C.V. Nagarjuna Reddy, J.@mdashThe issue regarding the nature of a document sought to be marked in evidence by the Petitioner, who is the Plaintiff in O.S. No. 23 of 2008 on the file of the learned Senior Civil Judge, Nandikotkur, falls for consideration in this Civil Revision Petition.
2. For convenience, the parties are referred to as they are arrayed in the suit.
3. The true translation of the document in question is as under:
On 7-5-2005 I have borrowed Rs. 5,00,000/- from B. Jaya Raghava Naidu, s/o. Tirupalu. I will repay in six months.
On the foot of this document, the Plaintiff filed the above mentioned suit for recovery of the alleged debt from the Defendant. In the plaint, the document is described as a ''receipt''.
4. In his written statement the Defendant maintained that the said document is a rank forgery as he never executed "the suit receipt in favour of the Plaintiff". The Defendant further pleaded that the Plaintiff created the suit receipt by forging his signature; and that to the suit notice he has sent a suitable reply.
5. A perusal of the reply notice sent by the Defendant shows that the Defendant maintained the same stand, describing the alleged receipt as a rank forgery and denying his borrowing the amount from the Plaintiff. It is further stated in the said reply notice that the Defendant filed a suit against the Plaintiff for recovery of certain amount in the Court of the Senior Civil Judge, Kurnool, and that as a counter-blast the Plaintiff has forged his signature and got the suit notice issued.
6. When the Plaintiff sought to mark the above said document in evidence, the Defendant raised an objection by taking the stand that the document is a promissory note and not a receipt. This objection was upheld by the Court below by holding that as the Defendant has undertaken to pay the sum of money allegedly borrowed by him, the same cannot be treated as a receipt within the definition of Section 2(23) of the Indian Stamp Act, 1899 (for short "the Act"). The Court further held that as the document in question was executed prior to coming into force of the amendment to Section 35 of the Act by the Finance Act 2006, it cannot be impounded and the same is not admissible in evidence.
7. At the hearing, the learned Counsel for both the parties have referred to and relied upon several judgments of various High Courts in support of their respective stands.
8. Section 2(22) of the Act defined "Promissory Note" as under:
Section 2(22) ''Promissory Note'' means 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 be performed or happen.
As the definition of promissory note in the Negotiable Instruments Act, 1881 (for short "the 1881 Act") is adopted by incorporation, the relevant provisions of the said Act need to be referred to. Section 4 of the 1881 Act defined "Promissory Note" as "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".
9. Section 13(1) defined the "negotiable instrument" and it is relevant to reproduce this provision along with all the explanations thereto hereunder:
13.(1) A "negotiable instrument" means a promissory note bill of exchange or cheque payable either to order or to bearer.
Explanation (i) 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 payable to particular person, and docs not contain words prohibiting transfer or indicating an intention that it shall not be transferable.
Explanation (ii) A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last endorsement is an endorsement in blank.
Explanation (iii) Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order it is nevertheless payable to him or his order at his option.
10. From the above noted definitions of the "promissory note" construed in the light of the definition of the "negotiable instrument" it would appear that a document, to be treated as a promissory note, requires to satisfy the following conditions:
1) It must be in writing;
2) It must contain an unconditional undertaking to pay, signed by the maker;
3) The unconditional undertaking to pay must be in relation to payment of certain sum of money; and
4) The money is payable to or to the order of a certain person or to the bearer of the instrument.
In contrast, a receipt relates to acknowledgment of (1) receipt of any money or any bill of exchange, cheque or promissory note; (2) receipt of any other movable property in satisfaction of a debt; (3) satisfaction or discharge of any debt or demand or any part of debt or demand or which signifies or imports any such acknowledgment and whether the same is or is not signed with the name of any person.
Let me see the suit document satisfies the requirements of which of the two documents.
11. In
117, Park Lane,
Secunderabad - Deccan,
Date 18th July 1950.
On demand I Ranganatha Rathi son of Harnath Rathi residing at Kachiguda Station Road, Hyderabad, promise to pay to Messrs Darabji Bros and Co., Bankers, 117, Park Lane, Secunderabad-Dn., a sum of O.S. Rs. 46,000/- (Forty six thousand only) together with interest thereon at 6 per cent per annum for value received in cash.
Executed at Secunderabad-Dn., this 18th day of July 1950.
Sd/- Ranganath Rathi,
(on four one-anna India revenue stamps)
Witnesses:
1. Sd/----.
2. Sd/----.
On expressing his opinion, the learned Judge has, however, referred the case to a Division Bench. After reviewing the case law relating to the judgments rendered by various High Courts on the subject, the Division Bench inter alia observed as under:
According to Sri Narasimha Ayyangar, the real test would be to find whether the document contains an unconditional undertaking to pay and that the absence of the words ''to the order of'' should not render the document any the less a promissory note. He would deduce the existence of an unconditional undertaking to pay in the document which is before us by the presence of the words ''on demand'', and it is on this basis that he has endeavored to distinguish the decisions of the various High Courts, all of which have taken the view that negotiability is the test of a promissory note. We find on a careful review of the decisions rendered by the High Courts of Bombay, Allahabad, Patna and Madras, that in some of them the words ''on demand'' were there but notwithstanding the existence of those words, the Courts had taken the view that the documents did not satisfy the test of negotiability and that they were not promissory notes. The expression ''on demand'' in a promissory note has a technical meaning. It means, ''payable immediately or forthwith''. But every document which contains a promise to pay on demand is not necessarily a promissory note.
In conclusion, the Division Bench agreed with the view of the learned Single Judge in holding that the document is not a promissory note.
12. A Full Bench of the Madhya Pradesh High Court in
(i) There should be an unconditional undertaking to pay;
(ii) The sum should be a sum of money and should be certain;
(iii) The payment should be to the order of a person who is certain, or to the bearer of the instrument; and
(iv) The maker should sign it.
13. On considering the document, which fell for its consideration, the Full Bench held that the same was not a promissory note, but a bond because the money was not payable to the bearer or order.
14. In Raghunath Balakrishna Deshpande v. Biharilal Krishna Prasad Dave AIR 1972 Mys 159, V.S. Malimath, J. (as His Lordship then was) laid emphasis on explanation (i) to Section 13(1) of the 1881 Act and held that a document, which is a promissory note could be a negotiable instrument u/s 13(1) of the Act, if the amount is payable either to order or to bearer. But, in view of the latter part of the said explanation, a promissory note shall be deemed to be payable to order, if the amount is expressed to be payable to a particular person and does not contain words "prohibiting transfer or indicating an intention that it shall not be transferable."
15. The legal position that emerges from the case law discussed above is that negotiability of the document is the main feature of a promissory note while the certainty of the sum payable and an unconditional undertaking signed by the maker are the other two important requirements to be satisfy for the document to fall within the description of the promissory note.
16. A close and careful examination of the document in question would reveal that the same contains two sentences. In the first sentence, the fact of the Defendant receiving the sum of Rs. 5 lakhs on 01.07.2005 from the Plaintiff is acknowledged. In the second sentence, which is rather cryptic, it is mentioned that he will pay the amount in six months. While the requirements of the sum being certain and an unconditional undertaking are satisfied, it needs to be examined whether it satisfies the most vital aspect of the negotiability of the document. As held by the Mysore High Court in Raghunath Balakrishna Deshpande (3 supra), by virtue of explanation (i) of Section 13(1), mere absence of the words that the amount is payable either to order or to bearer will not render the instrument non-negotiable, if the same does not contain words "prohibiting transfer or indicating an intention that it shall not be transferable", but the document should contain a recital that the money will be paid to "a certain person" as envisaged in Section 4 of the 1881 Act.
17. In the instant case, the document does not refer to the person to whom the Defendant has undertaken to pay, though it was acknowledged therein that the amount was received from the Plaintiff. I am, therefore, of the opinion that the essential requirement of undertaking to pay to a certain person is absent from the document. As such, it cannot be said that the document satisfies the ingredients of a promissory note.
18. The above conclusion left me to deal with the further question whether the document answers the description of ''receipt'' within the definition of Section 2(23) of the Act.
19. As noted hereinabove, a document falls within the category of a ''receipt'', if it satisfies one of the three requirements mentioned in the abovementioned provision. One such requirement is acknowledgement of receipt of any money or any bill of exchange, cheque or promissory note. The first sentence of the document, which was discussed supra, squarely satisfies this requirement. But, can it be said that whether the last sentence by which an undertaking was given to repay the money within a stipulated time takes away the character of ''receipt'' from a document? In my opinion, it does not. What is significant is that the definition of ''receipt'' is inclusive, but not exhaustive. It opens with the words "receipt includes". Therefore, if the document contains something more than what is required to be mentioned in the receipt, the same does not cease to be a ''receipt'' merely by addition of certain other words so long as the said document does not fall in any other category of the documents such as promissory note, bond etc. I have, therefore, no hesitation to hold that the document in question falls within the definition of ''receipt'' in Section 2(23) of the Act and the Court below has committed an error in holding that the same is a promissory note. As the receipt is liable for being impounded under the Act, the Court below is directed to refer the same to the competent authority for this purpose.
20. On the premises as above, the Civil Revision Petition is allowed.
