Judgement

This revision petition is directed against an order of the First Additional Chief Judge, City Civil Court, Hyderabad, given on 16th January, 1965. It arises in the following circumstances.

2. Respondent No. 1 instituted a suit for the recovery of some money due on a promissory note executed by the petitioner on 2nd January, 1962 in favour of respondents 2 and 3. Respondents 2 and 3 assigned the promissory note in favour of the 1st respondent-plaintiff by an endorsement. One of the objections taken by the 1st defendant i.e., the petitioner before me, in he written statement is that the suit document is a bond and not a promissory note. It was further contended that the endorsement amounts to an assignment of an actionable claim. The argument therefore, was that both the document as well as the endorsement ought to have been executed on the stamp paper and that since they are not so executed, the plaintiff-respondent No. 1 must pay the penalty for both these documents apart from the stamp duty payable thereon.

3. In pursuance of this objection, the trial Court framed issues 2, 3 and 4. These issues were considered first. The trial Court reached the conclusion that the suit document is a promissory note within the meaning of section 4 of the Negotiable Instruments Act (hereinafter called the Act) and therefore, could be transferred by an endorsement under the provisions of the same Act and that the promissory note therefore, was properly stamped and the endorsement does not require any stamp and hence the plaintiff need not pay any stamp duty or penalty.

4. The contention of Mr. C. Narasimhacharya, the learned Counsel for the petitioner, is that the suit document is a bond and not a promissory note. It was alternatively contended that even if it is not a bond, it is an agreement but never a promissory note.

5. In order to appreciate the implications of this contention, it is necessary to look into the document. The original it is Urdu and the accepted translation of it is as follows :-

"I, Bahadurunnissa Begum, daughter of .....executed and promise that a sum of I. G. Rs. 71,000........has been obtained by me under the heading of the room from Mr. Mohammed Moinuddin Ali Khan .... and Nawab Syed Mohammed Ali Khan the grand-son of etc., ..... in cash and I agree to pay thereof; that in future, on demand, the principal will be paid to the said person in lump sum and this pronote will be taken back by me."

6. Now a promissory note as defined in the Indian Stamp Act is as follows :-

"2 (22) Promissory note :- Promissory notemeans a promissory note as defined by the Negotiable Instruments Act, 1881 :

it also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not he performed or happen. "

It will thus be plain that under sub-section (22) of section 2 of the Indian Stamp Act, a promissory note has been defined to be an instrument answering its definition as given in the Act plus something more, that is, an instrument will he a promissory note under the Indian Stamp Act if it promises the payment of any sum of money out of any particular sum which may or may not be available, or upon any condition or contingency which may or may not be performed or happen. Admittedly the latter part of the definition of promissory note appearing in section 2 (22) of the Indian Stamp Act is not relevant for the purposes of this case. We have therefore, to look to the definition of promissory note as is given in the Act Under section 4 of the Act, a promissory note is defined to be an instrument in writing (not 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. On a close and analytical reading of section 4 of the Act it will be evident that the section recognises three kinds of promissory notes.

(1) A promise to pay a certain sum of money to a certain person,

(2) a promise to pay a certain sum of money to the order of a certain person, and

(3) a promise to pay the bearer.

While the second and the third kinds of instrument were undisputably negotiable, an instrument falling under the first category formerly was not negotiable under the Indian law. It was however, valid as between the immediate parties and was capable of assignment as an ordinary chose in action though not by negotiation, but Act 8 of 1919 amended Section 13 of the Act. Under the amended section 13 such a note also is now negotiable unless there are words like only towhich specifically restrict its negotiability.

7. It can thus be broadly stated that in order that an instrument may fall within the definition of promissory note contained in section 4 of the Act, it is necessary that there should be

(1) unconditional undertaking to pay,

(2) the sum should be a sum of money and it should be certain,

(3) the payment should be to or to order of, a person, who is certain, or to the bearer of the, instrument, and

(4) the maker should sign it.

It is however, clear that apart from fulfilling the abovesaid terms of definition of promissory note the instrument must further satisfy the following three tests :-

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.

It will thus be obvious that the first and essential requisite in regard to a promissory note is certainty - certainty as to the person to make the payment, the person to receive, it, the time and place of payment, the conditions of liability and also a certain amount to be paid. The main question therefore, in deciding whether a document is a promissory note is to consider whether in substance and primary intention of the parties it was a promissory note and whether it contains the necessary recitals and is not intended to record a different kind of transaction altogether. It must follow that the question whether the words in a given document amount to mere acknowledgment or to a promise, has to be decided on the intention of the parties keeping in view the real characteristics of the document.

8. In this background if the note in question is carefully considered, it becomes plain that the suit document fulfills all the requirements of Section 4 of the Act and consequently satisfies the requirement of section 2 (22) of the Indian Stamp Act. The instrument under consideration promises to pay a certain sum of money to a certain person. Merely because it does not contain the words orderor bearerit cannot be argued that it is not a promissory note. Such an argument will be inconsistent with Section 4 of the Act itself. Even without therefore, going into Section 13 and drawing upon that amended section and even if consideration is exclusively confined to Section 4 of the Act, I have no manner of doubt that a promise to pay a certain sum of money to a certain person would be a promissory note provided it satisfies the other requirements of the definition. If it is made necessary in order to apply Section 4 of the Act that the instrument must be not only payable to a certain person, but it must also in all cases be made payable to his order or to the bearer, the result would be that the first category of the instruments contemplated by Section 4 of the Act will have to be ignored. That the Legislature treats these types of documents also as promissory notes for the purpose of the definition is further made clear from Illustration bto Section 4 of the Act. It is as follows:

"(b) I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received."

Unhampered by consideration of any decision, therefore, a plain reading of Section 4 of the Act would make it abundantly plain that a promissory note containing an unconditional undertaking signed by the maker and which promises to pay a certain sum of money to a certain person would certainly be a promissory note within the definition of that term. A document therefore, which contains simply a promise to pay on demand a certain sum to a specified person is a promissory note though there may be no words of negotiability. Such documents fully satisfy the requirements of Section 4 of the Act, I am therefore, satisfied that the suit instrument is a promissory note and has been properly held to be so by the Court below, I am fortified in my conclusion by the following decisions.

9. In Mohamad Sadik v. Amiya Nath, 41 Ind Cas 693: (AIR 1917 Pat 521) (FB), a Full Bench of the Patna High Court was concerned with a document which was an instrument whereby a person had obliged himself to pay money to another and which was not payable to order or bearer. After disposing of the question whether it was attested or not and finding that the document was not attested by a witness, their Lordships held that the instrument was a promissory note and not a bond, and found that the one-anna stamp which was affixed to it, was sufficient.

10. In Bankidas v. Tanabai, AIR 1920 Nag 274 Javkson, A. J. C., held in a similar case:

"It is not because a document is not payable to order or bearer that it is excluded from the definition of promissory note; and even a document which contains simply promise to pay on demand a certain sum to a specified person is a promissory note."

To the same effect is Hans Raj v. Lachmi Narain, AIR 1928 Lah 388.

11. What was however argued by the learned counsel for the petitioner is that the suit document is a bond within the definition of that term as it appears in the Indian Stamp Act. His contention was that the definition is inclusive and therefore, it need not be confined to any one of the categories mentioned in the definition. According to him an instrument which is not attested, but if there is no promise to pay the amount to the order of a certain person or to the bearer and contains promise only to pay the amount to a certain person, such a document even without containing any attestations would be a bond. The definition of bond in Section 2 (5) of the Indian Stamp Act is as follows:

"(5) bondincludes -

(a) 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;

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another;"

Clause (a) of the definition is admittedly inapplicable. It is Cl. (b) which is relevant. According to that clause any instrument attested by a witness and not payable to order or bearer whereby a person obliges himself to pay money to another, would be a bond. Both the things therefore, are necessary to bring the document within Cl. (b) of Section 2 (5) of the Indian Stamp Act. First the instrument must have been attested by a witness, and secondly, the amount must not be made payable to order or bearer. If any one of the said two things is absent from an instrument, then Section 2 (6) of the Indian Stamp Act would not be attracted. Obviously the conjunction andmakes that position aboundantly clear. It is not or, but and, and when Cl. (b) itself is relevant, any document falling outside these clauses need not be considered merely on the ground that the definition of bond is inclusive. Even in such cases on the principle of ejusdem generis these clauses will have to be kept in view, I am therefore, satisfied that a document which is not attested by a witness would not be a bond merely because its amount is not payable to order or bearer Admittedly the suit promissory note is not attested by a witness. The promissory note therefore, does not become a bond merely because a certain amount is made payable to a certain person and not made payable to order or bearer.

12. The decisions cited by the learned counsel do not lay down that even in a case where the instrument is not attested by a witness it would still be a bond if it merely satisfies the other condition that the amount is not payable to order or bearer. State Bank of Hyderabad v. Ranganath Rathi, 1964-2 Andh LT 280: (AIR 1966 Andh Pra 215) and the decisions considered therein would be relevant to cases where the intrument is both attested and the amount not made payable to order or to bearer. In such cases it is clear that such an instrument would be a bond and not a promissory note. In my view in order to constitute a bond both these things must co-exist. This position is not much disputed, I am therefore, satisfied that the suit document is not a bond within the definition of section 2 (22) of the Indian Stamp Act.

13. It was next contended that in any case it would be an acknowledgment and an agreement. It is true that no definition of an agreement is given in the Indian Stamp Act and that the definition of that term as it appears in the Contract Act may be looked into for that purpose. It is however unnecessary to consider that question in so far as this case is concerned, I have already held that the suit document is a promissory note, and not a bond. The argument was that if it is found that it is neither a bond nor a promissory note, then it would be an agreement. When I have already held that it is a promissory note and not a bond what must follow is that it cannot be an agreement. In the view which I have taken it is unnecessary to consider the decisions cited for the purpose of this branch of the argument. No case was brought to my notice in which a document which was not attested but in which the amount was not made payable to order or to the bearer, was held to be a bond or an agreement. The cases cited therefore, will have to be considered only in the context of the facts of those cases.

14. It was finally contended that in cases where the document falls within the definition of more than one document, the document should be put under that category of documents, which would require more stamp duty to be paid under the Act. This is not a case where an argument under Section 6 of the Indian Stamp Act can arise, I have no manner of doubt that the suit document is neither a bond nor an agreement, but it is clearly a promissory note. In that view of the matter it is unnecessary to consider the argument advanced under Section 6 of the Indian Stamp Act.

15. For the aforesaid reasons this revision petition fails and is dismissed. There will be no order as to costs.

Revision dismissed.