2009 (3) KLT 72 - Abdul Salam v. State of Kerala -- 

Deserves re-consideration?

(By P. Rajan, Advocate, Thalassery)

The ruling, Abdul Salam v. State of Kerala (2009 (3) KLT 72)  rendered u/S.52 of Stamp Act, 1959 (Kerala), relates to refund request by a person who was the successful bidder in Court auction, of immovable property as the sale was set aside on the ground of fraud; thus asked to get back the deposited amount relating to purchase of stamp papers. As the facts reveal, the Court auction was on 14.1.2004 and the petitioner before the High Court, deposited the amount for purchase of stamp papers on 9.8.2004 along with the sale consideration, prescribed. But due to suppression of facts, the sale was set aside on 19.3.2005. The concerned party moved application for refund of stamp value on 27.7.2005. The learned Judge of the Executing Court, forwarded the application for refund of the stamp value to the authority concerned but was later rejected - thus the matter came before High Court’s consideration. Needless to say, the High Court also ruled that the claim cannot be allowed, being belated.

The learned Judge has considered the scope of S.52(c) of the Stamp Act, in order to hold that the request being made after a period of six months, the order impugned deserves confirmation. The relevant sub-section speaks of the period of six months regarding refund of value of stamps which have not been used and is fit for use. But this proviso under S.52, is a beneficial provision for stamp vendors and persons in possession of unused papers and stamps. The six months period fixed is to avoid request of refund at any time due to specific reasons. In the reported case it is evident that the party had deposited the stamp value in Court as stated in paragraph two. The procedures till confirmation of the sale are strictly to be in accordance with O.XXI of C.P.C, considering parties contentions and relevant rules, R.344(3) of Civil Rules of Practice and Rr.89, 90 of O. XXI are relevant in this context. The fraud came to light in the case reported, only on a later stage; thus set aside the sale. The bidder requested for refund within six months from the date of setting aside of sale as the relevant dates are 19.3.2005 and 27.7.2005.

The petitioner was not at fault as he could not anticipate non-confirmation of sale due to any reason on a prior date, coming within six months period, from the date of purchase of stamp papers/deposit in order to move the application for refund as stipulated in S.52(c) as held by the Court. The provision pressed into service is general in nature meant for stamp vendors and individuals. The section is silent about Court deposit and Court Sale. If it is in the possession of a person it is trite law; the judgment. The party in this case was vigilant and deposited the amount without delay and he can’t be blamed for the fraud played, by another, on Court. Supposing there was any appeal or revision at an intermediary stage, the matter would have taken more time for final disposal, if sale is stayed also.

The person stand to loose not because of his mistake but due to the suppression of facts by another culminated to Court’s finding. The instance being exceptional, S.52 of the Stamp Act, seems to be inapplicable and discretion of the Court in consonance with rule of equity and justice could have been the relief to the aggrieved.

Any law/rule is with a specific intention to serve some purposes. In the reported case the party is to loose his deposit amount, sans, laches on his part and undue enrichment to the exchequer is avoidable. The ruling deserves reconsideration as the facts and law need further examination by a Larger Bench.

Memorandum of Second Appeal “Cribbed, 

Cabined and Confined” by ‘Kalliani’

(By T.P. Kelu Nambiar, Sr.Advocate, High Court of Kerala)

With little hesitation, I venture to say, with respect though, without fear or illwill, that the decision of a learned Single Judge, in Kalliani v. Balagopalan (Reported in 2009 (1) KLT 288), blowing the whistle on S.100, of the Code of Civil Procedure, does not lay down the correct law on the rules relating to the procedure for filing Second Appeals. And, I do believe what I think.

My association with S.100, Code of Civil Procedure, is inveterate, starting from the time of my apprenticeship-at-law, during 1953-1954 in the High Court of Judicature at Madras, under veteran 'civil' lawyer Sri.Ayilyath Achuthan Nambiar.

I have intimate relationship with S.100, as it stood before 1.2.1977 and after 1.2.1977. Before 1.2.1977, under the then S.100, a Second Appeal lay to the High Court from a decree passed in appeal by any court subordinate to the High Court on any of the grounds, namely, the decision of the subordinate court being contrary to law or some usage having the force of the law; the decision having failed to determine some material issue of law or usage having the force of law; and a substantial error or defect in procedure provided by the Code or any other law for the time being in force, which may possibly have produced error or defect in the decision of the case upon the merits. S.100 started with the expression:

“Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force....”

S.100 was amended with effect from 1.2.1977, by the Code of Civil Procedure (Amendment) Act 1976, by the substitution of a new S.100. The substituted Section (32-year-old) also started by saying:

“Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force....”

The amendment provided that an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, if the High Court is satisfied that the case involves a substantial question of law. It was provided:

“In an appeal under this Section, the Memorandum of Appeal shall precisely state the substantial question of law involved in the appeal”. (Mark the word ‘state’). 

Further, on the High Court being satisfied that a substantial question of law is involved, it ‘shall formulate the question’, and the appeal shall be heard on the question so formulated.

O. 41, which relates to appeals from original decrees, provides, in R. 1, the form of appeal and what to accompany the Memorandum of Appeal. The relevant provision is:

“Every appeal shall be preferred in the form of a memorandum signed by the appellant or his pleader and presented to the Court or to such officer as it appoints in this behalf”.

O.41 R.2 relates to the contents of the memorandum of appeal. The provision, as far as it is relevant for the present purpose, says:

“The memorandum shall set forth precisely and under distinct heads the grounds of objection to the decree appealed from without any argument or narrative, and such grounds shall be numbered consecutively”.

No change was effected to these Rules by the Amendment Act 1976. Under R.9, of O. 41, “the court shall entertain the memorandum of appeal....and shall register the appeal”. Order 41 A provides for appeals to the High Court from original decrees of subordinate courts, (Regular First Appeals), and Rule 1 thereof says that the rules contained in O. 41 shall apply to appeals in the High Court of Kerala with the modifications contained in the Order.  O.42 relates to appeals from appellate decrees, with which we are now concerned. R.1 of O.42 says that the Rules of O.41, as modified by O.41A, shall apply, so far as may be, to appeals from appellate decrees. This provision is not amended by the Amendment Act of 1976.

Therefore, it falls into place that the relevant rules of procedure remained the same even after the amendment of S.100 with effect from 1.2.1977. It is clear that the amendment of S.100 will not affect the relevant rules as shown above. 

What S.100 says, after the amendment, is only that a Second Appeal shall lie to the High Court from a decree passed in appeal by a Subordinate Count, if the High Court is satisfied that the case involves a substantial question of law; and that, when a Second Appeal is filed, the Memorandum of Second Appeal shall precisely state the substantial question of law. The statement of the substantial question of law in the Memorandum of Appeal is not final, because, despite such statement, the High Court shall formulate the substantial question of law; and the appeal shall be heard either on such question of law formulated or any other substantial question of law formulated at a later stage. According to S.100, the appeal is from a decree passed in appeal and the Memorandum of Second Appeal shall state the substantial question of law. O.41, which applies to Second Appeals, provides that the appeal shall be in the form of a Memorandum. O. 41 also prescribes the contents of the Memorandum, by saying that the memorandum shall set forth precisely the grounds of objection to the decree appealed from.

Therefore, the position is clear that the procedures in O.41, O.41A, and O.42, are not affected by the amendment of S.100. S.100 does not prescribe any procedure. The rules of procedure are verily the rules contained in the First Schedule of the Code of Civil Procedure. 

Moreover, S.100, as already stated, starts by saying: “Save as otherwise expressly provided in the body of this Code or any other law for the time being in force”. Apart from the other provisions in the body of the Code, there are other laws in force concerning the matter, and other laws were these even before the Amendment Act 1976. The rules of the High Court of Kerala 1971 were in force at the time of the amendment of S.100 in 1976. The Rules of the High Court of Kerala were framed by virtue of the powers conferred by Art.225 of the Constitution of India, S.122 of the Code of Civil Procedure (itself), and all other enabling powers of the High Court of Kerala. Rules were made with the previous approval of the Government, conveyed in Government Order dated 19.11.1970. The rules are made to regulate the procedure of the High Court of Kerala. Art.225 of the Constitution of India confers power on the High Court to make rules of Court to regulate the proceedings of the Court and of members thereof sitting alone or in Division Court. The Article says that such powers shall be the same as immediately before the commencement of the Constitution. S.122 of the Code of Civil Procedure prescribes the power of the High Courts to make rules regarding their own procedure. Such rules are to be made after previous publication. That is why the Rules of the High Court of Kerala say that they were made after publication. S.122 also confers power on the High Courts to make rules to annul, alter or add to all or any of the rules in the First Schedule. R.47 of the Rules of the High Court of Kerala says:

“Statement of Facts:- The Memorandum of Second Appeals, Civil Miscellaneous Appeals and Civil Revision Petitions shall contain a brief statement of the facts of the case and shall set forth the grounds of objection to the judgment or order appealed against or sought to be revised”.

It is despite the provisions and position as above, a learned Single Judge held that the failure to set forth grounds of appeal in the Memorandum of Second Appeal cannot render the Memorandum of Second Appeal defective and it is enough if the Memorandum of Second Appeal sets out the synopsis and narrates a statement of facts indicating as to how the substantial questions of law stated in the Memorandum of Second Appeal arise for consideration. The learned Judge observed: “It is, therefore, not compulsory that a Memorandum of Second Appeal should raise grounds of objection to the decree appealed from. The practice of raising grounds in a Memorandum of Second Appeal has come to stay more out of habit than a legal prescription. Old habits die hard. The objection raised by the Registry was not well taken. The Registry shall number the Second Appeal....” It is not seen noticed by the learned Judge that filing of the Memorandum of Appeal precedes  arguing of the Second Appeal. And, how can it be said that “the objection raised by the Registry was not well taken”. What else could have the Registry done at the time of examining the ‘Memorandum’.

The learned Judge is seen to have placed reliance on the expression “so far as may be” in O.42. This reliance does not seem to be correct, because that expression has been there even before the amendment of S.100; and, moreover, this expression can in no way be related to the amended S.100. It is very clear that the amended S.100 speaks of ‘addition’, not ‘annihilation’ or ‘negation’. Also, O.42 R.2, inserted by the Amendment Act of 1976, is clear that ‘grounds’ are not ousted, for it postulates the existence of ‘grounds’, when it says’.... it shall not be open to the appellant to urge any other ground’. The learned Judge underlined only that portion of R.2 just above the portion I have here underlined.

A very important question, involving various legal aspects, is decided without hearing anybody in opposition. Only the counsel for the appellant appeared, and was heard. The said counsel was interested in defending ‘the defective Memorandum of Appeal’. An important question relating to the rules of procedure of the High Court could have been decided after inviting the general views of the Bar. Notice could have been given to the President of the Kerala High Court Advocates Association and the Advocate-General, because this is not a mere matter concerning the counsel for the appellant in this particular case. Or, the question could have been placed before the Hon’ble Chief Justice for a reference to a Division Bench. A particular learned Single Judge may sit for admission in regard to Second Appeals for a period, and the jurisdiction may later go to other Judges. There may be other learned Judges who may take a different view, while hearing Second Appeals. There is no appeal against the present order of the learned Single Judge. The learned Single Judge wholly missed R. 47 of the Rules of the High Court of Kerala. That Rule is not affected by the Amendment Act of 1976.

I should congratulate Advocate Sri.K.G.Balasubramanian for his thoughts on this matter, reported in 2009 (3) K L T Page 3-Journal. He has highlighted the provision in R.47 of the Rules of the High Court of Kerala. But I fail to understand the meaning of his opening paragraph, which is: “It was quite a relief to read Kallyani v. Balagopalan (2009 (1) KLT 288). The learned Judge has ruled in his inimitable style, that it is not compulsory that a Memorandum of Second Appeal should raise grounds of objection to the decree appealed from. I initially thought of all that one could save in terms of time, energy, space and expense”. Possibly my learned friend wanted to be apologetic. There are different ways of expressing respectful opinion. Sri.Balasubramanian has done it in his own way; and I am doing it in my own way, without shedding my signature. There is no use mincing matters when you express an honest and studied opinion on an important subject, like this, especially, where a thirty-two-year-old procedure is bade adieu.

This is not a verdict on a judgment. This is but a lawyer’s, (not yet lapsed), non-violent (not winged) view on a bona fide review of a verdict.

N. I. Act 138 Trial – Jurisdictional Difficulties

(By K.G. Joseph, Advocate, Aluva)

1. On a careful reading of S.138 of N.I. Act the importance of “a bank” “the bank” and “that bank” is noteworthy. In the main section itself the above words are concurrently used. Also in provisos (a) and (b) of S.138  “the Bank” is repeated. It is pertinent to note that the inference is Drawee Bank/Paying Bank/Drawer’s Bank/Accused’s Bank.

2. Bank's function inter alia includes collecting of cheques/paying of cheques. Collecting Bank receive the cheque from its customers for collecting the proceeds from Drawee Bank. Collecting Bank  pays the proceeds to the payee after due process of collection. In case of insufficiency of fund/exceeds arrangement in the Drawer’s A/C the Drawee Bank returns the cheque to the Collecting Bank with information regarding the return of the cheque as unpaid. The Collecting Bank gives intimation to the payee with returned cheque/information received from the Drawee Bank. This is the core function of the Collecting Bank from the time of presentation of cheque to his Bank by his customer - payee till its disposal as mentioned above.

3. There are occasions more often when the payee directly approaches the Drawee Bank where he either gets the payment directly or gets back the unpaid cheque with the information of reason regarding return of the cheque as the case may be.

4. There are again instances of Collecting Bank and Drawee Bank to be one and the same when the drawer and payee keep Bank A/Cs in one and the same Bank. There also the process of collecting/paying will be the same as above.

5. Banking Business necessitates/warrants the functions of the Paying Bank and the Collecting Bank which is distinct and unique and cannot be separated as it is like two sides of a coin and two wings of a bird. 

6. In Banking Law and practice the above system is in vogue from time immemorial. Ever since the coming into force of N.I. Act S.138 w.e.f. 1.4.1989 the scope and applicability of the new law have expanded considerably as is being witnessed for the last 20 years. The credibility/acceptability of cheque operations have gone a long way in establishing sound and easy financial transactions in the trade/commercial fields which smoothened the relationships of parties as well.

7. The important corner stones of the new law are based on the judicial declarations/pronouncement/rulings of Hon’ble Supreme Court/High Courts. Hon’ble Supreme Court with two Judge Bench have proclaimed a Dictum/Ratio in (1999 (3) KLT 440 (SC) - Bhaskaran v. Balan):  regarding jurisdiction for trial of offence fixing 5 local places starting from:-

Place of (1) Drawing of the cheque.

“ (2) Presentation of the cheque to the Bank.

“ (3) Returning the cheque unpaid by the Drawee Bank. 

“ (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount and 

“ (5) Failure of the Drawer to make payment within 15 days of receipt of notice.

8. The Dictum/Ratio declared by the Hon’ble Supreme Court is being adopted/followed all over India as the Law of the land on this subject bound by Art.141 of the Constitution of India. While explaining the law Hon’ble High Court in Santhosh Kumar v. Mohan (2008 (3) KLT 461) para 5 - last sentence it was clearly affirmed and pointed out that “the law relating to the jurisdiction is thus clearly stated. The difficulty, if any, can only be in correctly understanding the dictum and in applying the same to the given facts”. In the light of the clarification/explanation of the Hon’ble Supreme Court there is an earnest attempt to overcome the difficulty to correctly understand the dictum and the difficulty is being redressed considerably, as the same is being applied to the given facts. However with regard to the jurisdiction in place (2) in para 14, i.e. place of presentation of cheque to the Bank, there is difficulty to understand the same place as the place (3) in para 14 while applying the dictum with its explanation.

9. It is a well established system of Banking that the cheques are to be presented for payment to the Drawers Bank - Drawee Bank -Accused’s Bank - Paying Bank within 6 months/within the period of its validity which ever is earlier. The payee has got the option of presenting the cheque directly to the above Bank - Paying Bank or through his Bank - Collecting Bank - for payment. In either case the cheque is to be presented within the stipulated period to “the Drawee Bank” or else it is subject to bouncing on that ground under S.138(a) of N.I. Act as confirmed by 3 Judge Bench of Supreme Court in Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001 (2) KLT 148 (SC)). Returning the cheque unpaid by “the Drawee Bank” is coming under place (3) in the dictum. In other words it is correctly understood that “the Bank” in S.138(a) and “the Bank” ruled in 2001 (2) KLT 148 (SC) and “the Drawee Bank” in 1999 (3) KLT 440 (SC) para 14 place (3) are one and the same which is “Drawee Bank” and at the same time “the Bank” as ruled in para 14 place (2) is the Collecting Bank though these matters were discussed and explained in 2008 (3) KLT 461 by Hon’ble High Court.

10. Then it is difficult to understand that “presentation of the cheque to the Bank” under place (2) and Drawee Bank in place (3) are one and the same as it ultimately ends in the extinction of place (2) without considering the significance of the process of collection of cheque through Collecting Bank-Payee’s Bank which is not even considered under the dictum in 2 Judge Bench of Supreme  Court 1999 (3) KLT 440 (SC) nor discussed in the 3 Judge Bench decision in 2001 (1) KLT  148 (SC) where “the Bank” is Drawee Bank, on which the cheque is drawn and not banks where the cheque is presented for collection. There is no difficulty to understand “the Bank” in S.138(a) as same as “the Drawee Bank” in para 14 place (3). But the difficulty is to understand “the Bank” in para 14 place (2) as the same as place (3) in para 14 of 1999 (3) KLT 440 (SC). Confirming of jurisdiction to the place of “presentation of the cheque to the Bank” in para 14 - place (2) is established by Hon’ble Supreme Court and in the absence of subsequent Dictum/Ratio declared by the Hon’ble Supreme Court there is difficulty. The Supreme Court Dictums in the light of explanation of the High Court in para 5, 2008 (3) KLT 461 is to be correctly understood and applied, so as to avoid/minimize the difficulty regarding the jurisdiction.

11. Thought there is no new Ratio Decidendi/overruling/dissenting from the Dictum established so far after the 1999 (3) KLT 440 (SC) by the Hon’ble Supreme Court the obiter dicta - incidental legal principles discussed - as contained in 2008 (3) KLT 461 (including para 15) is being followed with persuasive effect as the criteria for fixing the jurisdiction thereby treating place (2) and (3) into same category ultimately putting an end to place (2) which is the actual difficulty at present for which suitable remedy is inevitable to attain ends of justice in the larger interest. The actual difficulty still subsists with a ray of hope in good faith for getting remedial relief atleast in due course, as is visible in Purushothaman  v.  State  of  Kerala (2009 (2) KLT 540)  by not following Ahammedkutty Haji v. State of Kerala (2007 (1) KLT 68)  and by following the 1999 (3) KLT 440 (SC) in respect of place of demand notice for jurisdiction.