1994 (2) TMI 325 - SC - Indian Laws

Summary

Issues Involved:
1. Classification of the instrument under the Kerala Stamp Act.
2. Obligation under the instrument and its relation to the Abkari Act.
3. Applicable stamp duty for the instrument.
4. Comparison with judgments from other High Courts.
5. Refund of excess stamp duty paid.

Issue-wise Detailed Analysis:

1. Classification of the Instrument under the Kerala Stamp Act:
The primary issue was whether the instrument executed by the respondents was a "bond" or an "agreement" under the Kerala Stamp Act. The Division Bench of the Kerala High Court held that the instrument was not a bond but an agreement, as the obligation mentioned in it was incurred under Section 7 of the Abkari Act and not created by the instrument itself. The Supreme Court, however, clarified that the definition of "bond" in Sub-Clause (i) of Clause (a) of Section 2 of the Kerala Stamp Act is clear and unambiguous. It stated that an instrument by which a person obliges himself to pay money to another, with the obligation void if a specified act is performed, qualifies as a bond. The Court concluded that the instrument in question was a bond as it created an obligation to pay a sum of money to the State of Kerala, void upon the performance of specified acts.

2. Obligation under the Instrument and its Relation to the Abkari Act:
The respondents argued that their obligation to pay excise duty on exported liquor arose under the Abkari Act, not the instrument. The Supreme Court noted that the respondents were liable to pay excise duty at the point of manufacture, and the instrument allowed them to defer payment until the liquor was cleared for export. The instrument stipulated that the respondents would pay the duty if the conditions were not met, thus creating a new obligation. The Court emphasized that the instrument facilitated the export of liquor without immediate payment of duty, subject to conditions, and the obligation to pay arose from the instrument itself.

3. Applicable Stamp Duty for the Instrument:
The respondents contended that even if the instrument was a bond, it should be liable to duty under Entry 32 (indemnity bonds) rather than Entry 13 of the Kerala Stamp Act. The Supreme Court analyzed the instrument and concluded that it indemnified the State of Kerala against loss of excise duty if the liquor was not delivered or the duty was not paid. Hence, the instrument should be assessed to duty under Entry 32, which pertains to indemnity bonds, rather than the general category of bonds under Entry 13.

4. Comparison with Judgments from Other High Courts:
The Supreme Court referred to several High Court judgments to support its interpretation. In Bira Lal Sircar v. Queen Emperess, the Calcutta High Court emphasized that a bond must create an obligation to pay money. The Allahabad High Court in Mai Dhan Gupta v. Board of Revenue and Hindustan Sugar Mills Ltd. v. State of U.P. held that the obligation must be created by the instrument itself, not a pre-existing one. The Bombay High Court in Patel Stone Trading Co. v. Ramsing reiterated that the instrument must create a new obligation. These judgments supported the Supreme Court's view that the instrument in question created a new obligation and was a bond.

5. Refund of Excess Stamp Duty Paid:
The respondents had paid duty on the document as per Article 13 of the Schedule to the Kerala Stamp Act, based on an interim order of the High Court. The Supreme Court directed the State Government to refund the excess amount paid by the respondents, as the duty payable under Entry 32 (indemnity bonds) was less than that under Entry 13. The refund was to be processed within three months from the date of the judgment.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgment and order of the Kerala High Court. It declared that the instrument executed by the respondents in Form VI of the Distillery and Warehouse Rules under the Kerala Abkari Act was liable to stamp duty under Entry 32 of the Schedule to the Kerala Stamp Act. There was no order as to costs, and the State Government was directed to refund the excess stamp duty paid by the respondents.