Stamp duty on usance bills, failure of consideration, and statutory interest on a silent bill of exchange

A bill of exchange payable on a fixed future date was treated, for stamp-duty purposes, as falling within the statutory concept of a bill payable on demand, so no stamp duty was attracted and the instrument remained admissible in evidence. The defence of want or failure of consideration was rejected because the defendant's own admissions showed supply of diamonds and acceptance of the bill, while the alleged arrangement with the drawer did not bind the plaintiff. Where the bill was silent on interest, statutory interest applied, and the plaintiff was entitled to interest at 18 per cent per annum.

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Issues: (i) whether the suit bill of exchange was liable to stamp duty and inadmissible in evidence; (ii) whether want or failure of consideration relieved the acceptor of liability; (iii) whether interest at 18 per cent per annum was payable under the Negotiable Instruments Act, 1881.

Issue (i): whether the suit bill of exchange was liable to stamp duty and inadmissible in evidence.

Analysis: The bill was payable on a fixed future date and, for the purposes of the Indian Stamp Act, fell within the extended statutory concept of a bill of exchange payable on demand. Under Section 3 and Article 13 of Schedule I, no stamp duty was attracted where the instrument was payable on demand. The Court also accepted that the remission notification applied because the instrument satisfied the conditions of a usance bill arising out of a bona fide commercial transaction.

Conclusion: The bill of exchange was not chargeable with stamp duty and was admissible in evidence.

Issue (ii): whether want or failure of consideration relieved the acceptor of liability.

Analysis: The defendant's own pleadings showed that diamonds had been supplied and that the bill had been accepted. The alleged understanding between the defendant and the drawer regarding payment arrangements was not shown to bind the plaintiff. The Court found the plea of absence or failure of consideration to be unsupported on the record and inconsistent with the admissions made by the defendant.

Conclusion: The defence of want or failure of consideration was rejected and the defendant remained liable as acceptor.

Issue (iii): whether interest at 18 per cent per annum was payable under the Negotiable Instruments Act, 1881.

Analysis: Section 80 of the Negotiable Instruments Act, 1881 applies where the instrument does not specify a rate of interest and does not confine its operation to inland bills. Since the bill was silent on interest, the statutory rate governed.

Conclusion: The plaintiff was entitled to interest at 18 per cent per annum.

Final Conclusion: The suit succeeded in full and the claimed amount with interest was decreed against the defendant.

Ratio Decidendi: For stamp duty purposes, a bill of exchange payable on a fixed future date may still fall within the statutory definition of a bill payable on demand under the Indian Stamp Act, and where the instrument is silent on interest, Section 80 of the Negotiable Instruments Act, 1881 supplies the rate of interest.

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