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HIGH COURT OF CALCUTTA
P. B. Mukharji, H. K. Bose
NATIONAL SECURITY ASSURANCE CO. - Appellant
Versus
R. RATILAL AND CO. - Respondent
A. F. O. D. 144 Of 1958
Decided On : MAY 24, 1960
STAMP ACT - GENERAL EXEMPTION - UNSTAMPED PROTECTION NOTE - EFFECT - CONSTRUCTION OF ARTICLE 47 OF SCHEDULE 1 OF THE INDIAN STAMP ACT - LETTER OF COVER OR ENGAGEMENT TO ISSUE A POLICY OF INSURANCE - MEANING AND SCOPE - ADMISSIBILITY OF UNSTAMPED PROTECTION NOTE IN EVIDENCE - PROCEDURE FOR IMPOSING DUTY AND PENALTY - SECTIONS 3, 17, 35 AND 42 OF THE INDIAN STAMP ACT.
Fact of the Case:
The plaintiff filed a suit against the defendant insurance company to recover the sum of Rs. 1,43,628-8-0 as damages for the destruction of his stock of bidi leaves and tobacco by fire. The plaintiff's claim was based on an unstamped Protection Note issued by the defendant company, which was held to be a policy of insurance by the trial court. The defendant company appealed against the trial court's decision, arguing that the Protection Note was invalid and inoperative in law and that the company could not be held liable in respect of the same.
Finding of the Court:
The court held that the Protection Note in question was not a policy of insurance within the definition of Section 2 (19) of the Indian Stamp Act and, therefore, it could not be charged with duty under Section 3 of the Act. The court further held that the Protection Note was a 'letter of cover' or 'engagement to issue a policy of insurance' within the meaning of the General Exemption in Article 47 of Schedule 1 of the Stamp Act and, therefore, it was not chargeable with duty. The court also held that the unstamped Protection Note could not be admitted in evidence under Section 35 of the Stamp Act, as it was not an instrument chargeable with duty. The court further held that the procedure followed by the trial court for imposing duty and penalty on the Protection Note was not in accordance with the provisions of Sections 35 and 42 of the Stamp Act.
Issues: 1. Whether the Protection Note in question was a policy of insurance within the meaning of Section 2 (19) of the Indian Stamp Act? 2. Whether the Protection Note was a 'letter of cover' or 'engagement to issue a policy of insurance' within the meaning of the General Exemption in Article 47 of Schedule 1 of the Stamp Act? 3. Whether the unstamped Protection Note could be admitted in evidence under Section 35 of the Stamp Act? 4. Whether the procedure followed by the trial court for imposing duty and penalty on the Protection Note was in accordance with the provisions of Sections 35 and 42 of the Stamp Act?
Ratio Decidendi: 1. The court held that the Protection Note in question was not a policy of insurance within the meaning of Section 2 (19) of the Indian Stamp Act because it did not have all the features of a regular policy of insurance, such as the terms and conditions of the insurance, the amount of the premium, and the period of the insurance. 2. The court held that the Protection Note was a 'letter of cover' or 'engagement to issue a policy of insurance' within the meaning of the General Exemption in Article 47 of Schedule 1 of the Stamp Act because it had the character or substance of an insurance policy, but it was not quite the same as an insurance policy itself. 3. The court held that the unstamped Protection Note could not be admitted in evidence under Section 35 of the Stamp Act because it was not an instrument chargeable with duty under Section 3 of the Act. 4. The court held that the procedure followed by the trial court for imposing duty and penalty on the Protection Note was not in accordance with the provisions of Sections 35 and 42 of the Stamp Act because the Protection Note was not an instrument chargeable with duty.
Final Decision: The court allowed the appeal, set aside the judgment and decree of the trial court, and dismissed the suit with costs.
( 1 ) THIS is an appeal from the judgment of J. P. Mitter, J. decreeing the plaintiff's suit with costs and interest for the sum of Rs. 93,628-8-0. The plaintiff claimed a decree for Rs. 1,43,628-8-0. The learned trial Judge recorded the fact that a sum of Rs. 50,000 had already been paid and therefore he decreed the suit for the balance of the sum of Rs. 93,628-8-0.
( 2 ) THE main point for decision in this appeal is the effect of an unstamped Protection Note under the law of insurance. The present suit was filed by the plaintiff on such an unstamped Protection Note which is also known as a Cover Note in respect of insurance against fire regarding plaintiff's stock of bidi leaves and tobacco. The decision depends on the construction of the provision for 'general Exemption' in Article 47 of Schedule 1 of the Indian Stamp Act.
( 3 ) SCHEDULE 1 of the Indian Stamp Act is introduced by Section 3 of the Statute providing for instruments chargeable with duty. The opening words of Section 3 are :"subject to the provisions of this Act and the exemptions contained in Schedule 1, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor, respectively" etc. Article 47 of Schedule 1 deals with 'policy of Insurance'. Various types of insurance are there mentioned, for instance, sea insurance, fire insurance, accident insurance, indemnity insurance, life insurance and Re-insurance. This Article 47 at the end concludes with the title 'general Exemption' providing as follows :"letter of cover or engagement to issue a policy of insurance : provided that unless such letter or engagement bears the stamp prescribed by the Act for such policy, nothing shall be claimable thereunder, nor shall it be available for any purpose except to compel the delivery of the policy therein mentioned. "
( 4 ) THE question in this case is whether the Protection Note in this suit comes within the Gene- ral Exemption, The terms of the Protection Note are relevant for the purposes of this appeal and propose to set out the protection note in extenso. It reads as follows :
Interim Protection Note No. C. B. D. 6404.
Policy No.
The national Security Assurance Co. Ltd.
(Incorporated in India )
Managing Director 22, Brabourne Road ,
H. D. Vasudeva .
Calcutta-1,
Dated 5th november, 1951.
Messrs.
M/s. R. Ratilal and Co. ,
4, Rupchand Ray Street ,
Calcutta .
Proposing to effect insurance against Fire on the usual Terms and Conditions of Companies Policies and having agreed to pay the sum of Rs .-------- Tariff. Premium therein, the property is hereby held insured to the extent of Rs. 1,00,000 in the manner, specified below viz :
Rupees one lac only.
On stock of Biri leaves, Biri Tobacco and spices and/or other hazardous and non hazardous goods whilst stored and/or lying in godown of first class construction owned by mohammed Shaffi ,
Mohammed ahmed at 12, Harinbari 2nd Lane , Calcutta .
Risks to be covered as per Policy No, 26625. For 12 months from 5th November 1951 to 5th november 1952.
N. B.-- This protection is in force for thirty days (or for a shorter period if so mentioned herein) from the date hereof or until the Company's Policy is prepared unless the Insurance is declined, in which case proportionate premium will be charged according to the time the company has been on the risk. If the protection note is cancelled for non-payment of premium, the company shall be entitled to recover from the insured premium at the current tariff short period rate for time on risk.
For the National Security assurance
Rate Tariff Co. Ltd.
Premium---- Rs. Tariff. The New India Asses.
Less Mofussil discount. Co. , ltd. ,
Net premium. Sd.
Principal Agent.
This Protection Note described as 'interim' bore no stamp. Its legal effect depends on the meaning and import of the 'general Exemption' in Article 47 of the 1st Schedule of the Stamp Act.
( 5 ) THIS will be
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