Report No. 67
27.16. Cases illustrating obscurity.-
In illustration of the obscurity as to what is and what is not a promise to pay, we may refer to the Allahabad case of Abdul Rafiq v. Bhaja, AIR 1932 All 199: 1932 All LJ 77, in which the Judges were inclined to take opposite views regarding the unconditional acknowledgment implying a promise to pay. Even if the interpretation that an express promise to pay is required in order to exclude an instrument from Article 1 is adopted, it is not, in practice, easy to come to a conclusion whether the words used in the particular instrument do or do not amount to an express promise to pay. Besides the cases already cited, the under-mentioned cases may be referred to in this connection.1
1. (a) Munilal v. Natwarlal, AIR 1947 Born 337.
(b) Jogendra Chandra Banerjee v. Sachindra Kumar, 40 Cal WN 399.
(c) Narayan v. Marayya, AIR 1951 Mad 605. (d)Jeevraj v. Lal Chand, AIR 1969 Raj 192.
27.17. Sometimes, the question also arises whether a memorandum of the rate of interest to be payable in future, when appended to an acknowledgment, is to be regarded as a stipulation to pay interest within the meaning of the proviso to Article 1. In general, the Courts hold that mere mention of the rate of interest without more is as good as an express stipulation.1-2 Sometimes, nice questions have arisen also by reason of the placing of the signature of the debtor in relation to the stipulation for interest.3
1. Mahadev v. Shivraj, ILR 41 All 169 (FB).
2. Lakshmi Bai v. Ganesh, ILR 25 Born 373.
3. Contrast Ram Prasad v. Parshottam, AIR 1937 All 256 (FB) with AIR 1931 Lah 4.
27.18. In a Patna case1, Courtney Terrell, C.J. observed that the policy of the article seems to be to provide for cases where the debtor and the creditor came to an agreement between themselves, that, in consideration of grant of some time to the debtor, the creditor demands as a condition that the debtor shall relieve him from the apprehension that the debt may be barred by limitation or that the evidence upon which he would be able to rely may not be available at the time of the suit: and it refers, therefore, to the special bargain where the debtor agrees to give the creditor evidence upon which he may rely to enforce the debt, as a condition of a concession by the creditor to the debtor.
1. Habibul Rahaman v. Anwar Dhan, AIR 1934 Pat 629 (630) (DB).
27.19. But it may be noted that according to the Nagpur view,1 mere intention to extend limitation is not enough. Where the acknowledgment relates to the balance of an account, a nice distinction is often made between an admission of the correctness of an account and an acknowledgment for the purpose of supplying evidence of a debt. Thus, a Bombay case2 holds that a debtor's admission as to correctness of an account, taken in writing in order that he may not subsequently dispute is correctness, cannot be regarded as an acknowledgment intended to supply evidence of debt. An acknowledgment of the correctness of account does not (for its validity) require a stamp.3 The debtor's admission of correctness of account taken on a memo, so that he might not subsequently dispute its correctness cannot, according to a Nagpur case,4 be regarded as, an acknowledgment under Article 1 executed to "supply evidence of" the debt. These decisions rest on a distinction which, at least, is a fine one and which is worth avoiding in a taxing statute.
1. Pachkodi Gulnb v. Krishnaji, AIR 1947 Nag 145 (150).
2. Manila! v. Natwarlal, AIR 1947 Born 337 (338).
3. Ramprabha Ojha v. Bishunath Ojha, AIR 1938 Pat 139 (140).
4. Madhavrao v. Hanmant, AIR 1941 Nag 707.
27.20. Alternatives for improvement considered.-
To remove the difficulties referred to above, one or more of the following possible alternatives could be considered1:
(i) The article may be improved on specific points, so as to reduce the difficulty caused in its application by the ingredients relating to-(i) intention to supply evidence; and (ii) absence of promise to pay.
(ii) The provisions of section 35 may be applied to acknowledgments, so as to mitigate the hardship caused by the present position.
(iii) The article itself may be deleted, thus, bringing the position in line with English law.2
1. These are not necessarily mutually exclusive.
2. See under "English law," supra.
27.21. Recommendation to delete the words "in order to supply evidence" etc. and to amend section 35, proviso (a).-
Alternative (iii) above may be considered too drastic. But both alternatives (i) and (ii) have much to commend themselves. As regards (i), enough has been said above to bring out the difficulties caused by the present working, which, though well-intentioned, causes unnecessary controversies and suffering. The words "in order to supply evidence of such debt", as well as the proviso excluding a promise to pay, are intended, perhaps, just to indicate broadly the description of the instrument. But these have been over-emphasised, and require to be deleted. Their deletion will create less difficulty than their retention. If the instrument amounts to a bond or agreement, it will be chargeable accordingly.
27.22. Recommendation to liberalise the law with reference to section 35.-
At the same time, alternative (ii) above should also be adopted1, and the provisions of section 35, main paragraph, should be extended to acknowledgments. If our recommendation to liberalise section 35, Proviso is accepted, then, of course, no further change is needed. What we would like to say is that even if Article 35, Proviso is not liberalised by accepting our recommendation in toto, what we have stated in this Chapter as to Article 1 and the application of section 35 should be carried out on its own merits.
1. This, of course, involves amendment of section 35, proviso (a). See recommendation as to that section.
27.23. We had in our Questionnaire1 put a Question whether article should not be totally deleted, having regard to the practical difficulties caused. While some replies have expressed agreement with the suggestion for deletion, some have not. We appreciate that this would be too radical a course. But we do consider it necessary to recommend such modifications as would take the case outside the stringent provision in section 35, proviso (a).
1. Question 76(a).
27.23A. Expression "written or signed."-
Let us now deal with a verbal point. Article 1 levies duty on an acknowledgment "written or signed" by the person acknowledging. There is a small discrepancy between this article and the charging section. Section 3 is the charging section, and an instrument is chargeable thereunder with duty if it is "executed". "Executed" and "execution" are defined in section 2(12) as "signed" and "signature" respectively. A document, though not executed, may yet be an instrument1; but is not chargeable with duty. Article 1 refers to acknowledgment as being "written or signed by or on behalf of the debtor". Now, an acknowledgment which is "signed by or on behalf of the debtor", is duly "executed", and, in this respect, the reference to "signed" does not create any substantial discrepancy-though there is no reason for not employing the expression "executed". But, in so far as mere "writing" attracts duty in respect of an acknowledgment (Article 1), there is a discrepancy between section 3 read with section 2(12) (on the one hand) and Article 1 (on the other hand).
1. Application of Chet Pa (in re:), (1903) 22 LC 75 (76) (FB) (Lower Burma).
27.24. Recommendation to substitute the word "executed".-
This discrepancy should be rectified by substituting, in Article 1, for the words "written or signed", the word "executed1 An acknowledgment which is only written by or on behalf of the debtor should not become liable to stamp duty until it is signed. It may, in this connection, be noted that the word "executed" is used in some other articles2, and, for the sake of uniformity of language,wherever the word "signed" is used, it should be changed to "executed"3. We may note that such an amendment has been approved by most replies to our Questionnaire4.
1. Compare recommendations as to Articles 28 and 42.
2. Articles 22 and 48.
3. See also recommendation as to Articles 28 and 42.
4. Q. 76(b).
27.24A. Increase of amount.-
We also recommend that the amount "twenty rupees" should be increased to hundred rupees, having regard to the present purchasing power of the rupee.
The following re-draft of Article 1 is recommended, in the light of the above discussion and subject to what we have stated above relating to the points that should not be carried out if section 35, proviso is revised according to our recommendation.
|Proper Stamp duty|
|1. ACKNOWLEDGMENT of a debt exceeding one hundred rupees in amount or value, executed by, or on behalf of, a debtor in any book (other than a banker's passbook) or on a separate piece of paper when such book or paper is left in the Creditor's possession......||Ten naye praise.|