Malik MUHAMMAD AKRAM vs KHUDA BAKHSH

' This judgment will dispose of this R.F.A. No,5 of 1989 against the judgment and decree, dated 21-12- 1988 passed by the learned Additional District Judge, Multan.

2. Briefly stated the facts of the case are that Khuda Bakhsh plaintiff/respondent (heein) had instituted a suit against the defendant/appellant (herein) for the recovery of Rs,60,000 as loan from the appellant paid on the basis of a pronote executed on 6-6-1984. The defendant/appellant after service of notice appeared in the Court and applied for permission to defend the suit. The same was allowed by the Court and thereafter the appellant had submitted his written statement and controverted all the allegations raised in the plaint. It was, inter alia, maintained in the written statement that pronote was not executed by him and certain thumb-impressions were obtained through coercion by the police. It was also maintained that the pronote did not perform the legal requirements and as such is not a valid document. The factual controversy appearing on the pleadings of the parties led to frame the following issues:-

(1) Whether the plaintiff has got no cause of action or locus standi to institute this suit? OPD

(2) Whether the suit is based on mala fides? OPD

(3) Whether the defendant has executed the pronote in dispute? OPP

(4) Whether the disputed pronote is result of collusion between police and the plaintiff and is based on fraud as stated in the written statement? OPD

(5) Whether the pronote in dispute does not conform to the legal requirement of a valid document?

(6) Whether the plaintiff is entitled to realise the disputed amount from the defendant? OPP (7). Relief.

' The Court after recording and appreciating the evidence of the parties vide judgment and decree dated 21-12-1988, decreed the suit of the plaintiff/ respondent (herein).

3. Learned counsel for the appellant contested Issue No,5 on the ground that the pronote in dispute was under-stamped and the adhesive stamps on the pronotes have not been cancelled,. Hence, the pronote was inadmissible in evidence. Relied on the cases of K.M. Munir v. Mirza Rashid Ahmad PLD 1963 (W.P.)' Kar. 905, United Bank Ltd' v. Mian Abdul Khaliq PLD 1988 Lah. 225, United Bank Ltd. v.

Kurnool Muhammad Muneer 1991 CLC 1758 and Mirza Arif Baig v Mubarak Ali PLD 1992 Lah.

366.

4. On the other hand, learned counsel for the respondent vehemently opposed the arguments of the learned counsel for the appellant and contended that under stamped promissory note admittedly an evidence without objection although is not admissible by virtue of section 35 of the Stamp Act but could not be challenged at any subsequent stage of the same suit.

5. I have heard the learned counsel for the parties and also gone through the record. The point that boils down for the determination in this case is whether the pronote on the basis of which the suit was filed by the plaintiff/respondent (herein) is not properly stamped and not admissible in evidence under section 35 of the Stamp Act or that the stamps affixed are not properly cancelled and if, so, whether decree could be passed on such instruments. Section 35 of the Stamp Act, 1899, contemplates; "No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any police officer, unless such instrument is duly stamped:-- "Provided that---

(a) any such instrument not being an instrument chargeable with a duty of one Anna (or half an Anna only), or a bill of exchange or promissory note, shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion."

6. Thus, under the provision of law, an instrument inadmissible in evidence or not duly stamped is considered, non-existent, in the suit in which A it was tendered. In the present case, the promissory note is of valuing an amount of Rs,60,000 and stamps required to be affixed on the promissory note of Rs,10 only while, the pronote bore 20 adhesive stamps of the denomination of 40 Paisas each and as such the promissory note is under value by Rs,2.

7. The promissory note bears 20 adhesive stamps valuing of Rs,8 denomination of paisas 40 each and out of these 20 stamps four stamps have not been cancelled. Under section 12 read with section 35 of the Stamp Act, 1899, where a pronote on which all the adhesive stamps have not been cancelled is rendered inadmissible in evidence. In this context, reference can be made in case of U.B.L. v. Mian Abdul Khaliq noted (supra) wherein learned Division Bench of this Court has held that a pronote on which the stamps have not been cancelled is not admissible in evidence.

' In case of U.B.L. v. Kurnool Muhammad Muneer noted (supra) Honourable Judge of the High Court has observed that stamps on promissory notes have not been cancelled, therefore, the promissory notes are void.

' In case of Mirza Arif Baig v. Mubarik Ali (supra) Honourable Judge of the Lahore High Court has held as under:- "Learned counsel for the respondent has raised serious objection to the admissibility of the pronote in question and has urged that the same should not be considered as valid evidence. His objection is that two of the adhesive stamps affixed on the pronote have not been cancelled and, thus, the document is rendered inadmissible in evidence. This objection is factually correct. The pronote bears 25 adhesive stamps of the denomination of paisas 40 each out of which two stamps have not been cancelled. It is the consistent view of this Court that where all the adhesive stamps on a pronote are not cancelled the document is rendered inadmissible in evidence and decree cannot be passed on the basis of the said document even if the defendant admits his liability. In this connection decisions of this Court in Firm Sri Chand Shee Parshad v. Lajja.Ram AIR 1939 Lah. 31 (D.B.), Sohn Lal Nihal Chand v. Raghu Nath Singh and others AIR 1934 Lah. 606 (D.B.), Sheikhupura Central Cooperative Bank Ltd. v. Ch. Tawakkal Ullah and another PLD 1977 Lah. 763 (D.B.), and United Bank Ltd. v. Mian- Abdul Khaliq PLD 1988 Lah. 255 (D.B.) have been relied upon. Learned counsel for the appellant on the other hand has not been able to cite any authority either of this Court or of the Supreme Court wherein a contrary view had been taken. I, therefore, have no hesitation in holding that the pronote in question is inadmissible in evidence and no decree could be passed in favour of the appellant against the respondent on the -basis of the said pronote."

' In case of K.M. Munir (supra), the Honourable Judge of the Karachi High Court has observed that so far as an uncancelled stamp is concerned, the instrument affixed shall be deemed to be unstamped and a pronote which is insufficiently stamped is inadmissible in evidence under section 35 of the Stamp Act, 1899, consequently, no decree could be passed on the basis of the pronote which is inadmissible in evidence.

8. So far as, the argument of the learned counsel for the respondent that the document admitted without objection could not be challenged is concerned, it is suffice to observe, that a document which is inadmissible and not a valid document even if admitted and exhibited would not be looked into C to establish the case on such document. The pronote though exhibited but this pronote being under stamped and all the adhesive stamps have not-been cancelled is without any backing of authority of law: The initial presumption under section 118 of the Negotiable Instrument Act is attached only to an instrument which is executed validly and required adhesive stamps are affixed on it. In this respect reliance can be placed on the case of Abdur Rehman v.

Muhammad Usman 1982 CLC 1128.

9. In case of Ch. Karam Singh v. Lal Singh AIR 1933 All. 109, in which, learned Judge observed that in case of loan on the basis of promissory note, the transaction of loan is wholly independent of the promissory note. The promissory note being taken as sole evidence in proof of the transaction of loan, the suit could not be decreed. In the present case, the promissory note was inadmissible in evidence being insufficiently stamped, therefore, I have no hesitation in observing that the arguments of the learned counsel for the respondent are misconceived that the promissory note in dispute has been accepted in evidence and its validity could not be challenged at subsequent stage of the suit.

10. In view of the above discussion and the principles laid down in the cases, referred to above, I am in agreement with the dictums laid down in cases (supra) by holding that promissory note in question was insufficiently stamped and out of all 20 stamps, four (4) denomination of 40 Paisas each had not been cancelled at the time of execution of the pronote, thus, the pronote being a invalid document, no decree cduld be passed in favour of the respondent against the appellant.

Resultantly, the appeal is accepted. The judgment and decree, dated 21-12-1988 passed by the learned- Additional Ditrict Judge Multan, is set aside and the case is remanded to the learned Senior Civil judge, Multan for decision afresh after recording the evidence of the parties about the loan valuing Rs,60,000 except the pronote which has been declared invalid document in its ordinary civil jurisdiction.