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Andhra Pradesh High Court
Judges : ANANTA NARAYANA AYYAR, P.SATYANARAYANA RAJU
State Bank of Hyderabad per V.V.Shastri - Appellant
Versus
Ranganath Rathi - Respondent
Decided On : 03-05-64
STAMP ACT - PROMISSORY NOTE - BOND - DISTINCTION - INSTRUMENT ATTESTED AND NOT PAYABLE TO ORDER OR BEARER, WHEREBY A PERSON AGREES TO PAY MONEY TO ANOTHER - HELD TO BE A BOND - STAMP DUTY AND PENALTY LEVIABLE UNDER ARTICLE 10 READ WITH SECTION 33 (1) (B) OF THE HYDERABAD STAMP ACT.
Fact of the Case:
A document was executed, which contained an unconditional undertaking to pay a certain sum of money to a certain person, but it was not payable to order or bearer and was attested by a witness. The question arose whether the document was a promissory note or a bond.
Finding of the Court:
The court held that the document was a bond and not a promissory note, as it was attested by a witness and was not payable to order or bearer.
Issues: Whether the document was a promissory note or a bond.
Ratio Decidendi: The court held that the document was a bond and not a promissory note, as it was attested by a witness and was not payable to order or bearer. The court relied on the definition of bond in Section 2 (4) (b) of the Hyderabad Stamp Act, which includes an instrument attested and not payable to order or bearer, whereby a person agrees to pay money to another.
Final Decision: The court dismissed the revision petition and held that the document was a bond and stamp duty and penalty was leviable under Article 10 read with Section 33 (1) (b) of the Hyderabad Stamp Act.
( 1 ) THIS Revision Petition has been referred to a Division Bench as it involves an important question of law.
( 2 ) AN objection was raised by the Court Fee Examiner that the document, which is extracted below, is not a promissory note but it bond and, therefore, stamp duty and penalty is leviable under Article 10 read with Section 33 (1) (b) of the Hyderabad Stamp Act. The learned Chief Judge, City Civil Court, upheld the objection and directed the plaintiff (the State Bank of Hyderabad) to pay stamp duty of Rs. 690 and a penalty of Rs. 6,900 in all totalling Rs. 7. 590 (H. S.) equivalent to Rs. 6505-71 np (I. G. ).
( 3 ) THE document reads as follows: "117, Park Lane, Secunderabad -- Deccan, Date 18/07/1950. On demand I Ranganatha Rathi son ot Harnath Rathi residing at Kachiguda Station Road, Hyderabad, promise to pay to Messrs Darabji Bros and Co. , Bankers, 117, Park Lane. Secunderabad--Dn. , the sum of O. S. Rs 46,000 (Forty six thousand only) together with interest thereon at 6 per cent per annum for value received in cash. Executed at Secunderabad-Dn. this 18th day of July 1950, Sd// Ranganth Rathi (on four one-anna India revenue stamps ). Witnesses: 1. Sd ). . . . . . . . 2. Sd ). . . . . . . .
( 4 ) ON the reverse of the document, there is an endorsement made by Darabji Brothers and Company, represented by partner, that the amount should be paid to the State Bank of Hyderabad or order.
( 5 ) THE document in question bears stamps requisite for a promissory note, and if it is held to of a promissory note, no question of payment of deficit stamp duty would arise. But the learned Judge has held that the document is a bond as defined in Section 2, Sub-section (4) of the Hyderabad Stamp Act. It is contended by Sri Narasimha Ayyangar, learned counsel for the plaintiff, that the conclusion reached by the Judge proceeds upon a misconstruction of the provision of Section 2 (4) (b) of the Hyderabad Stamp Act, that the document is a promissory note as defined in Section 2 (18) and that it is duly stamped.
( 6 ) THE question for decision is whether the document is a promissory note or a bond.
( 7 ) IT is common ground that this question must be answered with reference to the provisions of the Hyderabad Stamp Act, though it is no doubt true that those provisions are, for the most part, in pari materia with the provisions of the Indian Stamp Act.
( 8 ) BEFORE considering the contentions raised by the learned counsel for the petitioner, it would be convenient to read the material provisions of the Hyderabad Stamp Act. Section 2 (4) (b) reads: bond includes (a ). . . . . . . . . . . . . . . . . . (b) every instrument attested and not payable to order or bearer, whereby a person agrees to pay money to another. "
( 9 ) SECTION 2 (18) adopts by reference the definition of promissory note in the Hyderabad Negotiable Instruments Act.
( 10 ) THE following definitions of promissory note and negotiable instrument are from the authorised translation of the Hyderabad Negotiable Instruments Act (V of 1318 Fasli), as amended by Act No. XIV of 1329 Fasli. "3. A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. EXCEPTION: This does not include bank notes or currency notes. "****"11. A negotiable instrument means a promissory note, bill of exchange or cheque payable to (1) a specified person or his order; (2) the order of a specified person or the bearer thereof, or (3) any person or the bearer thereof. "section 3 of the Hyderabad Negotiable Instruments Act corresponds to Section 4 of the Indian Negotiable Instruments Act. Section 13 of the Indian Act, as amended in 1919, contains the definition of negotiable instrument. It reads as follows:--" (1) A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. EX
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