Akshay Zemindary, Ltd. v. Ramanath Burman — 1936 DIGILAW 287 (CAL)

JUDGMENT 1. The question raised by this Rule is as to the sufficiency of the stamp which has been affixed on a security bond executed under the circumstances to be referred to in detail hereafter, and also as to the form of the said security bond. It appears that during the pendency of an appeal to this Court an application was made by the Petitioners for stay of execution of decree in a rent suit. A Rule was issued on 25th March, 1935 and the following order was made by this Court: " After hearing Mr. Gunada Charan Sen for the Petitioner and Dr. Mukherjee for the Opposite Party we are of opinion that this Rule should be made absolute on these terms, namely, that the Petitioner is to deposit in the Court of the Subordinate Judge of Khulna a sum of Rs. 6000 on or before the 28th March, 1935 and is to furnish security for the balance of Rs. 9000 and odd within three weeks from this date to the satisfaction of the Court below. The amount of costs Rs. 1788-4-0 must also be deposited in Court within 4 weeks from this date. Unless these conditions are fulfilled the Rule will stand discharged with costs." 2. The Opposite Party in the present Rule on 12th April, 1935, put in an unregistered personal security bond for Rs. 9000 on a stamped paper of Rs. 7:8 jointly executed by 16 tenants of the Opposite Party hypothecating certain properties in the schedule thereto which consisted of holdings, under the Opposite Party in the lands in suit. Then there were intermediate proceedings to which it is not necessary to refer. It is sufficient for the purpose of the present Rule to state that the Subordinate Judge has considered that the stamp of Rs. 7/8, which was affixed on the security bond, was quite sufficient as according to him the bond was a security bond within the meaning of Art. 57 of the Indian Stamp Act. 3. On behalf of the Petitioners it was contended that the bond should be stamped under Art. 40 of the Stamp Act. The contention of the Petitioner was that the security bond was really a mortgage deed as contemplated by Art. 40 and did not come within the purview of Art. 57. 3. On behalf of the Petitioners it was contended that the bond should be stamped under Art. 40 of the Stamp Act. The contention of the Petitioner was that the security bond was really a mortgage deed as contemplated by Art. 40 and did not come within the purview of Art. 57. This contention was negatived by the Subordinate Judge by his order dated 15th January, 1936 and the Subordinate Judge came to the conclusion that the bond had been properly stamped as it was a security bond within the meaning of Art. 57. The present Rule was obtained by the Petitioner for the revision of that order. 4. We have heard Dr. Mukherjee, the Senior Government pleader, on behalf of the Crown as this is a matter which concerns the revenue of the Crown, and we have also heard the Petitioners and the Opposite Party. Having regard to the language of Art. 57, it appears to us clear that the present security bond is not covered by that Article. Art. 57 is in the following terms: "Security-bond or Mortgage-deed executed by way of security for the due execution of an office, or to account for money or other property received by virtue thereof or executed by a surety to secure the due performance of a contract, (a) when the amount secured does not exceed Rs. 1000 (b) in any other case (the same duty for a bond for the amount secured)." 5. It has been contended on behalf of the Crown, and also on behalf of the Petitioner, that this is not a security bond which is executed by these several sureties to secure the due performance of a contract. Mr. Sen who is appearing to show cause has contended that Art. 57 must be so read as to read the words " security bond " by themselves as not being affected by the qualifying clause which follows the words " Mortgage deed." We are unable to accede to this contention. In our opinion the words " security bond" or " mortgage deed" are both qualified by the subsequent words commencing with " executed by way of security" and ending with the words "the due performance of a contract." We have been referred to the definition of mortgage deed in sec. 2, cl. In our opinion the words " security bond" or " mortgage deed" are both qualified by the subsequent words commencing with " executed by way of security" and ending with the words "the due performance of a contract." We have been referred to the definition of mortgage deed in sec. 2, cl. 17 of the Stamp Act, according to which section a mortgage deed includes every instrument whereby for the purpose of securing money advanced or to be advanced by way of loan or an existing or future debt or the performance of an engagement, one person transfers, or creates, to or in favour of, another, a right over or in respect of specified property. 6. It is contended by Mr. Sen that the security bond was executed to secure the due performance of a contract, and his argument was that the contract was between this Court, and the judgment-debtor and to secure this contract this security bond was executed. We are unable to accede to this contention. The language of Art. 57 clearly shows that the security bond must be executed to secure the due performance of a contract. This Court merely passed an order that execution be stayed on security being furnished. The transaction purported to be an order and not an agreement or contract. Now what is the contract in the present case between the Court and a party to the suit? The true effect of the order of this Court is that to secure the due performance of an order of the Court the security bond has to be executed. The contract to pay rent has after the decree merged into the decree and the contractual debt has become a decretal debt. If the intention of the legislature was that the security bond was also to secure the due performance of an order or decree of Court one would have expected that those words would have been added after the words "to secure the due performance of a contract." There was nothing to prevent the legislature from introducing those words if the object was to secure the performance of a decree or order of a Court. Suretyship is a collateral engagement to answer for the debt, default or miscarriage of another. In the present case it is a collateral engagement to secure the due performance of the order of the Court. It is Mr. Suretyship is a collateral engagement to answer for the debt, default or miscarriage of another. In the present case it is a collateral engagement to secure the due performance of the order of the Court. It is Mr. Sen's contention that the security bond is really an agreement between the Court, and the 16 tenants in the present case. The difficulty in accepting this contention is that a Court can-not possibly be regarded as a judicial person, and as we have to consider later with reference to the form of the bond, the bond is not at all in proper form having regard to what has been observed by their Lordships of the Judicial Committee with reference to security bonds under Or. 41, rr. 5 and 6 of the Code of Civil Procedure. It is pointed out by the Judicial Committee in the case of Raj Raghubar Singh v. Jai Indra Bahadur Singh L.R. 46 IndAp 228: S.C. ILR 42 All. 158 (1919) "that the new Code of Civil Procedure, that of 1968, provides a special form of security bond to be given during the pendency of an appeal. The form shows that it is intended to be given to someone and not to be a mere undertaking to the Court. Whether that someone should be the other party or an officer of the Court is not made clear; but with this form in use it is not likely that the difficulty which surrounds the present case will arise in future." In the same case their Lordships stated that "the Court is not a judicial person. It cannot take property, and as it cannot take property it cannot assign it." In this view the form in which the security bond has been executed in the present case does not seem to be correct. The security bond should be addressed to some officer of the Court such as the sheristadar or some other responsible officer. 7. With regard to the question about the sufficiency of the stamp, the view we take receives support from a decision of a Full Bench of the Allahabad High Court in the case of Stamp Reference by the Board of Revenue ILR 52 All. 814 (Spl. B.) (1929). 7. With regard to the question about the sufficiency of the stamp, the view we take receives support from a decision of a Full Bench of the Allahabad High Court in the case of Stamp Reference by the Board of Revenue ILR 52 All. 814 (Spl. B.) (1929). We entirely agree with the observations of the learned Judges in that case that there was no such agreement in that case between the Subordinate Judge, and the judgment-debtor which would amount to a contract within the meaning of Art. 57. Indeed no agreement was expressed there as here. This Court directed in the present case that execution was to be stayed upon security being furnished and it was in pursuance of an order of this Court that the security bond in the present case was furnished. The security bond is really a mortgage deed within the definition in cl. 17, sec. 2 already referred to. It is true that there is a decision of the Lucknow Chief Court which is contrary to the view which has been taken by the learned Judges of the Allahabad High Court in this Full Bench decision. but we prefer to follow the Allahabad decision because we agree with the view that the word "contract " used in the Art. 57 must be taken to mean a contract as defined in sec. 2 (b) of the Indian Contract Act of 1877. 8. We do not think that the alleged agreement as in the present case between the Subordinate Judge and the sureties who are no parties to the suit is such a contract as would be enforcible in law. We therefore think that the security bond should be stamped as a mortgage deed within the meaning of Art. 40. 9. With regard to the form of the security bond, as has already been pointed out in the passage to which reference has already been made in the decision of the Judicial Committee in Raj Raghubar Singh v. Jai Indra Bahadur Singh L.R. 46 IndAp 228: S.C. ILR 42 All. 158 (1919), the form of the bond must be in favour of some person, and we think that the bond should be in favour of a named person, namely some officer. 10. 158 (1919), the form of the bond must be in favour of some person, and we think that the bond should be in favour of a named person, namely some officer. 10. The result is that this Rule is made absolute and the Opposite Party is directed to put in within a month from this date the security bond addressed to some officer of the Court on which a stamp should be affixed according to Art. 40 of the Indian Stamp Act treating the document into a mortgage deed, and the Opposite Party will also get this document registered within the said time. If this order is not compelled with, the Rule for stay will stand discharged. 11. Let this order be communicated to the lower Court and the execution records sent down, as early as possible. There will be no order as to costs.