Decided on November 18,1960

SUKANRAJ Respondents

Referred Judgements :-



JAGAT NARAYAN, J. - (1.)THIS is a revision application by two of the defendants against an order of the District Judge Pali dated 21st September 1956 holding the document on the the basis of which the present suit for recovery of money has been brought against them by the plaintiff is not a promissory note.
(2.)THE case of the plaintiff is that Chhogalal defendant and his brother Meghraj deceased used to carry on business in Mysore State under the name and style 'meghraj Hajarimal & Co. ", that they used to borrow money for their business from Sukanraj plaintiff and Ok Chand defendant from time to time, that the accounts were finally settled between the parties on Kartik Sudi 1 Svt. 2005 and a Khata for Rs. 19,397/0/6 was executed by Meghraj and Chhogalal in favour of Sukanraj and Ok Chand on 2. 11. 1948 in Mysore State, This Khata was referred to as an account stated in para 3 of the plaint and it was also mentioned that it contained an express agreement that Chhogalal and Meghraj would pay the amount together with interest at Rs.-/8/- per month wherever it was demanded by Sukanraj and Ok Chand either in Marwar or outside it. THE suit was instituted in the court of District Judge Pali on 2. 7. 1952 and the document was filed along with the plaint. It is not stamped with any revenue stamp. It bears two half-anna postage stamps. It runs as follows : - It may be translated in English as follows : - 400/- Cash - Samvat 2005 Miti Asad Bad 10. Received cash - Rupees four hundred paid. M. H. Co. Sd/- Chhogalal. 19397/-/6 300/- Samvat 2005 Miti Bhadva Sud 4. Paid cash. 700/- In words, Rupees nineteen thousand three hundred ninetyseven and anna half due, whereon monthly interest will be paid at the net rate of eight annas per month. This principal and interest is payable to Sah Sukan Rajji Ok Chandji of the village Ram Singhji-ka-Gurah in Marwar. This money due is unsecured. Wherever in Desh (i. e. Marwar) or in Pardesh (i. e. out of Marwar) the creditor will ask, it will be paid. Whenever the creditor will ask, the principal and interest shall be paid. Sd/- Meghraj Hajarimalji 1/2 anna Postage Ticket 1/2 anna Postage Ticket Sd/- H. Meghraj Meghral Hajarimal Co. Sd/- Chhoglal 1190/1/0 1158/1/0 Samvat 2005 Katik Bad 15 - Rs. 32/- Motor charges to and from To interest till Katik Bad 15 Smt. 2005. Ank 2315. 14 at -/8/- debited Sd/- Meghral Hajarimalji
Before the learned District Judge it was argued on behalf of defendants that the above document was a promissory note as it contains an unconditional undertaking to pay a sum of money which is certain, to a person who is certain and which is signed by the maker. They purported to rely on the observations made in Sahu Brijraj Sharan Vs. Sahu Raghu-Nandan Sharan (1 ). He however held that every document fulfilling these terms is not necessarily a promissory note and that the intention of the parties in executing the document has also to be looked into. He found that the intention of the parties in executing the suit document was not to create a promissory note. He relied on a decision of this Court in Chiranjilal Vs. Ramnath (2 ).

As was pointed out by this Court in Gordhan Singh Vs. Suwalal (3), in Sahu Brij Raj Sharan's case (1) no attempt was made to deal with all the requirements of a promissory note exhaustively. That case is an authority only for the proposition that in order to constitute a promissory note it is not essential that the payee should be specifically named after the words "i shall pay" or similar words, provided on reading the document as a whole there is no doubt as to who is the payee. It was laid down in Gordhan Singh's case (3) by this Court that apart from fulfilling the terms contained in the definition of 'promissory note' as given in the Negotiable Instruments Act the instrument must pass three further tests before it can be treated as a promissory note : - (1) The promise to pay must be the substance of the instrument, (2) There must be nothing else inconsistent with the character of the instrument as substantially a promise to pay, and (3) The instrument must be intended by the parties to be a promissory note. The suit document contains an unconditional undertaking to pay a sum of money which is certain, to a person who is certain and it is signed by the maker. What has to be seen is as to whether it passes the further tests laid down in Gordhan Singh's case (3 ).

The contention on behalf of the defendants is that the following three circumstances go to show that the parties intended to create a promissory note: - (1) that it is on a separate paper, (2) that the name of the payee is mentioned, (3) that according to para 3 of the plaint it contains an express undertaking to pay. As for the first circumstance the decision of this Court in Chiranjilal Vs. Ramnath (2) and Raghunath Prasad Vs. Seth Mangilal (4) were referred to. In both of these cases the documents were contained in account books. This circumstance was taken to raise a presumption that the parties did not intend to create negotiable instruments. In the case of a document which is written on a separate piece of paper such a presumption does not arise But no presumption can be drawn from this circumstance in the present case in favour of the document being intended to be negotiable. For the payees in this case are two persons Sukanraj and Ok Chand. There is no suggestion that they maintained common account books. There is nothing to show that apart from lending money to Meghraj and Hajarimal they carried on any other transaction jointly. The plaintiff has filed two earlier documents evidencing advances of loan to Meghraj and Hajarimal. It is the case of the plaintiff that the sum of Rs. 19,397/-/6 for which the present document was executed was the balance due against Megh Raj and Hajarimal on the earlier transactions. If the previous accounts between the parties were contained in an account book then certainly the execution of a document on a separate piece of paper might raise a presumption that it was intended to execute a negotiable instrument. That presumption however would not be conclusive and would have to be considered along with other circumstances of the case.

As for the second circumstance no presumption can be drawn from it that the parties intended to execute a promissory note. For the document is on a separate piece of paper and it was essential that the name of the person in whose favour it was executed should appear somewhere on the face of it. This would not have been necessary if it had been executed in a Bahi. For in that case the presumption would be that it was executed in favour of the person in whose Bahi it is contained. It may be mentioned here that in Chiranji Lal's case (2) the name of the payee was entered in the document which was held not to be promissory note.

Coming now to the third circumstance relied upon on behalf of the defendants I find that it is not alleged in para 3 of the plaint that there is express undertaking to pay in the document. The words "express maida" refer to the agreement by Chhogalal and Meghraj to make payment whenever it was demanded by Sukanraj and Okchand, either in Marwar or outside it. As the suit had been instituted in Marwar and the money had been lent and the document had been executed in Mysore State it was necessary to make a mention about this agreement in the plaint to give territorial jurisdiction to Marwar court to try the suit. The relevant part of the plaint in Gordhan Singh's case (3) which was referred to in this connection by the learned counsel for the defendants ran as follows : - "after understanding the partnership accounts the defendant found a balance of Rs. 1291/14/3 due against him in favour of the plaintiffs and handed over a writing about it to the plaintiffs at Shahpura. This writing was written by him in his own hand and a promise to pay in clear words was entered in it. "

The learned counsel for the defendants referred to the case of Sushil Chander Vs. Wali Ullah (5' ). The document in that case was in the following words : - "we, Abdul Hamid - Mohammad Said, residents of Mauza Armora promise to pay on demand with interest at 2 per cent per mensem to firm Hanuman Glass Works the sum of Rs 1781 due from us as per accounts regarding glass. "

The above document was not held to be a promissory note on its wordings. There was a specific finding in that case that the parties themselves regarded the document as a promissory note. It was on that basis mainly that the document was held to be a promissory note.

(3.)THERE are several circumstances in the present case which go to show that the parties did not intend to create a promissory note.
The document is headed as an account. It is written in the form in which an account is generally stated according to Mahajani practice after settling previous accounts. Promissory notes are generally written in the form of a letter by Marwaris. Debit and Credit entries were made on the document in the same way in which they are made in Khata contained in Bahis. The debit entries included a sum of Rs. 32/- which was added with the consent of the debtors as motor charges. It was explained at the Bar by the learned counsel for the plaintiff that this sum was spent in going by car from the place of business of the plaintiff in Mysore to the place of business of Meghraj Hajarimal in that State. The amount of a promissory note cannot be increased by subsequent debit entries of this nature. If the document were intended by the parties to be a promissory note no such entry would have been made.

In Md. Akbar Khan Vs. Attar Singh (6) the instrument was in the following terms: - "may God protect us. This (one) receipt is hereby executed by Bhai Hira Singh Attar Singh Kharbanda, residents, of Hoti, for Rs. 43900/ (forty three thousand and nine hundred rupees) half of which amount comes to twenty one thousand nine hundred and fifty, received from the firm of Lala Dunichand Lala Harichand Sethi for and on behalf of Captain Mohommad Akbar Khan of Hoti. This amount to be payable after 2 (two) years. Interest at the rate of Rs. 5/4/0 (Rs. Five annas four) per cent per year to be charged. Dated this 20th day of Chetar (first month of Hindu Calendar year) Svt. 1974, corresponding to 1st April, 1917. Stamp has been duly affixed. (Sd/-) Hira Singh Kharbanda. (Sd/-) Attar Singh Kharbanda. " It was held that the document was not a promissory note. Their Lordships observed - Their lordships prefer to decide this point on the broad ground that such a document as this is not and could not be intended to be brought within a definition relating to documents which are to be negotiable instruments. Such documents must come into existence for the purpose only of recording an agreement to pay money and nothing more, though of course they may state the consideration. Receipts and agreements generally are not intended to be negotiable, and serious embarrassment would be caused in commerce if the negotiable net were cast too wide. This document plainly is a receipt for money containing the terms on which it is to be repaid. " The document in Barijraj Sharan's case (1) which was held to be a promissory note ran as follows? - Shriman Sahu Raghunandan Sharanji Sambhar lake, In your account Rs. 4,668/15/- are due from my son Mahesh Chandra. I shall pay that amo unt by December, 1948. You rest assured. Brijraj Sharan 6. 8. 48. " It was in the form of a letter and not in the form of a Khata.

In Raghunath Prasad Vs. Seth Mangilal (4) it was observed : - "another restriction flows from the rule of construction to be adopted in such cases. This rule is laid down by Baron Pollock Grenfell Vs. Commissioners of Inland Revenne (7): 'as to the construction of the Stamp Act, I think it was very properly urged that the statute is not to be construed according to the strict or technical meaning of the language contained in it, but that it is to be construed in its popular sense ; meaning, of course, by the words 'popular sense' that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. The grounds for adopting that rule are much stronger under the Indian Stamp Act than under the English Stamp Act. " I accordingly hold that the intention of the parties in executing the above document was not to create a promissory note but to state the account and record an agreement about the payment of interest on the principal sum due at the rate of annas -/8/- per cent per month and to make the principal and interest payable whenever the creditor might choose to demand it.


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