The judgment established the distinction between agreements and bonds, emphasizing the requirement of attestation by a witness for an instrument to be considered a bond, and clarified the applicability of stamp duty under the Kerala Stamp Act, 1959.

1. A question of stamp duty arises for consideration in these Civil Revisions by the plaintiff, foreman of a kuri (chit funds). The bid amounts were paid to the subscribers of the kuri on their executing agreements undertaking to pay the future instalments. Over and above the subscriber, two sureties also joined in the agreements which were not attested by any witness. The plaintiff filed suits against those who committed default in the payment of future instalments. Along with the plaint, the agreements taken from the subscribers were also produced in Court. The trial court took the view that the agreements are bonds as defined in S.2 (a) of the Kerala Stamp Act, 1959, for short the Act, and should be stamped with ad valorem stamp applicable to 'bond' under Art.13 of the Schedule to the Act. Only a fixed stamp duty as per Art.5 (b) of the Schedule was paid. In two cases, the trial court directed the petitioner to pay deficit stamp duty and penalty. In two other cases the trial court impounded the instruments under S.33. The challenge in these Civil Revisions is against the above four orders of the trial court. The question is whether the agreements in question are instruments which attract a fixed stamp duty of rupees three under Art.5 (c) of the Schedule to the Act or they are really bonds as defined in S.2 (a) of the Act attracting ad valorem duty

under Art.13 of the Schedule.

2. S.2 (a) of the Act which defines bond reads: "(a) 'bond' includes

(i) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed as the case may be;

(ii) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(iii) any instrument so attested; whereby a person obliges himself to deliver grain or other agricultural produce to another."

Article 5 of the Schedule to the Act reads:

"5. Agreement or memorandum of an agreement Table:1

Art.13 of the Schedule reads:

Table:2

Exemptions

(a)

(b) "

(omitted as not necessary)

Websters' Third New International Dictionary gives the following meaning for ' the word agreement:

"the written instrument that is the evidence of an agreement," Osborn's Concise Law Dictionary says:

"The requisites of an agreement are: two or more persons, a distinct intention common to both, known to both, referring to legal relations and affecting the parties."

Stroud's Judicial Dictionary has quoted the following words from Re Symon, Public Trustee v. Symon (1944) S.A.S.R.102):

"'Agreement' signifies primarily a contract, that is, a legally binding arrangement between two or more persons, by which rights are acquired by one or more to acts or forbearances on the part of the other or others'.

3. At the outset it is to be noted that under the Stamp Act, duty is imposed upon the instruments and not upon transactions. If a transaction can be legally entered into by different kinds of instruments chargeable to stamp duty at different rates under the Act the parties to the transaction will have the option to choose the instrument they want to draw up. Agreements can be oral or written. We are concerned here only with written agreements which will only be instruments. Stamp duty can also be levied only on instruments. S.2(a) of the Act which defines bond includes three kinds of instruments. But we are concerned with only S.2(a)(ii) which is in pari materia with S.2(5)(b) of the Indian Stamp Act, 1899. It is clear from the Dictionary meanings of the word 'agreement' extracted above that a bond defined in S.2(a)(ii) of the Act is also an agreement to pay money. A legally binding arrangement between two or more persons creating rights and liabilities is the essence of both. A bond can be a written agreement but all written agreements will not be bonds. This is because of a positive test that an agreement reduced to writing should satisfy, namely, that it should