SHAHABUDDIN, J.--This !s an appeal by special leave from the order of the High Court of Lahore by which a document exhibited in Civil Suit No. 65 of 1947 in the Court of the Senior Subordinate Judge, Sialkot, brought against appellant Arifuddin and others was held to be a composite bond and agreement, subject as a bond to a duty which with the penalty prescribed under section 35 of the Stamp Act came up to Rs.15,673-10-0 and the said document was impounded and sent to the Collector for the levy of the above-mentioned duty and penalty with the observation that the same was realisable from the executant, the present appellant.
Facts giving rise to this appeal are as follows. On 9th April 1944, appellant Arifuddin executed P. 1, a promissory note, undertaking to pay on demand the first respondent Noor Hussain or order a sum of Rs.1,50,000 with interest at four annas per cent. Per month. It was stated in the promissory note that the amount wag borrowed for the business and benefit of the firm S. Shamas-ud-Din & Sons.
Arifuddin is a son of Shams-ud---Din and also a partner In his firm. On the same day he executed another current Exh' P. 2 in favour of the same Noor Hussain sad stamped it on the basis that it was 2n agreement. As the only point for determination in this appeal is whether Exh. P. 2 is a bond and should therefore have been stamped as such, it is necessary to set out its recitals in full: Sheikh Arifuddin, son of Sheikh Shams-ud-Din, case Sheikh, I, S resident of Mohindargarh, Patiala State, at present resident of owner and Karkun of the Firm Sheikh Shams-ud-Din & Sialkot, Sons' and Mukhtar-i-Am (general agent) on behalf of Sheikh Shams--ud-Din, partner of the said firm and my father, do hereby declare as follows :- I, in the capacity of owner and Karkun of the Firm 'S. Shams-ud-Din & Sons and Mukhtar-i-am (general agent) of Sheikh Shams-ud-Din, other partner of the said firm, under the general power- of-attorney, dated the 29th July 1943, registered by the Sub-Registrar, Abbottabad, having taken rupees one lac and fifty thousand (Rs. 1,50,000) from Nur Hussain, son of Fazal Din, case Sulahria Rajput, resident of Sialkot, by means of a pro-note of today's date, for the benefit and business of the firm 'Sheikh Shamas-ud-Din and Sons' have entered into an agreement with the above-named Noor Hussain for entering into a partnership with the said firm on the following conditions, namely :-
(1) Under the general power of attorney dated the 29th July 1943, executed by Sheikh Shams-ud- Din, I am fully authorised to raise a loan, enter into an agreement of every sort with another person, execute documents and take all proceedings on behalf of the firm for its benefit and its business.
But this being not expressed in clear words I agree that I will myself on behalf of my father Sheikh Shams-ud-Din execute and complete within a period of one month, a deed of partnership, a copy whereof is attached to this agreement, with the said Noor Hussain, after securing a fresh special or general power of attorney from him or have the same done by him. More-over, a general power of attorney, a typed copy whereof is attached to this agreement, shall be got executed and completed by my father in the manner aforementioned or it shall be executed and completed (sic).
(2) The money which has already been taken or will be taken from the said Noor Hussain shall be treated as capital of the said firm.
(3) If I fail to complete, the said agreement within the period aforesaid, I will be responsible for payment of Rs. 20,000 (rupees twenty thousand) per month as damages in addition to the return of the sum aforementioned.
Hence. I have executed this agreement, so that the same may serve as an authority."
This document bears the signatures of Arifuddin and three attesting witnesses.
But the deed of partnership promised in Exh. P. 2 was not executed. Nor did Arifuddin obtain a power of attorney executed for the purpose of business. On 8th April 1947, Noor Hussain filed a suit against the Firm S. Shams-ud-Din & Sons and its partners including the appellant Arifuddin for the recovery of Rs. 1,63,500 the principal and interest due under the promissory note, Exh. P.
1. In the plaint reference was made to Exh. P. 2 but it was stated that a separate suit would be brought against Arifuddin for damages for having acted in contravention of that agreement. In support of the claim both the documents were produced by the plaintiff Noor Hussain, but the present appellant in his written statement objected to the admissibility of Exh. P.
2. The Senior Subordinate Judge thereupon passed on 6th August 1947, an order calling upon the parties to argue on 2.)th August 1947, as to whether Exh. P. 2 was properly stamped, but the suit was not called till October 1947, apparently owing to disturbances, and when it was taken up the order of 6th August 1947, was lost sight of and the present appellant as defendant admitted the execution of Exh. P.
2. In February 1948, he did not press his plea of inadmissibility of Exh. P. 2, but subsequently, in November 1948, apparently on the stamp Auditor's objection that Exh. P. 2 should have been stamped as a bond the question arose as to whether the Court could after having already admitted the document in evidence decide the sufficiency of stamp on Exh. P.
2. The Senior Subordinate Judge took the view that as the document had been admitted without judicial determination it was open to him at that stage to decide whether it was properly stamped ; and as in his opinion it was a bond while in fact it has been stamped only as an agree--ment he excluded it from evidence. Noor Hussain thereupon took the matter in revision to the High Court and the Single Judge before whom the case first came up referred it to a larger Bench in view of the conflict of Judicial authority, on the question whether an admission of a document could be questioned at a subsequent stage. The learned Judges who finally heard the case, held that in view of section 36 of the Stamp Act the docu--ment once admitted into evidence could not be rejected subsequently on the ground that it was not sufficiently stamped. Having thus disposed of the main question before them, they proceeded to consider under section 61 of the Stamp Act whether Exh. P. 2 was property stamped and came to the conclusion that it was a bond as far as the amount of Rs.1,50,000 was concerned and should therefore have been stamped as such. In arriving at this conclusion they first referred to the definition of the bond in the Act and then went on to observe as follows :- "The definition of 'bond' is not exhaustive. The important ingredients are (a) the express obligation to pay money and (b) the condition in the nature of a defeasance. I L R 7 Bom. 137 held an attested instrument a bond in which the obliger stated that he borrowed a certain quantity of grain from the obliged and agreed to repay it at a future time in greater quantity although the instrument was silent as to the money value of the gram. Similarly in I L R 20 Born. 791 an instrument in the nature of a bond was nonetheless a bond because it did not come into operation unless and until the Hundi with respect to which it was passed has been dishonoured. In AIR 1920 Lah. 481 a document whereby the defendant took upon himself the liability of another person in respect of a debt and agreed to get in certain land mortgaged in lieu of that sum and that if he failed to do the same, he would pay the said sum of Rs. 1,000 together with interest, was held to be a bond with a condition.
Arifuddin's application for a certificate to appeal to this Court was dismissed on the ground that the case was not fit for certification. It was observed that the position he found himself was the logical conclusion of a point he himself raised and so he had to thank himself. Reference, there is apparently to the fact that the appellant had at the outset raised the plea that Exh. P.
2. Was inadmissible in evidence, which he subsequently did not press. One of the contentions in support of his application for special leave was that the order in question was appealable under sec--petition 109(a) of the Civil Procedure Code as it was a final order passed by the High Court. In the order granting special leave to appeal the respondents were given permission to object to the competency of appeal at the time of hearing. But the learned Advocate for the respondents had no objection. The learned Advocate-General whom this Court had issued notice, however, pointed out that no appeal lay as of right because the order was on a revision petition. As regards the special leave granted to the appellant he had nothing material to say.
The learned Advocate for the appellant raised the following points before us:
(1) Under section 61 of the Stamp Act the High Court had no jurisdic--petition to pass the order under appeal.
(2) Exhibit P. 2 was an agreement and not a bond ; and
(3) The duty was calculated at the rates which came into force after the instrument was executed.
As for the first point, after some argument, the learned Advocate abandoned it, and therefore it is not necessary to discuss this question. Suffice it to observe that under section 61 of the Stamp Act the High Court had the jurisdiction to pass the order it did. As regards the second point which is the main point for determination in this appeal the argument of the learned Advocate was that the High Court in determining the nature of the document Exh. P. 2 did not pay due regard .To all its recitals and the intention of the parties evident from them, and the execution of this document alongwith the promissory note for Rs.1,50,000. The fact that these documents were executed on the same day as part of the same transac--petition, it was contended established that the pronote for Rs.1,50,000 was intended to be kept alive and that Exh. P. 2 was intended to be an agree--ment regarding the taking into partnership of Noor Hussain and therefore that document was properly stamped as an agreement.
"In the authority to which reference has been made by us there was no pre-existing loan and if there was any pre-existing liability that was wiped out by the document executed by the debtor in favour of the creditor. There was either a fresh contract without any antecedent contract at all or there was a novation of the contract and the old contract was extinguished. In the case before us, the four promissory notes, remained outstanding and we know that, as a matter of fact, three suits were filed on the basis of the four promissory notes . . . . ."
It was argued by the learned Advocate for the appellant that had the learned _ Judges in the present case taken into consideration the fact that the promissory note executed on the same day as Exh. P. 2 was kept alive and a suit was filed on that document, they too would have come to the same conclusion as that in the case of Raj Narain referred to above. He further contended that the concluding words in the penalty clause viz. `in addition to the sum aforementioned' (the reference being to the sum secured by the pronote which itself was specially mentioned earlier in the document) were to be understood as having been added by way of extra caution. They were not strictly necessary in view of the existence of the pronote which was enforceable separately and those words only indicated that the obligation to pay damages was in addition to and not in derogation of the obligation under the pro-note. It was pointed out further that it was not possible to regard Exh. P. 2 as creating any obligation in respect of the pronote Exh. P. 1 independently of Exh.
P.
1. The words in Exh. P. 2 relevant to the obligations under Exh. P. L were the following viz. "I having taken rupees one lac and fifty thousand from Noor Hussain by means of a pronote . . . .
Have entered into an agreement ..........
If I fail to complete the said agreement within the period aforesaid I will be responsible for payment of Rs. 20,000 per month as damages in addition to the return of the sum afore-mentioned."
It was argued that if these words were construed a bond then if must be accepted that what was secured by those expressions was materially different from the obligations under Exh. P. 1 e.g., interest is not mentioned in Exh. P.
2. In the absence of any indication that there was any intention that there should be a novation or variance of the undertaking embodied in Exh. P. 1 which had been executed just before, one would be entitled to expect to see such an effect produced by the use of much clearer words.
But indeed the two documents had been so executed as to constitute a single transaction.
The learned Advocate-General on the other hand contended that the third clause in Exh. P. 2 made it clear that the appellant will repay Rs. 1,50,000 in case the deed of partnership was not drawn up and that to that extent the document was rightly held to be a bond. But he had nothing further to add to what the learned Judges had stated on this point. He did not cite any decision taking a view different from that expressed in the 1943 Allahabad case. In fact he did not refer to any decision and when his attention was drawn to the Allahabad case he submitted that as against it he relied on the decision under appeal, but he had to concede that the question which was considered in the Allahabad decision was not dealt with I by the High Court in the present case.
Exh. P. 2 clearly does not fall under either clause (b) or clause (c) of section 2(5) of the Stamp Act. It is therefore necessary only to examine whether as apparently held by the High Court it falls under clause (a) of the provision which is as follows ---.- .
"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 ;".
The obligation in Exh. P. 2 to pay damages in case the deed of partner-, ship was not executed within the time fixed was not an obligation coming under clause (a) of the definition. There is as far as this part of the document is concerned no initial obligation to pay. The obligation arises only if the specified act namely the execution of the deed of partnership is not done. The instrument to this respect therefore was an agreement with. a penal clause and was therefore rightly held to be an agreement and not a bond. The question for consideration is whether the words in addition to the return of the sum aforementioned, occurring in clause 3 of the' instrument considered with an earlier recital that Rs. 1,50,000 had been taken from Noor Hussain under a promissory note, create by themselves an obligation to pay that sum and thus bring this part of the instrument within the definition of a bond in the Act ?
To answer this question one has to determine the precise nature of the instrument and in order to do that, it is necessary to ascertain the intention of the parties. We have not been shown that the observation in Halsbury's Laws of England cited above as relied upon by the learned Advocate for the appel--lant does not apply to this country. There can be no doubt about its applica--petition as that is a general rule of the interpretation of deeds and documents. It seems to us that if Exh. P. 2 is considered as a whole there can be no double that it was executed solely for the purposes of taking Noor Hussain Into partnership and not for securing the liability of the appellant to repay the amount he had borrowed under the promissory note. The most importance circumstance in this connection is the bringing into existence of both the promissory note and the agreement to execute the deed of partnership almost at the same time and as parts of one of the same transaction. It significant that clause (2) of Exh. P. 2 does not state that the amount of Rs. 1,50,003 was received already. The words used in that connection viz. The money which has already been taken or will be taken' indicate that the entire money had not been received by the time the second document was executed. If the intention of the parties was that Exh. P. 2 should create two obligations namely the obligation to pay damages in case the deed of partnership was not executed as well as the obligation to return Rs.1,50,000 the promissory note would not have been executed at all, and the recital in Exh. P. 2 would have been differently worded. As it is, the words used in that connection seem to us more as words of reference to the liability under the promissory note than as words creating an obligation to repay. The fact that no reference is made to the interest payable under the promissory note far from showing the creation of an obligation in respect of that amount confirms the impression that the words used in the recital are only words of reference and that the promissory note was intended to be kept alive. In Hira La! Sarkar and others v. Queen-Empress (I L R 22 Cal. 757) a Division Bench pointed out that the important word in the definition of a `bond' was the word `Obliges' and that no document could be a bond within it unless it was one which itself created obligation to pay money as is the case of documents known as bond according to the common use of the word. This was no doubt a decision of 1895 but in the Stamp Act of 1879 the definition of bond was practically the same as in the present Act and even in the prior Act of 1869 the definition of bond consisted only of clause (a) of the definition of the present Act. In the present case even if it is considered that the above-quoted words of Exh. P. 2 amount to an express obligation to return the money it cannot be said that they create such an obligation as the obligation had already been created before Exh. P. 2 was executed and as pointed out above the same instrument contains indications of the intention of keeping Exh. P. 1 alive.
Had Exh. P. 2 been the only instrument between the parties it might have been considered to be on the same footing as the instrument dealt with in Maula Bux and others v. Munna Lai and others (AIR 1939 All. 205) referred to above, 'or the three decisions referred to in the order under appeal.
Reference to the facts in 1939 All. Case has already been made. The instrument in Magandas Khemchand v. Ramchandra Haji (I L R 7 Bom. 137) was an attested instrument in which the obliger stated that he had borrowed certain quantity of grain from the obligee and promised to repay in future in greater quantity. The instrument was held to be a bond as defined in the Act of 1879 as it created the obligation to pay. Similarly the instrument in Lakshmandas Raghunath--das v.
Rambhau Mansa Ram (I L R 20 Bom. 791) created the obligation by the obligers admitting the receipt of the amount of two hundis minus the interest and undertaking to get the hundis cashed within the stipulated time or to pay interest at certain rate in case of default. In Nand Lai v. Karam Chand and others (AIR 1940 Lab. 481) the obliger took upon himself the liability of another person for Rs.1.000 and agreed to get a certain land mortgaged in lieu of that sum and to pay the said sum in case of failure to get the mortgage. Here also obligation to pay was created by the instrument in question. None of these decisions in our opinion can therefore be said to apply to the facts of the present case.
On the other hand the decision in Radha Swami Sat Sang Sabha v. R.I Narain seems to us to directly govern the facts before us. The agreement in that case as is apparent from the judgment obviously referred to the obligation to pay the amount of the previous promissory notes in accordance with the new arrangement, but the learned Judges of the Allahabad High Court held that the later instrument was not a bond. We agree with the view expressed in that decision and in our opinion Exh. P. 2 does not come within the definition of a bond but is an agreement and was properly stamped.