JUDGMENT - G.H. GUTTAL, J.:---The plaintiff, a Co-operative Bank, sues to recover Rs. 59,042/- and interest due on a Hundi drawn by defendant No. 2 and accepted by defendants No. 1. At the request of defendant No. 2, of which defendants Nos. 3 and 4 are partners, the plaintiffs agreed to discount bills issued by defendant No. 2 in respect of certain steel plates supplied by the latter to defendant No. 1. The Hundi drawn by defendant No. 2 was accepted by defendant No. 1. When presented on 24th August, 1984, the Hundi was dishonoured.

2. The defendants have urged that the Hundi should be held to have been unstamped and, therefore, inadmissible in evidence. The Hundi is written on the first sheet. Annexed to this sheet, there are two additional blank Hundi papers, each of which bears the signature of defendant No. 2. No portion of the Hundi is written on these sheets. The three Hundi papers together make up the requisite stamp duty. The bill is written only on the first sheet. On these facts, the question is whether the Hundi is duly stamped as required by law.

3. By definition in section 2(11) of the Stamp Act, an instrument is duly stamped, if it bears adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force. Then section 13 requires that an instrument written upon paper stamped with an impressed stamp shall be written in such manner that “the stamp may appear on the face of the instrument and cannot be used or applied to any other instrument.”

Rule 7 of the Rules made under the Act lays down the manner in which an instrument, executed on more than one sheet, should be used. Where two or more sheets with engraved or embossed stamps are used to make the requisite stamp duty, it is necessary that “a portion of such instrument shall be written on each sheet so used.”

Section 14 of the Act prohibits writing of second instrument chargeable with duty upon the piece of stamped paper upon which an instrument chargeable with duty has already been written.

The effect of contravention of sections 13 and 14 read with Rule 7 is that every instrument written on more than one sheet of paper, but not written in accordance with section 13 and Rule 7, shall be deemed to be unstamped. Finally, in view of section 35, an instrument chargeable with duty, shall not be admissible in evidence unless it is duly stamped.

4. The signature of the defendant No. 2 appears on the second and third sheets of the blank Hundi Papers. Rule 7 requires that “portion of the instrument “shall appear on each of such sheets. “Instrument” has been defined in section 2(14) of the Indian Stamp Act to include every document by which “any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded.” It follows that a portion of the writing, which creates, transfers, limits, extends, extinguishes, or records a right or liability, must occur or each sheet. In other words, the writings on all the three sheets taken together must make the complete instrument. In this case, the instrument is completely written on the first sheet . The signatures on the blank sheets are not a part of the instrument. Therefore, the existence of mere signature on the second and third sheets does not mean that the instrument is written on the three sheets.

5. In the present case the instrument has been so written that the second and the third sheets can be used or applied for another instrument for the simple reason that no portion of the instrument is written on these sheets. This is clear contravention of section 13 of the Stamp Act, the substance of which has been set out in the previous paragraphs. If the plaintiff seek to use all the sheets to make up the requisite stamp duty, it is obligatory upon them to use the second and third sheets also by writing a portion of the instrument on each of them. If this is not done, the second and th

Click Here to Read the rest of this document