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Report No. 67

17.21. Recommendation as to pronotes.-

Since the hardship to the lender caused under section 35 of the Stamp Act has been noted by several persons, it is high time that this section was amended so as to "advance substantial justice", which under the present section the courts are unable to do,1 however much they may like. We, therefore, recommend that pronotes and bills also should be included within proviso (a) to section 35. If this recommendation is accepted, it will not be necessary to carry out our recommendation to limit the bar relating to pronotes to pronotes as denned in the Negotiable Instruments Act.2

1. See Perutnal v. Kamakshi Ammal, ILR 1938 Mad 933 (946) (FB) (Varadachariar, J.).

2. See discussion as to section 2-"Promissory note".

17.22. Section 35 and letters of credit.-

A point relating to "Letters of credit" has been discussed under an earlier section.1 The recommendation made there was as follows:-

(i) the mention of "letter of credit" should be removed from the definition of "bill of exchange payable on demand", and

(ii) in section 35, "letter of credit" should be expressly mentioned.

The second amendment, which concerns section 35, may be carried out, if our recommendations to delete bills of exchange from section 35, Proviso (a) is not accepted.

1. See discussion as to section 2(3)-"bill of exchange payable on demand", supra.

17.23. Duly stamped.-

Under section 35, proviso, a deficiency in the amount of the duty can be rectified. But the situation where there is no deficiency in the amount of the duty is not specifically covered by the proviso, though it would appear that the language of the proviso to section 35 is wide enough to cover such cases.

17.24. In the definition of the expression "duly stamped", a number of ingredients are implied, such as, provisions of the Act relating to description of the stamp, mode of affixing stamp and the like. As we have pointed out while discussing the definition of that expression,1 a difficulty may arise where the amount of the stamp satisfies the law, but, in other respects, the instrument is not "duly stumped" as explained above. As this is a recurring situation, it appears to be desirable to add in section 35, proviso (a), an Explanation on the point. We recommend that section 35, proviso (a), should be amended for the purpose, by adding such an explanation. We may note that most replies to our Questionnaire favour it.2

1. See discussion as to section 2(11) "duly stamped".

2. Q. 45.

17.25. As regards the case of use of a stamp of improper description, it is covered separately under section 37, which allows the defect to be rectified by applying to the Collector.

17.26. Where the full duty has been paid but irregularly stamped, no penalty except Re. 1. Where part duty is paid but irregularly stamped, then also Re. 1. Though this concerns rate, to avoid undue hardship, it is necessary. Mere irregularity should not be visited with a severe penalty.

17.27. Recommendation to amend section 35, Proviso (a).-

If the above line of reasoning is accepted, clause (a) of the proviso to section 35 should be revised on the following lines:-

"(a) any such instrument shall, subject to all just exceptions, be admitted in evidence, on payment of:

(i) the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, and

(ii) a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion.

Explanation.-Where an instrument bears stamp of a certain amount but is not otherwise duly stamped, then for the purposes of this proviso, the instrument shall be deemed to be duly stamped to the amount of the stamp which it bears i f a penalty of one rupee is paid into court."

17.28. Secondary evidence.-

Section Stamp Act, read with section 91 of the Evidence Act, excludes both the original instillment and secondary evidence of the contents of the instrument, if it is unstamped or insufficiently stamped.1

1. (a) Thaji Beebi v. Tirumulaippa, ILR 30 Mad 386.

(b) Lachmareddy v. Sham Raw, (1966) 2 An WR 251.

(c) Damodar lagannath v. Atmaram, ILR 12 Born 443.

(d) Mung Po Htoo v. Ma Ma Gye, AIR 1927 Rang 109.

(e) Lodlw Rain v. Hari Chand, AIR 1938 Lah 90 (92).

(f) Chanda Singh v. Amritsar Bank Co., AIR 1922 Lah 307.

(g) jhanda Singh v. Harnam Singh, AIR 1926 Lah 415 (416).

(h) Nalam Ramayya v. Nalam Achamma, (1942) 2 MI-J 164: ILR 1945 Mad 160 (FB).

(i) Subbu Naidu v. Varadarajulu Naidu, (1947) 1 MU] 90.

17.29. Lord Watson stated in Raja of Bobbili v. Inuganti China Sitaramaswami Gam, 1899 ILR 23 Mad 49 (PC), that, under the terms of section 34 of the Indian Stamp Act of 1879, as the copy could not be stamped, the original having been lost, it could not be admitted in evidence. This decision was followed by the Madras High Court1 in a case where the facts were these:-

Before the trial commenced, the plaintiff produced an, unstamped document purporting to support his claim to certain lands. Later, on, a mob invaded the Court, and set fire to it in which the record of the case was destroyed, among other things. When the trial commenced, the plaintiff sought to put in a copy of the document and paid the penalty into Court. It was held that the copy of the document was not admissible in evidence, even on payment of the penalty. The fact that the original document was destroyed by the action of the mob put the plaintiff in no better position.

1. Chidambarawv. Mayyappan, AIR 1946 Mad 298.

17.30. In another Madras case,1 it was held that where a deed of partition is inadmissible in evidence for want of registration, the partition cannot be proved apart from the deed. The lower court had held in this case that the partition could be proved by evidence apart from the deed which was not registered. On appeal, the Madras High Court (following an earlier case),2 held that where a deed of partition is inadmissible by reason of the fact that it had not been registered, the court can only regard the properly as being still belonging to the joint family.

1. Ramayya v. Achamma, ILR 1945 Mad 160 (FB) (case law reviewed).

2. Veera Raghava Rao v. Gopidarao, (1941) 2 MLJ 707 (Patanjali Sastri, J.).

17.31. These cases illustrate the hardship caused by the present position. The benefit of being allowed to prove the document on penalty should be extended to copies also.

17.32. The present position leads to the adoption of various tricks and devices by litigants. If the plaintiff can establish his case without proof of a written contract, he succeeds. And that is what he tries to do.

17.33. The defendant on the other hand, exploits the legal prohibition by suppressing the document and by stating that it was unstamped.1

1. See Subhish Pillai v. Muthathal Achi, AIR 1946 Mad 457.

Indian Stamp Act, 1899 Back

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