{"id":44626,"date":"2010-05-31T00:00:00","date_gmt":"2010-05-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/s-viswanathan-vs-leslie-philip-on-31-may-2010"},"modified":"2014-07-02T01:37:17","modified_gmt":"2014-07-01T20:07:17","slug":"s-viswanathan-vs-leslie-philip-on-31-may-2010","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/s-viswanathan-vs-leslie-philip-on-31-may-2010","title":{"rendered":"S.Viswanathan vs Leslie Philip on 31 May, 2010"},"content":{"rendered":"
Kerala High Court<\/div>\n
S.Viswanathan vs Leslie Philip on 31 May, 2010<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nWP(C).No. 15591 of 2010(O)\n\n\n1. S.VISWANATHAN,S\/O.V.R.SHIVARAMAKRISHNAN,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. LESLIE PHILIP,PROPRIETOR,\n                       ...       Respondent\n\n                For Petitioner  :SRI.SHAJI P.CHALY\n\n                For Respondent  : No Appearance\n\nThe Hon'ble MR. Justice THOMAS P.JOSEPH\n\n Dated :31\/05\/2010\n\n O R D E R\n                             THOMAS P. JOSEPH, J.\n                            --------------------------------------\n                            W.P.(C) No.15591 of 2010\n                            --------------------------------------\n                       Dated this the 31st day of May, 2010.\n\n                                      JUDGMENT\n<\/pre>\n
        Distinction between an “agreement” and a “bond” arises for a decision in<\/p>\n
this Writ Petition.\n<\/p>\n
        2.    Short facts necessary for a decision of the question are:<\/p>\n
Petitioner\/plaintiff and respondent\/defendant describing themselves as party<\/p>\n
Nos.2 and 1, respectively entered into Ext.P2, agreement on 14.01.2005. As<\/p>\n
per that agreement      respondent was to pay R.50,000\/- per month to the<\/p>\n
petitioner for services done by petitioner to the respondent. For recovery of the<\/p>\n
said amount petitioner sued respondent in the court of learned Sub Judge,<\/p>\n
North Paravur in O.S.No.275 of 2007. In the course of trial when petitioner<\/p>\n
attempted to introduce Ext.P2 in evidence respondent raised a contention that<\/p>\n
though, styled as an agreement it is a bond and hence liable to stamp duty and<\/p>\n
penalty accordingly. Petitioner asserted that the document is only an agreement<\/p>\n
in that it did not create liability on the respondent for the first time and hence<\/p>\n
stamp duty paid as if the document is only an agreement is sufficient. Learned<\/p>\n
Sub Judge considered the question and after referring to the relevant decisions<\/p>\n
on the point concluded that the document is “bond” as defined under Section 2<\/p>\n
(a)(ii) of the Kerala Stamp Act (for short, “the Act”) and is liable for stamp duty<\/p>\n
and penalty accordingly. That order is under challenge in this Writ Petition.<\/p>\n
Learned counsel for petitioner reiterating the contentions raised in the court<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                           2<\/span><\/p>\n
below asserted that Ext.P2 is only an “agreement”. According to the learned<\/p>\n
counsel as per the terms and conditions agreed between the parties liability of<\/p>\n
respondent to pay the amount is dependant on the service done by petitioner.<\/p>\n
It is the contention of learned counsel that in deciding whether the document is<\/p>\n
an agreement or bond, importance has to be given to the intention of parties –<\/p>\n
as to what they intended by the document, whether parties have created<\/p>\n
liability for the first time as per the document.      Learned counsel has placed<\/p>\n
reliance on the decisions in West Coast Electroplating Co. Ltd . v.<\/p>\n
Sreedharan (1971 KLT 383) and                   State Bank of Travancore v.<\/p>\n
Thayikutty Amma<\/a> (1988 (2) KLT 111). It is the contention of the<\/p>\n
learned counsel that even if two interpretations are possible the one which is in<\/p>\n
favour of the assessee so that his liability for payment of stamp duty is reduced<\/p>\n
is to be accepted. Reliance for that proposition is made on the decision in<\/p>\n
Mathai Mathew v. Thampi<\/a> (1989 (1) KLT 138). In response, learned<\/p>\n
counsel for respondent contend that it is by Ext.P2, agreement that liability of<\/p>\n
respondent towards petitioner was quantified for the first time, it is Ext.P2 which<\/p>\n
created liability on respondent to pay amount to the petitioner for the first time<\/p>\n
and hence that document falls within the mischief of “bond” as defined under<\/p>\n
Section 2(a)(ii) of the Act. It is the contention of learned counsel that at any rate,<\/p>\n
Ext.P2 will come within the mischief of Section 2(a)(i) of the Act. According to<\/p>\n
the learned counsel that document has been correctly interpreted by the learned<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                         3<\/span><\/p>\n
Sub Judge and it requires no interference under Article 227 of the Constitution.<\/p>\n
A “Bond” is defined in Section 2 of the Act thus,<\/p>\n
                    “(a) “bond” includes-\n<\/p>\n
                    (i)    any instrument whereby a person obliges<\/p>\n
             himself to pay money to another, on condition that the<\/p>\n
             obligation shall be void if a specified act is performed,<\/p>\n
             or is not performed, as the case may be;\n<\/p>\n
                    (ii)   any instrument attested by a witness and<\/p>\n
             not payable to order or bearer, whereby a person<\/p>\n
             obliges himself to pay money to another; and<\/p>\n
                    (iii)  any instrument so attested, whereby a<\/p>\n
             person obliges himself to deliver grain or other<\/p>\n
             agricultural produce to another;”\n<\/p>\n
“Agreement” comes from the word “agreementum” which is a word compounded<\/p>\n
by two words, viz; “of aggregatio” and “mentium”. By contraction of those words<\/p>\n
and by short pronounciation of them they are made one word, viz; agreementum<\/p>\n
which is no other than a union, collection, copulation and conjunction of two or<\/p>\n
more minds in anything done or to be done. Though the word “agreement” is not<\/p>\n
defined in the Act, that word finds definition in the Indian Contract Act as every<\/p>\n
promise and every set of promises forming the consideration for each other is an<\/p>\n
agreement . Every agreement is not a contract, but every contract contains an<\/p>\n
agreement which is enforceable under law.\n<\/p>\n
      3.     Decisions relied on by the learned Sub Judge and referred to in the<\/p>\n
order under challenge and the decisions relied on by the counsel for petitioner<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                          4<\/span><\/p>\n
highlighted one thing – if liability to pay the amount is created for the first time<\/p>\n
by the document, it is a bond while, if the document speaks about liability of<\/p>\n
the person concerned to pay a pre-existing liability it is not a bond. In West<\/p>\n
Coast Electroplating Co. Ltd . v. Sreedharan (supra) it was observed<\/p>\n
as a distinguishing     feature between      an obligation under a bond and an<\/p>\n
obligation under an ordinary contract that a breach of an obligation under a<\/p>\n
bond does not sound in damages whereas damages is what are who break an<\/p>\n
ordinary contract is subject to. It was held that in every case one has to look at<\/p>\n
the intention of the parties and if the intention of parties is not to extinguish the<\/p>\n
earlier obligation but to keep it alive and the document subsequently executed<\/p>\n
only provides for the method of payment and for reduction of interest under<\/p>\n
certain contingency such a document is merely an agreement and not a bond.<\/p>\n
        4.    One of the earliest decisions on the point is Hira Lal Sircar v.<\/p>\n
Queen Empress (ILR 22 Calcutta 757) where it was held that no<\/p>\n
document can be a “bond” within the relevant Section unless it is one which by<\/p>\n
itself creates an obligation to pay the amount. In Collector of Rangoon v.<\/p>\n
Maung Aung Ba (33 Indian Cases 920) it was held that an agreement to<\/p>\n
deliver agricultural produces for consideration and to compensate the<\/p>\n
covenantee in default does not fall within the definition of ‘bond’.        In the<\/p>\n
matter of Hamdard Dawakhana (Wakf) Delhi (AIR 1968 Delhi 1<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                         5<\/span><\/p>\n
(FB)), meaning of the word `bond’ was considered. It was held that in the case<\/p>\n
of bond in the event of breach party to the instrument who had obliged to pay<\/p>\n
money to the other is liable to pay the sum stipulated in the instrument whereas<\/p>\n
in the case of an agreement the quantum of damages has to be fixed by the<\/p>\n
court. To find out the character of an instrument one has to read the instrument<\/p>\n
as a whole and find out dominant purpose. A single instrument may embody<\/p>\n
several purposes but what is relevant for the purpose is the dominant purpose<\/p>\n
of the instrument. Sulaiman, J. stated in Surendra Prasad Narain Singh<\/p>\n
v. Sri Gajadhar Prasad Sahu Trust Estate and others (AIR<\/a> 1940<\/p>\n
FC 10) that the essential common feature of a bond and agreement is that as<\/p>\n
per the bond the person obliges himself to do the act mentioned therein and that<\/p>\n
the language of the instrument itself must expressly create the obligation.<\/p>\n
Referring to that decision the Supreme Court in Jiwanlal Achariya v.<\/p>\n
Ramesh Warlal Agarwalla (AIR<\/a> 1967 SC 1118) has stated that the<\/p>\n
word `bond’ (occurring in Bihar Money Lenders (Regulation of Transactions)<\/p>\n
Act) is used in its general sense, ie. deed by which one person binds himself to<\/p>\n
pay sum to another person. It is useful to refer to the decision of Allahabad High<\/p>\n
Court in re Dhampur Sugar Mills Ltd. (AIR 1956 All.25) where Article<\/p>\n
5 of the Indian Stamp Act was considered. That was an agreement between the<\/p>\n
company and its managing agent.          Question considered was whether the<\/p>\n
document was a ‘bond’. The court held that provision in the agreement that<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                           6<\/span><\/p>\n
company shall pay certain commission and allowances to the managing agent is<\/p>\n
a mere term of the managing agency agreement and it is not a ‘bond’. Having<\/p>\n
regard to the above position of law I shall consider whether Ext.P2 is a bond or<\/p>\n
is an agreement.\n<\/p>\n
       5.      Ext.P2 says that respondent has been doing business of imparting<\/p>\n
training   in BPO related activities and that he had authorized petitioner for<\/p>\n
conducting training in Data conversion and other IT related activities. It is stated<\/p>\n
that in the meantime parties agreed to make an agreement among themselves<\/p>\n
(to carry on business as aforesaid) and by Ext.P2 they have crystallized terms<\/p>\n
and conditions of that agreement. Condition No.1 is that the agreement will be<\/p>\n
effective from 01.10.2004 onwards. Condition No.2 which is relied on by both<\/p>\n
sides is that “the party of the first part will pay an amount of Rs.50,000\/- per<\/p>\n
month as consideration for the services done by party of the second part for<\/p>\n
conducting training in data conversion and other IT related activities”.<\/p>\n
(emphasis supplied).      Condition No.3 says that petitioner shall be responsible<\/p>\n
for meeting all expenses in connection with the aforesaid activities including<\/p>\n
staff salary, electricity charges, etc. Condition No.4 is that fee for imparting the<\/p>\n
training will be collected from the students by respondent . The last condition is<\/p>\n
that the agreement can be terminated by both parties by giving the other three<\/p>\n
months’ prior notice.\n<\/p>\n
       6.      There is weight in the contention of the learned counsel            for<\/p>\n
petitioner that it is not as if as per Ext.P2 a liability is created on the respondent<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                            7<\/span><\/p>\n
for the first time to pay Rs.50,000\/- to the petitioner. Instead payment of the said<\/p>\n
amount is for service rendered and is only one of the         terms and conditions of<\/p>\n
the agreement entered into between the parties their primary intention being<\/p>\n
conduct of business as stated therein subject ofcourse to the terms and<\/p>\n
conditions specified. Condition No.2 which is relied on by the parties did not<\/p>\n
create any unconditional obligation on respondent to pay any amount to the<\/p>\n
petitioner for the first time. The agreement only evidences terms and conditions<\/p>\n
agreed to between the parties. The agreement contains reciprocal promises.<\/p>\n
Payment of Rs.50,000\/- to the petitioner is conditional on petitioner rendering<\/p>\n
service to the respondent.       I am unable to understand reading Ext.P2 as a<\/p>\n
whole and condition No.2        in particular  that it is a document as per which<\/p>\n
liability is created for the first time on respondent to pay a certain amount.<\/p>\n
Ext.P2, in my view is only an ‘agreement ‘.       I also bear in mind that as stated in<\/p>\n
Surendra Prasad Narain Singh v. Sri Gajadhar Prasad Sahu<\/p>\n
Trust Estate and others<\/a> (supra) violation of the terms or conditions of the<\/p>\n
agreement as per Ext.P2 gives the parties, though it is not specifically stated in<\/p>\n
the agreement a right to sue for recovery of damages from the defaulting party.<\/p>\n
A further fact to be noted is that the agreement is terminable on the part of either<\/p>\n
of the parties at any time , the only condition being that three months’ prior notice<\/p>\n
has to be given.      Section 2(a)(ii) of the Act in the above circumstances has no<\/p>\n
application. Clause (i) also has no application as Ext.P2 does not provide that<\/p>\n
obligation to pay the amount shall be void if a specified condition is performed or<\/p>\n
WP(C) No.15591\/2010<\/p>\n
                                      8<\/span><\/p>\n
not performed.     Learned Sub Judge was not correct in holding that Ext.P2 is a<\/p>\n
bond. As such Ext.P1, order dated 19.03.2010 is liable to be set aside. I hold<\/p>\n
that Ext.P2 is only an agreement, nothing less, nothing more and is not liable<\/p>\n
to stamp duty as a bond.\n<\/p>\n
      Writ Petition succeeds. Ext.P1, order under challenge is set aside holding<\/p>\n
that Ext.P2 is only an agreement and not a bond.\n<\/p>\n<\/p>\n
                                             THOMAS P.JOSEPH,
\n                                                     Judge.\n<\/p>\n
cks<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court S.Viswanathan vs Leslie Philip on 31 May, 2010 IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C).No. 15591 of 2010(O) 1. S.VISWANATHAN,S\/O.V.R.SHIVARAMAKRISHNAN, … Petitioner Vs 1. LESLIE PHILIP,PROPRIETOR, … Respondent For Petitioner :SRI.SHAJI P.CHALY For Respondent : No Appearance The Hon’ble MR. Justice THOMAS P.JOSEPH Dated :31\/05\/2010 O R D E R […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-44626","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nS.Viswanathan vs Leslie Philip on 31 May, 2010 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/s-viswanathan-vs-leslie-philip-on-31-may-2010\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"S.Viswanathan vs Leslie Philip on 31 May, 2010 - 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