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Muthu Gounder Vs. Perumayammal - Court Judgment

LegalCrystal Citation
SubjectCivil;Criminal
CourtChennai High Court
Decided On
Case NumberSecond Appeal Nos. 842 and 970 of 1958
Judge
Reported inAIR1961Mad347; (1960)2MLJ568
ActsStamp Act, 1899 - Sections 2(22)
AppellantMuthu Gounder
RespondentPerumayammal
Appellant AdvocateN.R. Raghavachariar, Adv.
Respondent AdvocateT.M. Chinniah Pillai, Adv.
Disposition Appeal dismissed
Cases ReferredAlamelu Ammal v. Rangai Gounder
Excerpt:
.....demand executed on . . . by . . . i promise to pay you or order after a period of two years on demand by you the principal together with interest the sum of rupees . . . the documents were stamped with four-anna revenue stamp. if the documents were held to be promissory notes within the definition contained in section 2, sub-clause 22 of the stamp act (ii of 1899), it must be held to be insufficiently stamped. on the question whether the suit documents could be said to be promissory notes and therefore, inadmissible in evidence as having been insufficiently stamped, by reason of section 35 of the act ii of 1899, ; held, the suit documents were not promissory notes and could be received in evidence on being validated after payment of the proper stamp duty (which had been..........on demand executed on 21-2-1950 by ...... i promise to pay you or your order after a period of two years on demand by you the principal together with interest the sum of rs. ......."the documents are stamped with four anna revenue stamps. it is not disputed that if the documents were held to be promissory notes within the definition contained in section 2, sub-clause (22) of the stamp act, they must be held to be insufficiently stamped; they being payable otherwise on demand, the proper duty would be governed by article 49 (b) of the act, that is, duty as on a bill of exchange for the amounts covered by them. the question is whether the suit documents could be said to be promissory notes.3. under section 2(22) of the stamp act, a promissory note is one that would come within the.....
Judgment:
1. These appeals involve the decision of a common and only question, viz, whether the document on which the respective suits are laid is inadmissible by reason of the provisions of Section 35 of the Stamp Act. The trial Court gave the answer in the affirmative and dismissed the suits while the appellate Court Came to the opposite conclusion and decreed them.

2. The operative terms of the documents in the two appeals are identical and they ate to the following effect:-

"The on demand executed on 21-2-1950 by ...... I promise to pay you or your order after a period of two years on demand by you the principal together with interest the sum of Rs. ......."

The documents are stamped with four anna revenue stamps. It is not disputed that if the documents were held to be promissory notes within the definition contained in Section 2, Sub-clause (22) of the Stamp Act, they must be held to be insufficiently stamped; they being payable otherwise On demand, the proper duty would be governed by Article 49 (b) of the Act, that is, duty as on a bill of exchange for the amounts covered by them. The question is whether the suit documents could be said to be promissory notes.

3. 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 unconditial undertaking to pay a certain sum of money to or to the order of a certain person or bearer.

4. 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.

5. 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 he 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 payable at the end of two years 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.

6. Reliance however is placed upon the decision in Alamelu Ammal v. Rangai Gounder, AIR 1945 Mad 42. That was a case where it was agreed that the amount would be paid in two years. There was no stipulation for a demand after that period. It was held that the document in that case was a promissory note though not payable on demand. In the present case, the documents make it clear that the amounts due were not payable within the period of two years, and further there should be a demand after such a period.

In the circumstances, it cannot be held that the expression "on demand" contained in the documents was to mean "forthwith" or "immediately". The documents therefore contain stipulations more than what should ordinarily be in a promissory note. I am, therefore, of opinion that the learned District Judge was right in his view that the suit documents are not promissory notes and that they could be received in evidence on being validated after payment of the proper stamp duty (which had been done). The appeals fail and are dismissed with costs. Leave refused.


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