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Hanuman Vs. Fattu - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtRajasthan High Court
Decided On
Case NumberCivil Revn. No. 51 of 1966
Judge
Reported inAIR1967Raj235
ActsStamp Act, 1899 - Sections 2(5) and 2(22) - Schedule - Articles 13 and 49
AppellantHanuman
RespondentFattu
Appellant Advocate Lekh Raj, Adv.
Respondent Advocate N.M. Singhvi, Adv.
DispositionPetition allowed
Cases ReferredParlab Chand Ratan Chand v. Gilbert
Excerpt:
- - in the present case it is clearly stated by the executant that he shall pay the amount to the original payer on demand or shall pay to the endorsee on the demand of the latter. the suit document is, therefore, clearly a promissory note payable 3 1/2 months after the date of execution i......stipulation for a demand thereafter. it cannot be said that the words 'on demand' contained in the suit promissory notes have the technical meaning of being payable immediately, as they are conditional upon not being payable for a period of two years. further, the demand contemplated is one to be made after a period of two years, the making of a demand in such a case would be a condition precedent to the payment and, therefore, there would be no unconditional promise to pay in the documents. it will follow that the suit documents will not be promissory notes within the meaning of the expression in section 2(22) of the stamp act.' 3. the above case is distinguishable. in the present case it is clearly stated by the executant that he shall pay the amount to the original payer on demand or.....
Judgment:
ORDER

Jagat Narayan, J.

1. This is a defendant's revision application against an order of the appellate court holding that the suit document is not a promissory note. The document runs as follows:

'I Hanuman son of Hiralal declare that I have borrowed Rs. 300/- from Fattu in cash. I shall pay this amount to you on demand or on the demand of the person whom you order payment at the place of business together with interest at Rs. 1.50 per month on Mah Sudi l-S. 2016.'

The pronote was executed on Katik Badi 1-X. 2016 and was attested by a witness Bhanwarlal. The appellate court held, following the decision of a learned Singh Judge of the Madras High Court in Muthu Gounder v. Perumayammal, AIR 1961 Mad 347 that the promise contained in the above document was not unconditional inasmuch as the amount was payable on demand, the demand being a condition precedent.

2. In the above case the language of the promissory note runs as follows:

'1 promise to pay you or your order after a period of two years on demand by you the principal together with interest.' It was observed:

'Under Section 2(22) of the Stamp Act a promissory note is one that would come within the definition contained in Section 4 of the Negotiable Instruments Act and would include a note promising 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. A promissory note may be payable on demand or at a fixed determinable point of time But in every case there should be an unconditional undertaking to pay a certain sum of money to or to the order of a certain person or bearer.

The suit documents are not on their terms ones which stipulate payment on demand simpliciter. Nor are they ones which are payable at the end of a fixed period. They are a combination of both, that is, payment is to be made after two years on a demand being made. Further, if the documents are to be construed strictly, it would mean that even if there has been an order to pay them to another person there should be a demand by the original payer.

The expression 'on demand' in a promissory note has a technical meaning, viz., payable immediately or forthwith. In such cases, no actual demand is necessary to make the money due under the promissory note exigible Similarly, if the amount of the promissory note is made payable at the end of a fixed period, it will still be a promissory note as the date of payment is certain and thereafter the liability would be unconditional. No further demand would be necessary to make the amount due.

Now, in the present case, the unconditional promise to pay, which would otherwise exist if the promisor had merely agreed to pay ON demand, is qualified and made into a conditional one by making it payable after a period of two years; or conversely the unconditional promise which would exist even if the money is made conditional by the stipulation for a demand thereafter. It cannot be said that the words 'on demand' contained in the suit promissory notes have the technical meaning of being payable immediately, as they are conditional upon not being payable for a period of two years.

Further, the demand contemplated is one to be made after a period of two years, The making of a demand in such a case would be a condition precedent to the payment and, therefore, there would be no unconditional promise to pay in the documents. It will follow that the suit documents will not be promissory notes within the meaning of the expression in Section 2(22) of the Stamp Act.'

3. The above case is distinguishable. In the present case it is clearly stated by the executant that he shall pay the amount to the original payer on demand or shall pay to the endorsee on the demand of the latter. In both cases the words 'on demand' have the same technical meaning, viz., payable immediately or forthwith. Further it is stated in the promissory note that payment will be made at the place of business. That obviously means the place of business of the original payer or the endorsee. It cannot mean the place of business of the maker of the promissory note. Now if it were contemplated that the original payer or the endorsee will make a demand then the demand could only be made at the house or place of business of the maker, That was not under the contemplation of the parties.

It cannot be said, therefore, in the present case, that it was necessary to make an actual demand before the promissory note was payable after the period fixed for payment therein. The suit document is, therefore, clearly a promissory note payable 3 1/2 months after the date of execution i.e., payable otherwise than on demand.

4. On behalf of the plaintiff it was contended that as the promissory note was payable on demand after the date of payment it was one payable on demand within the meaning of Article 43 of the Stamp Act. Reliance was placed on Tikam Chand v. Laxmichand, AIR 1961 Raj 87 and Meghraj v. Shivji, Civil Revn. No. 105 of 1962 decided on 14-8-1962 (Raj) in which following the decision in Parlab Chand Ratan Chand v. Gilbert, AIR 1934 All 695 (1) it was held by me that a Shah Jog Hundi and a promissory note respectively payable after a fixed time were to be treated as payable on demand for the purpose of Stamp Act.

On reconsideration I find that Tikam Chand's case, AIR 1961 Raj 87 and Meghraj's case, Civil Revn. No. 105 of 1962 D/- 14-8-1962 (Raj) were incorrectly decided and that the analogy of a post-dated cheque cannot he applied to either a Hundi or a promissory note as the provisions relating to cheque are different both under the Negotiable Instruments Act and under the Stamp Act. Under both the Acts a cheque is defined as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Now a post-dated cheque is not expressed to be payable otherwise than on demand as there is nothing on the face of it to show that it was post dated when it was executed and it is exempt from stamp duty.

A promissory note or a bill of exchange not expressed to he payable otherwise than on demand cannot however, be treated as one payable on demand if the date of payment is different from the date of execution. I accordingly hold that a promissory note or a hill of exchange payable after a fixed time is payable otherwise than on demand. Under Article 49 (b) of the Stamp Act the duty on a promissory note payable otherwise than on demand is the same as on a bill of exchange for the same amount payable otherwise than on demand. Under Article 13 (b) (i) the duty payable on a bill of exchange otherwise than on demand for Rs. 300/- is Rs. 1.25. This has been reduced to one-fifth by Notification dated 25-1-1957. The proper duty on the promissory note in suit comes to 25 paise. As it is stamped with a stamp of 20 paise only it is insufficiently stamped and is inadmissible in evidence.

5. Another contention on behalf of the plaintiff is that the suit document is a bond, t am unable to accept this contention as the promissory note in suit is payable to order. 'Bond' is defined as follows in Section 2(5) of the Stamp Act:

'Bond' includes ----

(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.'

6. A promissory note which is not expressed to be payable to order or bearer certainly becomes a bond under Clause (b) above if it is attested. But if a promissory note is expressed to be payable to order or bearer then it cannot fall under Clause (b) above or under any other clause of Section 2 (5).

7. I accordingly allow the revision application and dismiss the suit of the plaintiff. In the circumstances of the case I direct that parties shall bear their own costs of these proceedings throughout.


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