1981 (3) TMI 270 - HC - Indian Laws

Summary

Issues:
- Interpretation of whether the hundis in question are considered "bills of exchange" under the Indian Stamp Act, 1899.
- Determination of whether the hundis fall under the definition of "bills of exchange payable on demand" as per Section 2(3) of the Act.
- Challenge to the trial court's decision regarding the duty chargeability of the hundis.

Analysis:
The judgment involves four petitions of revision arising from suits for money recovery based on Shahjog hundis. The defendants raised a preliminary objection that the hundis should be stamped under the Indian Stamp Act, claiming they are "bills of exchange." The trial court ruled that the hundis are not chargeable with duty as they fall under the definition of "bills of exchange payable on demand" as per Section 2(3) of the Act.

The key issue in the petitions is whether the hundis qualify as "bills of exchange" under Section 2(2) or "bills of exchange payable on demand" under Section 2(3) of the Act. The judgment references previous cases to establish that hundis payable on future dates are considered "bills of exchange payable on demand." The definition of "bill of exchange payable on demand" under the Act is broad, encompassing various payment conditions beyond immediate demand.

In a related case, it was emphasized that the Stamp Act's definition of "bill of exchange payable on demand" differs from that in the Negotiable Instruments Act, focusing on the instrument's payment terms rather than immediate payment. The judgment clarifies that the duty chargeability of hundis should be determined solely based on the Stamp Act's provisions, not the Negotiable Instruments Act.

The petitioners argued that since payment on the hundis was deferred to a future date, they should not be classified as "bills of exchange payable on demand." However, the judgment disagreed, citing a case where a similar hundi was deemed payable on demand despite the delayed payment date. The judgment stresses the importance of applying the Stamp Act's definitions accurately to determine duty chargeability.

Lastly, the judgment highlights the significance of citing relevant case law in legal arguments, noting that the outcome of cases could differ based on the cases presented. Ultimately, the court held that the hundis in question are "bills of exchange payable on demand" under the Stamp Act and are not subject to duty. The trial court's decision was upheld, and the petitions for revision were dismissed, with each party bearing their own costs.