Javer Chand And Others vs Pukhraj Surana

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 3 of 1958

Decision Date: 25 April 1961

Coram: Bhuvneshwar P. Sinha, Raghubar Dayal, J.R. Mudholkar

In this matter the Supreme Court of India rendered its judgment on twenty‑fifth April nineteen‑sixty‑one. The appeal, styled Javer Chand and Others versus Pukhraj Surana, was heard by a bench comprising Chief Justice Bhuvneshwar P. Sinha, Justice Raghubar Dayal and Justice J. R. Mudholkar. The case was reported in the All India Reporter at volume 1961, page 1655 and in the Supreme Court Reports (Second Series) at volume 1962, page 333, with the citator reference R 1978 SC 1393 (6). The appeal, designated Civil Appeal No. 3 of 1958, arose from a decree dated eight October nineteen‑fifty‑six pronounced by the Rajasthan High Court in Civil Regular Appeal No. 1 of 1953. The parties were identified as the petitioners, Javer Chand and others, and the respondent, Pukhraj Surana. The judgment was authored by Chief Justice Bhuvneshwar P. Sinha, with the bench’s opinions recorded under his name. The central issue concerned the admissibility of two hundi instruments that had been tendered and marked as exhibits in the suit, despite allegations that they were not properly stamped in accordance with the prevailing stamp law at the time the suit was filed in nineteen‑forty‑nine.

The respondent acknowledged that the two hundis were executed in December nineteen‑forty‑six and that they had been produced as evidence, but contended that they should have been rejected because they lacked the requisite stamp duty when the suit commenced. At the time of their execution, the Marwar Stamp Act of 1914 was applicable, and sections 9 and 11 of that enactment authorised the court to recover the full stamp duty and any penalty on unstamped instruments, thereby permitting their admission as evidence. However, the High Court observed that the subsequent Marwar Stamp Act of 1947, which amended the 1914 statute, introduced sections 35 (proviso a) and 36, which barred the admission of such instruments even upon payment of duty and penalty. The trial court, according to the appellate court, had failed to consider the 1947 Act, resulting in a pure mistake of law. The Supreme Court held that once a court, correctly or incorrectly, decides to admit a document as evidence, that decision becomes final for the parties and the matter is closed. The court emphasized that the determination must be made at the earliest stage—when the document is tendered and before it is marked as an exhibit. After the document is exhibited and the trial proceeds, section 36 of the 1947 Act takes effect, and neither the trial court nor an appellate or revision court may revisit that order. Such an order, the Court noted, does not fall within the class of judicial orders that are open to revision or review by a superior court. The Court also disapproved the earlier decision in Ratan Lal v. Dau Das, I.L.R. [1953] Raj. 833, which had suggested otherwise. The judgment thus clarified the law on the admissibility of inadequately stamped hundi documents under the Marwar Stamp Acts and affirmed the finality of the trial court’s evidentiary ruling once an exhibit has been formally marked.

The appeal stemmed from a decree dated 8 October 1956 of the Rajasthan High Court in Civil Regular Appeal No 1 of 1953. Counsel for the appellants were S T Desai and B P Maheshwari, while counsel for the respondent were N C Chatterjee and H P Wanchoo. The judgment was delivered on 25 April 1961 by Chief Justice Sinha. The principal issue for determination in the appeal was whether the two hundis that formed the basis of the suit were admissible as evidence. The learned trial judge had held that the hundis were admissible and, on that basis, had decreed the suit in full, awarding costs and future interest by his judgment and decree dated 26 September 1952. On appeal, the Rajasthan High Court at Jodhpur, by its judgment and decree dated 8 October 1956, allowed the appeal and dismissed the plaintiffs’ suit, directing each party to bear its own costs throughout the proceedings. The High Court also granted the requisite certificate under Article 133(1)(a) of the Constitution, and the matter consequently reached this Court.

For the purpose of appreciating the question of law, the relevant facts were recounted. The defendant‑respondent was alleged to have owed money to the plaintiffs‑appellants in the course of their business relationship as commission agents for the defendant in Bombay. To satisfy those dues, the defendant drew two mudatti hundis in favour of the plaintiffs for a total sum of Rs 35,000, one hundi for Rs 20,000 payable sixty‑one days after its date, and a second for Rs 15,000 payable one‑hundred‑twenty‑one days after its date. The plaintiffs endorsed both hundis to G Raghunathmal Bank and requested the bank to credit their account upon realisation. When the hundis matured, the bank presented them to the defendant, who dishonoured them, after which the bank returned the hundis to the plaintiffs. Because the defendant failed to pay the amounts due under the documents despite repeated demands, the plaintiffs instituted a suit for realisation of Rs 39,615, principal with interest. The suit was filed in the Court of the District Judge, Jodhpur, on 4 January 1949.

The defendant’s written statement need not be reproduced in full; it sufficed to note that the defendant admitted having executed the hundis but asserted that they had been drawn for the purchase of gold that the plaintiffs never delivered, and therefore the hundis were not honoured or accepted. The defendant denied any liability to the plaintiffs and contended that the hundis were drawn without consideration. The most significant defence raised by the defendant was the claim that the hundis were inadmissible in evidence because they had not been stamped in accordance with the applicable Stamp Law. Several issues were joined between the parties, but the only issue relevant to the appeal was whether the unstamped hundis were inadmissible as evidence.

In this case the second issue was framed in the following terms: whether the two hundis that formed the basis of the suit, being unstamped, were inadmissible as evidence. The wording of the issue suggested that the burden of proof lay with the defendant. Accordingly, the defendant was called to lead the evidence first. He was examined as the fifth defence witness and, in his examination‑in‑chief, he stated that he had not received any gold in connection with those hundis, that he had asked the plaintiffs to return the hundis, that the plaintiffs had refused to do so, and that he had drawn the two hundis that were exhibited as Exhibit P‑1 and Exhibit P‑2. He added that the handwritten parts of the hundis were in the hand of a person named Roopchand and that he had never received any notice requiring him to honour the hundis. The defendant’s other witnesses, identified as defence witnesses one, two and four, were examined and cross‑examined on matters relating to the terms printed on the hundis and to the identity of the author of the documents. Throughout the trial, the two documents continued to be referred to as Exhibit P‑1 and Exhibit P‑2.

The trial judge delivered his finding on the second issue by observing that the plaintiff had paid the applicable penalty, that the two documents had been properly exhibited, numbered and signed by the presiding officer of the court, and that they had consequently been introduced into the record. The judge further noted that the documents had been read in evidence by the counsel appearing for the defendant. Because the provisions of section 36 of the Marwar Stamp Act were mandatory, the judge concluded that the documents could not be rejected or excluded from evidence and that they therefore formed a proper part of the evidence on record. Accordingly, the judge decided the issue against the defendant. The suit was then decreed in favour of the plaintiff with costs as previously recorded.

On appeal, the High Court examined the same two hundis and observed that they were marked as Exhibits P‑1 and P‑2, bore the endorsement “Admitted in evidence,” and bore the signature of the trial judge. The High Court pointed out that when the hundis were executed in December 1946, the Marwar Stamp Act of 1914 was in force, and that sections 9 and 11 of that Act authorised the court to recover the full amount of stamp duty and any penalty where unstamped instruments were produced in evidence. Section 9 further provided that, upon payment of the proper stamp duty and any required penalty, the instrument would become admissible. The High Court also noted that when the suit was filed in January 1949, the plaintiff had paid the stamp duty and penalty in accordance with the Marwar Stamp Act of 1914. These observations formed the basis of the High Court’s finding on the admissibility of the hundis.

In this case the High Court observed that the Marwar Stamp Act of 1914 had been amended by legislation enacted in 1947. The amendment, according to the Court, was in substance comparable to the Indian Stamp Act. The High Court further noted that once the 1947 Marwar Stamp Act came into force, the two hundi instruments relevant to the present dispute could not be admitted into evidence under the provisions of section 35, proviso (a) of that Act, even if the required stamp duty and any penalty were paid. Turning to the provisions of section 36 of the same Stamp Act, the High Court held that the plaintiffs were not entitled to rely on that section because, in its view, the admission of the two hundis had been a “pure mistake”. Relying on a previous decision of the Rajasthan High Court reported in Ratan Lal v. Dan Das (1), the High Court concluded that where an admission of documents is a pure mistake, an appellate court may set aside the trial court’s order and correct the error. The Supreme Court, however, disagreed with that interpretation of section 36. It observed that section 36 reads: “Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.” The Court emphasized that the provision is categorical: once a document has been admitted, its admission cannot be challenged at any later stage on the ground of non‑stamping, except in the limited circumstances contemplated by section 61, which did not arise in the present controversy. The Court stressed that section 36 allows no other exceptions. Accordingly, any objection to the admissibility of a document on the basis that it is unstamped must be determined at the time the document is tendered in evidence. Once the Court, correctly or incorrectly, admits the document, the issue is finally closed for the parties. The Court also explained that section 35 operates as a penal provision with wide‑reaching consequences. Consequently, litigants must be vigilant when a stamp‑duty dispute is raised, and the party challenging admissibility must ensure that the Court does not admit the document. The Court must decide the question of admissibility at the moment the document is offered, before it is formally marked as an exhibit. The record in the present matter showed that the two hundi instruments were entered as exhibits P.1 and P.2 and carried the endorsement “admitted in evidence” signed by the Court. It

The Court observed that the present situation could not be classified as one in which a document had been unintentionally admitted without the Court first giving due consideration to its admissibility. Once a document had been formally marked as an exhibit in the proceedings and the trial had continued on the premise that the document formed part of the evidence, the parties had thereafter relied on it during the examination and cross‑examination of their witnesses. At that stage, section 36 of the Stamp Act became applicable. The Court further held that after a document had been admitted as evidence in the manner described, neither the Trial Court nor any Court of Appeal or revision possessed the authority to revisit or overturn that admission. Such an admission did not constitute a judicial order that could be subject to review or revision by the same Court or by a Court of superior jurisdiction. In the present case, the Court found that the High Court had committed a legal error by refusing to act upon the two hundi documents, which had been properly proved; their execution had been acknowledged by the executant himself, and therefore no additional proof was required. Since the finding on this point settled the matter and no other issue was raised by the parties, the Court allowed the appeal, set aside the judgment and decree issued by the High Court, restored the decision of the Trial Court, and awarded costs throughout. The appeal was thereby allowed.