CO-OPERATIVE ASSURANCE CO. LTD. Vs. LACHMAN SINGH BHAGAT SINGH
LAWS(P&H)-1950-5-5
HIGH COURT OF PUNJAB AND HARYANA
Decided on May 08,1950

Co -Operative Assurance Co. Ltd. Appellant
VERSUS
Lachman Singh Bhagat Singh Respondents

JUDGEMENT

Chopra, J. - (1.) THIS is a petition to revise an order dated 23 -6 -2006 of the Sub -Judge, 1st Class, Kapurthala requiring the Petitioner to pay full stamp under Section 18, Stamp Act, on an instrument execrated out of the State. The facts relevant to the question in dispute are: Lachhman Singh Respondent had purchased certain Bhares in the Peoples Bank of Northern India Ltd., Lahore and for these Rs. 700 were due to the Bank from him. The Bank went into liquidation and a pay order for Rs. 829 -4 -3 (including interest) was issued against the Respondent by the Liquidation Judge of the High Court, Lahore. The Respondent being a resident of Kapurthala State, the Official Liquidator brought a suit for the amount in the Court of the Sub -Judge, 1st Class, Kapurthala on 15 -9 -39. The suit lingered on for all these years and in the meantime Co -operative Assurance Co. Ltd. Amritsar, the Petitioner purchased the rights and liabilities of the Bank by a deed duly registered in Lahore on 13 -2 -47. An application to substitute the Petitioner as Plaintiff was presented on 10 -10 -2005 which was objected to by the Respondent. An issue calling upon the Petitioner to prove his right to continue the suit as a transferee was framed. On 10 -3 -2006 the Petitioner requested the Court to be allowed to produce secondary evidence of the transfer deed as it bad been lost from its head cilice in Lahore during riots of the partition days. The prayer which was not objected to by the Defendant was accepted and the Petitioner then produced a copy of the deed in his favour. An objection to its admissibility was taken by the Defendant on the ground of its being not properly stamped. The contention was that the instrument required State Stamps and that it should be so stamped when brought in the State. The trial Sub -Judge relying on Section 18, Stamp Act, ordered the copy to be stamped with full State Stamps required on the original which amounted to several thousands. This is a petition to revise this order.
(2.) SHRI Lachhman Das, the learned Counsel for the Petitioner, vehemently contends that the order which is unwarranted by law would result in irreparable injury to the Petitioner unless interfered with in revision. It is urged that the instrument was not executed in the State and therefore, unless it related to any property situate, or to any matter or thing done or to be done in the State, it did not require to be stamped under Section 3, Stamp Act. It is further argued that it was not the original instrument that was brought in the State and received by Court; what was sought to be brought on the record was only a copy and therefore it required to be stamped as provided by Article 24 of the Schedule, Reliance in support of the argument is placed on Herbert Francis v. Md. Akbar : A.I.R. 1928 Pat. 134 : 7 Pat. 99 and it is stressed that the trial Court did not properly appreciate the line of reasoning and the decision arrived at in the case. Mr. Jai Ruben, the learned Counsel for the Respondent, has not been able to meet the objections taken on behalf of the Petitioner. What he contends is that the contents of an instrument which is not properly stamped cannot be allowed to be proved by secondary evidence because a copy cannot be stamped nor any penalty could be charged as provided by Section 35 of the Act. Mt. Halima v. Emperor, A.I.R. 1947 Lah. 306 :, 48 Cr.L.J. 354 and Ladha Ram Lakhi Ram v. Harichand, A.I.R. 1938 Lah. 90 :, 181 I.C. 642 are cited as authorities in support of the argument. There can possibly be no quarrel regarding the principle laid down in these cases, and in fact this is what is being stressed by, the Petitioner. If the original instrument required to be stamped in the State and for that reason could not be considered to be properly stamped the copy must be thrown out as inadmissible and cannot be allowed to be placed on record or acted upon for the simple reason that it could not be stamped and no penalty could be realised on it as provided by Section 35 of the Act. When the original is not forthcoming, no question of curing the defect by payment of penalty arises. Section 18, Stamp Act, would not make the copy of such a document admissible by stamping it with the stamp required on its original as ordered by the trial Judge. The section would only apply to those documents which although executed cut of the State attracted duty in the State, and are brought in the State. Here the document which is brought in the State is a copy and not the original instrument which was executed outside the State. Article 24 of the Schedule gives the Stamp required on a certified copy which in this case would be of the value of rupee one. If the original did not require to be stamped when brought in the State, the copy need only to be stamped under this article; but, on the other hand, if the original required to be so stamped the copy shall have to be rejected as inadmissible for reasons already stated. Now it has to be seen whether the original instrument required to be stamped in the State. Section 3, Stamp Act, is the charging section under the Act and gives all the documents which are liable to duty under it. Substituting Kapurihala State 'for British India' to make the section applicable mutatis mutandis the result would be that a document (other than a bill of exchange or promissory note, which of course, the present document is not) executed out of the State is liable to State Stamp duty if it relates to any property situate, or to any matter or thing done or to be done, in the State and is received in the State. This clearly means that this instrument, executed out of the State as it is, would not attract duty in the State if it does not relate to any property situate, or to any matter or thing done or to be done, in the State. Mr. Jai Kishen has failed to show that the transfer deed relates to any property situate in the State or that it relates to any matter or thing done or to be done in the State. The shares in the name of the Defendant were in the company that had its head office in Lahore and the payment towards those shares also was to be made in Lahore. The liability of the Defendant to pay the amount to the company on the basis of the payment order arose and would be; deemed to be a thing to be done in Lahore. By the transfer of the Defendant's liability to the Petitioner the latter was entitled to realise the amount which was to be paid in Lahore and, therefore, it did not relate to any property situate or any thing to be done in the State. It may be argued that the right to sue in the State for the amount, or to be more precise, the right to continue the suit already filed in the State was transferred to the Plaintiff and, therefore, it related to property situate or at least to a thing to be done in the State. The question to my mind does not seem to be free from doubt, and I have not been able to lay my hands on any direct authority on the point. The counsel for the parties also have not been able to assist me in its decision and in fact Mr. Jai Kishen did not even take up this plea. I am, however, of the opinion that the right to continue the suit was only a consequence or result of the transfer of the debt and that the necessary result would not render the instrument relate to any property situate or thing to be done in the State. An instrument is to be stamped according to the true intent and the nature of the bargain which it represents. Another well established rule as regards the stamp duty is that an instrument should be stamped for its principal and leading object and this stamp covers every thing accessory to this object. The principal object of the instrument in this case was to transfer the debt to the Petitioner and the right to sue or to continue the already instituted suit obviously followed from it. I would, therefore, hold that the instrument when brought in the State did not require to be stamped under Clause (c) of Section 3, Stamp Act. A certified copy of it when brought in the State would require a stamp of rupee one only as required by Article 24.
(3.) IN the result this petition is accepted and the order of the trial Sub -Judge is set aside. The record should at once be sent to the Sub -Judge, 1st class, Kapurthala, who is directed to dispose it of at the earliest as it is hanging fire for several years. The parties are directed through their counsel to appear before him on 22 -5 -1950. No order as to costs.;


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