TMI Blog1976 (8) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... same would be paid by the Company. The Corporation applied to the Collector of Calcutta, for adjudication of the stamp duty payable on the document. The Collector examined the matter. The Collector found that the Company had applied to the Corporation for a loan The Corporation had sanctioned the amount of ₹ 97,28,444.58p. to the borrower (i.e. the Company) as an interest free loan under the terms and conditions laid down in the deed. The Corporation decided that the loan would be paid by instalments. The Corporation, as the first instalment of the loan had paid ₹ 15,00,000/- on the execution of the document. The borrower, i.e., the Company acknowledged the receipt of the loan and executed a separate receipt therefor. By the document the borrower, i.e., the Company undertook to repay to the Corporation the loan of ₹ 15,00,000/- by three equal instalments of ₹ 5,00,000/-. The first of such instalments would be paid on May 31, 1991; the second instalment on May 31, 1992 and the third instalment on May 31, 1993 without any interest. The borrower also agreed to certain conditions, if any default in repayment of the instalments had occurred. 3. The Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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; 11. Mr. Gupta also referred to Items 1, 16, 26, 34, 56 and 57 of Schedule 1-A to the Act. These items deal respectively with (1) Administration Bond, (2) Bottomry Bond, (3) Customs Bond, (4) Indemnity Bond, (5) Respondentia Bond; and (6) Security Bond or Mortgage Deed. 12. Apart from Section 2(5) and the aforesaid items in the Schedule, Mr. Gupta also referred to Section 8 of the Act which provides for Bonds, Debentures or other Securities issued on loans under Act 11 of 1879. 13. The principal contention of learned Counsel for the applicant' is that the' Stamp Act conceives of (1) the three categories of bonds mentioned in Section 2(5), (2) the six other types of bonds mentioned in the Schedule and (3) the bond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant before us has drawn our attention to these observations of the Supreme Court in support of his contention that the definition of 'bond' in the Indian Stamp Act, 1899, must be given a restricted meaning rather than the wider meaning in Section 2 (f) of the Bihar Act. 20. It appears to us that these are casual observations by learned Judges of the Supreme Court while construing a different statute altogether. We have to examine in depth the language used in Section 2(5) of the Indian Stamp Act, 1899, to appreciate the impact and amplitude thereof. 21. We were then referred to the Hitwardhak Cotton Mills Co. Limited v. Sorabji ILR (1909) 33 Bom 426. In this case the transactions comprised in a document consisted of a transfer of a mortgage secured on a cotton mill and an agreement that the transferee should lend money at the request of the transferor to the mortgaged mill for making improvements, additions and repairs and for working the mill. The question arose whether the document was a bond within the meaning of Section 2(5)(b) of the Indian Stamp Act, 1899. The Court held that an agreement to lend money does not create an obligation to pay money and, as such, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the first instalment of the said loan. 26. Immediately after this clause the operative portion of the document begins thus: Now these presents witness and it is hereby agreed as follows: In consideration of the premises aforesaid and of the sum of ₹ 15,00,000/-only to the Borrower paid by the Corporation as the first instalment of the said loan on the execution of these presents the receipt whereof is hereby and by the receipt hereunder written admitted and acknowledged the Borrower doth hereby covenant with the Corporation that the Borrower shall pay to the Corporation the said sum of ₹ 15,00,000/- only (hereinafter called the principal sum ) by three equal instalments of ₹ 5,00,000/- each of which the first instalment shall be paid on the 31st day of May, 1991 and the second instalment shall be paid on the 31st day of May, 1992 and the third instalment shall be paid on the 31st day of May, 1993 without interest except as hereinafter provided. 27. This clause is followed by further covenants of the borrower with the Corporation. In clause (i) of the further covenants by the borrower it is stated: If it appears to the Corporation at any t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely or at a fixed future date. A person who so binds himself is called the obligor, and the person to whom he is bound the obligee; and the instrument itself is sometimes called an obligation. 32. For our purposes in this case it would be enough to say that the ordinary meaning of a bond is that it is document or instrument whereby the obligor binds himself to pay to the obligee specified sum or sums of money at a fixed date or dates. If we apply this meaning to the document which is the subject-matter of this reference there is no doubt that the document is a bond. 33. We may, however, examine the legislative history of the definition of ' bond in different Stamp Acts that were in force in our country. 34. In the Stamp Act of 1869 the definition of a 'bond' was the same as could be found in the Limitation Acts of 1877 and 1908. The definition was as follows:-- 'Bond' includes 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. 35. In the Stamp Act of 1879 the definition of 'bond' rung thus: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement'. In the case of a bond, in the event of breach, the party to the instrument who had obliged to pay money to the other is liable to pay the sums stipulated in the instrument. In the latter case the quantum of damages has to be fixed by the Court. 44. One of the recent decisions on this subject is the decision of the Bombay High Court, in Patel Stone Trading Co., Nagpur v. Ram Singh, reported in AIR1975Bom79 . In an attested document in this case there was no mention of a pre-existing right or liability between the parties and for the first time a liability was created by the document whereby a person agreed to pay an ascertained sum to another and an express covenant about repayment was incorporated in the document. The Bombay High Court held that the document was a 'bond' within the meaning of Section 2(c)(ii) of the Bombay Stamp Act. The Bombay High Court has said 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 acknowledgment of a pre-existing liability. If there is merely acknowledgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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