Report No. 67
4.21. Recommendation relating to clause (c).-
Here, one does find oneself in a dilemma. If an obligation to deliver grain etc. arising under an agreement on sale is excluded, then there is very little scope left for clause (c). An agreement to deliver grain under a hypothecation bond would, of course, still fall within clause (c) (if the document is attested), but an instrument containing such an obligation would be chargeable as a "mortgage of a crop",1 and would not raise controversy in practice.
It is desirable that the legislative policy on the subject should be indicated more clearly. One alternative would be to modify clause (c) so as to exclude cases where the obligation is in pursuance of an agreement to sell the grain or produce. The opposite alternative would be to include such cases. Attestation will, of course, be required, as at present. Whichever alternative is preferred, the position regarding chargeability of the document would not be governed entirely by the definition of bond. Reference will also have to be made to Article 15, and to the case law on Article 5. The object in, suggesting an amendment of section 2(5)(c) is only to clarify the position with reference to the definition of "bond".
1. Article 41.
We are of the view that the first alternative should be preferred, since it is unrealistic to include such agreements within "bonds". An Explanation should, therefore, be added to clause (c), to the effect1 that an agreement containing a stipulation for delivery of grain or other agricultural produce in pursuance of an agreement for the sale of such article does not amount to a bond within the definition in the Stamp Act.
1. This is not a draft.
4.23. Section 2(5) and attestation.-
Sections 2(1)(b) and 2(5)(c) use the expression "attested", but there is no definition of that expression in the Stamp Act. There is a definition of "attestation" in section 63(c), Indian Succession Act, 1 5 (39 of 1925). This is a reproduction of the definition of the term as given in the earlier Succession Act.1-2
The definition of "attested" in the Indian Succession Act is as follows3:-
"(c) The Will shall be attested by two or more witnesses, each of whom has seen the testator sign or affix his mark to the will or has seen some other person sign the Will in the presence and by the direction of the testator, or has received from the testator a personal acknowledgment of his signature or mark, or of the signature of such other person; and each of the witnesses shall sign the Will in the presence of the testator, but it shall not be necessary that more than one witness be present at the same time, and no particular form of attestation shall be necessary."
1. Indian Succession Act, 1865 (10 of 1865)-section 50(3).
2. See-(a) D. Fernandez v. R. Alives, 1878 ILR 3 Born 382; (b) Nitya Goyal v. Nagendra Nath, 1885 ILR 11 Cal 429.
3. Section 63(c), Indian Succession Act, 1925.
4.24. In the Transfer of Property Act, there is a definition of "attestation". The definition in the Transfer of Property Act1 is quoted below:-
"attested", in relation to an instrument, means and shall be deemed always to have meant attested by two or more witnesses each of whom has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and each of whom has signed the instrument in the presence of the executant; but it shall not be necessary that more than one of such witnesses shall have been present at the same time, and no particular form of attestation shall be necessary."
1. Section 3, Transfer of Property Act, 1882.
It may be desirable to have definition adopting one of the two precedents referred to above. We prefer that contained in the Transfer of Property Act-of course, with the modification that one witness should do. We may add that the change recommended by us have generally found favour with most of the replies to our Questionnaire,1 wherein we had included specific queries as to the points which we have discussed above concerning section 2(b) and section 2(c).
1. Question 6.
4.26. The following rough draft is recommended
"Explanation.-In this clause, "attested", in relation to an instrument, means attested by at least one witness who has seen the executant sign or affix his mark to the instrument, or has seen some other person sign the instrument in the presence and by the direction of the executant, or has received from the executant a personal acknowledgment of his signature or mark, or of the signature of such other person, and has signed the instrument in the presence of the executant; but no particular form of attestation shall be necessary,"
4.27. Section 2(6)-"chargeable".- Section 2(6) defines the expression "chargeable", and needs no change.
4.28. Section 2(7)-"Cheque".-
Section 2(7) defines "cheque" as meaning a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. The definition of "cheque" in the Negotiable Instruments Act is identical.1 In England,2 the Bills of Exchange Act defines "cheque" as a bill of exchange drawn on a banker payable on demand. The English Stamp Act does not define a "cheque". The word "specified" occurring in our Negotiable Instruments Act, is not to be found in the Bills of Exchange Act, and the requirement of demand is expressed in positive terms. It may be noted that the definition in the (English) Bills of Exchange Act, is itself based on a judicial decision.3
We are not, however, concerned with these minute differences between the Negotiable Instruments Act and the Bills of Exchange Act as regards the definition of "cheque". If, in future, the Negotiable Instruments Act is revised, the definition in the Stamp Act could be reconsidered if that is regarded as appropriate.
1. Section 6, Negotiable Instrument Act, 1882.
2. Section 73, Bills of Exchange Act, 1882 (Eng).
3. Hopkinson v. Foster, 1874 LR Eq 74.
4.29. Stamp Duty on cheques in England.-
In England, cheques are subject to Stamp Duty;1 but the person to whom the cheque is presented may, if it is unstamped,2 affix thereto an adhesive stamp of the requisite amount.3
It may be noted that stamp duty is not leviable in India on cheques now, because Article 13 which levies a duty on a bill of exchange was so amended in 1927 as to remove the duty. What, then, is the significance of the definition of "cheque" in the Indian Stamp Act? So far as could be ascertained, and apart from the articles, there is one section of the Stamp Act4-section 30-which now uses the expression "cheque". That section provides that any person receiving any money exceeding twenty rupees in amount, or any bill of exchange, cheque or promissory note for an amount exceeding twenty rupees shall, on demand, give a duly stamped receipt for the same. The expression "cheque" appears in a few articles also. Thus, the definition has very limited utility. However, no changes appear to be necessary in this definition.
1. The Stamp Duty is a fixed one of 2 pence.
2. Section 38(2), Stamp Act, 1891.
3. As to drafts, see discussion relating to section 2(3)-"bill of exchange".
4. Section 30.
4.30. Section 2(9)-"Collector".- Section 2(9) defines the expression "Collector", and needs no change.