Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr.

on 28 April, 1971

Bombay High Court Bombay High Court Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971 Equivalent citations: AIR 1973 Bom 27, (1972) 74 BOMLR 174, ILR 1972 Bom 816 Bench: Malavankar JUDGMENT 1. This is an appeal against the judgment and decree passed by the District Judge, Osmanabad, in Civil Appeal No.34 of 1968 arising out of the decree passed by the Subordinate Judge Osmanabad, in Civil Suit No. 52/1 of 1955. 2. The predecessor of the respondents one Hirachand Amichand filed the suit for the recovery of Rs. 5250/O.S. on the basis of a pro-note dated 6th December 1952 alleged to have been executed by one Shivial Raoji, the predecessor of the present appellants. The original defendant contested the claim denying both the execution and consideration of the pro-note. He also contended that the so-called pro-note was a money bend and the same being not duly stamped, it was inadmissible in evidence. The plaintiff filed his rejoinder rebutting the contentions raised by the defendant and giving the history and the details of the consideration. The rest of the contentions, are not material for our purpose. The learned trial Judge, on the evidence placed before him by the parties on both the sides, came to the conclusion for the pronote and that the so-called pro-note, being a money bond not duly stamped, it was inadmissible in evidence. He, therefore, dismissed the plaintiff's suit with no order as to costs. The plaintiff then went in appeal to the District Font. The learned District Judge found that the document on the basis of which the plaintiff sought to recover the money was a pro-note and not a money bond, and that the plaintiff had proved both execution and consideration for the same. He, therefore, passed a decree for Rupees 4,500/- with costs of the suit and future interest at 4 per cent, per annum. Being aggrieved by this, judgment and decree, the heirs and legal representatives of the original defendant have come I second appeal to this Court. 3. The learned Counsel Mr. Sathe, appearing on behalf of the appellants, first wanted to challenge the finding recorded by the learned District Judge on the question of execution and consideration by taking me through the evidence. However, both the findings being findings of facts based on evidence, and the learned Counsel not being able to urge any question of law on the strength of which these findings of facts could be disturbed. I have no alternative but to accept them and hold that the appellants cannot challenge these findings of facts in second appeal. 4. The important question, however, that is agitated before me in this appeal is whether the document, Ex. 1. on the strength of which the respondents filed the suit for the recovery of money, is a pronote or a money bond. The agreed translation of the document, which is originally in Urdu, reads thus : "I Shivlal s/o Raoji Shah. r/o Tuljapur write this promissory note in favour of you Hirachand s/o. Amichand. r/o Osmanabad, for Rs. 4,500/- I. G. rupees four thousand five hundred I.G. only being the agreed amount of an earlier promissory note, which is without interest and which I promise to pay to you on demand. Further there is a separate promissory note for Rs. 3,300/- rupees three thousand and three hundred only, which has no connection with the sum of Rs. 4,500/- I. G. for which this promissory is given. Miti Marghashirsh Vadya 5. Shake 1874, Date 6-12-1952, in own handwriting. Sd/- Shivlal Raoji Shah, Witnesses. In own hand writing. Rangnath Krishnath Kakade.
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Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971

Shankar Sambha Navagaonkar. Amirkhan Azamkhan Sadashiv Madhav Mane." Now, the learned Counsel Mr. Sathe has urged that the document being attested by witnesses and not being payable to order or bearer, is a bond within the meaning of that word defined in Section 2(5)(b) of the Indian Stamp Act, inasmuch as under this document the original defendant obliged himself to pay money to the original plaintiff. The learned Counsel Mr. Deshpande, appearing on behalf of the respondents, however, has argued that though the document is attested one, it is clearly a pronote, inasmuch as (1) it is in writing and conditional promise to pay a sum certain in money only and nothing more. (3) it is payable on demand and (4) it is payable to a certain person, and thus satisfies all the requirements of Section 4 of the Negotiable Instruments Act, 1881. 5. Before I proceed to discuss these rival contentions, it is necessary to refer to one fact and it is this that prior to the Amendment Act 8 of 1919, S. 13 of the Negotiable Instruments Act stood thus : "A `negotiable instrument' means a promissory note, bill of exchange or cheque expressed to be payable to a specified person or his order, or to the order of a specified person, or to the bearer thereof, or to a specified person or the bearer thereof." Obviously, therefore, before 1919, every promissory note which fell under Section 4 of the Negotiable Instruments Act was not a negotiable Instruments Act was not a negotiable instrument. Only those promissory notes which were expressed to be payable to a specified person or his order, or to the order of a specified person, or to the bearer thereof, or to a specified person or the bearer thereof, were negotiable instruments. Necessarily, therefore, every promissory note, though in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to a certain person, was not a negotiable instrument within the meaning of that expression used in Section 13 of the Negotiable Instruments Act, as it stood before 1919. After the amendment of 1919, however, the old Section 13 was replaced by a new one and Explanation (!) to this new Section 13 made every promissory note a negotiable instrument, whether it was expressed to be payable to order or was expressed to be payable to a particular person, provided it did not contain words prohibiting transfer or indicating an intention that it shall not be transferable. As regards the Indian Stamp Act, which was passed in 1899, long after the Negotiable Instruments Act, 1881, was passed, promissory note is defined (vide Section 2(22) ) as a promissory note as defined by the Negotiable Instruments Act 1881. The second paragraph of the definition says that for the purposes of the Indian Stamp Act promissory note 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. For the purposes of the Indian Stamp Act, 1899, therefore, not only every promissory note defined under Section 4 of the Negotiable Instruments Act, 1881, was a promissory note, but in addition to that certain other documents which fell in the second paragraph were also defined as promissory notes. It is, however, material to note that the definition of promissory note given in Section 4 of the Negotiable Instruments Act, 1881, or the Section 2(22) of the Indian Stamp Act did not undergo any change even after Section 13 of the Negotiable Instruments Act was amended by the amending Act 8 of 1919. The result, therefore, is that even after the amendment of the Negotiable Instruments Act, 1881, by the amending Act 8 of 1919, ever promissory note which is a promissory note under Section 4 of the Negotiable Instruments Act, 1881, is also a promissory note for the purposes of the Indian Stamp Act and in addition to that certain other documents, which fall under paragraph 2 of Section 2(22) of the Indian Stamp Act, under that Act. The amending Act 8 of 1919, so far as it is relevant here, effected a change only in respect of the negotiable nature of a promissory note for the purposes of the Negotiable Instruments Act, 1881, in that after the amendment all promissory note falling under Section 4 of the Negotiable Instruments Act, 1881, whether or not they contain the words such as `order' or bearer' or any other term expressing the render them negotiable are now negotiable instruments, unless they contain
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Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971

words prohibiting transfer or indicating an intention that they shall not be transferable. But so far as the Indian Stamp Act, 1899, is concerned, the amendments does not affect it in any way. 6. Reverting to the rival contentions of the parties in respect of the document. Ex.1. it is not disputed before me that the document contains in writing an unconditional undertaking to pay a certain sum of money only to a certain person and it is signed by the maker. Ordinarily, therefore, it would come under the definition of the promissory note given in Section 2(22) of the Indian Stamp Act. But in addition to this the document is also attested by two witnesses and it is not payable to order or bearer. That being so according to the learned Counsel Mr. Sathe, the document would come under Section 2(5)(b) of the Indian Stamp Act, and , therefore, learned Counsel says that unless a pronote ex facie shows that the money under it is made payable to order or bearer, it would be a bond if it is attested, even though it contains an unconditional undertaking to pay certain sum of money to a certain person. The argument of the learned Counsel Mr. Deshpande, however, is that in view of the amendment of the Negotiable Instruments Act, 1881, by the amending Act 8 of 1919, the document, E.1, becomes a negotiable instrument and, therefore, even though it is attested and not made payable to order or bearer, it still continues to be a pro-note, under Section 2(22) of the Indian Stamp Act, and it would not come under Section 2(5)(b) of that Act. According to the learned Counsel, the words "not payable to order or bearer" in Section 2(5)(b) of the Indian Stamp Act, only show that the document should not be a negotiable instrument. In support of his arguments, he has pointed out that before the amendment of 1919, Section 13 of the Negotiable Instruments Act made only those pro-notes negotiable instruments which were made payable to order or bearer and, therefore, in order to show that the instrument coming under the definition of a bond as given in Section 2(5)(b) ought not to be a negotiable instrument, the words "not payable to order or bearer" were inserted in Section 2(5)(b) of the Indian Stamp Act. According to the learned Counsel, therefore, the test after the amending Act of 1919 is the test of negotiability. 7. In support of his argument, the learned Counsel Mr. Sathe has relied on a Full Bench decision of the Madras High Court in (1885) ILR 8 Mad 87 (FB). In that case the instrument dated 23rd June, 1880, which was a promissory note payable to order, was held to be a promissory note and not a bond, although it was attested, while another instrument, which was not payable to bearer or order and was attested, was held to be a bond. That was a case, however, under the old Stamp Act, and not under the Indian Stamp Act, 1899. This Court also in a case under the Indian Stamp Act, 1899, took the same view in Venku v. Sitaram, (1905) Ilr 29 Bom 82 (FB). In that case, the defendant had passed to the plaintiff a document to the effect: "I have this day taken from you in cash Rs. 48/- (forty-eight). I have received this amount. Therefore, I shall repay this money without taking any objection, when you should demand." The document was attested by two witnesses. It bore a one anna adhesive stamp. This Court held that since the document was attested and was not payable to order or bearer and the executant obliged himself to pay the money to another, it fell under Section 2(5)(b) of the Indian Stamp Act, 1899. Both these cases were decided before the Negotiable Instruments Act, 1881, was amended by the amending Act 8 of 1919. But even after the amendment of the Negotiable Instruments Act in 1919, some of the High Courts have taken the same view. The Calcutta High Court in Khetra Mohan Saha v. Jamini Kanta Dewan. , held that for the purposes of the Stamp Act the document as it appears on the face of it, has to be considered and because Explanation (I) is introduced by the amending Act 8 of 1919 to Section 13 of the Negotiable Instruments Act, 1881, it cannot be said that an instrument which on the face of it is not payable to order, is one made payable to order by virtue of the said Explanation and, therefore, it cannot fall under Section 2(5)(b) of the Indian Stamp Act. That was a case where the instruments were addressed to a particular person. Each of them contained an unconditional undertaking signed by the maker to pay on demand to the person in whose favour it was executed, a certain sum of money. Each of the instruments was attested by a number of witnesses. None of them was made payable to order or bearer expressly. The argument was that because the amending Act 8 of 1919 introduced a change in Section 13 of the Negotiable Instruments Act, 1881, such an instrument became a negotiable instrument and, therefore, though it was not expressly made payable to order or bearer, still it was an instrument payable to order or bearer, and, therefore, it did not fall under Section 2(5)(b) of the Indian Stamp Act. The Calcutta High Court repelled this argument and held that Explanation (I)
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Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971

introduced by Act 8 of 1919 to Section 13 of the Negotiable Instruments Act, 1881, could not be read into the definition of a bond as contained in Section 2(5)(b) of the Indian Stamp Act. The Nagpur Judicial Commissioner's Court as it then was in D. Rozario v. Hariballabh. AIR 1927 Nag 195, also took the same view. That was also a case where the instrument though a pro-note, was not made payable to order or bearer and was also attested, and still the Nagpur Judicial Commissioner's Court held that it was not a promissory note but a money bond falling under Section 2(5)(b) of the Indian Stamp Act, 1899. The Rajasthan High Court also in Bherulal v. Ghisulal, , held that the instrument in that case which was not payable to order or bearer and was also attested by a witness, was not a promissory note but a money bond under Section 2(5)(b) of the Indian Stamp Act, 1899. On the construction of the instrument also in that case, that High Court found that the language showed that it was written for evidencing the debt obtained by the debtor Bherulal, the matter and the purpose for which the debt was incurred and then an express promise to pay up the debt within the time was given therein. The language quite clearly showed that the instrument was not meant to be executed as a negotiable instrument. The Patna High Court in Ram Narayan Bhagat v. Ram Chandra Singh, , has also taken the view that for the purposes of the Indian Stamp Act, an instrument has to be considered as it stands and if, on the terms thereof, the due under it is not payable to order or bearer and is attested by a witness, it is a bond and not a promissory note within the meaning of the Stamp Act. It also held that Section 13 of the Negotiable Instruments Act as amended in 1919 did not introduce any change in the definition of a promissory note as given in Section 4 of that Act, the scope of a document coming within the definition of promissory note was enlarged as being negotiable even in absence of express terms as regards their negotiability and so, did not, in any way, introduce any change or enlarge the scope of the expression 'promissory note' as defined in Section 2(22) of the Stamp Act which had borrowed the definition of 'promissory note' from its definition in the Negotiable Instruments Act as laid down in Section 4 of that Act. In that case, the two documents in question were described as hand notes payable on demand. They were nothing to show in those documents that the sums due were payable to order or bearer. The High Court, therefore, held that the documents in question having been attested by a witness, and there being nothing in them to show that the amounts covered by them were payable to order or to the bearer, came within the term 'bond' as defined in Section 2(5)(b) of the Stamp Act. The Andhra Pradesh High Court, also in Bahadurrinisa Begum v. Vasudev. , has held that in order to bring an instrument within Clause (b) of Section 2(5) of the Stamp Act the instrument must have been attested by a witness, and secondly the amount must not be made payable to order or bearer. If any one of the two things is absent from an instrument, then S. 2(5) (b) would not be attracted. In that case however, the effect of the amending Act 8 of 1919 on the definition of promissory note given in Section 4 of the Negotiable Instruments Act or in Section 2(22) of the Indian Stamp Act was not considered. These decisions, therefore, support the argument advanced on behalf of the appellants by the learned Counsel Mr. Sathe. 8. The learned Counsel Mr. Deshpande, however has relied upon Jagjivandas v. Gumanbhai. . In that case, the question was whether a particular instrument fell under Section 2(22) of the Indian Stamp Act. The High Court did not consider the question as to whether the instrument fell under Section 2(5)(b) of the Indian Stamp Act, While discussing the question whether or not the instrument fell under Section 2(22) of the Indian Stamp Act. It is observed that "promissory note" is a wider term which may include two kinds of promissory notes, namely those which are not negotiable instruments and those which are, if the instrument satisfies the requirements of the definition in Section 4, the instrument must be held to be a promissory note, quite irrespective of the fact whether it is a negotiable instrument or not for the purposes of Section 13 of the Negotiable instruments Act. This decision, therefore, is of no assistance to the respondents. The most that it shows is this must only that in view of the amendment of the Negotiable Instruments Act, 1881, by the amending Act 8 of 1919, the instrument, Ex. 1, in this case became a negotiable Instrument. But this does not necessarily mean that, therefore, it would not come under Section 2(5)(b) of the Indian Stamp Act, when admittedly Ex. 1 is not made payable to order or bearer and it is also attested. The learned Counsel, however, has been able to lay his hands on one ruling which supports him. It is reported in Kadorilal v. Sukhlal, . There it is held that a document,
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Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971

essentially a promissory note but not containing a recital to be payable to order, and which becomes negotiable by reason of S. 13 Explanation (I) of Negotiable Instruments Act, though attested by a witness should be treated as a promissory note for the purposes of the Stamp Act also. In the first place, the document in that case was obviously an instrument made payable to order expressly and, therefore, it could not come under Section 2(5)(b) of the Indian Stamp Act. Secondly paragraph 10 of the judgment at page 8 of the Report shows that the earned Judges, with respect, have overlooked the fact that even under Section 4 of the Negotiable Instruments Act, 1881, an instrument which contains simple a promise to pay on demand a certain sum to a certain person is a promissory note, though there my be no words of negotiability such as "order" or "bearer". The Explanation (I), therefore, not only prescribes that in the absence of prohibition all promissory notes are negotiable, but it also enlarges the scope of the promissory notes which were not negotiable before the amendment but which are now negotiable on account of this amendment. The ruling also refers to Mohd. Akbar Khan v. Attar Singh AIR 1936 PC 171, to say that it is not necessary that the negotiability should be writ large on promissory notes. But with respect, I do not find anything in that decision to support that view. On the contrary Section 13 of the Negotiable Instruments Act, 1881, as it stood before the amendment of 1919, required that promissory note in order that it should be negotiable should be expressed to be payable to a specified person or his order, or to the order of the specified person, or to the bearer thereof, or to a specified person or the bearer thereof. The ruling also observes that the Privy Council decision clearly indicates that the aid of Section 13 of the Negotiable Instruments Act, 1881, can be taken even for the purpose of deciding whether the document is a promissory note or not for the purposes of the Stamp Act. Again with respect, I cannot agree. Their Lordships of the Privy Council referred to Section 13 not because they wanted to decide whether the document in that case was a promissory note for the purposes of the Indian Stamp Act, 1899, but because they wanted to point out that the document in that case, though otherwise a promissory note within Section 4 of the Negotiable Instruments Act 1881, must also be negotiable for there appeared to be no words prohibiting transfer or indicating an intention that it should not be transferable. But ultimately their Lordships decided the point on the broad ground that the kind of document was not and could not be intended to be brought within a definition relating to documents which are to be negotiable instruments, because such documents came into existence for the purpose only of recording an agreement to pay money and nothing more, though they may state consideration. I may incidentally mention here that the document in that case was dated 1st April 1917, while the amending Act 8 of 1919 came into force in 1919. I am, therefore, with respect, unable to agree with the view taken in the aforesaid decision of the Madhya Pradesh High Court. 9. I am of the view that the decisions relied upon by the learned Counsel Mr. Sathe correctly lay down the legal position and it is this that Section 13 of the Negotiable Instruments Act, 1881, after its amendment by the amending Act, 8 of 1919, does not introduce any change in the definition of promissory note given in Section 4 of that Act or in the definition given in Section 2(22) of the Indian Stamp Act, 1899, or in the definition of 'bend' given in Section 2(5)(b) of that Act. It only makes every promissory note coming under Section 4 of the Negotiable Instruments Act a negotiable instrument for the purposes of that Act, unless it contains words prohibition transfer or indicating an intention that it shall not be transferable. But if a promissory note falling under Section 4 of the Negotiable Instruments Act, 1881, and, therefore, under Section 2(22) of the Indian Stamp Act, 1899, is attested and not made payable to order or bearer it would fall under Section 2(5)(b) of the Indian Stamp Act, 1899, and would, therefore, amount to 'bond' for the purposes of that Act. For the purposes of the Indian Stamp Act, 1899, a document as it appears on the fact of it, has got to be considered. I, therefore, hold that the document. Ex.1. is a bond falling under Section 2(5)(b) of the Indian Stamp Act, 1899, and not a promissory note under Section 2(22) of that Act. 10. The difficulty, however, is that the document being admitted in evidence by the lower appellate Court rightly or wrongly, in view of the provisions of Section 35 of the Bombay Stamp Act, 1958, this Court will have no alternative but to confirm the decree and grant a declaration under Section 58 of the same Act. (Vide Devachand v. Hirachand Kamaraj. (1889) ILR 13 Bom 449 (FB) Bhagwandas Totaram v. Chhaganlal Raichand. 46 Bom LR 411 = (AIR 1944 Bom 235 (1)) Annamalai v. Veerappa, ; Venkata Reddi v. Hussain Setti AIR 1934 Mad 383 and Bhuspati Nath v. Basanta Kumari. ). I,
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Jaikumar Shivlal Shah And Ors. vs Motilal Hirachand Gandhi And Anr. on 28 April, 1971

therefore, pass the following order : 11. The decree passed by the lower appellant Court is confirmed and the appeal is dismissed. In the circumstances of this case, no order as to costs in this Court. 12. It is hereby declared that in the view that the document, Ex. 1. is a money-bond and not a pro-note, the amount of stamp payable on it is Rupees Words Not available in Book is Rs. 675/- O. S. The intimation of this declaration should be sent to the Collector of Osmandabad District along with the copy of this judgment. The document Ex. 1, is hereby impounded and it is directed that it should be sent to the Collector, Osmandabad, for further action. 13. Action dismissed.

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