Sheikh MUHAMMAD SHAKEEL Versus Sheikh Hafiz MUHAMMAD ASLAM

AMIR HANI MUSLIM, J.-- -This direct Appeal is directed against the judgment dated 18-6-2007 of the learned High Court of Sindh, whereby the 1st Appeal filed by the respondent was allowed, by the impugned judgment.

2. Brief facts of the case are that the respondent while doing cloth business requested the appellant for some investment in his business for which the respondent promised/undertook to pay periodic profits to the appellant. The appellant in good faith, gave a total amount of Rs.10,00,000 (Rupees ten lacs only) to the respondent on different dates, on the assurance that the respondent would return the entire invested amount on demand. Due to wilful defaults in payment of periodical profits, the appellant made repeated requests to the respondent to return his entire amount but the respondent failed to make the payment on one pretext or the other. However, to assure the appellant for return of the loan, the respondent executed a Promissory Note dated 25-5-2001, undertaking to return the amount of Rs.10,00,000 on demand. On 20-7-2001, the appellant demanded back his amount of Promissory Note on which the respondent paid Rs.2,00,000 (Rupees two lacs only) to the appellant, but despite repeated requests and demands he failed to return the balance amount of Rs.8,00,000. Consequently, on 23-11-2002, the appellant served legal notice through TCS at the address of the respondent which was returned un-served with the remarks that "Address still closed". The appellant again approached the respondent for return of the balance amount but failed. Thereafter the appellant filed a suit under Order XXXVII, Rule 2, C.P.C. against the respondent for recovery of Rs.10,00,000.

3. The respondent filed written statement denying the veracity of the Promissory Note on the ground that it was forged and a made-up document. On the divergent pleadings of the parties, the trial Court framed the following issues:--

(1) Whether the suit is not maintainable under the law and the plaintiff has no cause of action?

(2) Whether the defendant had executed promissory note dated 25-5-2001 of Rs.10,00,000 in favour of the plaintiff?

(3) Whether the plaintiff is entitled to recover the suit amount from the defendant?

(4) What should the order be?

4. The appellant filed his affidavit in evidence along with the affidavits of Sheikh Muhammad Saeed and Kamran Shakeel as his witnesses. The appellant and his said two witnesses were cross-examined. The appellant in his evidence produced Promissory Note which was exhibited as P.2, without any objection by the respondent. The respondent filed his affidavit in evidence along with the affidavits of his witnesses namely Salman Ahmed and Saeed Khan, and were cross-examined by the appellant's Counsel.

5. On conclusion of the evidence, the learned trial Court vide judgment dated 7-8-2004, decreed the suit of the appellant. The respondent filed Appeal before the learned High Court, which was allowed and the suit of the appellant was dismissed. Hence this direct Appeal by the appellant.

6. It is contended by the learned Counsel for the appellant that the learned High Court has erred in law by concluding that the Promissory Note (Exh.P-2) being insufficiently stamped was inadmissible in evidence.

7. The learned Counsel for the appellant further contended that the Promissory Note does not require attestation in terms of Article 17(2)(a) of the Qanun-e-Shahadat Order, 1984 (hereinafter referred to as the Order). According to the learned Counsel the Negotiable Instruments Act, 1881 (hereinafter referred to as the Act) is a special Act and defines Promissory Note to the exclusion of the requirements contained under Article 17(2)(a) of the Order. He submitted that the learned High Court ought to have concluded that provisions of Article 17(2)(a) of the Order are not attracted to a Negotiable Instrument.

8. The learned Counsel for the respondent on the other hand has supported the impugned judgment.

9. We have heard the learned Counsel for the parties and have perused the record. The appellant filed a suit in terms of Order XXXVII, Rule 2, C.P.C. on the basis of a Promissory Note executed by the respondent on 25-5-2001. The learned High Court has held that the Promissory Note was not attested in terms of Article 17(2)(a) of the Order, therefore, it was not a valid instrument. This finding of the learned High Court is contrary to the language of section 4 of the Act, which defines a Negotiable Instrument. In terms of section 4 of the Negotiable Instruments Act, a Promissory Note is required to contain the following ingredients:--

(i) An unconditional undertaking to pay,

(ii) the sum should be the sum of money and should be certain

(iii) the payment should be to or to the order of a person who is certain, or to the bearer, of the instrument,

(iv) and the maker should sign it.

10. If an instruments fulfills the above four conditions it will be termed as Promissory Note within the meaning of section 4 of the Act. The requirement of attestation of a document as contained under Article 17(2)(a) of the Order is contrary to the definition given by section 4 of the Act. Therefore, we are of the considered view that the Promissory Note Exh.P.2 produced by the appellant in evidence contains all the ingredients of a valid Promissory Note as defined in section 4 of the Act.

11. The next question relates to the finding of the learned High Court on the inadmissibility of the Promissory Note in evidence, for want of sufficient stamp, is also not in conformity with the language of section 36 of the Stamp Act. In the case in hand, admittedly the respondent has neither raised the plea in his written statement that the Promissory Note was insufficiently stamped nor the trial Court has framed an issue in this behalf. Even the trial Court in its judgment has not recorded any finding on the issue that the Promissory Note was insufficiently stamped and, therefore, was inadmissible in evidence.

12. Admittedly, the Promissory Note produced by the appellant in his evidence was exhibited as (Exh.P-2) without any objection being raised on its admissibility by the respondent. An insufficiently stamped Promissory Note is neither invalid nor void instrument, but it is only subject to disabilities mentioned in section 35 of the Stamp Act. A deficiently stamped pro note is not admissible in evidence nor it can be acted upon unless duly stamped. This is the ultimate purport of section 35 when construed along with Proviso (a).

13. Section 36 of the Stamp Act, on the other hand, is very comprehensive and provides that if a deficiently stamped instrument is once admitted in evidence and marked as an exhibit, it is not permissible for the Court of first instance, or in Appeal or in Revision to exclude such instrument from its consideration. However, deficiency of stamp on a Pronote is not covered by the provisions of Section 61 of the Act, whereas section 36, by itself, has not created any exception on such a Pronote. The provisions of section 36, are mandatory in nature and has overriding effect on section 35 imposing a complete bar to question the admissibility of a Promissory Note once it has been admitted and exhibited in evidence without any objection from the other side and includes all such instruments which fall under Proviso (a) to section 35 of the Stamp Act.

14. In the case in hand, irrespective of the fact that the Promissory Note produced by the appellant in evidence was insufficiently stamped, it was neither challenged by the respondent in his written statement nor an issue was framed and was admitted in evidence and marked as Exhibit P-2 without objection could not have been discarded by the learned High Court on the ground that it was insufficiently stamped. In such an eventuality section 36 of the Stamp Act debars the respondent from calling in question the admissibility of the Promissory Note on the ground that it was insufficiently stamped. We have also gone through the judgment of the learned Division Bench of the learned Lahore High Court in the case of Ch. Khalid Mehmood v. Ch. Said Muhammad (PLD 2005 Lahore 732) and fully endorse the view taken by the learned High Court on the issue which has direct nexus with the subject proceedings.

15. We, for the aforesaid reasons, allow this Appeal, set aside the impugned judgment and restore the judgment and decree of the trial Court. Parties are left to bear their own costs.

MWA/M-25/SC Appeal allowed.