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2007 DIGILAW 552 (AP)

P. Srinivasa Babu v. AMR Consultants Hyderabad

2007-06-13

GHULAM MOHAMMED

body2007
ORDER: This revision is directed against the order dated 09-10-2007 refusing to receive in evidence the document dated 10-09-2005 styled as 'memorandum of understanding' unless the stamp duty is paid in terms of Article 13 of Indian Stamp Act. 2. The plaintiff is the revision petitioner while the respondent is the defendant. The plaintiff filed suit for recovery of Rs.17,36,325/- with subsequent interest while the defendant laid counter-claim for Rs.31,60,000/-. During the trial, the plaintiff sought to mark the document dated 10-09-2005 styled as 'memorandum of understanding' entered into between the plaintiff and the defendant and objection was raised as to its admissibility. 3. Heard learned counsel for the parties and perused the record. 4. Learned counsel for the petitioner contended that the document sought to be marked is not a 'bond' as defined in Section 2(5) of Indian Stamp Act; that there is no obligation created under the document and as such it cannot be termed as 'bond'; that in order to constitute 'bond', it must be executed by one party in favour of other and create an obligation to pay, whereas both the parties have subscribed their signatures on the document now sought to be marked; that the document is merely a memorandum of understanding between the parties and the liability under it is pre-existing. Learned counsel vehemently contended that the memorandum of understanding cannot be termed as 'bond' as it is a mere acknowledgment of pre-existing right. Learned counsel for the petitioner relied upon the decision of Kerala High Court in M.R. SREEDHARAN Vs. G.GOPI AIR 2004 Ker. 167 . 5. Learned counsel for the respondent contended that payment of the amount is contemplated under the memorandum of understanding and mere affixing of signature by the plaintiff will not take away the character of the 'bond'. Learned counsel further contended that the memorandum had created an obligation to pay the amount to the plaintiff and the plaintiff affixing the signature on the memorandum will not change the obligation. Learned counsel relied upon the decision of this Court in PERUMALLA MALLESHAM Vs. CHENNAMANENI SUMANYA. 2007 (3) ALD 199 = 2007 (5) ALT 59 . 6. Having considered the rival contentions and decisions referred on either side, the point that arises for consideration in this revision is whether the document dated 10-9-2005 styled as 'memorandum of understanding' requires payment of stamp duty or not? 7. CHENNAMANENI SUMANYA. 2007 (3) ALD 199 = 2007 (5) ALT 59 . 6. Having considered the rival contentions and decisions referred on either side, the point that arises for consideration in this revision is whether the document dated 10-9-2005 styled as 'memorandum of understanding' requires payment of stamp duty or not? 7. Admittedly, the said Memorandum of Understanding had been signed by both the plaintiff and defendant on one-hundred rupees non-judicial stamp paper. One of the covenants is that the defendant has agreed to pay to the plaintiff an amount of Rs.48,00,000/- as business development charges for facilitating award of part of the work of the Project mentioned therein. Section 2 (5)(b) of the Indian Stamp Act stipulates the definition of the 'bond' and the provisions read as follows: "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 strict definition of 'bond' is not contemplated in the above provision and it is 'inclusive' in nature and it is not exhaustive, as such the documents/instruments such as the present one can be brought into its fold. Thus, the scope of the said Section is wide enough to bring within it any instrument, which obliges a party to pay money to another subject to certain terms and conditions agreed upon. In the instant case, it prima facie appears that the document is signed by both the parties, but the defendant who is a signatory, agreed to pay to the plaintiff a certain sum for facilitating the award of the work, and the document is signed in the presence of two witnesses. The main contention of the plaintiff is that the document dated 10-9-2005 is not a 'bond' within the meaning of Section 2(5)(b) of the said Act and it does not attract the stamp duty. 8. The document in question is signed by the plaintiff and defendant and also attested by two witnesses. The main contention of the plaintiff is that the document dated 10-9-2005 is not a 'bond' within the meaning of Section 2(5)(b) of the said Act and it does not attract the stamp duty. 8. The document in question is signed by the plaintiff and defendant and also attested by two witnesses. Though the plaintiff's signature is not necessary and even if his signature is affixed, the document has taken the substantial character of a 'bond'. Merely because the document is styled as 'memorandum of understanding', it does not lose the character of a 'bond' or a 'promissory note'. The nomenclature of the document will not decide the rights and obligations of the parties to the document concerned. It is seen that 100- rupees non-judicial stamp paper was purchased by P. Srinivasa Babu (plaintiff) in his name and the document is styled as 'memorandum of understanding' setting out the terms and conditions. The covenants, intention and conduct of the parties are necessary to know the character of document. The intention of the plaintiff in asking the defendant to execute the document in question is that he wanted the defendant to obligate the payment of the money to him. Thus, the substantial requirement of a 'bond' as stipulated in Section 2(5)(b) is satisfied and in the background of circumstances, the other requirement pales into insignificance. Apart from this, the plaintiff is asserting his right on the basis of the document in question, which cannot be permitted if it is inadequately stamped. When the plaintiff created an obligation for the defendant to pay a certain amount to him and terms were reduced to writing on a stamp paper and attested by two witnesses, this court is of the considered view that the document dated 10-9-2005 styled as 'memorandum of understanding' would come within the definition of 'bond' as stipulated in Section 2(5)(b) of Indian Stamp Act, and it is not properly stamped thereby requiring the plaintiff to pay the stamp duty as required under Article 13 of the Indian Stamp Act. 9. In the above circumstances, this Court is not inclined to interfere with the impugned order in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India. The Civil Revision Petition is accordingly dismissed.