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2007 Supreme(AP) 413
Andhra Pradesh High Court
Judges : P.S.NARAYANA
Jakka Gopal Reddy - Appellant
Versus
Neelakantam Venkata Krishna Reddy - Respondent
Decided On : 04/11/2007
Case No : S.A.No.575 of 1997
Headnote:
Constitution of India -Stamp Act 1899 - Section 2(22), 118 - Negotiable Instruments Act - Section 4 – Dishonor of Cheque - Alleged holder-in-due-course - Promissory Note - Revenue stamps are affixed - learned Counsel representing the appellant-defendant had further pointed out to the following substantial questions of law which are specified as hereunder:- 1) Whether the document can be treated as a Promissory Note and whether it is enforceable in law – when no revenue stamps are affixed underneath the said document as per the provisions of Stamp Act? - 2) Whether a transfer endorsement (Ex.A.1) receiving the consideration can be treated as a Promissory Note as held by Appellate Court? - 3) Whether it is not mandatory on the part of the plaintiff to prove that a document (Ex.A.2) alleged to have been transferred to him, is a promissory note and it is enforceable and the transfer endorsement (Ex.A.1) for consideration enables him to recover the amount mentioned therein? - 4) Whether the plaintiff can be treated as a holder-in-due-course by reason of an endorsement (Ex.A.1) on a document Ex.A.2 which is not a promissory note - Counsel while further elaborating his submissions had taken this Court through Section 4 of the Negotiable Instruments Act (hereinafter, in short, referred to as ‘Act’ for the purpose of convenience) and would maintain that even on a looking at Ex.A.2, it is clear that it is not stamped at all and a promissory note not duly stamped cannot be treated as a promissory note or at any rate, the same cannot be looked into for any purpose and the suit on the strength of such promissory note cannot be maintained. The learned Counsel also further had taken this Court through the findings recorded by the Court of first instance and had pointed out several of the discrepancies in the evidence available on record and would maintain that even otherwise, inasmuch as, the Court of first instance recorded appropriate findings on appreciation of evidence, the reversal made by the appellate Court cannot be sustained - learned Counsel also placed reliance on certain decisions – Held On the next page, the receipt of Rs.12,000/- had been referred to on the self-same day and on the Revenue Stamps, duly affixed, executant signed and the same was duly attested by two witnesses. It is true that if the portion of the document shown on the reverse to be severed from the other portion shown on the 1st page, it may have to be taken that inasmuch as the promissory note as such is not duly stamped, the same is inadmissible and a suit cannot be based on the strength of such promissory note. It is also true that on a reading of the recitals of Ex.A.2 at the 1st page, it appears to be a complete promissory note, but however, the stamps were not affixed there, though the executants had signed, but on the reverse, on the self-same day, as a continuation, it was recited that the consideration had been received and the stamps had been duly affixed and the same was duly signed by the executant and further the same had been duly attested by two attestors. The appellate Court recorded reasons in detail and came to a conclusion that all these recitals may have to be taken into consideration while deciding whether the document in question is a promissory note or not. No doubt, the practice and procedure, which had been followed, in the present case, appear to be a bit novel. But, however, on a careful reading of the recitals, this Court is of the considered opinion that the later portion of the document, the 3 lines on the 2nd page underneath which the stamps had been affixed and the executant had duly signed cannot be separated or severed from the former portion of the document i.e., the 1st page of Ex.A.2, especially, in the light of ‘PTO’ shown on the 1st page and also in the light of the fact that it was recited that the same had been scribed by the executant himself. In the light of these reasons, this Court is of the considered opinion that the document in question to be treated as promissory note since all the recitals appearing both on the 1st page and the 2nd page of Ex.A.2 to be read as a whole for the purpose of deciding whether the essentials of a promissory note within the meaning of Section 4 of the Act are satisfied or not, this Court is thoroughly satisfied that the essentials are satisfied - Second Appeal being devoid of merit, the same shall stand dismissed
1. This Court on 11-8-1997 made the following Order:-
“Admit on the question whether Ex.A.2 is a valid promissory note or not?”
2. Sri Ravindranath Reddy, the learned Counsel representing the appellant-defendant had further pointed out to the following substantial questions of law which are specified as hereunder:-
1) Whether the document can be treated as a Promissory Note and whether it is enforceable in law – when no revenue stamps are affixed underneath the said document as per the provisions of Stamp Act?
2) Whether a transfer endorsement (Ex.A.1) receiving the consideration can be treated as a Promissory Note as held by Appellate Court?
3) Whether it is not mandatory on the part of the plaintiff (alleged holder-in-due-course) to prove that a document (Ex.A.2) alleged to have been transferred to him, is a promissory note and it is enforceable and the transfer endorsement (Ex.A.1) for consideration enables him to recover the amount mentioned therein?
4) Whether the plaintiff can be treated as a holder-in-due-course by reason of an endorsement (Ex.A.1) on a document Ex.A.2 which is not a promissory note.
The learned Counsel while further elaborating his submissions had taken this Court through Section 4 of the Negotiable Instruments Act (hereinafter, in short, referred to as ‘Act’ for the purpose of convenience) and would maintain that even on a looking at Ex.A.2, it is clear that it is not stamped at all and a promissory note not duly stamped cannot be treated as a promissory note or at any rate, the same cannot be looked into for any purpose and the suit on the strength of such promissory note cannot be maintained. The learned Counsel also further had taken this Court through the findings recorded by the Court of first instance and had pointed out several of the discrepancies in the evidence available on record and would maintain that even otherwise, inasmuch as, the Court of first instance recorded appropriate findings on appreciation of evidence, the reversal made by the appellate Court cannot be sustained. The learned Counsel also placed reliance on certain decisions.
3. Sri M. Sudhakar Reddy, the learned Counsel representing respondent-plaintiff, in all fairness, would submit that on the 1st page of the promissory note in question, there are no stamps affixed but it was shown as PTO and on the 2nd page, after referring to the payment made, the stamps had been duly affixed and duly signed by the executant and hence these two portions cannot be treated as separate portions of the document or different portions of the document and all these recitals put together, would satisfy the ingredients of a promissory note as defined by Section 4 of the Act and hence the suit is perfectly maintainable. The learned Counsel placed reliance on certain decisions to substantiate his contentions. While elaborating his submissions, the Counsel also pointed out to the conduct of appellant-defendant and would comment that the Court of first instance was carried away by simple discrepancies whereas the appellate Court had appreciated the evidence in proper perspective and arrived at the correct conclusion. The learned Counsel pointed out to the relevant porltions of the findings recorded by the Court of first instance and also recorded by the appellate Court. The learned Counsel would conclude that, at any rate, such technicalities not to come in the way and liberal view to be taken while construing a document of this nature. The learned Counsel also had pointed out to all the recitals of the document in controversy.
4. Heard the Counsel. Perused the oral and documentary evidence available on record, the findings recorded by the Court of first instance and also the findings recorded by the appellate Court.
5. The unsuccessful defendant, aggrieved by the reversing Decree and Judgment made in A.S.No.125/91 on the file of II-Additional District Judge, Nellore, had preferred the present Second Appeal. The respondent herein-plaintiff institut
