S.J. Vazifdar, J.
1. The plaintiff has filed this summary suit to recover a sum of US $ 1,21,180.08 together with interest on US $ 87,180 at the rate of 18 per cent, per annum from April 1, 1999, till payment.
2. The suit is based on a bill of exchange drawn by Rosmira Diamonds Bavba and accepted by the defendant. The bill of exchange was drawn on April 16, 1997, and was made payable on July 14, 1997. In view of the defence raised by Mr. U.J. Makhija, learned Counsel appearing on behalf of the defendant, it will be convenient to set out the relevant part of the bill of exchange, which reads as under:
DRAWN UNDER COLLECTION BW970482
No. ... USD 182,130.00 ANTWRE 16/04/97On 14 July 1997 pay this FIRST OF EXCHANGE, (SECOND unpaid) to order of ANTWERSPSE DIAMANTBANK NV ANTWERPEN the amount of USD ONE-EIGHT-TWO-ONE-THREE-ZERO-AND 00/100 payable at the UNITED BANK OF INDIA, MUMBAI 400001 drawing rate for demand drafts on...with interest at...per cent, per annum added thereto from date hereof to approximate due date of arrival of the remittance in...value received.
ROSMIRA DIAMONDS BAVBA
(Sd.)
To Kamal & Company
136, Panchratna, Opera House
Mumbai-400004, India
For Kamal & Company
(Sd.)
Partner.
3. The facts leading to the making of the bill of exchange are these, Rosmira Diamonds Bavba sold rough diamonds to the defendants on the terms and conditions contained in an invoice dated April 16, 1997. In consideration of the advance made available by the plaintiff to Rosmira, Rosmira drew the said bill of exchange payable to the plaintiff. The defendant accepted the bill of exchange. The bill of exchange was presented for payment to the defendant by United Bank of India at the instance of the plaintiff. The defendant however, failed to make the payment on the due date. The defendant remitted a sum of US$ 49,950.00 on September 10, 1997, towards part payment. The defendant by its letter dated February 18, 1998, informed the United Bank of India that the balance amount would be paid within one month. The bill of exchange was protested for non payment on March 5, 1998. On March 30, 1998, the defendant made a further part payment of US$ 45,000.00, leaving the outstanding sum claimed in the suit. The defendant has failed and neglected to make payment of the said sum despite the plaintiffs notice of demand dated August 24, 1998. By the said letter/notice the defendant was also called upon to pay interest at the rate of 18 per cent, per annum.
4. Mr. Makhija raised three defences. Firstly, he submitted that the bill of exchange was not duly stamped and is therefore, not admissible in evidence. Secondly, he submitted that there was no consideration and/or there was a failure of consideration, as a result whereof the defendant was not liable as an acceptance of the bill of exchange. Lastly, he submitted that the defendant was not liable to pay interest.
5. The submission that the bill of exchange is duly stamped and is therefore not admissible in evidence is not well founded for two reasons.
6. Section 3 of the Indian Stamp Act so far, as it is relevant reads as under:
3. Instruments chargeable with duty. - Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore, respectively, that is to say,-
(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899;
(b) every bill of exchange payable otherwise than on demand or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and
(c) every instrument (other than a bill of exchange or promissory note) mentioned in that Schedule, which not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or, to be done, in India and is received in India.
7. Article 13 of the Schedule I pertains to 'bill of exchange', as defined by Section 2(2) not being a bond, bank note or currency note. Clause (b) of Article 13 provides a scale of stamp duty on a bill of exchange depending upon the value thereof and the period of payment provided thereunder : 'where payable otherwise than on demand....'
(Here printed in italics)
8. It is clear therefore, from Section 3(b) and Article 13 that no stamp duty has been prescribed in respect of bill of exchange payable on demand.
9. The question that arise for consideration is whether the suit bill of exchange is one payable on demand or one payable otherwise than on demand. The question must be answered with reference to the provisions of the Indian Stamp Act and not with reference to the Negotiable Instruments Act. Under the Negotiable Instruments Act, the suit bill of exchange may not be considered to be a bill of exchange payable on demand. While considering whether the document is a bill of exchange payable on demand or not for the purpose of determining the stamp duty payable thereon, it is the provisions of the Indian Stamp Act and not the provisions of the Negotiable Instruments Act that are relevant. The Negotiable Instruments Act has nothing to do with the stamp duty, except providing for certain limited purposes, such as provided in Section 29 thereof.
10. Section 2(3) of the Indian Stamp Act defines a bill of exchange payable on demand:
2. Definitions. - In this Act, unless there is something repugnant in the subject or context,-....
3. Instruments chargeable with duty. - Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in the Schedule as the proper duty therefore, respectively, that is to say,-
11. The suit bill of exchange though drawn on April 16, 1997, is payable on a particular day, viz., July 14, 1997 and therefore, covers within the ambit of Section 2(3)(b) of the Indian Stamp Act as it constitutes 'an order for the payment of any sum of money...at any other stated period'. Payment on a single day would also be included in the expression 'stated period'. Expression is not continued to multiple period. Thus, under Section 2(3)(b) of the Indian Stamps Act, the suit bill of exchange is one payable on demand and therefore not liable to stamp duty.
12. In Bhanwar Lal v. Firm Mangalji Chhoteylal , a learned single judge of the Rajasthan High Court considered a Shahjog hundi, the translation whereof is as under (page 158):
Written at the auspicious place, Shri Baran; please accept salutations from Shri Panna Lalji Birdhi Chandji to Shri Panna Lalji Birdhi Chandji. We have received here from Mahendra Kumar Aggarwal a sum of Rs. 5,000 in lieu of this hundi. The amount shall be paid to the Shah (a respectable person) on Phagun Badi 10, 2032 BK, at once according to the custom of Shahjog hundis.
Signature.
13. The learned judge held as under (page 158):
5. Now, so far as this Court is concerned, the matter cannot be treated as res integra. In Mool Chand v. Shankar Datta [1965] Raj LW 33, Jagat Narayan J. (as he then was) was also dealing with a hundi payable on a future specified date, like the hundis in the instant cases. He held that if the amount of the hundi is made payable on a future stated period or date, the hundi falls within the definition of 'bill of exchange payable on demand', as given in Section 2(3) of the Act. He took special note of the error committed by the trial judge in not treating the hundi in that case to be a 'bill of exchange payable on demand' merely on the ground that its payment had been postponed to a future date. In this context, the learned judge called special attention to the provisions of Section 2(3)(b) of the Act and pointed out that the said provisions give an extended meaning to the expression 'bill of exchange payable on demand'. If I may say so with respect the learned judge was perfectly right in making this observation. If we read the definition of 'bill of exchange payable on demand' as given in Section 2(3) of the Act it may be somewhat surprising to discover that the expression 'bill of exchange payable on demand' may, literally speaking be quite often a misnomer, for the instruments which the definition takes in may not actually be payable on demand. Let us now read the definition to see for ourselves the deep chasm between the literal meaning of the expression 'bill of exchange payable on demand' and its technical meaning as given in the definition.
14. The learned judge, after setting out Section 2(3), went on to observe as under (page 159):
6. It will be seen that none of the three types of instruments enumerated above can be said to be payable on demand properly so called, but they are all included in the definition of the expression 'bill of exchange payable on demand' as given in Section 2(3) of the Act. We must accept the meaning of 'bill of exchange payable on demand' as given in Section 2(3) of the Act and in doing so we have to keep aside our own understanding of the meaning of this expression based on the literal meaning of different words which it consists of.
Another case which has a direct bearing on this controversy is reported in Kanhaiya Lal v. Dulichand [1970] Raj LW 332. The hundi which was under consideration in that case was in these words : Kanhaiyalal Dulichand of Manohar Thana conveys his greetings to Kanhaiyalal Dulichand of Manohar Thana. We have deposited the sum of Rs. 3,000 for this hundi with Kanhaiyalal Shrichand of Manohar Thana. Please pay to a Shah in accordance with the custom with regard to Shah Jog Hundis on Asad Badi 13 Smt. 2014.
(Sd.) Duli Chand
7-5-67
It will be seen that this was a hundi to a Shah payable after a stated period of date. It was held in the cited case that the definition of a 'bill of exchange payable on demand' under Section 2(3) of the Stamp Act is much wider than what would be understood by this expression as used in the Negotiable Instruments Act, 1881. Following his earlier decision in Mool Chand v. Shankar Datta [1965] Raj LW 33, Jagat Narayan J. held that the Shahjog hundi under consideration by him was a 'bill of exchange payable on demand' as defined in Section 2(3) of the Act.
It is noteworthy that if the hundi in Kanhaiyalal's case [1970] Raj LW 332 could be adjudged on the basis of Section 19 of the Negotiable Instruments Act, 1881, it could not possibly be described as a 'bill of exchange payable on demand' because according to Section 19, it is only if no time for payment is specified in a bill of exchange that it can be described as a bill of exchange payable on demand, and not otherwise. When we are dealing with the question as to whether a particular instrument is chargeable with duty or not, and if chargeable, whether it has been duly stamped, we must decide the matter solely with reference to the provisions of the Stamp Act.
15. I am in respectful agreement with the judgment in Bhanwar Lai's case. I accordingly hold that the suit bill of exchange was not liable to stamp duty, being a bill of exchange payable on demand.
16. The original bill of exchange tendered by Mr. Tulzapurkar, the learned senior counsel appearing on behalf of the plaintiff, is therefore taken on record and marked exhibit 'A' in evidence.
17. Mr. Tulzapurkar, further submitted that the stamp duty prescribed of Article 13 had been remitted by a notification dated August 1, 1989, which reads as under:
ORDER
New Delhi, the 1st August, 1999,
STAMPS
S.O. 1892. - In exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 9 of the Indian Stamp Act, 1899 (2 of 1899), the Central Government, hereby remits the proper stamp duty chargeable under Article 13 of the Schedule 1 to the said Act in respect of usance bills of exchange, Where-
(a) such bills of exchange are payable not more than three months date of sight;
(b) such bills of exchange are drawn on or made by or in favour of a commercial bank of a co-operative bank; and
(c) such bills of exchange arise out of bona fide commercial or trade transactions.
No. 40/89. Stamps. F. No. 33/13/89-ST B.R. Mehmi, under Secretary.
18. It was not disputed that the suit bill of exchange was made on April 16, 1997, and was payable on July 14, 1997, i.e., it was payable not more than three months after the date. The first condition of the notification is therefore, satisfied. That the plaintiff is a commercial bank is clear from its name. This catfishes the second part of the notification. It is nobody's case that the bill of exchange does not arise out of a bona fide commercial or trade transaction. All three conditions of the notification are therefore, satisfied.
19. Mr. Makhija however, contended that the expression 'commercial bank' in Clause (b) of the notification ought to be restricted to the banks referred to in an earlier Notification dated July 14, 1961, which reduced to half the rates of stamp duty specified in Article 13. Items (b) and (c) of that notification mention various banks and financial institutions. There is nothing in either of the notifications that...that the term 'commercial bank' used in the notification dated August 1, 1989, should be so construed.
20. In the circumstances, the first defence is rejected.
21. Mr. Makhija's second defence is that there was no consideration and/or there was a failure of consideration as a result whereof the defendant was not liable as an acceptor of the bill of exchange. It is doubtful whether an acceptor of a bill of exchange can plead the defence of want of consideration against the payee. It is however, not necessary for me to consider this point as in the present case, there is no factual basis for the submission. Not only was there consideration but in their affidavit in reply the defendant has admitted that there was consideration for the bill of exchange, as in evidence from paragraph 3 of the affidavit in reply.
22. The defendant admits having business relations with Rosmira for several years. The defendant has however, alleged that the practice between themselves and Rosmira was that Rosmira would supply the diamonds as per requirement on credit; however, to procure the finance Rosmira would draw the bills of exchange in favour of their bankers, showing the defendant as the drawee. It is then alleged that as per the understanding the payments under the bill of exchange was to be made by Rosmira to the bankers. It was further admitted that the bills of exchange were accepted by the defendant.
23. Pausing here for a moment, it must be noted that this alleged understanding is only between the defendant and Rosmira. The plaintiffs have nothing to do with the same. There is nothing on record that even remotely indicates that the plaintiffs were a party to or had in any manner consented to such an understanding. It is also contended that the defendant used to pay the price of the diamonds directly to Rosmira who in turn paid the amount to the banks. The mere fact that in certain cases, Rosmira's bankers accepted the payment without presentation to the acceptor cannot take the defendant's case any further. If a payee is paid by the drawer, he is hardly likely to refuse such payment. That by itself would not and cannot by any stretch of imagination affect the right against the acceptor.
24. The defendant further admits that five packets of diamonds were in fact delivered by Rosmira to them. The contention is only that Rosmira supplied five packets of diamonds instead of four packets, as ordered by the defendant. It is important to note that the receipt of the diamonds is expressly admitted.
25. Thus consideration of bill of exchange qua the acceptor/defendant is established. What follows in the affidavit in reply is only an attempt to confuse the matter with a view to obtaining unconditional leave to defend the suit. To grant any relief to an acceptor on the basis thereof would denude commercial instruments of any commercial efficacy.
26. What allegedly transpired thereafter was admittedly only between the defendant and Rosmira in respect of the fifth packet, i.e., the extra diamonds. The plaintiff admittedly had nothing to do with any of this. There were negotiations and disputes the alleged resolution thereof between Rosmira and the defendants continued long after the bill of exchange was made, i.e., April 16, 1997, as well as after it became payable, i.e., on July 14, 1997. Even as per the affidavit in reply the same continued till March 13, 1998. According to the defendants they protested short the extra diamonds but Rosmira requested the defendants to accept the bill of exchange and ensured them that they would arrange the extra amount and there would be direct payment to the bank in respect thereof. However, it is not even the defendant's case that the plaintiffs were a party or had agreed to this arrangement. Thereafter Rosmira allegedly requested the defendant to sell the said extra diamond in the Indian market and to remit the payment against invoices. It was allegedly in view of these circumstances and assurances that the defendant made the part payment of the said amount of US$ 49,950 to Rosmira. Further negotiations ensued between Rosmira and the defendant in respect of the extra diamond once again. According to the defendants in view of the instructions of Rosmira to sell the diamonds by the respondent by the letter dated February 18, 1979, stated that they would arrange to make payment to the bank within one month. It is impossible to believe this. The alleged letter does not even remotely hint at any such things. It is clear that the defence as to want of consideration and failure of consideration is dishonest.
27. Lastly, Mr. Makhija submitted that as the bill of exchange is a foreign instrument, within the meaning of Section 12 of the Negotiable Instruments Act, 1881 and not an inland instrument as defined in Section 11 of the said Act the provisions of Section 80 of the Negotiable Instruments Act would not be attracted. This submission is also unfounded. Section 80 of the Negotiable Instruments Act reads as under:
Interest when no rate specified. - When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument, be calculated at the rate of eighteen per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realisation of the amount due thereon, or until such date after the institution of a suit to recover such amount as the court directs.
29. There is nothing in Section 80 which even remotely suggests that the provisions thereof apply only to inland bills and not to foreign bills, nor is there anything in any of the other provisions of the Negotiable Instruments Act which suggests the same. Thus the bill of exchange being silent as to the rate of interest the plaintiff is entitled to the interest at the rate of 18 per cent, per annum.
30. Mr. Makhija's reliance upon, unreported judgment of this Court in Dorbyl Eastern Cops Division of Dorbyl Ltd. v. m. v. Navigator in Admiralty Suit No. 60 of 1996, dated October 19, 1995, is not well founded. In that case, the provisions of the Negotiable Instruments Act were not involved. Further that was an order for the arrest of a vessel in exercise of the Admiralty jurisdiction of this court. The claim though in foreign currency was in respect of necessary repairs carried out to the vessels by the plaintiff. In these circumstances and as the claim was made in US Dollars, the court reduced the rate of interest to 5 per cent. The judgment has no application in the present case.
31. There is thus no defence to the suit.
32. The summons for judgment is made absolute and the suit is decreed as prayed.