Javer Chand v. Pukhraj Surana, (1962)

Introduction

This case revolves around the admissibility of an unstamped instrument as evidence in a civil suit. The issue directly pertains to the interpretation of Section 36 of the Indian Stamp Act, 1899, which addresses the finality of decisions once a document has been admitted in evidence. The judgment by the Supreme Court clarified the legal position regarding admissibility and the stage at which objections related to stamping must be raised.

Facts of the Case

The plaintiff, Jayee Chand, was a commission agent for the defendant, Pukhraj Sharma. In the course of business, the defendant incurred a debt towards the plaintiff and issued two Muddati Hundies (a traditional form of promissory notes):

1. One for Rs. 20,000, payable after 61 days.
2. One for Rs. 15,000, payable after 121 days.

The plaintiff endorsed these hundies to a bank for collection. Upon maturity, the bank was unable to recover the amount, as the defendant refused to honour the hundies. Consequently, the bank returned the unpaid hundies to the plaintiff.

Thereafter, the plaintiff filed a civil suit for recovery of the amount along with interest. The defendant admitted signing the hundies but contended that he had not borrowed any money. Instead, he claimed that the hundies were issued in anticipation of the plaintiff supplying gold in the future, which the plaintiff allegedly failed to do. He further argued that the hundies were unstamped and therefore inadmissible as evidence.

Case History

Trial Court

1. The trial court formally admitted the two hundies into evidence as Exhibit P-1 and P-2, after recording witness testimony about their content and execution.
2. The plaintiff paid the required stamp duty and penalty at the time of admission.
3.  The trial court treated the documents as valid evidence.

High Court:

The High Court overturned the trial court’s decision. It held that unstamped instruments are inadmissible in evidence under the Stamp Act and that even if the stamp duty and penalty were paid later, the documents could not be used to prove the transaction. The High Court ruled that the trial court erred in admitting the hundies.

Main Issue

1. Whether an instrument (Muddati Hundie) that was originally unstamped can be admitted and relied upon as evidence once it has been formally admitted by the court, particularly in light of Section 36 of the Indian Stamp Act, 1899.

Supreme Court’s Ratio Decidendi

1. The Supreme Court while interpreting Section 36 of the Stamp Act said once a document is formally admitted in evidence, its admissibility cannot later be questioned on the ground that it was unstamped or insufficiently stamped, unless Section 61 applies (which was not applicable in this case).
2. It is the duty of the court to examine the sufficiency of stamp duty at the time of admitting the document. Once admitted and marked, especially with participation from both parties, its evidentiary value is final and conclusive
3. The Court held that the defendant failed to object to the admissibility of the hundies at the appropriate stage.
4. Therefore, the High Court’s interference was erroneous.

Final Decision

1. The Supreme Court allowed the appeal and set aside the judgment of the High Court.
2.  It held that the hundies had been rightfully admitted into evidence by the trial court under Section 36 of the Stamp Act. Consequently, the Court ruled in favour of the plaintiff (Jayee Chand) and restored the trial court's decree for recovery of the money.