Stamp duty on shahjog hundis depends on the wider Stamp Act meaning of bills of exchange payable on demand.

Whether Shahjog hundis payable on a future stated date were chargeable as bills of exchange under the Indian Stamp Act turned on the wider statutory meaning of "bill of exchange payable on demand" in Section 2(3). The Rajasthan HC applied its earlier rulings that the Stamp Act expression is broader than its literal sense and can include instruments payable on a future date or at stated periods. It distinguished the narrower definition in the Negotiable Instruments Act and held that stamp liability must be determined only under the Stamp Act. The hundis were treated as bills of exchange payable on demand and therefore not chargeable with duty.

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Issues: Whether the Shahjog hundis in question were "bills of exchange" chargeable with duty under Schedule I, Article 13 of the Indian Stamp Act, 1899, or "bills of exchange payable on demand" within Section 2(3) of that Act and therefore not chargeable with duty.

Analysis: The defining question was whether a hundi payable on a future stated date falls within the extended statutory meaning of "bill of exchange payable on demand" under Section 2(3) of the Indian Stamp Act, 1899. The Court relied on earlier decisions of the same High Court holding that the expression in the Stamp Act is wider than its literal meaning and includes instruments payable on a future date or at stated periods. It also distinguished the definition under the Negotiable Instruments Act, 1881, observing that stamp liability must be determined only with reference to the Stamp Act and not by importing the narrower concept from Section 19 of the Negotiable Instruments Act, 1881.

Conclusion: The hundis were held to be bills of exchange payable on demand under Section 2(3) of the Indian Stamp Act, 1899 and not chargeable with duty; the revision petitions therefore failed.

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