This revision presents an important question of law, pertaining to the admissibility of a promissory note, in the context of adequacy of stamp duty.

The petitioner filed O.S.No.145 of 2005 in the Court of Principal Senior Civil Judge, Tirupati, against the respondent for recovery of a sum of Rs.9,49,175/-, on the strength of a promissory note dated 12-05-2002. The trial of the suit commenced, and the cross-examination of PW-1, i.e., the petitioner herein is in progress. When he sought to mark the promissory note, as an exhibit, objection was raised by the respondent, as to its admissibility.

The promissory note was written on an impressed stamp paper of Rs.20/-, purchased in the State of Tamil Nadu. By executing that document, the respondent is said to have borrowed a sum of Rs.7 lakhs on 12-05-2002. Placing reliance upon Rule 3(iii) of the Indian Stamp Rules, 1925, as they apply to the State of Andhra Pradesh, (for short ‘the Rules’), it was urged that the instrument cannot be treated as valid, since it was executed in the State of Andhra Pradesh, by using a stamp paper, purchased in the State of Tamil Nadu. The trial Court passed a detailed order dated 31-08-2009, sustaining the objection, on the strength of Rule 3(iii) of the Rules. Hence, this revision. Sri J. Ugra Narasimha, learned counsel for the petitioner submits that though Rule 3(iii) of the Rules insists that the stamp papers purchased in the State of Andhra Pradesh shall be used for writing the documents in the State of Andhra Pradesh, the provision by itself, does not bring about any invalidation of the document, if stamp papers purchased in other States are utilized. He contends that the Indian Stamp Act, 1899 (for short ‘the Act’), being a Central legislation, and the levy of stamp duty on promissory notes, being governed by Entry 91, List-I of VII Schedule to the Constitution of India, the validity of the promissory note cannot be tested on the touch stone of Rule 3(iii) of the Rules. He has placed reliance upon the judgment of the Supreme Court in V.V.S. RAMA SHARMA AND OTHERS v. STATE OF U.P. AND OTHERS 2009 (4) ALD 114 (SC). Learned counsel further submits that even if the use of stamp papers purchased from other State has resulted in any defect, it is curable under Section 37 of the Act, read with Rule 18 of the Rules. Though notice was served upon the respondent, she has not entered appearance.

The suit is filed on the basis of a promissory note dated 12-05-2002, under which, the respondent is said to have borrowed a sum of Rs.7 lakhs from the petitioner. It is not in dispute that the promissory note was written on an impressed stamp paper of Rs.20/-, purchased in the State of Tamil Nadu, on 11-04-2002. In the course of the trial of the suit, an objection was raised as to the admissibility of the document. The objection is based on Rule 3(iii) of the Rules. It reads,

“Rule-3. Description of Stamps:-Except as otherwise provided by the Act or by these rules, --

(i) all duties with which any instrument is chargeable shall be paid and such payment shall be indicated on such instrument by means of stamps issued by Government for the purposes of the Act;

(ii) a stamp which by any word or words on the face of it is appropriated to any particular kind of instrument, shall not be used for as instrument of any other kind.

(iii) Stamps purchased in Andhra Pradesh State alone shall be used for instruments chargeable with duty under the Act as in force in that State. (G.O.Ms.No.2454, Revenue (u), dated 30th December 1957):

Provided that stamps purchased in the State of Andhra Pradesh may also be used for instruments chargeable with duty under the Act as in force in the transferred territories. (Rest of the portion is omitted, since it is not necessary for this case)

From a perusal of Rule, it is evident that the rule making authority insisted upon use of the stamps, purchased in the State of Andhra Pradesh for instruments chargeable with duty under the Act as