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Firm Poonam Nahta v. Amarchand And Ors.
Structured Summary of the Opinion
Factual and Procedural Background
This matter arises from a suit filed by respondent no. 1 (Amar Chand) against non-petitioners no. 2 to 5. The trial court, under Order 38 Rule 6 C.P.C., ordered that certain amounts of M/s Krishna Bros. lying with the Central P.W.D. may be attached. The petitioner objected under Order 21 Rule 58 C.P.C., producing four documents (dated 22.3.69, 30.4.69, 14.6.69 and 6.8.69) in support of his claim that he was entitled to receive those amounts. The plaintiff objected to the admissibility of these instruments on the ground they were not property stamped.
The trial court framed an issue and, after examining the documents, held that the instruments dated 30.4.69, 14.6.69 and 6.8.69 were bonds in respect of amounts (Rs. 39,500; Rs. 11,000; and Rs. 31,000 respectively) and that because they were not properly stamped they could not be admitted in evidence unless stamp duty and penalty were paid by the petitioner. The petitioner challenged that order of the Additional District Judge (dated 9.12.71) by filing a petition under Articles 226 and 227 of the Constitution, arguing that the documents were memoranda of past transactions (not chargeable as bonds) or, alternatively, agreements chargeable under Article 5 of the Rajasthan Stamp Act, and claiming that the trial judge's error was patent on the face of the record and caused gross injustice by imposing heavy stamp duty and penalty.
Legal Issues Presented
- Whether the petitioner could properly invoke the writ/judicial review jurisdiction under Articles 226 and 227 of the Constitution to challenge the trial court's order on admissibility of the documents, or whether an alternative remedy by way of revision under Section 115 of the Code of Civil Procedure was available and mandatory.
- Whether the trial court's alleged error in treating the documents as "bonds" (and thereby attracting bond stamp duty and penalty) was an error "patent on the face of the record" such that the High Court could exercise extraordinary jurisdiction to correct it.
- Substantively, whether the impugned documents (Annexures A, B and C) are "bonds" within the definition in Section 2(5) of the Rajasthan Stamp Act or whether they are merely agreements/memoranda of past transactions (and therefore chargeable as agreements under Article 5 of the Stamp Act).
Arguments of the Parties
Petitioner's Arguments
- The three documents (Ex. A, Ex. B and Ex. C) were memoranda of past transactions and not chargeable to stamp duty as bonds.
- In the alternative, if they are to be treated as agreements, they should be chargeable only under Article 5 of Schedule II of the Rajasthan Stamp Act.
- The learned Additional District Judge committed an error patent on the face of the record by treating these documents as bonds; this error caused (or would perpetuate) gross injustice because the petitioner would be precluded from establishing his claim unless he paid heavy stamp duty and penalties (alleged by the petitioner to run into thousands of rupees).
- Accordingly, the petitioner invoked the High Court's extraordinary jurisdiction under Articles 226 and 227 to correct the alleged error and avoid perpetuation of injustice.
Respondent's Arguments
- The writ petition under Articles 226 and 227 was not maintainable because the petitioner had an alternative remedy by way of revision under Section 115 of the Code of Civil Procedure to challenge the impugned order of the Additional District Judge.
- Even if revision were not available, the alleged error was not patent on the face of the record and thus did not justify invocation of extraordinary constitutional jurisdiction.
- Substantively, the language of the documents brought them within the statutory definition of "bond" (Section 2(5) of the Stamp Act): they were attested by witnesses, not payable to order or bearer, and contained an obligation by the executant to pay money to another.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Harakhchand v. The State of Rajasthan, 1970 RLW 320 (Full Bench) | Full Bench authority deciding the contention whether revision under Section 115 of the Code of Civil Procedure lies to challenge such orders (and overruling certain earlier single-judge decisions). | The court relied on this Full Bench decision to reject the respondent's contention that the petitioner had an available remedy by revision under Section 115 and therefore could not be permitted to invoke Articles 226/227 in the circumstances of this case. |
| Moon Lal v. Sampat Lal, ILR (1952) 2 Raj. 1010 | Earlier single-judge authority on revisional remedy (as cited in the opinion). | Noted as having been overruled by the Full Bench in Harakhchand; hence not followed. |
| Poonamchand v. M/s Bastiram Deokishan, 1969 RLW 248 | Earlier single-judge authority which had held that procedural errors fall within Clause (c) of Section 115, and had views on non-availability of revision against an order admitting a document on payment of duty and penalty. | The Full Bench in Harakhchand dissented from and effectively negatived the view in Poonamchand that such matters fall within revisional jurisdiction; Poonamchand is recorded as overruled by the Full Bench. |
| Sahu Brijraj Sharan v. Sahu Raghunandan Sharan and Anr, ILR (1956) 6 Raj. 367 | A Division Bench decision referenced in the context of revisional jurisdiction and admissibility; did not expressly consider whether admissibility for insufficiency of stamp could be considered in revision. | The opinion notes that this decision did not settle the specific question and was relied upon by other judges; it was not treated as dispositive on the point in the present case. |
| Kalu Ram and Ors. v. Bhagirath, ILR (1959) 9 Raj. 187 | Referred to in the Full Bench proceedings and earlier authorities on revisional jurisdiction. | The Full Bench treatment caused the court to treat earlier single/division bench views with caution; Kalu Ram's correctness was questioned in light of the Full Bench authority. |
| Raghunath Prasad's case, ILR (1959) 9 Raj. 641 | A judge's opinion that the question of admissibility of a document on the basis of insufficiency of stamp duty cannot be decided in revisional jurisdiction under Section 115. | Cited to show conflicting views in earlier authorities and to support the conclusion that revision was not an adequate remedy in the present context. |
| Jaman Singh and Anr. v. The Board of Revenue and Ors., ILR (1960) 10 Raj. 1638 | Authority cited on the meaning of "error patent on the face of the record" and when an error is manifest on bare perusal of the order/judgment. | The court examined this authority (and underlying passages) to frame the correct test for "error on the face of the record" and to determine whether the present case met that standard for invoking Articles 226/227. |
| Dholpur Coop T & M. Union v. Appellate Authority, Rajasthan, ILR (1953) 3 Raj. 931 | Contains reproduced observations of the learned Chief Justice on the meaning of "error on the face of the record"—that the error must be so patent that a bare perusal of the judgment and record would show it. | The court quoted and applied this explanation to justify exercising extraordinary jurisdiction where a patent legal mistake is likely to cause gross injustice. |
| Satyanarayan Laxminarayan Hegde & Ors. v. Mallikarjun Bhavanappa Triumale, AIR 1960 SC 187 | Supreme Court authority supporting the view that a High Court may correct a patent mistake of law in exercise of Articles 226/227 if it would perpetuate gross injustice. | The court relied on this Supreme Court decision to support its conclusion that Articles 226/227 may be invoked in extraordinary cases where a patent legal error would otherwise perpetuate gross injustice. |
| Radha Swami Sat Sang Sabha v. Raj Narain, AIR 1943 All 218 | Allahabad High Court decision addressing whether recital of a previously created obligation in an instrument brings the instrument within the definition of "bond" under the Stamp Act; held that mere recital does not suffice unless the earlier obligations are extinguished or novated. | The court applied the test from Radha Swami to the present documents, concluding that because the promissory notes pre-existed and were not extinguished or novated by the impugned documents, the documents could not be treated as bonds. |
| Maula Bux and Ors. v. Munna Lal and Ors., AIR 1939 All 205 | Earlier authority (distinguished in Radha Swami) where a document was adjudged a bond when there was effectively a fresh contract or novation. | Referred to by Radha Swami and discussed by the court to explain why the present documents differ from cases where an instrument creates a fresh liability or novation. |
Court's Reasoning and Analysis
The court's analysis proceeded in a sequence addressing jurisdiction, the nature of the error, and the substantive character of the documents:
-
Jurisdictional question (revision vs writ):
The respondent's contention that the petitioner had an alternative remedy by way of revision under Section 115 of the Code of Civil Procedure was examined in light of Full Bench authority (Harakhchand). The Full Bench had considered and overruled some earlier single-judge decisions that would have supported the availability of revision for these kinds of questions. Relying on that Full Bench precedent and related discussion, the court concluded that the argument that the petitioner had an adequate alternative remedy by way of revision could not be accepted.
-
Test for "error patent on the face of the record":
The court reviewed authorities (including Jaman Singh and Dholpur Coop) explaining that an "error" permitting extraordinary relief must be so patent that a bare perusal of the judgment and record would show it. If such a mistake of law is manifest and is likely to perpetuate gross injustice, the High Court in appropriate cases may exercise its jurisdiction under Articles 226 and 227 to correct it. The court also cited a Supreme Court authority (Satyanarayan Laxminarayan Hegde) in support of this proposition.
-
Application of the jurisdictional and "error patent" tests to the facts:
The court found that the petitioner was placed in a position where, because the trial court had demanded payment of substantial stamp duty and penalty (allegedly around Rs. 11,000 according to one counsel), he would be effectively precluded from establishing his entitlement to the attached funds unless he paid that amount. The court regarded this as a circumstance likely to perpetuate gross injustice and considered that it justified invocation of the High Court's extraordinary jurisdiction under Articles 226 and 227.
-
Examination of the three documents (Annexures A, B and C):
The court examined the substance of each document:
- Annexure A (30-4-69) recited that the executant had borrowed sums previously against promissory notes and that the parties desired to reduce the terms and conditions to writing; it recorded that sums had been advanced and laid down terms including an additional sum (Rs. 2,500) and modes of payment and authorised the creditor to receive payment from the department if necessary.
- Annexure B was materially similar, reflecting slightly different aggregate amounts but substantially the same terms.
- Annexure C (6-8-69) similarly recorded past transactions and advances (including a reference to Rs. 30,000 advanced against a promissory note) and incorporated largely the same conditions as the earlier documents.
The trial judge had characterized these documents as falling within the statutory definition of "bond" (Section 2(5) of the Stamp Act) because they were attested by witnesses, not payable to order or bearer, and contained recitals of the executant's obligation to pay money.
-
Statutory definition of bond and applicable test:
The court set out Section 2(5)'s definition of "bond" (including clause (b): an instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money). The court observed that mere attestation alone does not make an instrument a bond; the essential ingredient is that the instrument must itself create the obligation to pay.
Relying on the Allahabad High Court decision in Radha Swami Sat Sang Sabha v. Raj Narain, the court reiterated the test: where a document only recites obligations already created by antecedent promissory notes and does not extinguish or novate those earlier instruments or create a fresh obligation, the document is not a bond for stamp duty purposes. In contrast, a document that effects novation or creates a fresh obligation may be a bond.
-
Application of the Radha Swami test to the present documents:
The court found that the advances mentioned in the impugned documents were made against previously executed promissory notes (the instruments themselves acknowledge the existence of those pronotes). The documents did not extinguish or novate the earlier pronotes; they served to record terms, modes of payment, and certain conditions regarding unsettled earlier liabilities. Consequently, the executant's obligations to pay derived from the earlier promissory notes rather than being newly created by the impugned documents.
Accordingly, the court concluded that the documents could not be classified as "bonds" within Section 2(5) and instead were "pure and simple agreements" (i.e., memoranda recording past transactions and terms governing payment), and so ought to be stamped as agreements under the Stamp Act (Article 5), not as bonds attracting the more onerous treatment applied by the trial court.
-
Conclusion of analysis:
Given the above findings—that revision was not an adequate alternative remedy in the circumstances, that the petitioner faced potential gross injustice from the trial court's demand of duty/penalty, and that the impugned instruments were agreements rather than bonds—the court decided to allow the writ petition.
Holding and Implications
Holding: The writ petition is allowed. The court declares that the three impugned documents (Annexures A, B and C) are "pure and simple agreements" and not "bonds" for the purposes of the Rajasthan Stamp Act; they should therefore bear the stamp duty prescribed for agreements under the Act. (The opinion concludes: "The writ petition is accordingly allowed. No orders as to costs.")
Implications:
- Direct effect on the parties: The trial court's characterization of the documents as bonds (with the consequence that they were inadmissible in evidence unless stamp duty and penalty for bonds were paid) is set aside; the documents are to be treated and stamped as agreements under Article 5 of the Stamp Act. This relieves the petitioner from having to pay the higher bond stamp/penalty demanded by the trial court to establish his claim on those documents.
- Procedural/constitutional implication: The High Court accepted exercise of extraordinary jurisdiction under Articles 226 and 227 in the face of a claimed injustice caused by a manifest legal error in the trial court's order, and declined to accept the availability of a revisional remedy under Section 115 as an adequate alternative in the present circumstances (relying on Full Bench precedent).
- Precedential scope: The opinion applies and interprets prior authorities (including a Full Bench decision and the Allahabad High Court test from Radha Swami). The court's decision resolves the classification of the specific impugned documents in this case; the opinion does not purport to create a novel rule beyond applying established tests to these facts.
No orders as to costs were made by the court.
1. In a suit filed by respondent no. 1 Amar Chand against non-petitioners no. 2 to 5 an order was passed by the trial court under Order 38 Rule 6 C.P.C. that the amount of M/s Krishna Bros. lying with the Central P.W.D. may be attached. Having felt aggrieved by that order the petitioner filed objection under Order 21 Rule 58 C.P.C. and submitted in support of this claim four documents dated 22.3.69, 30.4.69, 14.6.69 and 6.8.69. The plaintiff objected the admissibility of these instruments in evidence on the ground that they were not property stamped. An issue was framed by the trial court and after examining the documents the learned Judge held that the instruments dated 30.4.69 14.6.69 and 6.8.69 were bonds in respect of the amounts Rs. 39500/- Rs. 11000/-, and Rs. 31000/- respectively and since they were not properly stamped they could not be admitted in evidence unless the stamp duty along with the penalty was paid by the petitioner. This order of the learned Additional District Judge dated 9.12.71 is impugned by the petitioner by filing this petition under articles 226 and 227 of the Constitution inter alia on the ground that all these three documents which contained terms of agreement tendered before the execution of the documents, were nothing more than the memorandum of agreement and as such no stamp duty was leviable on them In the alternative it is averred that at best these documents can be covered by the term "agreement" and they should therefore, be governed by Article 5 of the Rajasthan Stamp Act (hereinafter referred to as 'Act') It is also urged that since the error committed by the learned District Judge is patent on the face of he record, his court must exercise its extra ordinary jurisdiction to undo justice that has been done to the petitioner by asking him to pay the stamp duty and the penalty which according to the petitioner runs in thousands. It was therefore, prayed that this Court may declare trial the documents Ex. A., Ex. B and Ex. C are memorandum of past transactions and not chargeable to any stamp duty or in the alternative they may be declared as agreements which are chargeable to stamp duty under Article 5 of schedule II of the Act.
2. Mr. U.L. Gupta who has appeared on behalf of respondent no. 1 has argued that the petition under Article 226 and 227 is not maintainable as a revision application can be filed under Section 115 of the Code of Civil Procedure to challenge the impugned order of the learned Additional District Judge; and even if the revision is not maintainable the petitioner cannot invoke the extra ordinary jurisdiction of this Court as the error which is said to have been committed by the trial court, cannot be said to be an error patent on the face of the record. The learned Counsel also argued that the language of these documents clearly bring them within the term 'bond' as defined in Section 2(5)of the Act.
3. This contention of Mr. Gupta that a revision petition can lie before this Court under Section 115 of the Code of Civil Procedure, in my opinion, stands decided by the Full Bench Authority of this Court in Harakhchand v. The State of Rajasthan 1970 RLW 320. Mr. Gupta also placed reliance on certain authorities of this Court reported in Moon Lal v. Sampat Lal ILR (1952) 2 Raj. 1010, Sahu Brijraj Sharan v. Sahu Raghunandan Sharan and Anr. ILR (1956) 6 Raj. 367, Kalu Ram and Ors. v. Bhagirath ILR (1959) 9 Raj. 187 and Poonamchand v. M/s Bastiram Deokishan 1969 RLW 248 But out of these four judgments two judgments in Moonlal v. Sampatlal ILR (1952) 2 Raj. 1010 and Poonamchand v. Bastiram Deokishan 1969 RLW 248 have been over-ruled by the Full Bench judgment in Harakchand's case 1970 RLW 320. The learned Judges have specifically mentioned in the full bench case that they find it difficult to accept the view point expressed by the learned single judge in Moonlal v. Sampatlal ILR (1952) 2 Raj. 1010 and Poonamchand v. M/S Bastiram Deokishan 1969 RLW 248. Bhandari J. was a party to the Full Bench Authority where in Kalu Ram's case is referred and while relying on a division bench case reported in Sahu Brijraj Sharan v. Sahu Ragnunandan Sharan and Anr. ILR (1956) 6 Raj. 367 he held that a question whether a particular document was admissible in evidence on payment of penalty as provided Under Section 35 of the Act can be revised by the High Court under Section 115 of the Code of Civil Procedure. But the same learned Judge while deciding Raghunath Prasad's case ILR (1959) 9 Raj. 641 was definitely of opinion that the question of the admissibility of a document on the basis of insufficiency of stamp duty cannot be decided while exercising revisional jurisdiction under Section 115 of the Code of Civil Procedure. Division Bench in Sahu Brijraj Sharan's case ILR (1956) 6 Raj. 367 did not consider this question whether the question of admissibility of a document can be considered by the High Court in revisional jurisdiction and, therefore, the judgment given by the learned C.J. in Kalu Ram's case ILR (1956) 6 Raj. 367 cannot be said to be a correct judgment specially when the full bench has now laid down a definite law while dissenting from the judgment of Jagat Narayan J. in Poonamchand's case 1969 RLW 248 wherein it was held that all procedural errors fall under Clause (c) of Section 115 of Code of Civil Procedure. This view has been negativated by the full bench authority in Harakchand's case 1970 RLW 320. But it may be mentioned here that in Poonamchand's case 1969 RLW 248 the learned Single Judge was definitely of the view that the document if insufficiently stamped (which includes documents which require to be stamped but are unstamped) no revision would lie against an order offering to admit the document in evidence on payment of a certain amount of duty and penalty under the Stamp Act. In this view of the matter this argument of Mr. Gupta that the petitioner had an alternative remedy of filing the revision application against the impugned order of the trial court cannot be accepted.
4. The alternative argument of Mr. Gupta that the error which is said to have been committed by the learned trial Judge while passing the impugned order cannot be said to be an error patent on the face of the record as this error which is being pointed out by the learned Counsel for the petitioner cannot be discerned by the perusal of the order sheets. In support of this argument the learned Counsel relied on the observations of the learned Judges in Jaman Singh and Anr. v. The Board of Revenue and Ors. ILR (1960) 10 Raj. 1638. Perhaps the learned Counsel has advanced this argument on the basis of the head note wherein it has been mentioned that the error must be patent and manifest on a bare perusal of the order itself But when this authority is carefully perused then we find that the learned Judges while relying on a previous authority of this Court in Dholpur Coop T & M. Union v. Appellate Authority, Rajasthan ILR (1953) 3 Raj. 931 reproduced the observations of the learned Chief Justice which are as follows:
The meaning of this expression is well settled, and the error of law envisaged should be so patent that a bare perusal of the judgment and the record on which it is based would show that there was error.
The expression the 'error' on the face of the record would therefore, mean that if by looking to the judgment and the record the error becomes manifest this Court can correct that error in the exercise of its jurisdiction under Article 226 or a supervisory jurisdiction under Article 227 if the court feels that a gross injustice is going to be perpetuated It is true that the High Court while exercising its jurisdiction under Article 226 or 227 cannot assume the role of an appellate authority, but if the mistake of law is patent on the face of the record and if that error is likely to perpetuate gross injustice to the parties then in extra ordinary circumstances this Court has been vested with a jurisdiction under Article 226 and 227 to correct such errors of law. I find support to this view of mine from the judgment of the Supreme Court reported in Satyanarayan Laxminarayan Hegde and Ors. v. Mallikarjun Bhavanappa Triumale AIR 1960 SC 187.
5. In the present case the petitioner filed an application before the lower court claiming that the property of the defendant could not be attached in the suit filed by respondent No. 1 as it was the petitioner alone who was entitled to receive that amount from the Central P.W.D. This claim of the petitioner was based on these three documents which were declared by the trial court as inadmissible in evidence unless proper stamp duty and penalty which according to Mr. L.R. Mehta, amounts Rs. 11000/- is paid by the petitioner. The petitioner feels that the demand of such a huge penalty and stamp duty against the provisions of the stamp act would result in gross injustice to him as the documents are rendered almost ineffective as the petitioner is precluded to base his claim on these documents without paying Rs. 11000/- Obviously this situation puts the petitioner in such a position that he cannot get his claim established to the property attached in the suit unless he pays a heavy amount of stamp duty and penalty. This, in my opinion, is a circumstance which entitles the petitioner to invoke the extraordinary jurisdiction of this Court to avoid the perpetuation of injustice, which he feels is done to him.
6. Whether the documents Annexure A, B and C fall within the definition of agreement, 1 shall have to examine the nature of the documents.
7. The first document is dated 30-4-69. The preamble of this document states that the executant had borrowed a sum of Rs. 22000/- on previous dates against pronote executed for each amount mentioned therein, and the terms and conditions on which the amounts were advanced were agreed upon between the parties, the parties were desirous that all those terms and conditions may be reduced in writing so that no misunderstanding may arise and it was therefore, thought it advisable that Annexure A may be got executed by respondent Vijai Kishan on 30-4-69 in favour of the petitioner firm. The parties have given this document the name 'agreement' and the important terms and conditions of the agreement were incorporated therein, few of them are: that the firm Poonamchand Nahta shall advance loan to the executant to the extent of Rs. 22000/- against the pronote; that the executant shall pay besides the loan advanced an amount of Rs. 2500/- to firm Poonamchand Nahta for giving this timely aid to the executant for the performance of his contract with the Central P.W.D. It further lays down the mode of payment to the plaintiff In paragraph 4 of these terms it has been mentioned that if the payment is not made to the creditor in the manner mentioned therein then the executant himself shall be personally liable to pay the amount advanced to him and the document also authorises the creditor firm to receive the payment directly from the department concerned.
8. Annexure B is a similar document except that the amount advanced to the executant by the plaintiff firm upto the date of the execution of this document was little more than the amount mentioned in Annexure A otherwise the terms and conditions mentioned in the said document are almost identical as contained in Annexure A.
9. Similarly document Annexure C executed on6-8-69 mentions all the past events and the transactions of giving and taking the loan between the parties up to the time the said document was executed by the executant Besides the past transactions it also mentions about Rs. 30000/- advanced to the debtor by the creditor firm against the pronote. The other conditions are almost the same as were incorporated in the previous two documents.
10. The learned Judge while deciding the issue about the admissibility of these documents in evidence on the objection that they were insufficiently stamped, admitted that these documents do mention about the events that had taken place in the past but he was of opinion that these documents fall within the term "bond" as defined in the Act to the extent to which it created an obligation on the executant to pay the amounts which were either received on the date of the execution of the document or which were to be received by him at some later date and to the extent to such a liability which was specifically taken by Vijai Krishan to pay the amount along with the interest mentioned in these documents they were declared bonds.
11. The main argument of learned Counsel for the petitioner is that these documents do contain certain amounts that have been borrowed by the executant from the petitioner firm but the documents themselves speak that all those amounts were advanced by the creditor firm against the promissory notes executed from time to time by respondent Vijai Krishan. Learned Judge was led away by this fact that the promissory notes which were executed by Vijai Krishan in favour of the petitioner firm were not produced before the court and. therefore, perhaps he thought that the liabilities for the amounts mentioned in these documents were taken up by the executant by executing the impugned documents only.
12. Bond has been defined in Section 2(5) of the Act as follows;
(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.
The learned Counsel appearing on behalf of the respondent urged that these three documents in question fall within Clause (b) of this definition as all these instruments have been attested by witnesses and that they were not payable to order or bearer and that the executant has taken the obligation on himself to pay the money mentioned there in.
13. It is true that all these documents have been attested by the witnesses but the mere act of attestation does not bring the document within the definition of bond. The main and essential ingredient which can be pressed into service to bring a particular document within the definition of a bond is that a person must oblige himself to pay the money to another by means of that document. This question whether a recital of an obligation to pay particular debt which was advanced against a promissory note already executed in favour of the creditor would bring that document within the definition of bond and on that basis can it be said that the executant has obliged himself by mere recital of the past events to pay money to the person in whose favour the instrument is executed. The question that was raised before the learned Judges of the Allahabad High Court in Radha Swami Sat Sang Sabha v. Raj Narain AIR 1943 All 218 was whether mere recital of an obligation in an instrument would bring that document within the definition of bond under the Stamp Act. The argument advanced on behalf of the counsel was that if a document was attested by witnesses and was not payable to order or bearer and under it the first party obliges himself to pay money to the second party then a document according to a previous judgment of that very court in Maula Bux and Ors. v. Munna Lal and Ors. AIR 1939 All 205 was adjudged as a bond Since all these three requisites were present in the document the question was raised before that court that such a document should also be declared as a bond. Their Lordships while distinguishing their previous authority in Maula Bux and Ors. v. Munna Lal and Ors. AIR 1939 All 205 observed as follows:
In the authority to which reference has been made by us there was no pre-existing loan and if there was any pre-existing liability that was wiped out by the document executed by the debtor in favour of the creditor. There was either a fresh contract without any antecedent contract at all or there was a novation of the contract & the old contract was extinguished. In the case before us, the four promissory notes remained out standing and we know that, as a matter of fact, three suits were filed on the basis of the four promissory notes.... In every case one has to look at the intention of the parties and we find that in the present case the intention of the parties was not to extinguish the old promissory notes but to keep them alive and the document only provided for the method of payment and for reduction of interest under certain contingencies.
The test that was laid down by their Lordships to judge a document which recites the obligation that had already been created against a promissory note is that the document would fall within the definition of a bond only when either the previous promissory notes have been annulled by executing subsequent document or there has been a novation of the contract on account of the document in question. In the opinion of their Lordships of the Allahabad High Court if a document makes a mention of an obligation which has already been created against promissory notes and the object of the document is only to lay down certain terms and conditions regarding the mode of payment etc. then such document cannot fall within the definition of bond. Applying this decision to the present case I find that all the advances were made by the petitioner firm to the executant of these documents against the promissory notes. These documents also speak that promissory notes were executed by the executant before advancement of loan to him. Simply because that liability which was taken by the respondent Vijai Krishan has once again recited in the present document, these documents cannot be brought within the definition of a bond as this liability has not been created under the document in question nor these documents wipe out the old liabilities that were created under the different promissory notes executed by Vijai Krishan in favour of the petitioner and create fresh liability and, therefore, it is difficult to say that Vijai Krishana obliged himself to pay the money to the petitioner firm under these documents. That obligation which has bean mentioned in these documents can be traced from the promissory notes executed by Vijai Krishan in favour of the petitioner firm which are still in vogue.
14. It is contended by learned Counsel for the respondent that these promissory notes were not produced by the petitioner firm before the trial court and, therefore, at this stage the petitioner firm cannot without any jurisdiction base its argument that the liabilities were created by the execution of the promissory notes about which the respondent has no knowledge. I feel argument cannot be advanced at this stage because the questioned documents themselves speak of the execution of promissory notes by Vijai Krishan in favour of the defendant firm at the time when different sums were advanced to Vijai Krishan and these documents do not mention that those promissory notes shall not form the basis for claiming the payment from Vijai Krishan of the debt advanced to him by the petitioner firm on the basis of those pronotes. The old contract between the debtor and the creditor by executing the pronotes in favour of the petitioner firm do not get extinguished toy writing these three documents which are primarily agreements between the parties for the performances of their duties and obligations created under the promissory notes especially in the matter of payment of debts taken by Vijai Krishan from the petitioner firm. In these circumstances I find it difficult to uphold the view of the learned trial Judge that these agreements shall be treated as 'bond' in respect of the amounts mentioned therein. I, therefore, declare that the three documents are pure and simple agreements and they should, therefore, bare the stamp duty prescribed for agreement under the Act.
15. The writ petition is accordingly allowed. No orders as to costs.
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