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PETITIONER: R.   RATILAL & CO.

       Vs.

RESPONDENT: NATIONAL SECURITY ASSURANCE CO.  LTD.

DATE OF JUDGMENT: 16/12/1963

BENCH: SARKAR, A.K. BENCH: SARKAR, A.K. SHAH, J.C. DAYAL, RAGHUBAR

CITATION:  1964 AIR 1396            1964 SCR  (5)1047

ACT: Indian  Stamp  Act (II of 1899), s. 35, Sch. 1  Art.  47-Un- stamped  letter  of  cover of  fire  insurance-If  and  when admissible in evidence.

HEADNOTE: The  appellant  filed a suit on a duly completed  policy  of fire  insurance and an unstamped letter of cover in  respect of the same kind of insurance, issued by the respondent,  to recover  from  it  the  loss suffered as  a  result  of  the destruction  of the insured goods by fire.   The  respondent admitted  liability  on the policy but with  regard  to  the letter  of  cover  it  contended that  the  letter  was  not admissible evidence for want of stamp. Held  :  Per Sarkar and Shah JJ. (i) A letter  of  cover  no doubt  contains  a  contract of insurance but it  is  not  a policy  of insurance and cannot be admitted in  evidence  as such under s. 35 of the Stamp Act. The  Citizens Insurance Co. of Canada v. William Parsons,  7 A.C. 96. (ii) The  proper  construction of the General  Exemption  in Art.  47 of schedule 1 of the Stamp Act is that a letter  of cover  is  not  exempt from duty only when it  is  used  for compelling  the delivery of the policy mentioned in it.   If it  is used for any other purpose it is not exempted.   When it is not so exempt it is an instrument chargeable with duty under s. 3 of the Stamp Act and admissible                             1048 on  evidence  on payment of the requisite duty  and  penalty under 35 of the Act. Per Raghubar Dayal J. (dissenting):- Section 35 contemplates letters of cover to bear the necessary stamp at the time  of execution  and  that any subsequent  affixing  of  requisite stamp  on  an unstamped letter of cover will not make  it  a document  which  can be used for any purpose  including  the basing of a claim.  Theproviso  to the  General  Exception cannot be construed to mean that    subsequent   to    the execution of a letter of cover anyplace standing     to gain thereby may just put the requisite stamp on it and thereafter   use  it  for  enforcing  any  claim   for   any purpose.

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Narayanan Chettiar v. Karuppathan, I.L.R. 3 Mad. 251.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 382 of 1961. Appeal  from the judgment and decree dated May 24, 1960,  of the  Calcutta High Court in Appeal from Original Decree  No. 144 of 1958. B.K.  Bhattachargee,  D.K. De and S.N.  Mukherjee,  for  the appellant. N.C. Chatterjee and D.N. Mukherjee, for the respondent. December  16,  1963.  The Judgment of A.K. Sarkar  and  J.C. Shah JJ. was delivered by Sarkar, J.    Raghubar  Dayal   J. delivered a dissenting Opinion. SARKAR J.-The appellant filed a suit in the Original Side of the  High  Court at Calcutta on a duly completed  policy  of fire  insurance dated March 15, 1951 and bearing No.  26625, and  an unstamped letter of cover dated November 5, 1951  in respect of the same kind of insurance issued by the  respon- dent,  to recover from it the loss suffered as a  result  of the   destruction  of  the  insured  goods  by  fire.    The respondent  admitted liability on policy No. 26625 but  with regard  to the letter of cover it contended that the  letter was not admissible in evidence for want of stamp.  As it did not contest liability on that letter on any other ground nor on  the policy, the only question in this appeal is  whether the  letter  of  cover can be admitted  in  evidence.   That question depends on some of the provisions of the Stamp Act, 1899, to which reference will be made in due course. 1049 The  letter  of cover which bore  the  description  ’Interim Protection Note’ provided. that the appellant "Proposing  to effect  insurance  against  fire and having  agreed  to  pay Tariff Premium thereon, the property is hereby held  insured to  the  extent  of Rs.1,00,000  in  the  manner,  specified below."  Then  followed a description of the goods  and  the statement that the risks to be covered were to be as per the said  policy  No. 26625 for twelve months from  November  5, 1951.   Thereafter  it was stated,, "The  protection  is  in force  for  thirty  days or until the  Company’s  Policy  is prepared  unless  the Insurance is declined".  The  fire  on which the claim is based, occurred on the night of  November 5, 1951 or during the early hours of the morning of the next day.  It is not in dispute that the appellant offered to pay all premium due on the letter of cover. It  will  be  useful at this stage to refer to  two  of  the provisions  of the Stamp Act and they are s. 35 and Art.  47 in   Schedule  1.  Section  35  provides,’  "No   instrument chargeable  with duty shall be admitted in evidence for  any purpose   unless such instrument is duly  stamped:  Provided that--(a)  any  such  instrument  not  being  an  instrument chargeable with a duty not exceeding ten naye paise only, or a    bill  of exchange or promissory note, shall,subject  to all just exceptions, be admitted in evidence on payment     of the duty with which the same is chargeable  together with  a penalty  of There is no dispute that the letter of cover  is an "instrument".  Schedule 1 of the Act specifies the duties payable on various instruments.  Article 47 of the  Schedule specifies the duties chargeable on various kinds of policies of  insurance.   Section B of this article deals  with  fire insurance  policies and specifies various duties as  payable in  respect of various kinds of policies of  fire  insurance for diverse amounts, the minimum duty chargeable on a policy of insurances under this article being fifty naye paise: Now

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this  article contains at the end a general exemption  which is in these words: 1050 "GENERAL EXEMPTION.               Letter  of  cover  or engagement  to  issue  a               policy  of  insurance: Provided  that,  unless               such  letter  or engagement  bears  the  stamp               prescribed  by  this  Act  for  such   policy,               nothing  shall  be claimable  thereunder,  nor               shall it be available for any purpose,  except               to  compel the delivery of the policy  therein               mentioned." It  seems  to us clear that the words ’such policy’  in  the proviso  to  the General Exemption in Art. 47 refer  to  the kind of policy with which a letter of over or engagement  to issue a policy mentioned in the first part of the exemption, is  concerned.   In the present case, therefore,  the  words "such  policy"  would indicate a policy of  fire  insurance. This does not appear to be disputed. It  was said on behalf of the appellant that the  letter  of cover  was  really  a  policy  of  insurance  and  would  be admissible in evidence on payment of the duty chargeable  on a policy of fire insurance and penalty under the  provisions of s. 35 proviso (a) of the Act.  It was next said that even if  it was not a policy of insurance but a letter  of  cover only,  it would still be admissible in evidence  under  that section  as  an instrument chargeable with duty  as  it  was neither  a  bill of exchange nor a promissory  note  nor  an instrument  chargeable  with  duty not  exceeding  ten  naye paise. The  learned trial Judge held that the instrument was not  a letter of cover but it was in reality a policy of  insurance because it contained a contract of insurance.  It is not  in dispute that if this view is correct, then on payment of the duty  and the penalty the instrument would be admissible  in evidence  under  s.  35. The Appellate Bench  of.  the  High Court, however, was unable to accept the view of the learned trial  Judge and, we think, in this the Appellate Bench  was right.  The fact that a letter of cover contains a  contract of  insurance cannot make it a policy of insurance.  As  the learned  Judges of the Appellate Bench rightly pointed  out, the letter of 1051 cover was granted a general exemption from the liability  to the  duty  specified  in Art. 47, that is  to  say,  it  was exempted from duty which would, but for such exemption, have been  payable on it under that article.  Now under  Art.  47 duty was payable on various policies of insurance.  It would follow that a letter of cover would have been liable to duty as  a  policy  of insurance if the exemption  had  not  been granted.   The letter of cover had, therefore, to contain  a contract  of insurance for it would not otherwise have  been liable to duty under Art. 47.  But it did not thereby become a policy of insurance    only for then the exemption and the article would  have been in conflict with each other. We may also  mention  that the word ’cover’ itself  indicates  that property  is held insured or covered by it  against  certain risks. What then is a letter of cover ?   How    is   it   to    be distinguished from a policy of insurance?  The Act  contains no  definition of it or of an ’engagement to issue a  policy of  insurance’. but the terms are well known in trade.   The Act   is  dealing  with  businessmen  and  with   mercantile documents well known to them.  It may be shortly stated that a letter of cover no doubt contains a contract of  insurance

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but  it  is not a policy of insurance in the  common  under- standing  of that word in the trade.  It is well known  that in order to obtain an insurance against the risk of fire the assured has first to send a proposal to the insurer and then the  insurer takes a little time in making enquiries  as  to whether  it  would  accept the proposal  and  undertake  the obligation  of covering the risk.  He issues a  policy  only after  he is satisfied that it would be a  prudent  business proposition  to  do  so.  Experience of  trades  people  has however  shown that some kind of protection for the  interim period  when  the  insurer  is  making,  the  enquiries   is necessary.   This  protection is given by what is  called  a ’letter  of  cover’.  It is expressly  a  contract  granting insurance for the period between its date and until a policy is  prepared  and delivered if one is eventually  issued  or otherwise  upto a date mentioned in it, just as a period  of thirty days is mentioned in the Interim 1052 Protection  Note  issued  in this  case:  see  The  Citizens Insurance  Co.  of Canada v. William Parsons(1).   We  think that  the  present  Interim Protection  Note  satisfies  the conditions  which  would make it a letter of cover  in  this sense.   It gives protection for a period of thirty days  or the  period  upto the date of the issue of the  policy.   An engagement to issue a policy means, it seems to us, more  or less  the  same  thing as a letter of cover.   A  letter  of cover, therefore, cannot be admitted in evidence under s. 35 as a policy of insurance. The next question is whether a letter of cover is itself  an instrument  chargeable with duty under the Act.  It  is  not disputed  that  if  it is not so chargeable,  it  cannot  be admitted  in evidence under s. 35 by subsequent  payment  of duty and penalty.  Now s. 3 specifies instruments which  are chargeable  with duty under the Act.  It says,  "Subject  to the  provisions of this Act and the exemptions contained  in Schedule  1, the following instruments shall  be  chargeable with  duty of the amount indicated in that Schedule  as  the proper duty therefor respectively, that is to say,-(a) every instrument       mentioned      in       that       Schedule which..................... is executed in India on or  after the  first day of July 1899".  July 1, 1899 is the  date  on which the Act came into force. Now  the  contention of the respondent is that a  letter  of cover is not an instrument chargeable with duty because  the General Exemption in Art. 47 of the Schedule exempts it from such  duty.   This contention was accepted  by  the  learned Judges of the Appellate Bench of the High Court who  pointed out.   "It is significant that the words used are  not  that such  letter  is chargeable with duty.  The words  used  are ’bears the stamp prescribed by the Act for such policy’.  On a proper interpretation this means that such letter of cover is not chargeable with duty as such under the Act but if  it bears  the  stamp  prescribed by the Act  for  a  policy  of insurance, then it will shed its inability and will become a competent document on which a claim for loss could be made." (1) 7 C. 96. 1053 They  further  observed, "as no stamp is fixed  for  such  a letter  of cover being not a document chargeable with  duty, the  statute  uses  the significant words  or  ’bearing  the stamp’ and indicates the rate by saying that the stamp  must be  the same for such a letter of cover which is  prescribed for  a policy of insurance under the Act"’.  In  this  Court Mr.  Chatterjee  for the respondent also advanced  the  same argument.

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We are unable to accept the view which found favour with the Appellate  Bench of the High Court.  The matter was  put  in two  ways.   The  first  was that  an  instrument  which  is exempted from duty by Schedule 1 is not chargeable with duty under  s. 3 and a letter of cover is so expressly  exempted. No doubt, if an instrument is exempted by the Schedule  from duty,  then  it cannot be chargeable.  But we do  not  think that  a  letter of cover is for all purposes  exempted  from duty  by  the  General  Exemption.   We  think  the   proper construction  of  the General Exemption clause is  that  the exemption  is to apply only if the letter of cover  is  used for  compelling the delivery of the policy mentioned in  it. If  it  is  used  for any other  purpose,  then  it  is  not exempted.   That is why a proviso has been employed  in  the provision  and the effect of that is to take the  letter  of cover  out  of the exemption in all other cases.  If  it  is taken  out  of the exemption, then, of course,  the  present argument fails.  We are unable to see how a letter of  cover can  be  said  to have been exempted for  all  purposes,  if certain  things  cannot  be claimed under it  for  the  sole reason  that it does not bear a stamp.  If it were  exempted for all purposes, it would be fully enforceable even without a  stamp.   When  a letter of cover  is  not  stamped,  then nothing  is  claimable  under it except the  delivery  of  a policy.  If, however, it bears the stamp prescribed for  the appropriate policy, a claim can be made under it.  It  seems to  us that if an instrument bears a stamp, it has  incurred the  liability  for  the stamp duty; it has  not  then  been exempted.   Therefore  it cannot be said that  a  letter  of cover is exempted from duty in all cases.  When 1054 it is not exempted, it is an instrument chargeable to duty. The  other way in which the contention was put  is based  on the  use  of the words ’bears the stamp prescribed  by  this Act’.   It was said that if an instrument is made to bear  a stamp, it is not thereby made chargeable to stamp duty.   We are wholly unable to see how an instrument can bear a  stamp prescribed by the Act unless it is chargeable to duty  under the  Act for the Act deals only with instruments  chargeable to  duty  under  it.   It is  difficult  to  appreciate  the argument that what the proviso meant by the use of the words ’bears the stamp prescribed by this Act for such policy’ was only to indicate the amount of the duty.  No doubt the  rate is  there,  but the instrument has to bear a stamp  of  that rate.  The Act nowhere says anything as to how an instrument is  to bear a stamp.  Section 17 says that  all  instruments chargeable with duty shall be stamped before or at the  time of execution.  If the letter of cover was not chargeable  to duty  but  has  only  to bear  a  stamp  as  the  respondent contends, s. 17 would not apply to it.  There would then  be no   provision  to  prevent  an  instrument  which  is   not chargeable to duty but is required to bear a certain  stamp, from  having that stamp affixed to it at any point of  time. The  result would then be that where an instrument has  only to  bear  a  stamp, the stamp can be  affixed  even  at  the hearing before the instrument is tendered.  That, of course, would  not  assist the respondent at all and would,  in  our view,  introduce  an anomaly in the Act which would  be  the result  of  putting an unnatural construction on  the  words ’bears  the stamp’.  We think that by the use of  the  words ’bears the stamp’ the legislature intended to convey that  a letter  of  cover would be chargeable to duty in  all  cases except for compelling delivery of a policy. A  letter  of  cover  is,  in  our  opinion,  therefore,  an instrument   chargeable  to  duty  under  the  Act  and   so

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admissible in evidence on payment of the requisite duty  and penalty under s. 35 of the Stamp Act as  1055 it is neither an instrument chargeable to duty not exceeding ten naye paise nor a bill of exchange or a promissory note: It  seems to us, though we do not base our judgment  on  it, that the idea of exempting a letter of cover from payment of duty  in  the first instance was to avoid  the  hardship  of payment  of duty twice over on the same insurance,  for  the policy  issued after the letter of cover had to  insure  the goods from the time that the letter of cover itself  insured them  and  the  policy had to be  stamped.   If  the  policy insured  the  goods  from a date after  the  expiry  of  the insurance  by the letter of cover, the latter would then  be an  independent  policy of insurance, may be for  a  shorter time; it would not then be an interim cover and,  therefore, not a letter of cover at all.  It may also be stated that in very  few cases it would be necessary to enforce the  letter of  cover  as an insurance for it is unlikely that  in  many cases the fire would have occurred during the period covered by it. We  have now to state that the appellant had paid  the  duty and penalty as required by s. 35.  There is no objection any more  to  the  admissibility  of  the  letter  of  cover  in evidence.  The only defence that was taken by the respondent to  the  claim of the appellant, therefore,  fails  and  the appeal should succeed. We wish, however , to observe that we have in this  judgment dealt only with a letter of cover concerning fire  insurance and our remarks on the interpretation of the proviso in  the General  Exemption in Art. 47 of Schedule 1 to the Act  have been made in that context only.  Whether those remarks would apply  in  the case of a letter of  cover  concerning  other varieties  of  insurance  was  not a  matter  for  our  con- sideration  and  on  that  question  we  have  expressed  no opinion. We  would  for  these reasons allow the appeal  and  pass  a decree   in  favour  of  the  plaintiff-appellant  for   Rs. 93,628/81- and costs with interest thereon from the date  of the’ judgment of the learned trial Judge at six per cent. 1056 RAGHUBAR  DAYAL J.-I agree that the interim protection  note does  not amount to a policy of insurance and that it  is  a letter  of  cover  or  engagement  to  issue  a  policy   of insurance.   I  do not agree that   it  can  be subsequently stamped in view of the proviso (a) to  s. 35 of  the  Indian Stamp Act, hereinafter called the Act. The  interim  protection note, being a letter of  cover,  is exempted from stamp duty under the general exception to art. 47 of Schedule 1 of the Act. it can be used to base a claim, or  for  any  other  purpose, only if  it  bears  the  stamp prescribed  by the Act for the policy which is to be  issued in  pursuance  of  the letter of  cover.   The  trial  Court admitted this letter of cover on the appellant’s paying  the requisite duty and penalty under s. 35 of the Act.  The High Court has held that this could not be done as the provisions of  s. 35 of the Act were not applicable to documents  which were   not  chargeable  with  duty  under  the   Act.    The correctness of this view is challenged for the appellant. The general exception, together with the proviso reads:               "Letter  of  cover or engagement  to  issue  a               policy of insurance:               Provided  that, unless such letter or  engage-               ment  bears the stamp prescribed by  this  Act               for  such policy, nothing shall  be  claimable

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             thereunder, nor shall it be available for  any               purpose, except to compel the delivery of  the               policy therein mentioned."               Section  35 of the Act, omitting the  provisos               other than (a), reads:               "No  instrument chargeable with duty shall  be               admitted  in evidence for any purpose  by  any               person  having  by law or consent  of  parties               authority  to  receive evidence, or  shall  be               acted upon, registered or authenticated by any               such person or by public officer, unless  such               instrument is duly stamped:               1057               Provided that-               (a)   any   such  instrument  not   being   an               instrument   chargeable   with  a   duty   not               exceeding  ten. naye paise only, or a bill  of               exchange or promissory note, shall, subject to               all  just exceptions, be admitted in  evidence               on payment of the duty with which the same  is               chargeable,  or in the case of  an  instrument               insufficiently stamped, of the amount required               to make up such duty, together with a  penalty               of five rupees, or, when ten times the  amount               of  the  proper  duty  or  deficient   portion               thereof exceeds five rupees of a sum equal  to               ten times such duty or portion;" It is clear that an unstamped letter of cover or  engagement to  issue  a  policy  of insurance  can  be  used  only  for compelling the delivery of the policy therein mentioned, and can neither be used for any other purpose nor can any  claim be based on it.  A claim can be based on it if it bears  the stamp  prescribed by the Act for the policy contemplated  by the  letter  of cover or engagement.  The question  then  is whether the proviso contemplates the letter of cover to bear the  stamp  prescribed  for the policy at  the  time  it  is executed  or can take in a letter of cover which is  not  so stamped  at  the time of its execution but  is  subsequently stamped by any person interested in stamping it or under any orders under the Act.  I am of opinion that it  contemplates letter  of cover to bear the necessary stamp at the time  of execution  and  that any subsequent  affixing  of  requisite stamps  on an unstamped letter of cover will not make  it  a document  which  can be used for any purpose  including  the basing of a claim. The various provisions of the Act provide for the subsequent stamping  of  the  document  only  when  that  document   is chargeable  with duty, under the provisions of s. 3  of  the Act.  The Act does not, ,and naturally, could not have dealt with  orders for subsequent stamping of documents  which  at the time of execution are not liable to stamp duty.  They I/SCI/64-67 1058 are  good  valid  documents  without  any  stamp  duty   and therefore  no  question can arise in  future  about  ,.their being stamped under the orders of Court or a public officer. There  is  no such provision either ,in the  Act,  though  a number of sections deal with the subsequent charging of  the deficit  duty  and  penalty  as well.   No  penalty  can  be contemplated on account of a document being not stamped when it required no stamp under the provisions of the Act and was therefore not chargeable with stamp duty. It is pertinently remarked in.  Narayanan Chetti v.    Karuppathan (1) :

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             "It  appears to me that the levy of a  penalty               authorized under the proviso, on the admission               of   an   insufficiently   stamped   document,               implies,  a punishment for neglect in  failing               to  affix  the  proper stamp at  the  time  of               execution......  The levy of a  penalty  shows               that  the date of execution is that  which  is               regarded in the use of the word  ’chargeable’,               and  that  chargeable  therefore,  means   not               chargeable   under  the  Act  of   1879,   but               chargeable under the Act in force at the  date               of execution." The  view  expressed in this case was affirmed by  the  Full Bench in a reference from the Board of Revenue to the Madras High Court under s. 46 of the ACt(2). The provisions of s. 35 apply to such instruments which were chargeable  with  duty.  Such instruments, if  not  properly stamped,  were  not  to  be admitted  in  evidence  for  any purpose,  nor  could  they  be  acted  upon,  registered  or authenticated  by  any  person or ,by  any  public  officer. Certain  instruments  which  are not  duly  stamped  can  be admitted in evidence if they fall under any of the  provisos of  the  section.  The provisions of this section  will  not apply to instruments which are not chargeable with duty. ’Chargeable’,  according to s. 2(6), means  ’chargeable’  as applied  to an instrument executed or first  executed  after the commencement of the Act, chargeable (1)  I.L.R. 3 Mad. 251, 253. (2) I.L.R. 5 Mad. 394.  1059 under  the  Act  and as applied  to  any  other  instrument, chargeable  under  the  law  in force  in  India  when  such instrument was executed or, where several’ persons  executed the  instrument  at different times,  first  executed.   The expression  ’chargeable under the- Act’ indicates  that  the chargeability would be the    ultimate result of the various provisions of the Act.  Section  3  of  the  Act  provides  that   subject  to  the provisions  of  the  Act and  the  exemptions  contained  in Schedule  1,  the instruments mentioned within  its  clauses (a),  (  b)  and (c) would be chargeable with  duty  of  the amount  indicated  in  that  Schedule  as  the  proper  duty therefor.   This means that instruments which  are  exempted under  any  provision  of  the Act  cannot  be  said  to  be chargeable  with  duty  even though in the  absence  of  the exemptions those instruments would have fallen under any  of the  articles  of  Schedule  1. A  policy  of  insurance  is chargeable  with  duty under Art. 47 of Schedule  1,  but  a letter  of cover is not chargeable with duty in view of  the general  exemption  to this article.  It  follows  that  the letter  of  cover  is  a document which,  as  such,  is  not chargeable with duty. A  document chargeable with duty and executed by any  Person in India is to be stamped before or at the time of execution : vide s. 17.  If the letter of cover is intended by  either the  insured or the person offering to make an insurance  to be  used for making a claim thereunder and therefore  to  be treated as a policy, it is incumbent on that person to  have the  letter  of cover properly stamped  with  the  requisite stamp for that policy.  If they do not so intend and  desire the  letter of cover to remain as a letter of cover  on  the basis  of  which only the delivery of the  policy  mentioned therein can be enforced, they may take the advantage of  the general  exception and need not stamp it.  The  decision  to stamp it or not to stamp it is to be taken at the time  when

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it  is to be executed.  If it is not then stamped, it  is  a mere letter of cover which requires no stamp duty.  It is  a valid and 1060 complete  document.  No provision of the Act for  its  being stamped  subsequently either by any of the parties to it  or by any public servant exists.  The provision in the  proviso to  the  general exception about the letter of  cover  being used to found a claim or for any other purpose when it bears the stamp prescribed by the Act for such, policy, cannot  be construed to mean that subsequent to its execution any party standing to gain thereby may just put the requisite stamp on it and thereafter use it for enforcing any claim or for  any purpose.   Such  a  construction of  the  proviso  would  be against  public policy and may defeat one of the objects  of the Act.  It is true that the Act is a revenue measure,  but at  the same time the stamping of documents gives a  certain formality  to the transaction and to the preparation of  the document.   The letter of cover is exempted from stamp  duty because  as  unstamped  it cannot be used  for  any  purpose except for enforcing delivery of the policy.  If  subsequent stamping of such document, in order to convert the letter of cover  into a real policy, be left at the sweet will of  the party  standing  to gain on account of the  uncertain  event having  occurred, it would be against public policy  because thereby a party who is sure to gain by fixing the  requisite stamp, whose value is bound to be negligible compared to the monetary gain it stands to gain, will not mind the fixing of the  necessary  stamp and parties in general would  like  to avoid  payment of the stamp duty in the first instance  when the  document is executed.  Further, the letter of cover  is issued by the insurer and, on the happening of the uncertain event,  it  would be the person insuring who would  like  to affix the requisite stamp and thereafter claim the amount of damages  incurred  within  the limits of  the  policy.   The executant of the letter of cover may thus be forced to abide by  the  terms of the document as a policy when he,  at  the time  of  executing the document, did not intend  to  be  so bound.  When a letter of cover is not stamped at the time of execution,  both the parties stand to lose what they are  to gain monetarily on its basis.  The person insuring stands to lose the  1061 recovery of any loss he may incur prior to the issue of  the policy.  The insurer-company stands to lose the recovery  of the premium for the limited period, i.e., the period between the date of the cover note and the date when loss occurs  to the  proposer.   Both the parties take risk of loss  by  not stamping  the  letter  of cover and thus  not  making  it  a document  on which the claim other than the delivery of  the policy can be  based. In this connection, reference may be made to s.   47 of  the Act  which  provides for a subsequent  stamping  of  certain documents in certain circumstances.  But this too deals with certain  documents which, though chargeable with  duty,  are not covered by proviso (a) to s. 35. Section 62(1)(b) makes it penal to execute or sign otherwise than  as a witness, any instrument chargeable with duty  and not included in cl. (a), without it being duly stamped.  Any subsequent stamping of a letter of cover with the  requisite stamp  would lead to the parties avoiding the penalty  pres- cribed  by  s.  62(1)(b),  as the letter  of  cover  is  not chargeable with duty and the subsequent stamping would  mean that  it  becomes a policy of insurance,  a  document  which could be enforced on account of being properly stamped.

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Section  29 provides that in the absence of an agreement  to the  contrary,  the expenses of  providing  the  appropriate stamp  shall  be  borne in the case of  a  policy  of  fire- insurance by the person issuing the policy.  Though there is no definite provision in the Act as to who should stamp  the document, in view of the provisions of s. 62, the person  to suffer  for non-stamping a document chargeable with duty  is the  executant.   The  insurer will not like  to  stamp  the letter   of  cover  subsequently  and  specially  when   the uncertain event had taken place.  Subsequent stamping by the assured   in  such  circumstances,  could  not   have   been contemplated by the Legislature. Further, in view of the proviso to the general exception  to art. 47, nothing could be claimed under 1062 an  unstamped letter of cover.  This means that no suit  can be-instituted  for the recovery of any amount alleged to  be due  to  the  plaintiff.  When the  suit  itself  cannot  be instituted, no question of taking action  under s. 35(a)  of the Act can arise , as that action is to be taken subsequent to the institution of the suit and at the time of  admitting the document in evidence. It is suggested for the appellant that the provisions of the general  exception  indicate that the letter  of  cover  was exempted  from stamp duty as the Legislature did not  intend that  the stamp duty be paid twice over, once on the  letter of  cover and a second time when the policy was issued.   If the Legislature had really intended so, it could have simply provided  that  if  a letter of cover  bears  the  requisite stamp,  the  policy need not be stamped.   The  Legislature, however, spoke differently.  It exempted the letter of cover and  provided that a letter of cover without stamp could  be used only for enforcing the delivery of the policy mentioned therein.  The object behind the exemption therefore  appears to be the very limited purpose for which the letter of cover can be used.  The Legislature was aware of a letter of cover usually containing material which would make it a policy for a limited period and therefore further provided that it  can be  used  to found a claim or for any other  purpose  if  it bears  the  requisite stamp for a  policy.   The  reasonable inference is that the Legislature left it to the  discretion of the parties concerned to have the letter of cover stamped or not according to the use they intended to make of it, and therefore it would be wrong to construe the provision to the effect  that any subsequent stamping of the document in  any circumstance  would  change the nature of the  document  and make it available for purposes for which it was not intended to be used at the time of execution. Reliance  has  been  placed for the appellant  on  the  case reported as Tricamji Damji & Co. v. Virji Kanji (1). (1)  [1922] 24.  B.L.R. 820.  1063 In that case the plaintiff had claimed damages on the  bases of  an unstamped protection note with respect to a  contract of  sea-insurance.   Marten  J., held  that  the  expression ’unless such letter or engagement bears the stamp prescribed by  this Act for such policy’ in. the general  exception  to art. 47 meant affixation of the stamp before or at the  time of  execution, as provided by s. 17 and that s. 35(a )  must be  read subject to the express direction in the proviso  to the  general  exception  in  art.  47.   His  view  was  not accepted,  wrongly  I think, by the Appellate  Bench,  which held  the  protection  note to be a policy  which  could  be received  in evidence after necessary action under s. 35  of the Act is taken.  We have already held the protection  note

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in the present suit to be not a policy. I am therefore of the opinion that the High Court was  right in  holding that the interim protection note,  not  properly stamped as a policy at the time of its execution, cannot  be subsequently stamped with the requisite stamps in  pursuance of  the  provisions  of s. 35(a) of the  Act  and  that  the appellant  cannot base his claim on the  interim  protection note in suit.  I would, accordingly, dismiss the appeal with costs of this Court and the High Court and modify the decree of  the  High  Court to the effect that  the  suit  for  Rs. 93,628-8-0  be  dismissed with proportionate  costs  in  the trial court.                            ORDER In  accordance with the opinion ’of the majority the  appeal is allowed, decree in favour of the plaintiff, appellant for Rs.  93,628/8/- is passed, and costs with  interest  thereon from the date of the judgment of the learned trial judge  at six per cent. 1064