Decided on July 24,1968



- (1.) THE question arising in this miscellaneous appeal is whether or not the suit document is a promissory note. The trial Court has held that it is a promissory note; but the trial Judge has dismissed the suit since the document is not sufficiently stamped. Under Section 35 of the Indian Stamp Act. "no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon. . . . . . . . . " In the proviso to the above section documents which can be admitted in evidence on payment of duty have been indicated. But the promissory note under consideration does not come under that category. The present promissory note is for Rs. 4,500/-, Under Article 49 of the Stamp Act the duty payable is the same as a bill of exchange and calculated on that basis the plaint promissory note is chargeable with Stamp Duty of Rs. 100/ -. But the stamp affixed on the note is to the value of 40 Np only. So there is no doubt that the document if treated as a promissory note is insufficiently stamped and the learned Subordinate Judge haa rightly dismissed the suit. On appeal, however, the learned District Judge has taken the contrary view. According to him the plaint document is not a promissory note since it does not contain the negotiability clause "or to the order of.
(2.) UNDER the Indian Stamp Act Section 2 Sub-section (22 ). "promissory note" means a promissory note as defined by the Negotiable Instruments Act 1881;" and under Section 4 of the Negotiable Instruments Act a "promissory note" is denned as, "an instrument In writing (note being a bank-note or a currency-note)containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. " It is true that in the plaint instrument the clause "x xx". is absent; but all the other requirements which go to constitute a promissory note are pre sent. From the definition of the promissory note quoted above it is obvious that the clause "or to the order of" is not mandatory. Illustrations (a) and (b) to the section are in respect of promissory note; the plaint promissory note would come under illustration (b) which is as follows:- " (b) I acknowledge myself to be indebted to B in Rs. 1,000/-, to be paid on demand, for value received. " The requirement "or to the order of" is absent in the above illustration. The illustration contains only an acknowledgment of the debt and undertaking to pay on demand and that is sufficient to make a promissory note. The trend of decisions as far as I am able to see is in favour of the view that the absence of the expression "or to the order of" will not make the document any the less a promissory note. A Full Bench of the Madras High Court has held so; In the matter of Validation of a Document dated 14-6-47 executed by Kuppusami Chetty, in favour of Arunachala Chettiar, AIR 1955 Mad 652 (FB ). Rajamannar, C. J. , speaking for the Bench would observe;--"the mere omission of the expression "to the order of would not render a document any the less a promissory note, if otherwise it fulfilled the terms of the definition of promissory note. Actually a promissory note need not contain this expression. It is sufficient if there is an unconditional undertaking to pay a certain sum of money to a certain person. " To the same effect is the recent decisions In Chhabildas Mangaldas v. Luhar Kohan arja, AIR 1967 Guj 7 and Bahadurrinisa Begum v. Vasudev Naick, AIR 1967 Andh pra 123. In the former case. AIR 1967 Guj 7 it was held:-- "where it is not disputed that the document which is in writing is neither a bank-note nor a currency-note, and it contains an unconditional promise to pay a specific sum to a certain person on demand, the document is a promissory note as defined in Section 4 of the Negotiable instruments Act. A promissory note however is not necessarily a negotiable instrument. For the purpose of deciding as to whether a document is or is not negotiable the primary test is to find out whether, in fact the terms thereof satisfy the definition of a negotiable instrument as given in Section 13 of the Negotiable Instruments Act 1881. If, having regard to the Explanation attached to that section, the document is found to be a promissory note which is made payable to a certain person, then, the document would be an instrument which is payable to the order of that person, and unless there are other surrounding circumstances in the case which indicate that negotiability of that instrument was not intended by parties, the mere fact that the document is one which, in the opinion of the Court, is not drawn up in the customary manner in which promissory notes are drawn up by bankers and merchants, it does not follow that the document must be deprived of its character of negotiability simply because it is a strange visitor in the accustomed circle of negotiable papers. " In the latter case, AIR 1967 Andh Pra 123, the Andhra Pradesh High Court has observed:-- "if an instrument promises to pay a certain sum of money to a certain person unconditionally merely because it does not contain the words 'order' OP 'bearer' it cannot be argued that It is not a promissory note. Such an argument will be inconsistent with Section 4 of the Act itself. "
(3.) SECTION 13 (1) Explanation (1) of the Negotiable Instruments Act makes it clear that even if the expression "or to the order of" is absent the document can be negotiated if negotiability is not expressly prohibited by the terms of the document. The Explanation reads:-- "explanation (1) ---A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payble to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable. " In the present case there is no express prohibition in the document against negotiability and as a matter of fact the parties also understood it in that manner as is evident from the fact that it has been negotiated and it is the endorsee who has come forward with the suit.;

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