Rakesh Jain & Others vs Vinod Kumar Bhola
2010 Latest Caselaw 2704 Del

                                        REPORTED
*    IN THE HIGH COURT OF DELHI AT NEW DELHI


%                             DATE OF RESERVE: February 11, 2010


                              DATE OF DECISION: May 21, 2010


+             RFA 476-78/2005 and CM No.9428/2005 (stay)



      RAKESH JAIN & ORS.                     ..... Appellants
                    Through: Mr. Sanjay Jain, Sr. Advocate with
                             Ms. Garima Jain and Ms. Ruchi Jain,
                            Advocates

                     versus

      VINOD KUMAR BHOLA                    ..... Respondent
                  Through: Mr. Ravi Sikri and Mr. Vaibhav
                           Kalra, Advocates


CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL

1. Whether reporters of local papers may be allowed
   to see the judgment?

2. To be referred to the Reporter or not?

3. Whether judgment should be reported in Digest?


: REVA KHETRAPAL, J.

1. This appeal is directed against the judgment and decree dated

07.04.2005 passed by the learned Additional District Judge decreeing the

suit of the plaintiff in the sum of Rs.3,32,100/- with interest @ 12% per

annum from the date of the filing of the suit till the date of realization

against all the three defendants.

2. The respondent-plaintiff in the suit filed by him against the

defendants No.1, 2 and 3 for the recovery of the aforesaid amount had

alleged in the plaint that the defendants No.1 and 2 (the appellants

herein), who were known to the plaintiff, had approached the plaintiff

somewhere in July, 2000 and informed the plaintiff about their plans for

expanding their partnership business. Thereafter, it is alleged, the

defendants No.1 and 2 repeatedly approached the plaintiff to invest his

money in the expansion project of their partnership business. In view of

the assurances held out by them, the plaintiff agreed to invest his money

with the defendants on the following terms and conditions, mutually

settled and agreed upon between the parties in the suit:-

"a. That the plaintiff was to invest a sum of Rs.15,000/- every month with the defendants for a total of one and half years (18months) starting from 10th August, 2000 to 10th January, 2002. b. That on this Rs.15,000/- deposited with the defendants every month the defendants No.1 was to issue a Promissory Note of the equivalent amount and pay interest @ 24% per annum.

c.That the Promissory Notes were to be for a period of one and half years, after which the defendants were to return the principal amount of Rs.15,000/- along with interest at the above mentioned rate of 24% per annum."

3. Pursuant to the aforesaid oral understanding arrived at between the

parties, the plaintiff regularly deposited with the defendants a sum of

Rs.15,000/- beginning 10th August, 2000, and in all a total amount of

Rs.2,70,000/- was deposited with the defendants till 10th January, 2002

by the plaintiff, thereby complying with his part of the agreement. The

defendant No.2 regularly issued promissory notes on the terms and

conditions as stated above after receiving every payment of Rs.15,000/-

from the plaintiff, the details whereof are set out in paragraph 6 of the

plaint. However, in January, 2002, when the time came for repayment

of the amount mentioned in the promissory note of 10 th August, 2000,

the defendants delayed the payment of the amount due, viz., the

principal amount and the interest thereon @ 24% per annum, and sought

time on the pretext that the extension plans undertaken by the respondent

were not yet fulfilled. The defendants further promised the plaintiff that

they will pay the amount due as on 10th January, 2002 in the next month

along with the amount due in lieu of the promissory note executed by

them on 10th September, 2000. On their failure to honour their

commitments, the plaintiff was constrained to serve the defendants with

a legal notice dated 20th April, 2002. Despite the issuance and service of

the said notice dated 20th April, 2002, as alleged in the plaint, the

defendants have till date failed to clear the outstanding of Rs.3,32,100/-.

Hence, the suit for recovery of the aforesaid amount under the provisions

of Order XXXVII of the Code of Civil Procedure.

4. On receiving summons of the suit, the defendants (the appellants

herein) entered appearance and also filed an application for leave to

defend the suit. The defendants-appellants were granted unconditional

leave to defend and, therefore, filed their written statement.

5. The suit was contested by the defendants principally on the

ground that the promissory notes were not admissible in evidence being

payable "otherwise than on demand". This being so, the alleged

promissory notes were not duly stamped as required under Entry 49 read

with Entry 13 of the First Schedule to the Indian Stamp Act, 1899 and in

view of Section 35 of the said Act, were not admissible in evidence. A

number of other preliminary objections were also raised to the

maintainability of the suit.

6. On merits, it was submitted in the written statement that one Shri

Vijay Kumar Bhardwaj used to visit the shop of the defendants in the

Defence Colony market during the year 1993. When the defendants

were facing severe financial crunch, the said Vijay Kumar Bhardwaj

offered to bail out the defendants and started giving them loans as and

when the defendants required the same. Each time the loan was handed

over to the defendants, the said Vijay Kumar Bhardwaj used to obtain

the signatures of the defendants on a blank pro-note along with a blank

cheque on the ground that the same were being taken as security for the

repayment of the loan and would be returned to the defendants after

repayment of the loan amount.

7. Around the first week of May, 1998 when the financial position of

the defendants had further deteriorated, the said Vijay Kumar Bhardwaj

suggested to the defendants that the defendants transfer the first and

second floors of Shop No.41, Defence Colony belonging to them in his

favour and the entire loan would stand adjusted towards the sale

consideration thereof. Having no other option, the defendants agreed to

the aforesaid proposal. Shri Vijay Kumar Bhardwaj in turn agreed to

return the blank pro-notes and cheques to the defendants. The said Vijay

Kumar Bhardwaj, however, stated that since he was a Government

servant (working in the police department), liable to be questioned on

his source of income, the Sale Deed for the first floor of Shop No.41,

Defence Colony market be executed in the name of his brother Shri Ajay

Kumar Bhardwaj and similarly the Sale Deed for the second floor of the

aforesaid shop be executed in the name of his brother-in-law Shri

Pramod Khanna.

8. Accordingly, two unregistered Sale Deeds were executed by the

defendants in June, 1999 whereby the first and second floors of Shop

No.41 were transferred to Ajay Kumar Bhardwaj, the brother of Vijay

Kumar Bhardwaj and to Shri Pramod Khanna, brother-in-law of Vijay

Kumar Bhardwaj for Rs.15,48,000/- each. As the total sale

consideration for the two floors amounted to Rs.30,96,000/-, the entire

loan given by Vijay Kumar Bhardwaj stood adjusted as per the

defendants. According to the defendants, at this juncture, the intentions

of Shri Vijay Kumar Bhardwaj turned malafide and the said Vijay

Kumar Bhardwaj started misusing the cheques and pro-notes bearing the

signatures of the defendants by filing false suits and other proceedings

under fictitious names with a view to extract money from the defendants.

Thus, though the plaintiff is a complete stranger to the defendants and no

transaction ever took place between the plaintiff and the defendants, a

calculated fraud was played upon the defendants by the said Shri Vijay

Kumar Bhardwaj to which the plaintiff is an active party, apart from

being a beneficiary.

9. On the pleadings of the parties, the following issues were framed

by the learned trial court on 01.05.2003:-

"(i) Whether the suit is bad for mis joinder of the parties as so alleged in preliminary objection No.2 of the written statement? OPD

(ii) Whether the suit is not maintainable in its present form ? OPD

(iii) Whether the suit is premature as so alleged in preliminary objection No.4 of the written statement? OPD

(iv) Whether the suit is barred by limitation?

OPD

(v) Whether the suit has not been properly valued for the purposes of court fees and jurisdiction? OPD

(vi) Whether the plaintiff is entitled for the suit amount? OPP

(vii) Whether the plaintiff is entitled for the interest, if so, then at what rate and to what extent? OPP

(viii) Relief."

10. An additional issue was subsequently framed on 05.09.2003 as

follows:-

"1A. Whether the promissory notes are not properly stamped as so alleged in preliminary objection No.1 of the written statement? OPD"

11. The learned trial court on the basis of the evidence adduced by the

parties and the documentary evidence on record, as stated above, held

the plaintiff entitled to a decree for Rs.3,32,100/- along with costs and

interest @ 12% per annum from the date of the filing of the suit till

realization against the defendants. Aggrieved by the judgment and

decree of the learned trial court, the appellants have preferred the present

appeal.

12. Mr. Sanjay Jain, the learned senior counsel for the appellants

confined his arguments in the appeal to additional Issue No.1A, viz., to

the non-admissibility of the pro-notes and the findings on the other

issues rendered by the learned trial court were not assailed by him. As

such, it is deemed unnecessary to go into the factual aspects of the pleas

raised in defence and the findings rendered by the learned trial court

thereon. In any case, I have gone through the findings rendered on issue

Nos.1 to 5, which pertain to the maintainability of the suit and also on

the remaining issues and I do not find any perversity or illegality in the

said findings.

13. According to the appellants, thus, the core questions arising in the

appeal are:-

(A) Whether the pro-notes, relied upon by the learned trial court

to decree the suit, have been rightly admitted in evidence by

the learned trial court?

(B) Whether the respondent-plaintiff could claim a decree

independent of the said promissory notes?

14. The contention of Mr. Sanjay Jain, the learned senior counsel for

the appellants is that the entire edifice of the suit filed by the respondent-

plaintiff under Order XXXVII of the Code was based on the pro-notes,

which, according to the respondent-plaintiff, had become due and

payable. It is submitted that a mere reading of the plaint itself clearly

demonstrates that the suit was based only on the promissory notes and

no part of the claim was structured on any other document or cause of

action. The appellants-defendants had filed their leave to defend

application, wherein one of the preliminary objections was that the pro-

notes were insufficiently stamped and, thus, not admissible in evidence.

The learned trial court by its order dated 27.11.2002 favourably

considered the said submission and on the basis thereof granted

unconditional leave to defend to the appellants-defendants. The

appellants-defendants thereafter filed their written statement wherein

they took the same objection being preliminary objection No.1, which

reads as follows:-

"All the promissory notes are not admissible in evidence. Each Promissory note is payable „otherwise than on demand‟. This being so, the alleged Promissory Notes are not duly stamped as required vide Entry 49 read with Entry 13 of Schedule Stamp Act and in view of Section 35 of the Stamp Act the said promissory notes are not admissible in evidence."

15. Mr. Jain further contended that on the basis of the aforesaid

preliminary objection, an additional issue was also framed by the learned

trial court, being Additional Issue No.1A:-

"Whether the promissory notes are not properly stamped as alleged in preliminary objection No.1 of the written statement? OPD"

16. The argument of Mr. Jain is that simply because leave to defend

the suit was granted in the instant case, the basic character of the suit did

not change and the claim of the respondent-plaintiff remained structured

on the promissory notes. Therefore, if the promissory notes are

inadmissible in evidence, the suit cannot be decreed. Alternatively, it is

argued that there being no independent document to support the theory

of loan apart from the promissory notes, there was nothing to justify the

passing of the decree against the appellants herein.

17. It is further submitted by the learned senior counsel for the

appellants that the learned trial court had no occasion to apply its mind

to the admissibility or otherwise of the promissory notes and to pass any

adjudicatory order thereon. The mechanical exercise performed by the

learned trial court of marking the documents could not be construed to

mean that the promissory notes had been admitted in evidence, more so,

as no admission/denial of the documents anterior to the marking of the

documents had taken place, and the exhibit-marking was done by the

respondent-plaintiff in the affidavit of evidence filed by him. No

subsequent order was invited from or returned by the Court to establish

the admissibility of the documents. Moreover, the plaintiff, in his entire

evidence, nowhere propounded the theory of an oral transaction of loan

or laid any basis of claim independent of the promissory notes. Thus, the

findings of the trial court on the theory of an oral transaction of loan are

misconceived, unfounded and untenable, besides being beyond the

pleadings and evidence on record.

18. Mr. Jain also contended that the conferment of benefit of Section

36 of the Stamp Act on the respondent-plaintiff by the learned trial court

was also without any basis whatsoever, for, to confer the benefit of

Section 36 of the Stamp Act, the instruments in question (the pro-notes

in the instant case) had to be first admitted in evidence. Once the said

basic premise remained unfulfilled, as in the instant case, the suit was

bound to fail in its entirety. Thus, if the promissory notes themselves

were found to be inadmissible in evidence, the suit could not be decreed

on the alternative premise of loan, more so as there was independent

document to support the oral theory of loan, apart from the promissory

notes.

19. Reliance in support of the aforesaid contention was placed by Mr.

Jain on paragraph 15 of the decision of this Court in Sudir Engineering

Company vs. Nitco Roadways Ltd., 1995 (34) DRJ 86, which reads as

follows:-

"(15) The marking of a document as an exhibit, be it in any manner whatsoever either by use of alphabets or by use of numbers, is only for the purpose of identification. While reading the record the parties and the Court should be able to know which was the document before the witness when it was deposing. Absence of putting an endorsement for the purpose of identification no sooner a document is placed before a witness would cause serious confusion as one would be left simply guessing or wondering which was the document to which the witness was referring to while deposing. Endorsement of an exhibit number on a document has no relation with its proof. Neither the marking of an exhibit number can be postponed till the document has been held proved; nor the document can be held to have been proved merely because it has been marked as an exhibit."

20. Mr. Jain next submitted that a distinction was drawn by the

Supreme Court in Javer Chand vs. Pukhraj Surana, 1961 SC 1655

between cases where a document has been inadvertently admitted,

without the Court applying its mind to the question of its admissibility,

and cases where the marking upon the exhibited documents was done

after judicial determination by the Court. The following extract of the

said decision was specifically referred to:-

"The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked as Exs. P. 1 and P. 2 and bore the endorsement 'admitted in evidence' under the signature of the Court. It is not, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of its admissibility."

21. Mr. Jain submitted that in the case of Ram Rattan vs. Bajrang Lal

(1978) 3 SCC 236, the Supreme Court emphasized that the Court has to

judicially apply its mind when an objection is taken regarding

admissibility of a document and it is only after admission of a document

in evidence after such judicial determination that Section 36 of the

Stamp Act would come into play. The relevant extract of the judgment

relied upon by the learned counsel for the appellants is as follows:-

"When the document was tendered in evidence by the plaintiff while in witness box, objection having been raised by the defendants that the document was inadmissible in evidence as it was not duly stamped and for want of registration, it was obligatory upon the learned trial judge to apply his mind to the objection raised and decide the objection in accordance with law. Tendency sometimes is to postpone the decision to avoid interruption in the process of recording evidence and, therefore, a very convenient device is resorted to, of marking the document in evidence subject to objection. This, however, would not mean that the objection as to admissibility on the ground that the instrument is not duly stamped is judicially decided; it is merely postponed. In such a situation at a later stage before the suit is finally disposed of it would none-the-less be obligatory upon the court to decide the objection. If after applying mind to

the rival contentions the trial court admits a document in evidence, Section 36 of the Stamp Act would come into play and such admission cannot be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. The Court, and of necessity it would be trial Court before which the objection is taken about admissibility of document on the ground that it is not duly stamped, has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case and where a document has been inadvertently admitted without the Court applying its mind as to the question of admissibility, the instrument could not be said to have been admitted in evidence with a view to attracting Section 36(see Javar Chand v.Pukhraj Surana), AIR 1961 S.C. 1665. The endorsement made by the learned trial judge that "objected, allowed subject to objection", clearly indicates that when the objection was raised it was not judicially determined and the document was merely tentatively marked and in such a situation Section 36 would not be attracted."

22. Finally, the learned counsel for the appellants relied upon a

Division Bench judgment rendered by this Court in Love Kumar Sethi

vs. M/s. Deluxe Stores & Ors., 145 (2007) DLT 275, which, according

to him, being on identical facts was squarely applicable to the instant

case.

23. To counter the arguments of Mr. Sanjay Jain, Mr. Ravi Sikri, the

learned counsel for the respondent contended that the plaintiff-

respondent had filed his affidavit by way of evidence on 04.08.2003 and

the documents, i.e., the promissory notes, etc. were exhibited on the

same day without any objection from the side of the defendants-

appellants. However, an application raising an objection that the

promissory notes were not duly stamped and thus could not be taken as

evidence was subsequently filed on 05.09.2003 by the appellants herein.

On the same day, i.e., on 05.09.2003, the additional issue, being Issue

No.1A was framed.

24. Thus, Mr. Sikri urged that in the present case, as noted by the

learned trial court, all the promissory notes and receipts had been

exhibited without any objection of the defendants about insufficiency of

the stamp duty. The instruments in question having been once admitted

in evidence, by virtue of the provisions of Section 36 of the Indian

Stamp Act such admission shall not, except as provided in Section 61 of

the said Act, be called in question at any stage of the same suit or

proceeding on the ground that the instrument has not been duly stamped.

In support of this submission, Mr.Sikri relied upon the decision

rendered by the Rajasthan High Court in Kedar Singh Chauhan vs.

Bhagwan Singh, AIR 2001 Raj. 125, the relevant portion of which is

reproduced hereunder:-

"The Court further said that once a document has been marked as an exhibit in the case and trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross examination of their witnesses, Section 36 of the Stamps Act comes into operation and once the documents is taken in evidence it is not open either to the trial Court itself or to a Court of Appeal or revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction."

25. Mr. Sikri on behalf of the plaintiff-respondent also sought to place

reliance on the decision of the Supreme Court in Javer Chand vs.

Pukhraj Surana, 1961 SC 1655 (relied upon by the appellants as well),

wherein, the Supreme Court while dealing with the defendant's plea that

the suit of the plaintiff based on certain hundis was liable to be rejected,

as the hundis were inadmissible in evidence because they had not been

stamped in accordance with law, held as follows:-

"That section is categorical in its terms that when a document has once been admitted in evidence, such admission cannot be called in question at any stage of the suit or the proceeding on the ground that the instrument had not been duly stamped. The only exception recognised by the section is the class of cases contemplated by s. 61, which is not material to the present controversy. Section 36 does not admit of other exceptions. Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence. Once the Court, rightly or wrongly, decides to admit the document in evidence, so far as the parties are concerned, the matter is closed. Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked as Exs. P. 1 and P. 2 and bore the endorsement 'admitted in evidence' under the signature of the Court. It is not, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of its admissibility. Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-

examination of their witnesses, s. 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or revision to go behind that order. Such an order is not of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction."

26. Mr. Ravi Sikri, the learned counsel for the plaintiff-respondent

further submitted that once Section 36 of the Indian Stamp Act comes

into the picture, the provisions of Section 35 of the said Act are rendered

inapplicable, which is evident from a bare reading of Section 36 itself.

Section 36 of the Act being apposite, is reproduced hereunder:-

"36. Admission of instrument where not to be questioned.- Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not duly stamped."

27. Mr.Sikri contended that even if a duty is cast upon the Court and

the Court fails to perform the same, Section 36 of the Stamp Act will

come into force on its own motion as observed by the Supreme Court in

Shyamal Kumar Roy vs. Sushil Kumar Agarwal, (2006) 11 SCC 331:-

"22. What was necessary was that the document should be marked in presence of the parties and they had an opportunity to object to the marking of the document. The question of judicial determination of the matter would arise provided an objection is taken as to what document is tendered in evidence and before it is marked as an exhibit in the case. Before the learned Trial Judge, reliance was placed on a decision of a learned Single Judge of the Andhra Pradesh High Court in Vemi Reddy Kota Reddy v. Vemi Reddy Prabhakar Reddy. In that case there was nothing on record to show that the document was marked

as an exhibit after an objection has been raised. The said case, therefore, has also no application to the facts of the present case.

23. It may be true that the object of Indian Stamp Act is to collect revenue and the amendments carried out by the State of West Bengal provides for more stringent steps in that behalf. It may also be true that by reason of Sub- Section (4) of Section 33 of the West Bengal Act, a duty has been cast upon the court to apply its mind when an instrument having insufficient stamp duty is brought to its notice, but, only thereby Section 36 of the Indian Stamp Act cannot be made inapplicable. Section 36, as indicated hereinbefore, applies on its own force."

28. Reliance was also placed by Mr. Sikri on a decision of the Patna

High Court in Rajendra Prasad vs. Most. Siba Devi and Ors., AIR 1982

Pat 65 and upon the decision of this Court in Delhi Box Co. vs. Munshi

Lal Abhinandan Kumar, 28 (1985) DLT 272 to contend that if a

promissory note has once been admitted in evidence though in disregard

of the provisions of Section 35 of the Indian Stamp Act, its admissibility

cannot be questioned at a subsequent stage, and it will be available as

evidence in the proceeding for all purposes, as if it had been properly

stamped at the outset.

29. After considering the rival submissions of the parties and the

precedents cited at the bar, I am of the considered opinion that Section

36 of the Indian Stamp Act is couched in mandatory terms and admits of

no exceptions, except as provided in Section 61. Thus, the challenge to

the admissibility of an insufficiently stamped instrument stands

foreclosed as soon as the said instrument is admitted in evidence. The

reason is not far to seek. Section 35 of the Indian Stamp Act, as held by

the Supreme Court in Hindustan Steel Ltd. Vs. Messrs Dilip

Construction Company, AIR 1969 SC 1238, is a fiscal measure enacted

to secure revenue for the State on certain classes of instruments. Its

stringent provisions are conceived in the interest of the revenue. It is not

enacted with a view to enable a litigant to defeat the legitimate claim of

the other party based on an insufficiently stamped instrument, by raising

a technical objection as to its admissibility once the document has been

admitted in evidence, whether rightly or wrongly.

30. In other words, Section 36 of the Indian Stamp Act has been

enacted to ensure that there is no miscarriage of justice on fiscal grounds

alone and towards this objective mandates that in case that an instrument

is once admitted in evidence, the same shall not be susceptible to

challenge on the ground that it has not been duly stamped. The words

"at any stage", which occur in the said Section, are a pointer to the

legislative intent. Looked at it from another angle, once an instrument

has been admitted in evidence even if it has been so admitted

mistakenly, and the parties proceed to trial on the said basis, examining

and cross-examining the witnesses on the premise that the instrument is

an integral part of the record, for a Court of law to order the de-

exhibiting of such a document at a subsequent stage, by ordering that it

shall not be reckoned as admissible, may result in grave injustice to the

party at whose behest the document has been admitted in evidence. The

provisions of Section 36 in a sense, therefore, in my view, are intended

to operate as a manner of estoppel by enacting that the admissibility of a

document shall not be reconsidered/considered once the document has

crossed the barrier of being admitted in evidence, whether by intent or

by mistake, whether rightly or wrongly. As already stated, to

hold otherwise would be to afford a limited play to the provisions of

Section 36, which, in fact, are by legislative design intended to foreclose

challenge to the admission of a document at a subsequent stage of the

same suit or proceeding on the ground of it falling short of the fiscal

requirements.

31. Further, as held by the Supreme Court in the case of Shyamal

Kumar Roy (supra), an objection to the admissibility of a document

must be raised at the appropriate stage by the party objecting to its

admission in evidence. In case of failure to do so, admissibility of a

document cannot be questioned by such a party at a subsequent stage.

Once the document is marked as an exhibit, the party loses its right to

reopen the question of its admissibility . A conjoint reading of

Section 35 and Section 36 of the Act thus lead to the conclusion that a

party who does not object to the admissibility of a document at an

appropriate stage does so at his peril. Indeed, the Supreme Court in the

Shyamal Kumar Roy case (supra) has gone a step further by stating that

though a duty has been cast upon the Court to apply its mind when an

instrument having insufficient stamp duty is brought to its notice, only

thereby Section 36 of the Indian Stamp Act cannot be made inapplicable.

Section 36 applies on its own force, i.e., it comes into operation

automatically once a document is admitted in evidence. Thus, where

the opposing party whether on account of the failure or neglect of the

Court or on account of its own lack of vigilance loses its right to object

to the admissibility of the document at the appropriate stage, it cannot at

a subsequent stage of the same suit or proceedings challenge the

admissibility of the very same document or instrument.

32. Adverting to the second limb of the submission of the learned

counsel for the appellants that if the promissory notes themselves were

found to be inadmissible in evidence, the suit could not be decreed on

the premise of loan advanced by the plaintiff-respondent to the

appellants-defendants, in view of my findings recorded hereinabove, it is

unnecessary for me to venture into this arena. However, I cannot help

but notice that the learned trial court has rightly held that a suit on the

basis of the original loan transaction will be maintainable, the

promissory notes being a mere collateral security. A similar view was

taken by this Court in Radha Mohan and Anr. vs. Radha Fancy Stores

and Ors., 23 (1983) DLT 269, wherein it has been held that where an

insufficiently stamped promissory note cannot be the basis of a suit, the

plaintiff can fall back on the original contract.

33. As far as the judgment of this Court in the case of Love Kumar

Sethi (supra) is concerned, the same is clearly distinguishable. In the

said case a Division Bench of this Court had affirmed the view taken by

the learned District Judge that the promisory notes in the said case were

insufficiently stamped and therefore inadmissible in evidence. There

can be no dispute so far as this proposition of law is concerned, nor, in

fact this legal position has been challenged in the present appeal.

34. In view of the aforesaid, the inevitable conclusion is that there is

no merit in the present appeal. The appeal is accordingly dismissed.

There shall, however, be no order as to costs.

REVA KHETRAPAL (JUDGE) May 21, 2010 km