C.R.P.No.1089 of 1993

20th February, 1997

Petitioner Counsel: Mr. G. KRISHNA MURTHY
Respondent Counsel: Mr. M. V. DURGA PRASAD

Cases Cited:
AIR 1973 AP 342 (FB) [Para 7]

JUDGMENT

JUDGMENT :- This revision is filed against the Judgment passed in S.C.No.78/90 on the file of Subordinate Judge, Machilipatnam.

2. The plaintiff is the revision petitioner. The suit is based on a promissory note to recover Rs.8,000/- with interest at 12% per annum. The plaintiff stated that the defendant is an employee and he is not entitled to the benefit of Act 45/87. The defendant denied that he borrowed any amount under the promissory note. His case is that one Kalepalli Chalapathi Rao, uncle of the defendant is working in B.E.L. He obtained his signature on the blank promissory note with revenue stamps of Rs.0.15 ps., and Rs.0.05 ps., affixed to the said blank note. Subsequently, the pronote was got filled in by the said Chalapathi Rao in the name of the plaintiff. His further case is that the pronote is materially altered by affixing additional revenue stamps. There is not proper cancellation of the stamps. Hence, the pronote is not admissible in evidence.

3. The Trial Court considered two points:- (i) Whether the defendant executed the promissory note; and (ii) Whether the said pronote is materially altered and to what relief. The Lower Court considered the evidence on record. It believed the evidence of PWs.1 and 2. PW-1 is the husband of the plaintiff, PW-2 is the attestor of Ex.A-1. According to their evidence the defendant borrowed Rs.8,000/- and subscribed his signature on Ex.A-1. Therefore, the Lower Court held that the suit pronote is proved. On Point No.2, the Lower Court held that there is material alteration and therefore held that the suit pronote is not admissible in evidence. In the result, the suit was dismissed with costs.

4. Aggrieved by the said Judgment the present revision is filed.

5. The learned Counsel appearing for the revision-petitioner submitted that the finding on Point No.2 is not correct. The reasons given that Ex.A-1 is not admissible in evidence, are not based on sound principles etc.

6. I am unable to agree with this contention. The Lower Court found that the 3rd revenue stamp was subsequently affixed. PW-1 in his cross-examination could not say as to why a line was drawn on the 3rd stamp and further stated that he cannot say why there is a line below the stamps affixed on Ex.A-1. When PW-1 was not in a position to explain, the Lower Court rightly came to the conclusion that the third stamp was affixed subsequently. A pronote of the value of Rs.8,000/- should contain stamp worth Rs.0.25 ps. If the third stamp is not taken into consideration in the case on hand, the value of the two stamps affixed earlier is only Rs.0.20 ps. Therefore, under Section 35 of the Indian Stamp Act, insufficiently stamped instrument is not admissible in evidence and it cannot be even used for collateral purposes. Under Section 87 of the Negotiable Instruments Act, the person who is in custody of the instrument (i.e., the plaintiff) should explain the circumstances under which the third stamp was affixed to Ex.A-1. There is no such explanation coming forth in this case. Therefore, the Lower Court was right in holding that Ex.A-1 is not admissible in evidence.

7. The learned Counsel for the revision-petitioner further submitted that even though Ex.A-1 is not admissible in evidence, the plaintiff can fall back upon the original transaction. To substantiate this proposition of Law he relied upon a Full Bench decision of this Court in Lothamasu Sambasiva Rao Vs. Thadwarthi Balakotiah, AIR 1973 AP 342 (FB). In that case it was held that the plaintiff can lay an action of recovery of the amount advanced by him basing on the original cause of action where the suit negotiable instrument becomes inadmissible in evidence under Section 35 of the Indian Stamp Act, provided there is an allegation in the plaint and proof in evidence about the fact that the promissory note did not incorporate all the terms of the contract of loan and that it was executed as a conditional payment or a collateral security and that if the instrument embodies all the terms of the contract and the instrument is improperly stamped, no suit on the debt will lie and that it will be barred by Section 91 of the Evidence Act and Section 35 of the Indian Stamp Act. It was also held that in a case where there is an express contract and the document is hit by the provisions of Section 35 of the Indian Stamp Act and Section 91 of the Evidence Act, then Section 70 of the Contract Act cannot be invoked on the theories of 'implied promise', money 'had and received', quasi contract and 'just and reasonable' or 'unjust enrichment' or any other equitable doctrine.

8. The ratio of the above decision is quite clear. The ratio of that case has no bearing on the facts of the case on hand. There cannot be any doubt that the plaintiff can lay an action for recovery of the amount advanced basing on the original cause of action when the pronote becomes inadmissible in evidence by virtue of Section 35 of the Stamp Act and Section 91 of the Evidence Act, provided there is an allegation in the plaint and proof in the evidence about the fact that the promissory note did not incorporate all the terms of the contract of loan and that it was executed as a conditional payment or a collateral security. This requirement is lacking in this case. There is no pleading to the effect that Ex.A-1 is only executed as a conditional payment or as a collateral security. The plaintiff relied upon Ex.A-1 fully contending that the defendant executed the pronote and obtained loan of Rs.8,000/-. During the trial it was established that the third stamp was affixed later to make good the deficiency of stamp on Ex.A-1. This certainly renders Ex.A-1 an insufficiently stamped document and it is hit by Section 35 of the Indian Stamp Act. The plaintiff is also not entitled to any relief because he made material alteration by affixing the third stamp on Ex.A-1. On this ground also, the plaintiff has to be non-suited.

9. In the above circumstances, the Lower Court was justified in dismissing the suit. There are no grounds to interfere with the Judgment under revision. Hence, the Civil Revision Petition is dismissed. No costs.

Petition dismissed.