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1974 Supreme(Bom) 42

Bombay High Court
DHARMADHIKARI
Patel Stone Trading - Appellant
Versus
Ramsing - Respondent
Decided On : 02/22/1974

Advocates:
G.K. Potey, for Applicant; B.U. Wahane and Munawarbhai, for Opponent; M.B. Mor, Asstt. Govt. Pleader, for the State.

A document that creates an obligation to pay an ascertained sum with an express promise for repayment, and is attested by witnesses, is a bond within the meaning of Section 2(c) of the Bombay Stamp Act.

Headnote:

STAMP ACT - BOND - DOCUMENT ACKNOWLEDGING DEBT AND PROMISING REPAYMENT - STAMP DUTY - INTERPRETATION OF SECTION 2(C) OF THE BOMBAY STAMP ACT - DISTINCTION BETWEEN BOND AND AGREEMENT - TEST TO DETERMINE WHETHER A DOCUMENT IS A BOND OR NOT - RELEVANCE OF DOMINANT PURPOSE OF THE INSTRUMENT.

Fact of the Case:

A suit was filed for recovery of an amount due on a document, which was objected to by the defendant on the ground of insufficient stamp duty. The trial court found the document to be a bond and directed the plaintiff to deposit the deficit stamp duty and penalty.

Finding of the Court:

The court held that the document in question was a bond within the meaning of Section 2(c) of the Bombay Stamp Act, as it created an obligation to pay an ascertained sum with an express promise for repayment, and was attested by witnesses.

Issues: 1. Whether the document in question is a bond within the meaning of Section 2(c) of the Bombay Stamp Act? 2. Whether the document is a security bond within the meaning of Article 54 of the Bombay Stamp Act?

Ratio Decidendi: 1. The court applied the test laid down in previous case laws to determine the nature of the document. It held that the dominant purpose of the document was to create an obligation to pay an ascertained sum, and not merely to acknowledge a pre-existing liability. 2. The court held that the document was not a security bond as contemplated by Article 54 of the Bombay Stamp Act, as its main purpose was to create an obligation to pay, and the other clauses were ancillary to this main object.

Final Decision: The court dismissed the revision petition filed by the plaintiff, upholding the trial court's order to deposit the deficit stamp duty and penalty.

JUDGMENT :- The plaintiff filed a suit for recovery of the amount on the ground that the non-applicant committed a breach of agreement and also for damages for wrongful removal of the truck. In that suit the plaintiff also claimed a mandatory injunction requiring the non-applicant to place the truck in his possession till the amount is satisfied. The claim of the plaintiff was denied by the defendant on various grounds. Thereafter the issues were framed and the case was fixed for evidence. During the course of evidence it seems that the plaintiff referred to document dated April 21, 1971. At this stage the defendant objected to this document being proved stating that it is insufficiently stamped. In view of the objection raised by the defendant, the parties were heard and the learned Civil Judge (Senior Division), Nagpur, by his order dated December 12, 1973, found that the instrument dated April 21, 1971 is a bond and should have been executed on a stamp paper of Rs. 397.50 as per Sch. I, Art. 13 of the Bombay Stamp Act. The learned Judge found that it was written on a stamp paper of Rupees 3.50 only. The said instrument was impounded and the plaintiff was directed to deposit an amount of Rs. 4,334 being the amount of deficit stamp duty as well as penalty if he desires that the document should be admitted in evidence. The learned Judge further directed that in case the plaintiff does not pay the said stamp duty and penalty, the document should be sent to the Collector for recovery of the stamp duty and penalty. Against this order passed by the Civil Judge (Senior Division), Nagpur, the present revision has been filed.

2. Shri Potey, the learned counsel for the applicant contended before me that the document in question is not a bond but is merely an agreement providing for a payment of pre-existing debt. If the document is read as a whole, it will be clear that after acknowledging the amount payable, the document further directed the mode of payment of the amount which was to be adjusted from the truck charges. The document further provides that Rs. 50 per week were to be paid to the defendant for his maintenance and the truck was to remain in custody of the plaintiff till the payment was made. The document further provides that all other expenses will be incurred by the plaintiff about repairs etc. of the truck, which will be debited to the account of the defendant. According to Shri Potey, by this document the defendant has only acknowledged the pre-existing liability. The liability as such has not been created by the document and therefore, it cannot be termed as a bond within the meaning of Section 2 (c) of the Bombay Stamp Act. Shri Potey further contended that the true test to decide whether a document is a bond or not is to find out as to whether the document has created a liability in itself. If the document does not create any obligation or a liability, then it cannot be styled as a bond but will have to be construed as an agreement or in the alternative a security bond. According, to Shri Potey, in any case, as the document provides that the truck should be placed in the custody of the plaintiff. The said arrangement was arrived at between the parlies by way of security and, therefore, in any case, it will be a security bond and not a bond simpliciter as defined in Section 2 (c) of the Bombay Stamp Act.

3. For this proposition, Shri Potey has relied upon Radha Swami v. Raj Narain (AIR 1943 All 218) and Hindustan Sugar Mills Ltd. v. State of U. P. (AIR 1972 All 8) (SB). On the other hand, it is contended on behalf of the defendant by Shri Munawarbhai and Shri Mor, Assistant Government Pleader, that the said document cannot be termed as an agreement because there is not only an acknowlegment of an obligation of an ascertained amount but further there is an express obligation incorporated in the document itself regarding the payment of the amount. There is an express promise to pay the balance itself coupled with the int























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