1995(1) ALL MR 424
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.P. SHAH, J.
Chandrakant Baliram Vaidya. Vs. Madhav Chhagan Patil & Others
Writ Petition No.2771 of 1994
21st February, 1995
Petitioner Counsel: Mr. D.T. PATIL
Respondent Counsel: Mr. N.B. SHAH with PRAVIN SHAH
Bombay Stamp Act (1958) S.2(c)(ii) -Bond -"Usanwar Pawati" whether a bond - Test is to ascertain whether it by itself creates an obligation with express promise to repay the amount or whether it merely acknowledges pre-existing liability.
In the present case by the "Usanwar Pawati" the defendant has acknowledge the liability for an amount of Rs. 50,000 and has expressly promised to repay the same within a period of one year and this promise has been incorporated in the document itself. There is an acknowledgement of an ascertained amount with a further promise to pay the amount and the document is attested by the witness. Held the trial Court was right in holding that the document is a bound and therefore, there was no need to interfere with the direction to impound the document under O.13, R.8 of C.P.C.(1882) ILR 8 CAL 284, AIR 1939 ALL 205; AIR 1972 MP 54 relied on. (Para 5)
JUDGMENT: The short question is whether the document described as "Usanwar Pawati" (In Marathi, Usanwar Pawati ) produced by the defendant is a bond or whether it is merely an acknowledgement of a pre-existing liability.
(i) any instrument whereby a person obliges himself to pay money to another, on condition that 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."
3. It is well settled that the real test to decide whether a particular document is a bond or not, is to find out, after reading the document as a whole, whether an obligation is created by the document itself or whether it is merely an acknowledgement of a pre-existing liability. If there is merely an acknowledgement of a pre-existing liability which could have been enforced apart from the document itself, then the matter stands on a different footing. But if the document creates an obligation in itself with an express promise for payment of an amount will have to be treated as a bond within the meaning of Section 2(c)(ii) of the Bombay Stamp Act.
4. In the matter of Hamdard Dawakhana (AIR 1968 Delhi 1), the full Bench of the Delhi High Court observed that finding out the true character of an instrument, one has to read the instrument as a whole and then find out its dominant purpose. In this context, the Full Bench made a reference to a decision of the Calcutta High Court in Gisborne and Co. v. Subal Bowri [(1882) ILR 8 Cal 284] and the observations made by Garth, Chief Justice, therein. It was held by the Delhi High Court :-
" The test laid down by the learned Chief Justice for distinguishing a "bond" from an "agreement", is : In the former case, in the event of breach, the party to the instrument, who had obliged to pay money to the other, is liable to pay the sum stipulated in the instrument. In the latter case the quantum of damages has to be fixed by the Court."
Similar test has been laid down by the Allahabad High Court in Har Dayal v. Babu Ram (AIR 1939 All 205). In this context, the Allahabad High Court held that :-
" An instrument, in the form of an agreement between two parties, reciting that a certain sum is due from the first party to the second covenanting that the first party will pay the same with interest in certain instalments, and being attested at witnesses and not being payable to order or bearer, comes within the definition of a bond as given in section 2(5) of the Stamp Act, and the stamp duty payable thereon is that for a bond, although the instrument appears to be in the form of an agreement."
The Madhya Pradesh High Court has observed in Gulabchand v. Bhama (AIR 1972 MP 54) as follows :-
" Thus, on reading the aforesaid description in Article 1 with sub-section (5) of section 2 of the Act, it would appear that where an acknowledgment contains a promise to pay, it is not to be stamped as an acknowledgment, but will have to be stamped as a bond, where it is attested by a witness and is not payable to order or bearer."
5. Bearing in mind the above principles, it is seen that in so far as the present document is concerned, the defendant has acknowledged the liability for an amount of Rs.50,000/- and has expressly promised to repay the same within a period of one year and this promise has been incorporated in the document itself. In the said document, there is an acknowledgement of an ascertained amount with a further promise to pay the amount and the document is attested by the witnesses. Thus, the trial Court is clearly right in holding that the document is a bond and, therefore, there is no need to interfere with the direction of the trial Court to impound the document under order XIII, Rule 8 of C.P.C.