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Abubacker Labbai Vs. Chinnathambi Rowther - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1938Mad262; (1938)1MLJ159
AppellantAbubacker Labbai
RespondentChinnathambi Rowther
Cases ReferredRaj Raghubar Singh v. Jai Indra Bahadur Singh
Excerpt:
- - in the lahore case, the bond was executed by the debtor as well as the sureties......deeds, pawn or pledge, a bottomry bond, a mortgage of a crop, a respondentia bond and a security bond. article 57 prescribes the duty payable in respect of a 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. it is said that article 57, and not article 40, applies because the bond in question is a surety bond for the due performance of a contract. section 2(h) of the contract act defines a contract as being an agreement enforceable by law.5. the lahore high court held in a case headed in re stamp duty on security bond under the provincial insolvency act, section 21 i.l.r. (1935) lah. 74 that a bond of this.....
Judgment:

Alfred Henry Lionel Leach, C.J.

1. The following question has been referred to the Court under Section 57 of the Indian Stamp Act by the Board of Revenue as the Chief Controlling Revenue Authority of the Presidency:

Whether the document, a security bond for Rs. 4,500 executed in pursuance of an order of the Court of the Subordinate Judge of Tiruvarur, hypothecating also immovable property, should be stamped under Article 40, Schedule I, or under Article 57, Schedule I, of the Indian Stamp Act.

2. These articles correspond respectively to Articles 33 and 46 of the Madras Stamp Amendment Act of 1922.

3. The facts are shortly these. One Abubacker Labbai, Chinnathambi Rowther applied in the Court of the Subordinate Judge of Tiruvarur under the Provincial Insolvency Act to be adjudged an insolvent, and under Section 21(1) of that Act was required to give a bond with two sureties for his due appearance in the insolvency proceedings. A bond was accordingly executed by two sureties in favour of the Sheristadar of the Court in the sum of Rs. 4,500 and was stamped under Article 57 of the Stamp Act, or rather, under the corresponding article of the local Act. The Central Board of Revenue have asked the Court to decide whether this is correct. If Article 57 does not apply the only other article which can is Article 40. This is common ground.

4. Article 40 prescribes the duty to be paid on a mortgage deed not being an agreement relating to deposit of title deeds, pawn or pledge, a bottomry bond, a mortgage of a crop, a respondentia bond and a security bond. Article 57 prescribes the duty payable in respect of a 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. It is said that Article 57, and not Article 40, applies because the bond in question is a surety bond for the due performance of a contract. Section 2(h) of the Contract Act defines a contract as being an agreement enforceable by law.

5. The Lahore High Court held in a case headed In re Stamp Duty on Security Bond under the Provincial Insolvency Act, Section 21 I.L.R. (1935) Lah. 74 that a bond of this nature is a bond for the due performance of a contract and consequently is to be stamped under Article 57. In that case the bond differed materially from the bond we are now considering. The bond in the present reference was not executed by the debtor, but merely by the sureties. In the Lahore case, the bond was executed by the debtor as well as the sureties. This decision followed a previous decision of the Lahore High Court in Tullah Shah-Ram Saran Shah v. Ghulam Hussain I.L.R. (1933) Lah. 78 which concerned a bond given under Order 41, Rule 5 of the Code of Civil Procedure.

6. The Allahabad High Court has taken the contrary view. Stamp Reference by the Board of Revenue I.L.R. (1929) All. 844. A Full Bench consisting of Kendall, Young and King, JJ., held that the bond given under Order 41, Rule 5 was not a bond for the due performance of a contract, because there could be no contractual relation with the Court. An agreement amounting to a contract must be entered into by the parties with the object of creating contractual relations between themselves and this was impossible when the Court was concerned. A bench of the Calcutta High Court in Akshay Zemindary, Limited v. Ramanath Burman (1936) 40 C.W.N. 1281 expressed a similar opinion, and expressly held that the word 'contract' used in Article 57 means a contract as defined in Section 2(h) of the Indian Contract Act.

7. We agree with the decisions of the Allahabad and Calcutta High Courts. As the Privy Council pointed out in Raj Raghubar Singh v. Jai Indra Bahadur Singh (1919) 38 M.L.J. 302 : L.R. 46 IndAp 228 : I.L.R. 42 All. 158 (P.C.) the Court is not a juridical person and is incapable of contracting. Moreover in circumstances such as these there is nothing in the nature of a contract with the Court. When a debtor applied to be adjudicated an insolvent, he is required by law to attend before the Insolvency Court when required. It is not a matter of agreement; it is his duty to be there and if he does not attend when he should attend, the Court can compel his attendance. In this case the sureties did bind themselves to the Sheristadar that the insolvent would attend when called upon, but their obligation was not an obligation connected with the performance of a contract by the insolvent.

8. For the reasons indicated we are of the opinion that Article 40, not Article 57 is the appropriate article. We answer the reference accordingly.


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