Madras High Court upholds that once a document is admitted in evidence, its admissibility cannot be challenged based on breach of Stamp Rules; affirms and clarifies existing precedent on Section 35 and Section 36 of the Indian Stamp Act, providing authoritative guidance for money recovery suits based on negotiable instruments.
Summary
| Category | Data |
|---|---|
| Case Name | SA/1069/2019 of Velchandiran Vs Rajavanniyan |
| CNR | HCMA011282302019 |
| Date of Registration | 24-10-2019 |
| Decision Date | 02-09-2025 |
| Disposal Nature | DISMISSED |
| Judgment Author | HONOURABLE MRS. JUSTICE K. GOVINDARAJAN THILAKAVADI |
| Court | Madras High Court |
| Bench | Single Bench |
| Precedent Value | Binding within territorial jurisdiction; significant persuasive value elsewhere |
| Overrules / Affirms | Affirms first appellate court judgment; follows Supreme Court precedent |
| Type of Law | Civil Law — Negotiable Instruments, Stamp Act, Evidence |
| Questions of Law |
|
| Ratio Decidendi |
The Court held that neither the Indian Stamp Act nor relevant Rules provide for invalidation of a document merely because it is executed on stamp paper purchased in another’s name. Citing Supreme Court decisions, it clarified that once such a document is admitted in evidence (especially when unchallenged at the time of marking), Section 36 of the Indian Stamp Act bars questioning its admissibility on those grounds at a later stage. The object of the Stamp Act being revenue generation, technical breaches in stamp procurement do not defeat substantive rights if the document has been admitted and relied upon during trial. |
| Judgments Relied Upon | Thiruvengada Pillai v. Navaneethammal (AIR 2008 SC 1541); Javer Chand v. Pukhraj Surana (AIR 1961 SC 1655); Hindustan Steel Ltd. v. Dalip Construction Co. (1969) 1 SCC 597 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Section 35, 36 of the Indian Stamp Act; Rule 6(2) of Indian Stamp Rules; Negotiable Instruments Act Section 118 presumption; judicial precedents mentioned above |
| Facts as Summarised by the Court |
Plaintiff sued for recovery under a promissory note dated 15.08.2011 executed by the defendant for Rs.2,00,000/-. Defendant argued the promissory note was fabricated on stamp paper purchased in 2003, eight years prior, and in another’s name. Trial court found for the defendant citing suspicion on the document; appellate court decreed the suit relying on admission of signature and presumption under Section 118 of NI Act. Defendant in second appeal raised questions of law on stamp paper’s admissibility and evidentiary value. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts within the jurisdiction of Madras High Court |
| Persuasive For | Other High Courts and Supreme Court (especially for issues relating to Stamp Act/NI Act) |
| Follows | Thiruvengada Pillai v. Navaneethammal (AIR 2008 SC 1541); Javer Chand v. Pukhraj Surana (AIR 1961 SC 1655); Hindustan Steel Ltd. v. Dalip Construction Co. (1969) 1 SCC 597 |
What’s New / What Lawyers Should Note
- Confirms that executing a promissory note on old stamp paper, or on stamp paper purchased in another’s name, does not automatically render it inadmissible in evidence, if not objected to at the stage of marking.
- Clarifies that Section 36 of the Indian Stamp Act operates as a complete bar to later objections on admissibility once the document is admitted as evidence and relied upon by parties during trial.
- Reinforces that the primary object of the Stamp Act is revenue; public policy does not allow technicalities to defeat substantive claims post-admission of documents.
- Lawyers must raise objections as to stamp paper admissibility at the time of evidence, not after the document is admitted and relied on.
Summary of Legal Reasoning
- The core legal issue was whether the use of old stamp paper or stamp paper purchased in another’s name invalidates a promissory note under Rule 6(2) of the Indian Stamp Rules and Section 35 of the Indian Stamp Act.
- The court cited the Supreme Court’s decision in Thiruvengada Pillai v. Navaneethammal to clarify that neither the Indian Stamp Act nor the Stamp Rules prescribe an expiry for stamp papers; old stamp papers may be validly used for execution.
- On the question of admissibility, the court relied on Javer Chand v. Pukhraj Surana to hold that once a document is admitted in evidence without objection, its admissibility cannot subsequently be challenged, except as provided under Section 61.
- The court observed that even if Rule 6(2) is breached, neither the Stamp Act nor the Stamp Rules prescribe an invalidating consequence; at the most, the document would attract penalty but would remain admissible post-payment.
- Emphasizing the presumption under Section 118 of the Negotiable Instruments Act upon admission of signature, the burden shifted to the defendant to show lack of consideration or fabrication, which was not discharged satisfactorily.
- The court held that the first appellate court was correct in decreeing the suit based on admitted and unobjected evidence and found no substantial question of law warranting interference.
Arguments by the Parties
Petitioner (Defendant / Appellant)
- The suit promissory note is fabricated; the stamp paper was purchased in 2003, but the note is dated 2011.
- Stamp paper was in the name of the defendant’s brother, not in the name of either party; fabrication alleged due to family enmity.
- Trial court correctly dismissed the suit citing inauthenticity and failure of the plaintiff to prove consideration.
- Admissibility should be barred under Rule 6(2) of the Indian Stamp Rules and Section 35 of Indian Stamp Act.
- Presumption under Section 118 NI Act is rebutted by showing circumstances of blank stamp paper misuse.
Respondent (Plaintiff)
- Defendant admitted his signature; presumption of consideration arises under NI Act.
- Defendant failed to produce evidence to show fabrication or family discord.
- Appellate court judgment is based on due consideration of law and evidence; no interference warranted.
Factual Background
The plaintiff filed a suit for recovery of Rs.2,00,000/- based on a promissory note dated 15.08.2011, allegedly executed by the defendant for family expenses. The defendant argued the promissory note was fabricated using an old stamp paper purchased in 2003 in his brother’s name, claiming enmity and denying consideration. The trial court dismissed the suit citing doubts over the document’s genuineness; however, the appellate court reversed this, upholding the plaintiff’s claim. In second appeal, the defendant challenged admissibility on stamp law grounds.
Statutory Analysis
- Indian Stamp Act, 1899
- Section 35 bars admission of unstamped or inadequately stamped documents in evidence but admits them post-payment of duty and penalty.
- Section 36 provides that once a document is admitted in evidence, its admissibility cannot be called into question except under Section 61 (revision by revenue authority).
- Indian Stamp Rules, 1925
- Rule 6(2) restricts that a stamp paper purchased by or for a person should only be used by that person or their representative; however, no specific consequence is prescribed for breach.
- Negotiable Instruments Act, 1881
- Section 118 – Presumption arises as to consideration once execution/signature is admitted; burden shifts to the defendant.
Dissenting / Concurring Opinion Summary
No separate dissenting or concurring opinions reported in the judgment.
Procedural Innovations
No new procedural precedents or innovations noted in the judgment.
Alert Indicators
- ✔ Precedent Followed
Citations
- Thiruvengada Pillai v. Navaneethammal & another, AIR 2008 SC 1541
- Javer Chand v. Pukhraj Surana, AIR 1961 SC 1655
- Hindustan Steel Ltd. v. Dalip Construction Co., (1969) 1 SCC 597