This is a reference under S. 57 of the Indian Stamp Act, and, the question referred to us is whether the instrument under consideration amounts to a mortgage falling under Art. 40 of Sch. I of the Stamp Act, as well as a bond falling under Art, 15 and a pledge falling under Art. 6.
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 “Rannadi Maligai “, on the contract failing the instrument in question styled deed of argument came into existence. As per this document the first party agreed to pay to the second party the said sum of Rs. 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. Cl. 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. 5(0. The balance of Rs. 20,000 it is provided, will be a second mortcharge on the distribution rights of the film under production. It is unnecessary to set out the areas in which the second charge over distribution rights is given. Cl. 7, the next important cne provides that a certain camera, which had been pledged earlier on 27tb November, 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.
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. Sundarsanam Pictures A.I.R 1968 Mad. 319. held that the similar agreement advancing money over a film under prediction, does not create a mortgage. The essential ingredient for an instrument to be a mortgage, as defined under S. 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. S 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 Schedule 1 of the Stamp Act.
On the question whether this instrument is also a pledge, clause 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. Art 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 pro party, where such deposit, pawn of pledge has been made by way of security for the repayment of money advanced or to be advanced by way of loan or an existing or future debt”.
The very Article gives an indieation of what is meant by pawn or pledge of moveable property. The moveable property must have been given by way of security for the repayment of money advanced or to be advanced by way of loan or an existing or future debt ia this case, moveable property has been pledged for an existing debt. S. 172 of the Indian Contract Act defines “pawn” or “pledge” as bailment of goods as security for payment of a debt or performance of a premise. Clearly, the instrument also satisfies the requirement of Art, o. As the instrument is attested, it does not fall under the exemption to Art, 6.
The next question for consideration is whether the instrument falls under S. 5 or S. 6 of the Stamp Act. The learned Additional Government Pleader would contend that S. 5 applies to this case S. 5 deals with instruments containing distinct matters. Under that section, any instrument comprising of relating to several distinct matters, shall be chargeable with the aggregate amount of the duties with which seperate instruments, each comprising or relating to one of such matters, would be chargeable under this Act. We are unable to see how this instrument can fall under S. 5. As pointed already, it is an attested instrument evidencing a pledge by way of security for money due. A bond also is an instrument whereby a person obliges himself to pay money to another, and the instrument is attested. The only condition with reference to a pledge is that moveable property is given as security. The obligation to pay money in this case is one and indivisible. As Additional security, moveable property is given as pledge. It is difficult to say that the instrument consists of distinct matters.
Reference was made by learned counsel to the decision of the Supreme Court in Board of Revenue v. A.P Benthall 1956 S.C 35. But that was a case where a person possessed rights, both in his personal capacity and in a represesentative capacity as trustee. The stamp duty payable on the power of attorney there in question came up for consideration, and the Supreme Court held that there was a delegation of power by the executant in both his capacities and the position ia law was exactly the same as different persons jointly executing a power in respect of matters which were unrelated. Such is not the case here. In our view, S. 6 of the Stamp Act is alone applicable to the case. The Instrument in question falls both under Art 15 and Art 6 and, such a case, under S. 6, it shall be chargeble only with the highest of the duties payable. The Revenue cannot charge the instrument for the stamp duty payable under both the heads.
Reference was made by learned counsel for the respondent to the decision in R.S.S.S Sabha v. Rajnaraian for the contention that the instrument in question cannot be considered to be a bond: But that was a case where, where with reference to a promissory note a document was subsequently executed which provided the method of payment and reduction of interest, under certain contingencies. In that case the obligation under the promissory note did not merge in the subsequent document concerned Here that is not the case. Here earlier, there was a contract advancing moneys for the production of a film. The contract fell through before it was completed, and, for the advances taken, the first party obliged himself by the instrument under consideration, to pay the amounts advanced under the contract. The mutual obligations between the parties were put an end to, and the first party agreed that their relationship was thereafter that of a debtor and creditor. He obliged himself by the instrument to pay Rs. 40,000, then due, in a particular manner, and, in addition gave a camera as security.
In the eircumstanees, we answer the reference in the following manner. The instrument is not a mortgage falling under Art 40 of schedule 1, but, it is a bond falling under Art. IS and also a pledge falling under Art 6. S. 5 of the Stamp Act does not apply to the matter, The instrument would fall under S, 6 of the Act, and the highest of the stamp duties payable thereunder is leviable. No order as to costs.
V.C.S
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