(1.) A document styled as an agreement, whereunder the executant undertakes to repay the amount borrowed earlier with interest within the period provided under the document, is a bond or an agreement, is the question to be decided in this petition. Relying on a decision of this Court in Gopakumar v. Easwar Pillai 2006 (1) ILR Ker. 140, learned Munsiff held that the document is a bond and therefore it is insufficiently stamped and impounded the document. It is challenged in this petition filed under Article 227 of Constitution of India.
(2.) The document is styled as an agreement executed by respondent in favour of petitioner. The recitals in the document show that respondent had borrowed Rs. 80,000/- from petitioner earlier to enable him to go to outside India. Under the agreement, respondent agreed to repay the same with interest at 12% within one year from the date of execution of the agreement. It also provides that on the failure to repay, petitioner is entitled to realise the same personally as well as against the property of respondent. Learned Munsiff held that the document creates an obligation. Following the decision in Gopakumar's case it was held that it is a bond and not an agreement and therefore it is insufficiently stamped. Learned Counsel appearing for petitioner relying on the decision of this Court in Mathai Mathew v. Thampi 1989 (1) KLT 138 and State of Kerala v. Mcdowell and Co. Ltd. 1994 (1) KLT 802, argued that when the document shows that the amount agreed to be repaid was a pre-existing debt, the document does not create a new obligation and so it is only an agreement and not a bond. Learned Counsel appearing for respondent on the other hand relying on the decision in Gopakumar's case argued that the document creates an obligation to pay the amount with interest and hence it is a bond.
(3.) A learned single Judge (as his Lordship then was) in Mathai Mathew v. Thampi (supra) considered this question in detail. It was held that the distinguishing feature of a bond is that the obligation must have been created in the instrument itself and if the obligation was a pre-existing one, it does not partake of the character of a bond. It was held that when a promise is made and accepted, an agreement is created and it is immaterial whether the promise relates to any pre-existing liability or obligation and in the absence of any other definition in the Act, an agreement can be understood as one envisaged in the contract and thus a bond can be distinguished from an agreement on the aforesaid premise. Another single Judge of this Court in Sreedharan v. Gopi took the same view reiterating that the essential ingredient which distinguishes a bond and an agreement is that in the case of a bond, if the obligation was a pre-existing one it would partake the character of a bond. Document which evidences acknowledgment of an antecedent obligation or a pre-existing liability would not normally become a bond. The Apex Court in State of Kerala v. McDowell and Co. Ltd. 1994 (1) KLT 802 (SC) construing the definition of bond in Sub-clause (1) of Clause (a) of Section 2 of Kerala Stamp Act, held as follows: