1990 PLP 603 (CLC)

4. Now comes the question whether the stamps affixed had been properly and effectually cancelled so that these could not be used again. In order to examine this question it may be useful to reproduce the relevant provisions of the Stamp Act which have decisive bearing on the point agitated in this appeal. Section 12 of the Stamp Act Teads:‑ "

12. Cancellation of adhesive stamps ‑‑ (1) (a) Whoever affixes any adhesive stamps to any instrument chargeable with duty which has been executed, by any person shall, when affixing such stamp, cancel the same so that it cannot be used again; and (b) whoever executes any instrument on any paper bearing an adhesive stamp shall, at the time of execution, unless such stamp has been already cancelled in manner aforesaid, cancel the same so that it cannot be used again.a (2) Any instrument bearing an adhesive stamp which has not been cancelled so that it cannot be used again, shall, so far as such stamp is concerned, be deemed to be unstamped. (3) The person required by subsection (1) to cancel an adhesive stamp may cancel it by writing on or across the stamp his name or initials or the name or the initials of his firm with the true date of his so writing, or in any other effectual manner." (4) Both on authority and principle it appears that the question whether or not a stamp has been effectually cancelled is one purely of fact to be decided by an examination of the stamp itself. In the present case the stamps have been cancelled by drawing a line across each of them. Examination of the document and the stamps affixed, leaves no manner of doubt in my mind that the stamps are affixed for the first time. Section 12 of the Stamp Act, 1899 (Act 11 of 1899) fell for consideration before the superior Courts more than once. Reference to some of the decisions may be useful. In Punjab Zamindars Bank Ltd., Lyallpur through Sardar Desa Singh v. Babu Muhammad Shaffi (A I R 1938 Lahore 505) Tek Chand, J. after a survey of the precedent case‑law, had this to say:‑‑ "After examining the promissory note in question and hearing counsel for the parties, I am unable to accept the view of the Courts below. They appear to be under the impression that subsection (3) of section 12 lays down a rigid and hard and fast rule that when an adhesive stamp has been affixed on the instrument, and the person executing it writes his name or initials on the stamp it is essential that the "true date" of his so writing must appear on the stamp and that if this had not been done, the stamp cannot he held to have been effectually cancelled. This however is not the only mode in which such stamp can be cancelled. In subsection (3) itself it is stated at the end that the stamp may be cancelled, "in any other effectual manner". Reading section 12 as a whole, it will appear that all that is legally necessary is that where an adhesive stamp is affixed on any instrument chargeable with duty, the person executing it shall, when affixing such stamp, cancel the same "so that it cannot be used again". The Legislature has not attempted any exhaustive list of the modes in which cancellation may be done. In the first part of subsection (3) one of such modes is mentioned, and it is then said that the executant may cancel the stamp "in any other effectual manner". The object of the cancellation obviously is to make the stamp unfit for further use in the ordinary course of business, and whether this has been done in any particular case is a question to be determined on an examination of the instrument in question. The section does not lay down that the cancellation must be such that it would be impossible for a criminally inclined person to use the stamp again." The learned counsel for the parties have cited a large number of rulings, but I do not think it necessary to discuss them in detail, as each case was decided on its particular facts and the observations made therein must be taken to have been made in reference to its peculiar facts. The learned counsel for the respondent has relied largely upon S.A. Rali v. Salemali Fazl (14 Bombay 102) and Virbbadrapi v. Bhimaji Brinji (28 Bombay 432). The correctness of the case last mentioned was however quoted by Rattigan, J. in Piran Ditta v. Mangal Singh (108 P.R. 1908) and more recently these cases have been dissented from by the Bombay High Court also. In Tata Iron and Steel & Co. Ltd. (108 I.C. 465 at pages 474‑75) Crumt, J. after pointing out that the question in each case is one which is to be determined upon the facts of the case and that no one else can really be an authority for another, observed as follows: "The Legislature, I take it, says what it means and that is, that the stamp in its cancelled condition cannot be. used again. It does not say that the process must be so thorough that no evilly‑disposed person can, in any manner, render the stamp fit for further use. Indeed the process which the legislature declared to be adequate in section 12 (3) might be defeated by criminal ingenuity. The learned Judge then referred to the English case in Mo Mullen v. Sir Alfred Hickman Steamship Co., Ltd. (1902) 71 L. J. C 76,6) where the opinion was expressed that "Line or a cross on the stamp might amount to sufficient "cancellation", and following this decision he disapproved the dicta in the previous decisions of his own Court referred to above. The Rangoon High Court considered the question at length in Kolai Sai v. Julai Najam" (3 Rangoon 39) and there also the decision in 14 Bombay 102 and 28 Bombay 432 were dissented from, and it was held that all that is necessary is that it should be apparent on the face of the stamp that it has once been used. This is all that could reasonably be expected from ' the person executing it, and is all that is in fact required by section

12. Reference may also be made to Kirpa Ram v. Sarumal (3 A.L.J. 326). The learned Judges of the Courts below have referred to three Punjab cases, reported in Mela Ram v. Brij Lai (148 P.R. 1919), Naryana Iyer v. Venkatarama Aiyar (15 I C 202) and Allah Bakhsh v. Dost Muhammad (A I R 1935 Lahore 716). The first two of these cases however do not in any way support their conclusion. In 148 P.R. 1919 it was observed that the question whether or not a stamp has been effectually cancelled is one purely of fact to be decided on an examination of the stamp itself. In that particular case, the stamp had been cancelled drawing diagonal lines right across on the stamp, their ends extending to the paper, and it was held that this was an effectual cancellation. In 15 I.C. 202 lines had been drawn across the stamps and this was held to be sufficient. It was nowhere laid down in those cases, as appears to have been supposed, that it is essential that the writing on the stamp, to be effectual, must necessarily extend on to the paper. In the third case, A I R 1935 Lahore716 the promissory note in question bore four one‑anna stamps, and it was held that at the time of the execution of the note only three stamps had been affixed, and that the fourth stamp was affixed subsequently. On this finding, the instrument could not be said to have been properly tamped and was therefore held to be inadmissible." In Mela Ram Brij Lai and others (A I R 1920 Lah. 374) Broadway, CJ observed: "With regard to the first contention it was argued that the legislature contemplated that the cancellation of a stamp would render it impossible for use a second time. It seems to me that the question whether or not a stamp has been effectually cancelled is one purely of fact to be decided by an examination of the stamp itself. In the present case the stamp has been cancelled by drawing diagonal lines right across it, their ends extending across the paper. Examination of the stamp leaves no room for doubt that it was affixed for the first time on this document. It seems to me therefore that it has been effectually cancelled. A cancellation by drawing lines across a stamp has been considered in Muhammad Amir v. Kedar Nath (15 I.C. 202), in which case the dicta contained in Piran Ditta v. Mangal Singh (108 P.R. 1908) was approved of. I accordingly hold that the stamp has been effectually cancelled within the meaning of section 12 of Stamp Act ...." In Passumal v. Cogonnaj (A I R 1921 Sind 77), a Bench decision the Court observed:‑‑Section 12 of Act 11 of 1599, subsection (1) requires a person affixing an adhesive stamp to any instrument to cancel the same so that it cannot h( used again and subsection (3) of the same section describes some of th, methods in which an adhesive stamp may be cancelled with the words "car in any other effectual manner". The question, therefore, whether a particular stamp has or has not been effectually cancelled so that it cannot be used again is a question that depends on the facts of each case In the present case there cannot be the slightest doubt that the plaintifl or his guardian did intend to cancel the stamp on the document in suit As I have remarked, two parallel lines were drawn across the stamp extending beyond its edges and it cannot be alleged for a moment, nor has it been, that this was not done with the intention of cancelling tht, stamp. Now subsection (3) of section 12 does not profess to exhaustivct~ prescribe the various methods by which a stamp may be cancelled. And drawing lines across a stamp may be as effectual a mode of cancelling it as by writing one's signature across it. 1n my opinion section 12 does not make it obligatory that a stamp should be so cancelled as to make its use again a physical impossibility. Any ingenious scoundrel may devise various means of re‑using a stamp of the effective cancellation of which there could be so reasonable doubt. I think the criterion for determining whether a stamp has been effectually cancelled within the meaning of section 12 is, whether the ordinary conscientious man would, on sceino the stamp, come to the conclusion that it has already been brought in use. In the present case I feel no reasonable doubt that a pcrsor observing the lines across ilic stamp, would feel convinced that the stain f. was used. It is possible that the two lines on the stamp could be obliterated and t;.e stamp brought into requisition again, but I hold, despite this circumstance, that the stamp was effectually cancelled within the meaning of section 12." Reference can also he uscfullv made to Habib Bank Ltd. v. Raza Sons << Co. and another P L D 1978 Kar./ 425 wherein learned Single Judge after reproducing section 12 of the Stamp Act observed: "Now, if an adhesive stamp is affixed on a document and it is canceliccl by drawing line across it, it cannot be used again unless it is removed from the document which may not be possible without in some measure causing some visible damage to the stamp itself. Moreover, undr subsection (3) of section 12, the t‑egislaturc has not pro%idcd that the person required to cancel an adhesive stamp affixed to a promissory note or to a document must do so in such a manner that it is impossible for a criminal minded to use that stamp again in any circumstaces whatever ...."

5. The main object and principle underlying section 12 of the Stamp Act is I that the possibility of a stamp affixed to an instrument being used again should be precluded. Examination of the promissory note shows that the stamps affixed thereon have been cancelled by drawing a line across those stamps. On two of the 113 stamps the line extends to the paper also. To my mind the legal requirement of the effectually cancelling the stamps as required by section 12 of the Stamp Act had been faithfully complied with so as to prevent the stamps being used again. I am, therefore, of the opinion that the lower Court was in error in holding that the promissory note was not adequately stamped or that the stamps which Promissory Note bore were not effectually cancelled. I would, therefore, allow appeal, set aside the impugned judgment of learned District Judge and remand the case to the Court of appeal for its decision afresh. in accordance with law on the basis of the material already on record. Parties to bear their own costs. Records be transmitted to the Court below. H.B.T./H‑153/L Appeal allowed.