Andhra HC (Pre-Telangana)
Mabu Saheb @ Mahaboob vs V. Krishna Murthy on 13 September, 1996
Equivalent citations: 1997(2)ALT292
Author: K.B. Siddappa
Bench: K.B. Siddappa
ORDER K.B. Siddappa, J.
1. This Revision is filed against the order in O.S.No 37 of 1991 on the file of the Court of the Principal District Munsif, Nandikotkur.
2. An objection was raised by the Advocate for the respondent (sic. petitioner) at the time of marking of the documents through P.W.1. The learned Counsel for the petitioner (sic. respondent) argued that the respondent (sic. petitioner) borrowed the suit loan from the plaintiff under two chits. He also executed two chits. They are memoranda of agreements for taking amount from the plaintiff. He also submitted that they are not promissory notes. He further submitted that the promissory note as per Section 4 of Negotiable Instruments Act and also Section 2(22) of the Stamp Act, must contain unconditional undertaking to pay the amount. In this case, there is no unconditional undertaking. He relied upon Edward Waston v. Mrs. Theresa Chitty, AIR 1934 Allahabad 1052. He prayed for admission of documents as stamp duty and penalty under Article 6 of the Stamp Act are paid.
3. On the other hand it is the case of the defendant that the documents in question are promissory notes. The documents are not stamped. Therefore, they are not admissible in evidence, by virtue of Section 35(1) (a) of the Stamp 30 Act. In support of his contention, he relied upon Judgment reported in Thenappa Chettiar v. Andiyappa Chettiar, . He also relied upon Judgment (reported) in Food Corporation of India v. Sri Ramachandra B &R Rice Mill, AIR 1985 A.P. 25. He further relied upon a Division Bench Judgment in Shrinivas Pansari v. Hari Prasad Mehra, AIR 1983 Patna 323.
4. After considering the rival contentions, the lower Court held that the suit documents do not come under the ambit of Section 35(a) of Stamp Act and they are admissible in evidence. Aggrieved by the said order, the present Revision is filed by the defendant.
5. The learned Counsel appearing for the Revision petitioner submitted 40 that the contents of documents clearly indicate that they are promissory notes. There is promise to pay certain amount on interest to the creditor. All the ingredients of promissory note as defined under Section 4 of the Negotiable Instruments Act are present in the documents. Sub-section (22) of Section 2 of the Stamp Act includes a note promising the payment of any sum out of any particular fund. Even though the words "or order" are absent in the documents, the documents will certainly come under the ambit of Sub-section (22) of Section 2 which envisages a note promising the payment of money. It is held in Thenappa v. Andiyappa (2 supra) as under.
"A promissory note though it may be one as defined in the Negotiable Instruments Act, if it is not payable on demand, will fall under clause (b) of Article 49 of the Stamp Act though under the definition in Section 2(22) it will fall under the first part thereof."
6. On the other hand, the learned Counsel appearing for the respondent submitted that there is no promise to pay in the documents. Again, there are no recitals to pay to the creditor. According to him, there are two essential ingredients to constitute a promissory note, by virtue of Section 4 of Negotiable Instruments Act. In the documents under consideration those two essential ingredients are not found. Therefore, they cannot be treated as promissory notes. In support of his contention he relied upon a Judgment of Privy Council in (Nawab Major Sri) Mohammad Akbar Khan v. Attar Singh, AIR 1936 SC 171, in which the document read as follows:
"May God Protect us. This (one) receipt is hereby executed by Bhai Hira Singh Attar Singh Kharbanda, residents of Hoti, for Rupees 43,900 (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 Duni Chand Lala Hari Sethi for and on behalf of Captain Mohammad Akbar Khan of Hoti. The 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) Sambat 1974, corresponding to 1st April, 1917. Stamp has been duly affixed."
7. Their Lordships after considering the terms of the document held that it is indeed doubtful whether a document can properly be styled as promissory note which does not contain an undertaking to pay, not merely an undertaking which has to be inferred from the words used. It is plain that the implied promise to pay arising from an acknowledgement of a debt will not suffice. It was further held that this document plaintly is a receipt for money containing the terms on which it is to be repaid. It is also held that it is not without significance that the defendants who drew it, and who were experienced money lenders, did not draw it on paper with an impressed stamps as they would have had if the document were a promissory note, and that they affixed a stamp which is sufficient if the document is a simple receipt. Being primarily a receipt even if coupled with a promise to pay, it is not a promissory note. This view of the meaning of a promissory note appears to coincide with the grounds of decision in 21 Q B D 352(2), etc. He also relied upon the Full Bench Judgment of Madras High Court reported in Hariram v. I.T. Commissioner, (F.B.).
In this case the following document was under consideration, which reads as follows:
"Promissory note executed on 14-6-1947 in favour of Arunachala Chettiar, son of Kolakkara Chettiar residing at Palappudi Village, hamlet of Sathyamangammal, Gingi Taluk by Kuppuswami Chettiar, son of Venkatachala Chettiar, residing at the aforesaid village. In respect of the sum received from you at Tiruvannamalai by me in the year 1943 and given for opening a Javuli shop by T. Arunachala Iyer the sum found due to you is Rs. 3,000. As this sum of rupees three thousand had to be paid to you, I shall pay the same together with interest at Rs. 0-4-0 per month per Rs. 100 in six equal instalments, and discharge the same. To this effect is the promissory note executed by me with my consent."
8. Their Lordships held that the document in question is not a promissory note, because there is no unconditional undertaking to pay a certain sum of money.
9. In my considered opinion the submission made by the learned Counsel for the respondent cannot be accepted. The recitals in the document are quiet clear. There is definite sum to be paid. Interest also is stipulated. There is promise to pay that amount. The words "Tvvagalavadanu" certainly indicate the promise on the part of the debtor to pay the debt. It is true that the words "or order" are absent but that itself does not render the document not as promissory note. Section 4 of the Negotiable Instruments Act reads as follows:
"A "Promissory note" is 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."
10. In this case, the money promised "to" pay to the creditor constitutes a negotiable character of the pronote. In addition to that, Section 2(22) of the Indian Stamp Act clearly envisages that a note promising payment of money also constitutes a promissory note for the purpose of Stamp Act. I am of the firm opinion that the documents under consideration are certainly promissory notes within the meaning of Section 4 of Negotiable Instruments Act and Section 2 sub-section (22) of Indian Stamp Act, 1899. The Judgments relied upon by the learned Counsel for the respondent are distinguishable on the facts. In the Privy Council case referred to above, the document itself is described as a receipt. There is a condition that the amount is payable after two years and there is no promise to pay the amount. In those circumstances their Lordships held that it is only a receipt and not a promissory note. In the Madras Full Bench case the document contains condition to pay the amount in 6 equal instalments. In those circumstances, the Full Bench opined that it is not promissory note as there is no unconditional undertaking to pay a certain sum of money. In the case on hand there is unconditional promise to pay the amount. Certainly the documents under consideration are promissory notes and the lower Court erred in holding that the documents are admissible in evidence.
11. For the foregoing reasons, the order of the lower Court is set aside and the Revision is allowed but in the circumstances without costs.