An instrument that creates both a bond and a pledge is subject to stamp duty under Section 6 of the Stamp Act, and the highest of the stamp duties payable under the relevant articles of Schedule I is leviable.

NATESAN, J. :- This is a reference under Section 57 of the Indian Stamp Act, and, the question referred to us is whether the instrument under consideration amounts to a mortgage falling under Article 40 of Schedule I of the Stamp Act, as well as a bond falling under Art. 15 and a pledge falling under Art. 6.

2. It is seen, on a perusal of the instrument, that with reference to an anterior contract, under which the second party to the instrument had advanced a sum of Rs. 40,000, for the production and completion of talkie picture "Kannadi Maligai," on the contract failing, the instrument in question styled deed of agreement came into existence. As per this document the first party agreed to repay to the second party the said sum of Rupees 40,000 with interest, under the terms and conditions set out in the document. The material parts of the document, with which we are now concerned, are found in Cl. 4 and Cl. 7. Clause 4 provides for the payment of Rs. 10,000, on the date of signing of the agreement and the issue of two post-dated cheques, each for Rs. 5000. The balance of Rs. 20,000 it is provided, will be a second charge on the distribution rights of the film under production. It is unnecessary to set out the areas in which the second mortgage over distribution rights is given. Clause 7, the next important one, provides that a certain camera, which had been pledged earlier on 27-11-1961, shall continue as security until the entire amount due under the instrument to the second party is discharged. The value of the camera is also specified as Rs. 25,000. Cl.8 of the instrument provides for the entire balance due under the agreement to be paid within a period of six months from the date of the agreement.

3. We may immediately answer the claim of the Chief Controlling Revenue Authority that the instrument is a mortgage. In this case, the security, if at all, is created over a picture to be produced and completed, and we have in Chief Controlling Revenue Authority v. Sudarsanam Pictures, AIR 1968 Mad 319 held that a similar agreement advancing money over a film under production, does not create a mortgage. The essential ingredient for an instrument to be a mortgage, as defined under Section 2 (17) of the Stamp Act, is that the property should be 'specified property.' A film under production is manifestly not specified property, it is not property in existence. But, we have no doubt that the instrument in question is a bond. Section 2 (5) defines "bond" as including any instrument whereby a person obliges himself to pay money to another, attested by a witness, and not payable to order or bearer. In the instant case, we have a document whereby the first party obliges himself to pay a certain sum of money to the second party. The instrument is admittedly attested. The obligation to pay the money is clear, it is in acknowledgment of a liability. This is not a case of a mere promise to pay money. The essential requisites for an instrument to be a bond are:

1.there must be an obligation to pay money,

2. the money must not be payable to order or bearer, and

3. the instrument must be attested by a witness. All the essential requisites for a bond are found in this case, and we are of the view that this instrument falls under Art. 15 of Sch. I of the Stamp Act.

4. On the question whether this instrument is also a pledge; Cl. 7 of the instrument, in clear words, pledges a camera for the moneys due and undertaken to be paid under the instrument. The instrument clearly says that the camera shall continue as security until the entire amount due is discharged. Article 6 (2) relating to stamp duty payable, on a pledge runs:

"Art. 6. Agreement relating to deposit of title deeds, pawn or pledge, that is to say, any instrument evidencing an agreement relating to ...............

(2) the pawn or pledge of moveable property, where such deposit, pawn or pledge has been made by way of security for the repayment of money advanced or to be advanced by