to as persuasive authority aligning with the view that admissions once made are final except as provided by Section 50.
Report in I.L.R. 8 Mad. 564 (Madras Reports)	The dictum that where an instrument has been admitted in evidence and judgment delivered, its admission can only be called in question in a proceeding under Section 50.	Invoked to support the proposition that post-admission challenges are limited to Section 50 proceedings.
M.P. Currie v. M.R. Chatty, 11 Calc. W.R. Civ. Rul. 520	Rulings under the old Stamp Acts indicating that certain orders are not to be treated as affecting the merits so as to permit interference under civil procedure provisions.	Used to bolster the argument that appellate interference is prohibited where the objection does not affect the merits or jurisdiction under Section 578 CPC.
Sonaka Chowdrain v. Bhoobunjoy Shaha, I.L.R. 5 Calc. 311	Authority cited in relation to non-interference where admission of document had occurred.	Supplementary authority to support the rule of finality and non-entertainment of such objections on appeal.
Ramasami Cheiti v. Ramasami Chetti, I.L.R. 5 Mad. 220	Decision stating that a document admitted in evidence by the District Judge could not be called in question later under the Stamp Act provisions, and that such an objection did not affect the merits, invoking Section 578 CPC.	Relied upon to show that admission by a court precludes later challenge on appeal when the objection does not go to merits or jurisdiction.

Court's Reasoning and Analysis

The opinion contains two contrasting lines of legal analysis by different judges; both analyses and their bases are summarized below strictly as presented in the text.

First Judge's Analysis (Dissenting reasoning summarized)

Begin with construction of Clause 3 of Section 34 by reference to Section 50. Section 50 identifies three classes of admissions for its purposes: (1) "as duly stamped," (2) "as not requiring a stamp," and (3) "upon payment of duty and a penalty under Section 34" (i.e., under Clause 1 of Section 34).
The judge concluded that Clause 3 of Section 34 should be limited to those admissions falling within the three classes specified in Section 50; only in those cases is the admission insulated from later challenge except as provided by Section 50.
He held the present case did not fall within any of these three classes because the instruments were promissory notes (not bonds), and promissory notes are expressly excluded from the operation of Clause 1 of Section 34 (which authorizes admission "upon payment of duty and a penalty").
Consequently, the payment of duty and penalty in respect of these promissory notes was a payment outside Section 34 and could not be equated with a payment "under Section 34" as contemplated by Section 50; therefore Clause 3 could not be read so broadly as to prevent re-examination of the admission by the successor judge.
He expressed the view that treating such notes as admissible because of subsequently levied duties and penalties would defeat the clear legislative purpose that unstamped promissory notes are absolutely inadmissible in evidence (treated as waste paper for purposes of a suit).
Accordingly, he would reverse the District Judge's order of remand and direct disposal according to law. However, because Mr Justice Parsons did not concur, the order of the District Court was affirmed under Sections 575 and 590 of the Code of Civil Procedure.

Mr Justice Parsons' Analysis (Majority reasoning as later affirmed)

He characterized the Stamp Act as a fiscal statute whose provisions should be construed to protect revenue. Section 34 makes unstamped instruments inadmissible except by provisos; those provisos include: (1) admission on payment of duty and penalty for certain instruments; (2) admissibility in certain criminal proceedings; and (3) a proviso (third proviso) that when an instrument has been admitted in evidence such admission shall not, except as provided in Section 50, be called in question at any stage of the same suit.
Parsons J. emphasized that these provisos should be read separately as independent provisos to the main section rather than as provisos conditional upon one another. Thus, proviso III (finality of admission) operates independently of proviso I.
He relied on Section 50, which protects revenue and prescribes the limited circumstances under which admissions can be questioned; once the requirement of revenue protection is satisfied by the endorsement and payment procedure, the declaration that an instrument is duly stamped is final between the parties.
Section 39 was invoked as further support: it prescribes how endorsement is to be made and states that "every instrument so endorsed shall thereupon be admissible in evidence and may be registered, and acted on, and authenticated, as if it had been duly stamped." Parsons J. noted the use of "any instrument" and "every instrument" and drew attention to the absence of similar protective language in Sections 37 and 38, inferring that the legislature intended the court's action under Section 34 to be final.
He cited authorities (Khoob Lall, Enayetoolah, Girdhari Das, Mohammed Ewaz, the Madras report, etc.) as direct support for the proposition that no appeal lies from an order admitting a document in evidence as duly stamped and that accordingly one Subordinate Judge cannot set aside the admission made by his predecessor in the same case.
He also relied on civil procedure principles (Section 578 CPC) and prior rulings under old Stamp Acts to argue that the order did not affect merits or jurisdiction and therefore appellate interference was prohibited; accordingly, the District Judge's order should be affirmed and the decree affirmed under Section 575 of the Code.

Holding and Implications

Holding: The ultimate, controlling holding in this opinion is that the order appealed against was affirmed. The Full Bench heard the subsequent appeal and "affirmed the decision and the reasoning of Mr. Justice Parsons."

Implications:

Direct effect: An instrument that a court has admitted in evidence following the payment/endorsement procedure contemplated by the Stamp Act cannot be called in question later in the same suit except as provided by Section 50 of the Act. The opinion, as affirmed by the Full Bench, treats such admissions as final between the parties for the purposes of that suit.
Costs: The opinion records that costs are to be "costs in the cause."
Scope: The majority's reasoning emphasizes fiscal protection and finality; the dissenting judge saw a narrower construction of Clause 3 of Section 34 as required by Section 50 and the text of the Act. The Full Bench's affirmation indicates that the majority view (Parsons J.'s reasoning favoring finality of admission) prevailed in this matter.
Precedential effect: The opinion relies on prior case law to support finality of admissions; the Full Bench affirmed the reasoning consistent with those authorities. (The opinion itself records decisions relied upon but does not purport to announce a novel principle beyond applying established authorities and statutes.)

Note: This summary is strictly limited to the facts, reasoning, authorities, and outcomes explicitly contained in the provided opinion text. No information not present in the opinion has been added.

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Devachand And Anr. v. Hirachand Kamaraj

1. The decision of this appeal turns upon the construction to be put upon Clause 3 of Section 34 of the Indian Stamp Act, 1879, in reference to a promissory note not stamped at the time of its execution, in respect of which the Court, in which a suit has been brought upon such note, has levied the proper stamp duty under the Act together with a penalty of ten times the amount of the proper duty. The question is whether, after a Subordinate Judge has so admitted the note in evidence, he or his successor in office can, in a later stage of the same suit, question the propriety of such admission and treat the instrument as inadmissible.

2. The present suit was brought on three promissory notes, all of which were unstamped when the plaint was filed. At the time when the issues were settled, the Subordinate Judge levied what he understood to be the proper duties on the notes, which he regarded as bonds within the meaning of the Act, together with ten times the amount of those duties, as if Clause 1 of Section 34 of the Act had been applicable to them. His successor in office, who decided the suit, hold the instruments to be promissory notes, which, under the Act, could be legally stamped only at E the dates of execution; and, finding that they had been illegally admitted under clause 1 of section 34, he rejected the claim with costs. His decision was reversed by the District Judge, who was of opinion that the instruments were promissory notes, but that clause 3 of section 34 of the Act was a bar to the reconsideration by the Subordinate Judge, who decided the case of the order admitting the instruments made by his predecessor.

3. I am unable to concur in the propriety of the District Judge's order. The proper construction of clause 3 of section 34 is, I think, to be arrived at on a consideration of the terms of Section 50, which is referred to in clause 3 of section 34, and shows that an instrument is regarded, for the purposes of that section and, therefore, presumably of clause 3 of section 34 also, as having been admitted in evidence when it has been admitted either (1) "as duly stamped," or (2) "as not requiring a stamp," or (3) "upon payment of duty and a penalty under Section 34," i.e., under Clause 1 of that section. Section 50 applies only to three classes of admissions, and those, I think, are the only admissions contemplated in clause 3 of section 34. It is when the admission of an instrument falls under one of these three classes that the instrument can be regarded as having been "admitted in evidence" within the meaning of the clause. When the instrument has been so admitted, its admission cannot be called in question, except as provided in Section 50. The present, however, is not a case falling under either of the three classes specified in Section 50 of the Act. The instruments sued on can only be construed as promissory notes. They are not bonds within the meaning of the Act. They were not admitted as already "duly stamped," for they were on plain paper when executed and when sued on; and could not legally be stamped after execution. Though now properly stamped they cannot even now be regarded as "duly stamped"--see Sakalchand Jadavji v. Gulabchand Motichand Printed Judgment for 1882 p. 29 nor where they admitted as not requiring a stamp, for they clearly required a stamp. They were admitted on payment of the proper duty and a penalty at the time of the settlement of issues. If such payment could be regarded as a payment of duty and a penalty under Section 34 "within the meaning of Section 50, then the view of the District Court would be correct. But a payment of duty and a penalty on a promissory note, which is expressly excluded from the operation of clause 1 of section 34, cannot be regarded as a payment under that section such as is contemplated in Section 50. It is a payment outside the section altogether. If a plaintiff were given a decree on promissory notes not stamped at the time of execution, but in respect of which stamp duties and penalties have been illegally levied during the progress of a suit, he would, in my opinion, obtain an advantage never intended by the Legislature. For the purposes of a suit, the Act treats as waste paper promissory notes not stamped at the time of execution. Such notes are absolutely inadmissible in evidence, and no construction can, I think, be put on clause 3 of section 34, which would permit the clear purpose of the Act in respect of such notes to be evaded.

4. I cannot put so wide a construction on that clause as has been adopted by the District Judge, and would, therefore, reverse his order of remand, and direct him to dispose of the appeal before him according to law. As, however, Mr. Justice Parsons does not concur in this judgment, the order of the District Court must be affirmed, under Sections 575 and 590 of the Code of Civil Procedure. Costs to be costs in the cause.

Parsons, J.

5. I am of opinion that the order appealed against should be affirmed. The facts are these. The plaintiff filed with his plaint an instrument which he called a khata. The defendant objected in his written statement that the instrument was not duly stamped. The Subordinate Judge thereupon inspected the instrument, and holding that it was a bond as defined in Section 3 of the Indian Stamp Act, 1879, admitted it in evidence on payment of the proper duty and the penalty under Section 34, and under Section 39 of the same Act certified that the

"proper duty and penalty having been levied in respect thereof, the instrument is admitted in evidence."

The Subordinate Judge who succeeded to the Court held, when the case next came before it, that as the instrument was not a bond but a promissory note, his predecessor had acted illegally in allowing the duty and penalty to be paid, and in admitting the instrument in evidence, and he thereupon rejected it, and dismissed the suit. The District Judge, in appeal, was also of opinion that the instrument was a promissory note, but he held as it had been admitted in evidence by the first Subordinate Judge on payment of duty and penalty, and had been duly endorsed, the second Subordinate Judge was precluded by the terms of the third proviso to Section 34 of the Stamp Act of 1879 from calling in question such admission.

6. It is argued before us, and it is the opinion of my learned colleague, that the instrument being a promissory note, none of the provisions of section 34 apply to it, and that the admission of it in evidence on payment of duty and penalty was wholly illegal and could be taken exception to by the successor of the Subordinate Judge who admitted it and by an appellate Court. I cannot agree to this argument or in this opinion. The Stamp Act is a purely fiscal regulation. Its sole object is to increase the revenue, and all its provisions must be construed as having in view the protection of the revenue. To that end it has enacted in Section 34 that no instrument chargeable with duty shall be admitted in evidence, acted upon, registered, or authenticated, unless such instrument is duly stamped; but it makes provisos to this by enacting (1) that certain instruments, though not duly stamped, shall be admitted in evidence on payment of duty and penalty, (2) that nothing shall prevent the admission of any instrument in evidence in certain criminal proceedings, and that (3) when an instrument has been admitted in evidence, such admission shall not--except as provided in Section 50--be called in question at any stage of the same suit or proceeding, on the ground that it has not been duly stamped. These three provisos ought, in my opinion, to be read separately,--that is to say, each should be considered to be a proviso to the body of the section and not as provisos to each other. I think that proviso I in no way affects the operation of proviso III any more than proviso III affects the operation of proviso II, and that it is possible, without making any change in the law as laid down in one proviso, to omit all consideration of another proviso. For instance, if the provisos I and II are left out altogether and the section then read, the law as to the power of questioning the admission of an instrument would, I conceive, be the same as it is with those provisos remaining as they are.

7. So read, the law is precisely what we should expect in a strictly fiscal regulation. By Section 50, the revenue is fully protected, and that object being attained, the declaration that the instrument is duly stamped once made is made final between the parties to the suit, so that no objection can henceforward be taken to the admissibility of the instrument on the ground that it is not duly stamped. section 39 of the same act makes this, if possible, still more clear; for, after stating how the endorsement of an instrument on which duty and penalty has been levied shall be made, it expressly enacts that every instrument go endorsed shall thereupon be admissible in evidence and may be registered, and acted on, and authenticated, as if it had been duly stamped. The use of the words "any instrument" in the first clause, and of "every instrument" in the second clause, is noticeable, and when considered along with the absence of any such clause, as occurs at the end of Section 37 and Section 38, leads me to the conclusion that the action of the Court, under Section 34, however wrong it may be, is final and cannot be questioned by any party to the suit in any subsequent proceedings.

8. I am fortified in this opinion by the decision in Khoob Lall v. Jungle Sing I.L.R. 3 Calc. 787, where, following the decision in Enayetoolah v. Shaikh Meajan 16 Calc. W.R. Civ. Rul. P. 6 it was held that no appeal lay from an order admitting an instrument in evidence, even though the objection was raised that the instrument in law was a promissory note, which it was illegal to admit in evidence on payment of duty and penalty. To the same effect is the decision in Girdhari Das v. Jagan Nath I.L.R. 3 All. 115, where it was held that the Collector's endorsement under Section 39 of Act XVIII of 1869 (which for the purposes of that decision may be said to exactly correspond with section 31 of the present act), cannot be objected to even though he may have endorsed a promissory note in contravention of the provisions of that Section. This ruling, in so far as an irregular proceeding is dealt with, may be compared with the decision of the Privy Council in Mohammed Ewaz v. Birj Lall L.R. 4 I.A. 166 at p. 175. The case in the eighth volume of the Madras Report I.L.R. 8 Mad. 564 can also be cited in support of his view of the law, the dictum in that case being that where an instrument has been admitted in evidence, and judgment delivered, its admission can only be called in question in a proceeding under Section 50.

9. These decisions, with the propriety of which I fully concur, are direct authorities on the point that no appeal will lie from an order admitting a document in evidence as duly stamped; and if no appeal will lie, then a fortiori it is not competent to one Subordinate Judge to set aside the admission of an instrument made by his predecessor in the same case. In fact, on this latter ground alone, it might be possible to support the order of the District Judge.

10. I may mention that no case has been cited to us in which it has been held that an instrument once admitted in evidence can afterwards be rejected on the ground of its not being duly stamped. The cases cited show merely that a promissory note cannot be stamped after execution. No doubt these cases have been correctly decided; but they have, I conceive, no bearing whatever upon the question that is now before the Court.

11. There is another reason to be stated why, in my opinion, this Court cannot interfere with the order of the District Judge, and that is that the order is not one which affects the merits of the case or the jurisdiction of the Court (Section 578 of the Civil Procedure Code). There are numerous rulings to that effect under the old Stamp Acts, ex, gr. M.P. Currie v. M.R. Chatty 11 Calc. W.R. Civ. Rul. 520. I may supplement them with the decisions in Sonaka Chowdrain v. Bhoobunjoy Shaha I.L.R. 5 Calc. 311 and Ramasami Cheiti v. Ramasami Chetti I.L.R. 5 Mad. 220. The latter decision is particularly in point, for the Warned Judges there say that

"the document having been admitted in evidence by the District Judge we are precluded by Section 24, Clause 3, of the Stamp Act from allowing it to be called in question now. The objection is not one affecting the merits of the decision, and, therefore, under Section 578 of the Civil Procedure Code, we are prohibited from entertaining it."

For these reasons my opinion is that the order should be affirmed, and under section 575 of the code the decree is affirmed accordingly. We agree in ordering that the costs of this appeal shall be costs in the cause.

12. Against this decision the defendants appealed under Section 15 of the amended Letters Patent.

13. The appeal was heard by a Full Bench (consisting of Sargent C.J., Nanabhai, and Jardine, JJ.), who affirmed the decision and the reasoning of Mr. Justice Parsons.

Devachand And Anr. v. Hirachand Kamaraj

Structured Summary of the Provided Legal Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiff's Position

Defendant's Position

Table of Precedents Cited

Court's Reasoning and Analysis

First Judge's Analysis (Dissenting reasoning summarized)

Mr Justice Parsons' Analysis (Majority reasoning as later affirmed)

Holding and Implications

Devachand And Anr. v. Hirachand Kamaraj

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