Allowed

K Prasad, Krishna Dist v. J Adiseshaiah, Krishna Dist

Andhra Pradesh HC18 Oct 2019CRP/432/2017

Case brief

AI extract

What is this about?

A revision petition held that an agreement dated 13.07.2011 reflecting a loan relationship between parties, which served as collateral to a sale deed, did not constitute a bond under Section 2(5) of the Stamp Act. The High Court set aside the lower court order, ruling no stamp duty or penalty was payable, and the agreement falls under Article 6 of Schedule 1A.

What did the court decide?

The order dated 05.12.2016 passed by the Principal Senior Civil Judge, Gudivada, in I.A.No.610 of 2016 in O.S.No.197 of 2016 is set aside. Pending miscellaneous petitions are closed.

K Prasad, Krishna Dist Vs J… — Contract and Commercial Disputes | Andhra Pradesh HC (2019)

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HONOURABLE SRI JUSTICE M. VENKATA RAMANA

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C.R.P.No.432 of 2017

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ORDER:

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This revision petition is directed against the order of the Court of learned Principal Senior Civil Judge, Gudivada, in I.A.No.610 of 2016 in O.S.No.197 of 2016 dated 05.12.2016.

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The defendant is the petitioner. The respondent as the plaintiff laid the suit against the petitioner for grant of permanent injunction restraining him from interfering with his peaceful possession and enjoyment of the plaint schedule property.

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An extent of Ac.2.30 cents of agricultural land comprising of Ac.2.22 cents in RS.No.189/2 and Ac.0.08 cents in RS.No.189/3 of Kapavaram Village of Pamarru Mandal, Krishna District is the plaint schedule land, which shall be referred to hereinafter as “suit land” for convenience.

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The petitioner filed written statement resisting the claim of the respondent.

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I.A.No.610 of 2016 was filed under Order XXXIX Rules 1 and 2 read with Section 151 C.P.C for grant of temporary injunction in favour of the respondent and against the petitioner and to grant ex parte (ad interim) injunction in favour of the respondent against the petitioner. The petitioner resisted the claim of the respondent in the above petition filing an appropriate counter.

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In the course of hearing the petitioner sought to rely on an agreement described in Telugu as “angikara patram” dated 13.07.2011. Since an objection, as to admissibility of this document, was raised learned trial Judge considered it as a ‘bond’ within purview of

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Section 2(5) (a) & (b) of Indian Stamp Act, 1899. Thus, it was held that it is inadmissible and for want of registration being barred under Section 17 of the Registration Act as well as exigible for stamp duty and penalty.

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Sri Vijayababu, learned counsel for the petitioner contends that the document styled “angikara patram” in Telugu is nothing but a simple agreement falling within the scope of Article 6 of Schedule 1A of Stamp Act as applicable in the State of Andhra Pradesh and observations of learned trial Judge in this context treating it as bond calling upon the petitioner to pay stamp duty and penalty thereon and holding that it is inadmissible in terms of Section 17 of the Registration Act is improper. Referring to recitals in the agreement in question, while explaining the purpose for which this document is sought to be relied on by the petitioner, in the proceedings in the trial court with reference to pleadings set up by both the parties, contentions have been elaborated. Thus it is sought to set aside the order impugned.

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Sri Y. Ramatirdha, learned counsel for the respondent while asserting that the respondent has been in possession and enjoyment of the suit land having had purchased for valuable consideration from the petitioner under sale deed dated 13.07.2011, assailed the nature of the agreement sought to rely on by the petitioner. Thus the order under revision is supported on behalf of the respondent.

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Now, the point for determination is – whether the agreement in question is a bond within the purview of Section 2 (f) (a) & (b) of Stamp Act and if the objections raised in the impugned order to consider the same are proper?

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The pleadings set out by the respondent at the trial are to the effect that he had purchased the suit land from the petitioner for a

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valuable consideration of Rs.5.75 lakhs on 11.04.1979 and thus he has been in peaceful possession and enjoyment of the same.

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The predominant contention of the petitioner against such claim of the respondent is that the above sale reflected only a simple loan transaction when he requested the respondent for a loan of Rs.10 lakhs. It is also the case of the petitioner that upon borrowing Rs.10 lakhs agreeing to repay the same with interest at 24% p.a., as desired by the respondent, he executed the sale deed dated 13.07.2011. He further stated that he and the respondent entered into a contemporaneous agreement on the same day, viz., 13.07.2011 whereby certain terms were set out to the effect that if the petitioner failed to repay the amount due within a period of two years therefrom, the suit land shall be treated as absolute property of the respondent. It is further version of the petitioner in his pleadings that this agreement also contain a recital and which in fact is true that possession of this suit land remained with him and that the sale deed nominally incorporated a recital that the suit land was delivered in possession to the respondent.

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The agreement in question as per the copy of its English translation in page 27 reads as follows :-

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“EXECUTANTS: 1. Adiseshaiah S/o Jonnalagadda Venkataramaiah @ Chinna Venkataramaia, R/o Veeravalli Mokasa Village, 2. Prasad S/o Kolusu Venkateswara Rao, R/o Jujjuvaram village, Pamarru mandal, Krishna District. Acceptance Letter (in vernacular language Anjeekara Patram) executed by both the parties together. NATURE OF THE DOCUMENT: The 2^nd party of this document requested the 1^st party to adjust some amount towards his family expenses. Then the 1^st party asked the 2^nd party to execute a regular Sale Deed in his favour with regard to A.C.2.22 cents in re-survey No.189/2 and Ac.0.08 cents in Re-Survey No.189/3 in his favour then he 2^nd party accepted for the same and executed a regular Sale Deed vide Doc.No. /11 at Sub-Registrar Office Pamarru. The interest of Rs.10,00,000/-by the 1^st party is Rs.2/per month. The duration to re-pay the amount advanced by the 1^st party to the 2^nd party is two years. If the 2^nd party fails to repay the loan with the period accepted between the parties then it

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is open for the 1^st party to take possession of the west land and enjoy the same as per his will.

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This acceptance letter is executed with the acceptance of both the parties to this document . Witness: xxxxx(M. Masthan Rao) 1.xxxxxxx(Jonnalagadda Adiseshaiah) xxxxx (M.B. Shareef) 2.xxxxxxx (K. Prasad).”

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A careful consideration of this document indicates that there are two parts therein. First part refers to the nature of transaction entered into in between the executants and petitioner and respondent. It is with reference to the execution of a regular sale deed in favour of the respondent in respect of the land in question. It further refers to alleged borrowal of certain amount by the petitioner from the respondent for his family expenses. Thereafter, it refers to payment of interest at the rate of 24% p.a on the amount of Rs.10,00,000/- alleged to have borrowed by the petitioner from the respondent.

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The second part of this document relates to the term of repayment of money alleged to have been so borrowed. They are to the effect that the petitioner should repay the same to the respondents within two years and if there is any default to repay the amount so borrowed within the period so stipulated, the respondent shall take possession of the land in dispute and enjoy the same as per his will.

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When the recitals of the document are considered comprehensively, they do indicate that it is a document contemporaneously entered into between the parties with reference to certain alleged transaction in between them. The second part of this document alone was taken into consideration by the trial Court without considering its effect in entirety.

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The recitals are taken into consideration by the learned trial Judge to hold that it created an obligation on the petitioner to repay the money within two years and therefore it is a bond.

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It is to be seen whether this document falls within the scope of

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Section 2(5) of Stamp Act. It reads:

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“Section 2 (5):- Bond includes–

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(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;

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(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

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(c) Any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another;”

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The trial Court has taken into consideration sub-clauses (a) and (b) of Section 2(5) of Stamp Act in drawing such an inference, which obviously cannot be made applicable, in as much as recitals in the agreement did not in any manner indicate that in case of failure of petitioner to repay money stated therein within a period of two years, the obligation thereunder shall be void. It is not such a condition which falls within purview of clause (a) of Section 2(5) of Stamp Act. Nature of obligation if at all, be taken, since this document contemplates such incidence, to get possession of the property as per its recitals. But, it remained a serious disputed question in this case.

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This agreement is attested by the witnesses and recitals are not to the effect that the amount mentioned therein shall be payable by the petitioner either to the order of the respondent his bearer. It recites as to an obligation to repay the amount alleged to have been borrowed by the petitioner from the respondent. When these recitals in this agreement are considered, it is difficult to apply clause (b) of Section 2(5) of Stamp Act. Clause (c) of this provision is completely inapplicable to this case.

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In the above circumstances, as rightly contended for the petitioner, recitals in this agreement merely point out a relationship of creditor and debtor between the respondent and the petitioner making out certain mutual obligations. In such an event, it is rather difficult to consider this document as an instrument falling within the purview of Section 2(5) of Stamp Act and as a bond.

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It is true that the distinction between a bond and an agreement evidencing relationship of the parties to it as creditor and debtor is too thin to apply. The essential information gathered from such recitals holds the key in deciphering the nature of the document.

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Observations in the order under revision that there is possibility of petitioner suing the respondent for specific performance of such terms or recitals in the agreement seemingly farfetched. Even otherwise subject to proof of this agreement, a party who is entitled to such right may have recourse to any such possibility even otherwise having regard to the nature of the suit. In fact, there is no necessity to consider such possibility.

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Nonetheless, having regard to the nature of the dispute which fell for consideration in this revision petition, the inference is to draw that the document, viz., agreement dated 13.07.2011, as rightly pointed out by the petitioner, remains an agreement reflecting a contemporaneous transaction along with sale deed, basing on which the respondent claimed his right, title and interest to the suit land in dispute. Therefore, observations so recorded by the learned trial Judge cannot be deemed valid nor this document falls within the scope of Section 2 (5) of Stamp Act, to call it a bond. Therefore, there is no necessity to pay stamp duty and penalty thereon. This document falls within the scope of Article No.6

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C.R.P.No.432 of 2017

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of Schedule-IA of the Stamp Act as applicable to the State of Andhra Pradesh.

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Therefore, the petition as to the application of Section 17 of Registration Act also cannot stand having regard to the nature of this document. Even otherwise, the effect of this document can be considered in terms of Section 49 of Registration Act for collateral purpose.

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During the course of hearing this day, Sri Y. Ramatirtha, learned counsel for the respondent brought to the notice of this Court that injunction petition in I.A.No.610 of 2016 in O.S.No.197 of 2016 has already been disposed of by the trial Court and C.M.A is pending against such order in the Court of the learned XVI Additional District Judge, Krishna at Gudivada. It is also brought to the notice of this Court that trial is yet to commence in this suit and that the affidavit in lieu of examination-in-chief has been filed by the respondent.

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Nonetheless, for the reasons stated above, this revision petition has to be allowed holding that the agreement in question is a sample agreement and that it is not a bond.

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In the result, this revision petition is allowed. Consequently order of the learned Senior Civil Judge, Gudivada in I.A.No.610 of 2016 in O.S.No.197 of 2016, dated 05.12.2016 is set aside. There shall be no order as to costs.

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Consequently interim order earlier granted, if any, stands vacated and pending miscellaneous petitions, if any, shall stand closed.

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_________________________ M. VENKATA RAMANA, J.

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18^th October, 2019 Js.

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HONOURABLE SRI JUSTICE M. VENKATA RAMANA

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C.R.P.No.432 of 2017

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18^th October, 2019

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Js.

K Prasad, Krishna Dist v. J Adiseshaiah, Krishna Dist

Case brief

What is this about?

What did the court decide?

K Prasad, Krishna Dist v. J Adiseshaiah, Krishna Dist

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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