An agreement for a cash credit overdraft, which creates a lien and charge on movable property of every description coming into the possession of the bank on account of the borrowers, is chargeable to duty under Art. 6 of Sch. I of the Indian Stamp Act, 1899, as an agreement relating to the pledge of movable property.

ANANTANARAYANAN, J. : This is a reference under S. 57 of the Indian Stamp Act, 1899, made in pursuance of a writ of mandamus which was directed to issue by Srinivasan, J. in W. P. No. 881 of 1960.*

Tersely stated, the question is whether the instrument between the parties, viz., Messrs. Sundaram Finance (P.) Ltd., and the Punjab National Bank Ltd., which is termed an agreement for cash credit overdraft dated 18-6-1957, is properly chargeable to duty as an agreement relating to the pledge of moveable property, falling under the scope of Art. 6 of Sch. I, formerly Art. 5 of Sch. 1-A, of the Indian Stamp Act, 1899, or whether, as contended by learned counsel on behalf of Messrs. Sundaram Finance (P) Ltd., the instrument is merely an agreement falling under the scope of Art. 5 of Sch. I, and chargeable to duly under that Article.

2. In directing the issue of the writ, the learned Judge referred to the character of this document, and set forth verbatim the principal clause appearing therein. We may state that the document purports to be an agreement between the parties for an overdraft of Rupees fifteen lakhs to be expended by the Punjab National Bank Ltd., Delhi, in favour of Messrs. Sundaram Finance (P.) Ltd., with specified rate of interest, and repayable to the Bank on demand. It is not in dispute that the Punjab National Bank Ltd., had in its possession, on that date, certain hire purchase agreements executed by third parties in favour of Messrs. Sundaram Finance (P.) Ltd., and also certain negotiable instruments executed by individuals in favour of Messrs. Sundaram Finance (P.) Ltd., which according to learned counsel for Messrs. Sundaram Finance (P.) Ltd., has to be regarded as collateral securities relating to the hire purchase agreements. Clause 11 of the present agreement purports to create certain rights in the creditor bank, in respect of these documents. As the crux of the issue before us is the interpretation of the present agreement, we think it is necessary to set forth the relevant pan of clause 11 here, again, verbatim :

"That the borrowers do further agree and hereby give to the said Bank during the currency and for the payment of its dues, a general lien and right of set oil and charge on all moveable property of every description coming into the possession of the said Bank-on account of the borrowers or any one of them or for the time being held by the said Bank on behalf of the borrowers or any one of them, whether alone or jointly with others-in India, or elsewhere including without prejudice to this generality, any moneys, bullion, deposits, deposit receipts for moneys, promissory notes, bills of exchange, hundis, stocks . . . . . ."

In clause 12 there is specific reference to the possible enforcement of the debt by pledgee (the Punjab National Bank Ltd.) by selling" these securities, for the clause states :

"It is hereby agreed that in the event of there being a surplus available after payment of all such principal and interest moneys and all charges and expenses as aforesaid of the net proceeds of such sale of security as aforesaid; it shall be lawful for the Bank to apply the said' surplus . . . . ."

3. Upon the instrument, as it stands, and giving effect to the ex facie purport and tenor of the language employed, there would appear to be very little doubt in this case. At one stage of the argument it was seriously contended before us that the Bank might not have had in its possession any such hire purchase agreements and negotiable instruments, as alleged, and hence that the agreement might have to be strictly regarded as one to create obligations in respect of such title deeds only in future. In order to clarify this, which is purely a question of fact, we called for an affidavit, and the relevant affidavit has been filed by the Chief Accountant of Messrs. Sundaram Finance (P.) Ltd. This document makes it clear beyond doubt that there were in the possession of the Bank hire purchase agreements and ne