IN THE HIGH COURT OF MADRAS
Decided On: 19.05.2010
Appellants: Rudra Financial Services
Vs.
Respondent: Kota Nadamuni
Vs.
Respondent: Kota Nadamuni
Hon'ble Judges/Coram:S. Tamilvanan , J.
Citation: 2010(4)CTC488,2011(2) CivilLJ389 Madras
1. This Civil Revision has been preferred against the Order, dated 19.11.2004 made in the Interlocutory Application in LA. No. 18287 of 2004 in O.S. No. 2970 of 2002 on the file of the XVIII Asst. Judge, City Civil Court, Chennai. The Revision Petitioner is the First Defendant in the Suit, that was filed by the Respondent herein, seeking relief of declaration that the mortgage deed, dated 29.04.2000 executed by the Plaintiff in favour of the First Defendant relating to the suit schedule property was redeemed and also permanent injunction restraining the Defendants in the Suit from bringing the property for sale in public auction to realise the mortgage amount.
2. The Interlocutory Application in LA. No. 18287 of 2004 was filed by the Plaintiff in the Suit under Sections 33 and 35 of Indian Stamp Act to impound Ex. B.1 and not to act upon till for the document, proper stamp duty with necessary penalty amount is paid by the Defendant. The Interlocutory Application was allowed by the impugned order and the Defendant was directed to pay stamp duty with penalty for Ex. B.1 on or before 01.12.2004. Against which, the First Defendant in the Suit has preferred this Revision.
3. As per the impugned order, it is seen that D.W.1 has stated that Ex. B.1 is an agreement and the terms and conditions of the same at No. 2 reads as follows:
2. The second part has advanced a sum of Rs. 1,00,000/- as loan with interest to the first party. Apart from that second party's friends have contributed a sum of Rs. 2,00,000/- to the first party, which first party undertakes to pay through second party with interest at 36% per annum.
Sri Balaji Traders, Proprietor Kota Nathamuni is stated as first party and Sri. B.K. Mittal, Proprietor, Rudra Financial Service is the second party. The said Ex. B.1 is in ten rupees non-judicial stamp paper and not duly stamped. According to the learned Counsel appearing for the Respondent/Plaintiff, the document cannot be acted upon, unless it is duly paid with stamp duty and penalty.
4. In the counter, it was contended that Ex. B.1 was only a hypothecation agreement, dated 03.05.2000 and as such prevailing stamp duty of Rs. 10/- was paid. As no objection was raised while the said document being marked, the admissibility of the document, since that was already marked already, cannot be questioned later on. It is not in dispute that as per Section 2(5)(b) of Indian Stamp Act, 'Bond' includes any instrument attested by a witness and not payable to order or bearer whereby a person obliges himself to pay money to another.
5. As per the impugned order, it is seen that under Ex. B.1, the Defendant advanced a loan of Rs. 1 lakh and Defendant's friends gave Rs. 2 lakhs to the Plaintiff and the Plaintiff undertook to repay the said amount with 36% interest p.a., hence, Ex. B.1 is only a bond.
6. Learned Counsel appearing for both sides have not disputed the fact that after the instrument is duly stamped, has to be impounded under Sections33 and 35 of the said Act. As per Section 35 of the Act, the document cannot be admitted in evidence, if it is not duly stamped. In the instant case, the document was already marked, however, the Court below has held subsequently that stamp duty has to be paid with penalty for Ex. B.1
7. In Hindustan Steel Ltd. v. M/s. Dilip Constructions Co., MANU/SC/0474/1969 : AIR 1969 SC 1238, the Hon'ble Supreme Court has held as follows:
4...The agreement ignores the true import of Section 36. By that Section an instrument once admitted in evidence shall not be called in question at any stage of the same Suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge against an instrument that it shall not be acted upon because it is not only duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of Section 42(2) which enact, in terms unmistakable, that every instrument endorsed by the Collector under Section 42(1)shall be admissible in evidence and may be acted upon as if it had been duly stamped.5. The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments; it is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent the stringent provisions of the Act are conceived in the interest of the revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of the initial defect in the instrument...
The Hon'ble Supreme Court has categorically ruled that the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments, it is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent the stringent provisions of the Act are conceived in the interest of the revenue.
8. A Three Judge Bench of the Allahabad High Court in Hindustan Sugar Mills v. State, MANU/UP/0002/1972 : AIR 1972 All. 8, has held that where the liability is not created under the instrument itself but is a pre-existing liability, it cannot be said that the recital of the same and an undertaking to meet it in the instrument will make it a bond.
9. In Javer Chand v. Pukhraj Surana, MANU/SC/0036/1961: AIR 1961 SC 1655, the Hon'ble Apex Court has held as follows:
Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked as Exs. P.1 and P.2 and bore the endorsement 'admitted in evidence' under the signature of the Court. It is not, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of its admissibility. Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-examination of their witnesses, Section 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or Revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction.
10. Referring the term "Bond" as defined in Oxford Dictionary the Hon'ble Supreme Court in State of Kerala v. Mcdowell and Co. Ltd.,MANU/SC/0276/1995: AIR 1995 SC 1445, has held that in every case a bond represents debt its holder is a creditor. Commonly, bonds are secured by mortgage and thus a bond is a promise to pay money at a future date. It is also an instrument in writing or written acknowledgement for the payment of debt.
11. Section 2(5) of the Indian Stamp Act reads thus:
(5) Bond includes --(a)- 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;(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another.
12. The Hon'ble Apex Court in the decision, State of Kerala v. Mcdowell and Co. Ltd., MANU/SC/0276/1995 : AIR 1995 SC 1445, has held as thus:
11...The written obligation under the bond which gives rise to payment of money to Government is breach of any of the conditions of the permit granted by the Excuse Officer. The obligation to pay arises not under the instrument but for breach of condition imposed by the Department. The obligation in consequence of which the amount is liable to be paid is not as a result of any relationship of debtor and creditor but violation or breach arising out of permission granted by the Excise authorities. The agreement itself shows that the bounden shall be liable to pay the Government in case bounden commits breach of any condition of the permit issued by the department. The obligation to pay thus arises not as a creditor or debtor but for breach of the condition imposed not by the bond or agreement but of some condition imposed in the permit issued by the Excise Authorities. The liability to pay duty arises under the Abkari Act, the rules framed under it and not under the instrument. The Stamp Act does not visualise duty for extension of facility to the distiller. If the Legislature in Section 7(1)(b)would have used the word 'agreement' it would have been difficult for the department to claim duty on it as bond. The result shall be no different if it uses the word 'bond' as it is not the use of the word but nature of document which is decisive of duty. The Stamp Act is a fiscal statute. It should not be construed as to cause unintended hardship. Since the language of the Section does not admit of any doubt and the document executed in Form VI being in respect of right arising out of permit issued by the department it was not liable to be stamped as bond, but as agreement.
13. In the Civil Revision Petition, learned Counsel appearing for the Revision Petitioner submitted that Ex. B.1 was marked through P.W.1, who has admitted its execution in favour of the Petitioner/First Defendant and no objection was raised by the Respondent/Plaintiff for marking the said document Ex. B.1 and therefore, the admissibility or validity of the document cannot be questioned by the Respondent/Plaintiff. It is farther contended that Ex. B.1 is not for the Suit amount relates to the mortgagee, but is important to prove the bona fide defence of the Petitioner/First Defendant. According to the learned Counsel appearing for the Revision Petitioners, the Court below has erroneously decided the Ex. B.1 as a bond, though it was only an agreement.
14. The Revision Petitioner has not produced a certified copy of Ex. B.1. However, it is not in dispute that Ex. B.1, dated 03.05.2000 was typed on Rs. 10/- non-judicial stamp paper. After making the document, the Respondent/Plaintiff cannot question the same, in the light of the various decisions referred to above.
15. As held by the Hon'ble Apex Court held in Hindustan Steel Ltd. v. M/s. Dilip Constructions Co., MANU/SC/0474/1969: AIR 1969 SC 1238, the Indian Stamp Act is a fiscal measure. Even after marking the document, the Court can ask the party, who marked the document to pay necessary stamp duty.
16. In the instant case, on the Petition filed by the Respondent/Plaintiff, after hearing both sides, the Court below directed to pay stamp duty, holding that Ex. B.1 is a bond, which needs stamp duty and penalty. Though the copy of Ex. B.1 was not produced by either side, from the impugned order and the averments made by both the parties, by way of typed set, I am of the view that there is no error in the impugned order passed by the Court below, holding the said document is a bond, in the light of the various decisions of the Hon'ble Apex Court and the Allahabad High Court and therefore, this Civil Revision Petition is liable to be dismissed. In the result, confirming the order passed by the Court below, this Civil Revision Petition is dismissed. Consequently, connected C.M.P. No. 2389 of 2005 is also dismissed and for the compliance as per the order of the Court below to pay the stamp duty, one month time is granted from the date of receipt of a copy of this order. No order as to costs.
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