Point of Law: Distinguishing feature of a bond is that the obligation must have been created in the instrument itself and that if the obligation was a pre-existing one, it does not partake the character of a bond.

JUDGMENT :

The issue that arises for consideration in this original petition is as to whether Ext.P3 is a bond as defined under Section 2(a) of the Kerala Stamp Act, 1959 (hereinafter referred to as “the Act”) or an agreement.

2. This original petition is filed by the plaintiff in O.S. No.126 of 2017 on the files of the Additional Sub-Court-I, Kozhikode and the respondent herein is the defendant. The suit is one for realisation of a sum of Rs.54,15,120/-. It is contended in the said suit that the plaintiff and defendant have long-standing acquaintance and they had done several business transactions in India and abroad including a business in mobile phones and its accessories and that they decided to stop the same and on settlement of accounts, it was found that a sum of Rs.53,57,000/- is payable by the defendant to the plaintiff. Based on that Ext.A1 agreement and Ext.A2 promissory note were executed on 16.01.2017, copies of which are produced as Exts.P3 and P4.

3. During the course of the trial of the suit, the court below as per Ext.P5 order dated 14.10.2019 impounded Ext.P3 document upon entering a finding that the obligation to pay money is created by Ext. P3 itself and therefore the document has the character of a bond and directed the petitioner to pay stamp duty and penalty. It is challenging Ext.P5 order of the court below that the present original petition is filed.

4. The learned counsel for the petitioner would contend that a reading of Ext.P3 would clearly show that no liability was created by the said document and the same was executed only to acknowledge and admit a liability which already existed and therefore he contended that a document whereby the executor undertakes to clear a pre-existing liability within the period provided is only an agreement and not a bond. It is also contended that no transaction was done nor any passing of consideration took place on the date of execution of Ext.P3 and that no liability has been created by the said document. Therefore, Ext.P5 order directing to pay stamp duty and penalty treating it as a bond is unsustainable and liable to be set aside by this Court. Since sufficient stamp duty applicable for execution of an agreement is already paid, Ext.P3 is not liable for impounding and no penalty can be imposed. In support of the contention, the learned counsel relies on the decision in Mathai Mathew v. Thampi (1989 (1) KLT 138); Krishnan Kutty v. Jayakrishnan (2005 (2) KLT SN. 26 Case No.32) and Radha v. Sankaranarayanan (2007 (1) KLT 20).

5. On the contrary, the learned counsel for the respondent would contend that the account has been settled as per the said agreement and the amount liable to be paid to the petitioner as per the settlement of accounts is clearly stated in Clause (3) of Ext.P3. Based on the same, he would contend that as the account has been settled as per Ext P3 and an obligation to pay money has been created by the said document itself, Ext P3 will come within the definition of a bond as defined in Section 2(a) of the Act. Therefore, it is submitted that Ext.P5 order of the trial court treating Ext.P3 document as having the characters of a bond and the direction to pay stamp duty and penalty is perfectly legal and valid and therefore no interference is called for.

6. I have considered the rival contentions of the parties.

7. The term "bond" is defined as per Section 2(a) of the Act and it reads as follows :

"(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"

8. For an instrument to partake the character of a bond an obligation must have been cr