K.K.Lahoti, J.:-
(1) This petition is directed against an order dated 16 - 4 - 2008 by the additional district judge, panna in civil suit no. 29 - a/2007, by which the court found that document in question was a promissory note, not an agreement for payment of remaining consideration of sale and was on a proper stamp duty. Holding it, the trial court found that the document can be received in evidence.
(2) Learned counsel for petitioner submitted that in fact the document in question was a 'bond' and not a 'promissory note'. From the language of document it is apparent that a definite amount of money was promised to be paid to the plaintiff/respondent with a condition that only after payment of the amount the defendant shall be entitled for mutation in the revenue record. If the defendant effects mutation without such payment then the plaintiff would be entitled to object the mutation and for declaration of sale deed as void. The document was signed by both the parties and also attested by two witnesses, so it falls within the purview of "bond" as defined under section 2 (5) of the indian stamp act, 1899. He has also placed reliance to a full bench judgment of this court in sant singh vs. Madandas panika and another, 1976 jlj 235 and submitted that this writ petition be allowed, impugned order be set aside, the document in question be declared as bond, the trial court be directed to impound it and only after recovery of duty and penalty it be permitted to be received in evidence.
(3) Learned counsel for plaintiff/respondent no. 1 opposed the contention and submitted that in fact the document in question is a "promissory note" by which the defendant agreed to pay unpaid consideration of sale deed to the plaintiff, though it was signed by the parties and attested by witnesses, but it does not fall within the purview of bond. In the alternative, it was argued by shri pareek that it is an agreement for payment of unpaid consideration. He placed reliance to full bench judgment of delhi high court in the matter of hamdard dawakhana (wakf) delhi c. Reference, air 1968 delhi 1 and submitted that this writ petition be dismissed with costs.
(4) To appreciate the rival contention of the parties, it would be appropriate if the document in question is referred which reads thus : - from the perusal of aforesaid the following position emerges: -
(i) that plaintiff phoola sold his land survey no. 2581/2 area 0. 98 hectares to the defendant. Out of total consideration, rs. 20,000/ - was paid by the defendant to the plaintiff at the time of execution of sale deed, which was paid to co - owner guttu s/o thochan chamar, who was co - executor of sale deed. Remaining amount rs. 1,20,000/ - was not available with defendant, so he had agreed to pay it within one year from the date of sale deed, i. E. , april, 2002.
(ii) it was also stipulated in the agreement that only after payment of entire amount to plaintiff the defendant would be entitled for mutation of his name and in case without payment of amount mutation proceedings were initiated then the plaintiff would be entitled to object it and to get sale deed declared as void. In that regard the cost of proceedings were to be paid by the defendant.
(iii) the document was signed by the defendant bhismat pandey, plaintiff phoola (t. I.) and two witnesses, namely shivkumar and lallu chamar (t. I.) -
(iv) as the aforesaid amount was not paid, the suit was filed by the plaintiff for declaration that sale deed dated 12 - 4 - 2001 be declared as void, possession of land be delivered to the plaintiff or in the alternative a decree in favour of plaintiff of unpaid consideration of rs. 1,20,000/ - alongwith 12% interest from 12 - 4 - 2001 be granted.
(5) The defendant/petitioner contested the suit by filing written statement, issues were framed. Before recording the evidence the petitioner objected to the document that it was not on appropriate stamp duty and was inadmissible in evidence. The trial court by the impugned order found that in fact, it was a promissory note and not an agreement for the sale of land. The plaintiff was not liable to make payment of stamp duty and penalty on the entire consideration of document. The stamp duty of rs. 20/ - was sufficient. It is this order, which is under challenge in this petition.
(6) To appreciate the rival contention of the parties, it would be appropriate if the definition of bond in the indian stamp act, 1899 may be referred which reads thus: -
"bond: section 2. (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. "
Promissory note has been defined in section 2 (22) which reads thus: -
"promissory note: section 2. (22) "promissory note" means a promissory note as defined by the negotiable instruments act, 1881; it also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen. "
As per section 2 (22) the definition of promissory note shall be as defined by negotiable instruments act, 1881. For ready reference the definition of promissory note as defined in section 4 of the negotiable instruments act may be referred, which reads as under: -
"4. "promissory note". - a "promissory note" is an instrument in writing (not being a bank - note or a currency - note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. "
Now in the light of aforesaid definitions firstly the definition of promissory note may be looked into. Section 4 of the negotiable instruments act provides as under: -
(a) an instrument in writing. (b) an unconditional undertaking, signed by the maker, to pay a certain sum of money only. (c) money is payable to the person in whose favour the promissory note is executed or to the order of a certain person or to the bearer of the instrument. It should be signed by the maker. From the perusal of aforesaid document, it is apparent that except the money was payable to the order of or the bearer of instrument, other conditions were incorporated in the document.
(7) Under section 2 (h) of the indian contract act, 1872, an agreement enforceable by law is a contract. Under section 10 of the contract act all agreements are contracts if they are made by free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void. An "agreement" or a "memorandum of agreement to sale of immovable property" has been provided in schedule 1 - a of indian stamp act, which provides stamp duty when possession of property is delivered or is agreed to be delivered without executing the conveyance, the stamp duty as of conveyance on the market value of property is to be paid. But when possession of property is not given 1% of the total consideration of property, set forth in the agreement or in the memorandum of agreement, is payable. But in the present case, the sale deed was already executed and possession was also delivered to the petitioner herein. In the set of facts, it does not fall within the purview of agreement as provided under schedule 1 - a of indian stamp act.
(8) Now the definition of "bond" may be looked into, as provided under section 2 (5) of the indian stamp act, which has been referred hereinabove. As per the definition, the essential ingredients of bond are as under: -
(1) the person obliges himself to pay money to another. (2) on a condition that the obligation shall be void if the specific act is performed or not performed, as the case may be. (3) the instrument must be attested by a witness. (4) that the amount shall not be payable to order or bearer and a person obliges himself to pay money to another.
(9) A full bench of this court had an occasion in sant singh 3 (supra) , to consider the essential and distinctions of bond and promissory note. The full bench held the essentials of a promissory note as under: -
" (1) an unconditional undertaking to pay; (2) the sum should be a sum of money and should be certain; (3) the payment should be to the order of a person who is certain, or to the bearer of the instrument; and (4) the maker should sign it. If these four conditions exist, the instrument is a promissory note. " in respect of bond, the full bench held that following are the essentials of a"bond": - " (1) there must be an undertaking to pay; (2) the sum should be a sum of money but not necessarily certain; (3) the payment will be to another person named in the instrument; (4) the maker should sign it; (5) the instrument must be attested by a witness; and (6) it must not be payable to order or bearer. "
The full bench on a comparison between the essentials of promissory note and those of bond found that there are three distinguishing features, which are as under: -
" (i) if money payable under the instrument is not certain, it cannot be a promissory note, although it can be a bond. (ii) if the instrument is not attested by a witness, it cannot be a bond, although it may be a promissory note. (iii) if the instrument is payable to order or bearer, it cannot be a bond, but it can be a promissory note."
Defining aforesaid the two peculiar features of bond has been narrated as under: -
(a) positive - it must be attested by a witness. (b) negative - it must note be payable to order or bearer.
Appreciating aforesaid, the full bench held in paras 7, 8 and 9 as under: -
"7. It is also clear that if in an instrument the above two distinguishing features (positive and negative) are present, then, even if the four essentials of a promissory note are also present, the instrument will still be a bond, because all the ingredients of a promissory note are also present in a bond with the exception that whereas a promissory note can be payable, apart from the person named in it, to the order of that person or to the bearer of the instrument, a bond cannot be payable to order or bearer.
8. Therefore, an instrument, which is not payable to bearer or order but is attested by a witness will also be a bond within the definition of section 2 (5) of the stamp act, although simultaneously it may also fall within the definition of a promissory note within the meaning of section 2 (22) of the stamp act read with section 4 of the negotiable instrument act.
9. Having thus opined out the distinction between promissory note and a bond, we may at once say that in the last mentioned situation that is, where an instrument comes within the description of a promissory note as well as that of a bond, by virtue of section 6 of the stamp act, it will be chargeable only with the highest of the duties chargeable, i. E. , stamp duty as chargeable on a bond. That section reads thus: -
"subject to the provision of the last preceding section, an instrument so framed as to come within two or more of the descriptions in schedule i, shall, where the duties chargeable thereunder are different be chargeable only with the highest of such duties: provided that nothing in this act contained shall render chargeable with duty exceeding one rupee a counterpart or duplicate of any instrument chargeable with duty and in respect of which the proper duty has been paid."
(10) In view of the settled law by the full bench, now the factual position in the present case may be looked into. The document in question is attested by two witnesses and is not payable to order or bearer. Apart from this all the essential ingredients of bond are found in the document, i. E. , (a) an undertaking to pay a definite sum of the amount, (b) the payment was to be made to the plaintiff, (c) the maker had signed it, (d) the instrument has been attested by two witnesses and it is not payable to order or bearer. In view of aforesaid settled law by the full bench there is no iota of doubt that the document in question is a bond.
(11) Now the judgment relied on by the learned counsel for respondent no. 1 may be looked into. The delhi high court in the matter of hamdard dawakhana (supra) , considering the test to determine nature of instrument for the purposes of stamp duty held in para 9 that the instrument has to be read as a whole to find out its dominant purpose, a single instrument may embody several purposes, but what is relevant for the purpose of the act, is the dominant purpose of the instrument. Considering the difference of bond and agreement the full bench in para 14 held that the test for distinguishing a "bond" from "agreement" is that 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. The full bench in para 16 of the judgment considering the question whether the instrument was a conveyance or an agreement held that the same did not evidence any transfer of property, so it cannot be considered as a conveyance.
(12) In the light of aforesaid ratio, the respondent cannot take any benefit to arrive this court to a conclusion that the document is not a bond, but is a promissory note. The law laid down by the full bench in sant singh (supra) is fully applicable in the present case and all the ingredients of bonds are present in the document. The document is also attested by witness and is not payable to order or bearer. Apart from this other ingredients of promissory note though are present, but in view of specific two peculiar features of a bond, which exist in the present document, no conclusion can be arrived except that the document in question is a bond.
(13) Now one more question remains for consideration that after arriving at a finding that the document in question is a bond what procedure is to be adopted by the trial court. In this regard, a recent judgment of this court in mukesh yaduvanshi vs. Smt. Radhadevi awasthy, w. P. No. 13974/2008, decided on 22 - 7 - 2009 may be referred in which a judgment of apex court in peteti subba rao vs. Anumala s. Narendra, (2002) 10 scc 427, is referred thus: -
"chapter iv of the indian stamp act contains provisions regarding "instruments not duly stamped". Section 35 falls under the said chapter and empowers the trial court to direct the party (who wants the document to be acted upon) to pay the stamp duty (or the deficient portion) together with a penalty of rupees fifteen, or, when ten times the amount of the proper duty or deficient portion thereof exceeds fifteen rupees, a sum equal to ten times such duty or portion. This is for the purpose of enabling the document to be admitted in evidence. In such a situation the document would be admitted only on payment of the aforesaid sum. In a case, where the party is not willing or he cannot afford to pay the said sum the court has to adopt the procedure envisaged in section 38 (2) of the act. In a case where the party fails to pay the penalty suggested by the court the document impounded has to be sent to the collector for the purpose of taking further steps in respect of that document as provided in section 40 of the act. The collector has the power to require the person concerned to pay the proper duty together with a penalty amount which the collector has to fix in consideration of all aspects involved. The restriction imposed on the collector in imposing the penalty amount is that under no circumstances the penalty amount shall go beyond ten times the duty or the deficient portion thereof. That is the farthest limit which means that only in very extreme situations the penalty need be imposed up to that limit. The collector is not required by law to impose the maximum rate of penalty as a matter of course whenever an impounded document is sent to him. He has to take into account various aspects including the financial position of the person concerned. The impugned judgments passed by the trial court and the high court are set aside. The trial court is directed to impound the document as indicated in section 33 (1) and forward the same to the collector concerned as envisaged in section 38 (2) of the act. "
It was held by the division bench thus: -
"in view of the aforesaid settled position of the law, prayer made by the petitioner is allowed. Petitioner is permitted to move an application before the trial court for forwarding the document under section 38 (2) of the act to the collector. On filing such an application, the trial court shall forward the original agreement to the collector hoshangabad to complete the proceedings envisaged in section 40 of the act, within a period of one month from the date of receipt of the document. 6. In view of the aforesaid, this petition is finally disposed of with the following directions: - (i) petitioner is permitted to move an application before the trial court under section 38 (2) of the stamp act for forwarding the agreement to the collector, hoshangabad for initiating proceedings as envisaged under section 40 of the act. (ii) the trial court on filing such an application shall forward the document with a specific direction to the collector to complete the proceedings within a period of one month from the date of receipt of the document. (iii) the collector, hoshangabad shall proceed in the matter in accordance with section 40 of the act. The collector while considering the question of payment of duty and penalty shall follow the law laid down by the apex court in para 6 of peteti subbarao (supra) and remit the document after due ascertainment as per section 40 of the act. Thereafter, the trial court shall proceed in the matter, in accordance with law. Considering the facts of the case, there shall be no order as to costs."
(14) In view of aforesaid, it is directed that the trial court shall impound the document in question and shall send it to the collector, panna with a specific direction to him for dealing with the document as per section 40 of the indian stamp act, within a period of sixty days from the date of receipt of such document.
(15) With the aforesaid direction, this petition is allowed. The impugned order is set aside. Considering the facts of the case, there shall be no order as to costs.
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