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2016 DIGILAW 321 (KER)

JAGADEESH v. A. K. THOMAS

2016-03-21

K.ABRAHAM MATHEW

body2016
JUDGMENT : The simple question that is agitated in this Original Petition filed by the defendant is whether the document on the basis of which the respondent filed the suit is a promissory note or bond. In the affidavit filed by him in lieu of his examination-in-chief in the trial court the petitioner sought to get it marked as a promissory note. The petitioner filed an objection to it. The court after hearing both parties held that it is a promissory note. 2. The document carries the label promissory note. The essential recitals in it are as follows: "On demand I will pay Rs.22,00,000/- I have borrowed from you with interest at Rs.3/-per Rs.100/- per month". It is attested by two witnesses. 3. Promissory note is defined in Section 4 of the Negotiable Instruments Act 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." 4. The definition of bond is seen in Section 2(a) of the Kerala Stamp Act. Bond includes- (i) 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, (ii) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and (iii) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another. 5. The document in question does not contain the words to the order or the bearer. The submission of the learned counsel for the respondent is that it is still a promissory note. On the other hand, the argument advanced by the learned counsel for the petitioner is that as the document does not contain the words to the order or the bearer and at the same time it is attested by witnesses, it is a bond. 6. The first of the three decisions pressed into service by the respondent is Kochuthresia v. Devadas ( 1987(1) KLT 645 ). 6. The first of the three decisions pressed into service by the respondent is Kochuthresia v. Devadas ( 1987(1) KLT 645 ). This court held that absence of the expression 'to the order' is not by itself sufficient to hold that the document in question is not a promissory note. The document involved in that case was not an attested one. So these decision on it is of no assistance to answer the question raised in this case. 7. The second decision relied on by the respondent is Sankaran Namboodiripad v. Vijayan ( 1987 (2) KLT 745 ). The learned Judge in that judgment observed that a document which contains 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. In other words, even in the absence of words to the order or the bearer the document may be a promissory note. But the instrument involved in that case had not been attested by witnesses. This decision also does not help the court to resolve the dispute in this case. 8. The third decision upon which reliance is placed by the respondent is Alikunju Hamsa v. Varghese George ( 1994(1) KLT 246 ). What was held in that case is that even though a promissory note is not liable to be attested, the fact that it is attested will not make it any the less a promissory note if it is made payable to order or the bearer. The last decision which was brought to my notice by the learned counsel for the respondent is one rendered by a division bench of this court in Vijayakumaran Nair K. @ Vijayan v. Ajikumar (RFA No.415 of 2014). The division bench held that the document which required interpretation in that case was a promissory note. But there was no attestation of the document by witnesses. One of the decisions from which support was taken by the division bench is Hameed Haji v. Appukutty ( 1968 KLT 869 ). 9. State Bank of Travancore v. Thayikutty Amma ( 1988 (2) KLT 111 ), Gopakumar v. P.Iswar Pillai (ILR 2006(1) Kerala 740) and Nyamathulla M.D. v. A.Chitharanjan Reddy (2008 (4) KHC 595(A.P) are the decisions relied on by the petitioner. 9. State Bank of Travancore v. Thayikutty Amma ( 1988 (2) KLT 111 ), Gopakumar v. P.Iswar Pillai (ILR 2006(1) Kerala 740) and Nyamathulla M.D. v. A.Chitharanjan Reddy (2008 (4) KHC 595(A.P) are the decisions relied on by the petitioner. In State Bank of Travancore's case the learned Judge held that to call an instrument a bond it should satisfy the following conditions: 1. The instrument shall be attested by a witness 2. It shall not be payable to order or bearer 3. By the said document the person who has executed it shall oblige himself to pay money to another. In that case the obligation to pay the amount was not created for the first time under the document. So the court held that it was not a bond. In Gopakumar v. P.Iswar Pillai's case, there is no discussion of law. In Nyamathulla M.D. v. A.Chitharanjan Reddy's case a division bench of the Andhra Pradesh High Court took the view that an instrument to be a promissory note must necessarily contain the words to the bearer or the order. This interpretation militates against the consistent view taken by this court right from 1968. 10. When it comes to the interpretation of a document, its label is not conclusive. Merely because the document sought to be marked by the respondent carries the label promissory note the court cannot hold that it is a promissory note. 11. The following are the features of the document in question. (1) The amount is payable to a certain person, namely the respondent. (2) The petitioner has made an unconditional undertaking to pay the amount. (3) The petitioner has signed the document. 12. The instrument does not contain the words to the order or the bearer. The decisions discussed above are sufficient to hold that still it may be a promissory note. 13. Section 2(a) of the Kerala Stamp Act provides that an instrument is a bond if (a) its executant obliges himself to pay money to another. (b) it is not payable to order or bear, and (c) it is attested by a witness. To determine whether an instrument which is not payable to order or bearer is a promissory note or bond the following question should be asked. Is it attested by a witness. If the answer is in the affirmative it is, no doubt, a bond and not a promissory note. To determine whether an instrument which is not payable to order or bearer is a promissory note or bond the following question should be asked. Is it attested by a witness. If the answer is in the affirmative it is, no doubt, a bond and not a promissory note. This is the view taken by High Court of Andhra Pradesh in Bahadurrinisa Begum v. Vasudev Naick and others (AIR 1967 A.P.123), the High Court of Bombay in K. Mallaya Lachmayya Gop v. Prabhakarrao Marotrao Dhote (AIR 1976 Bombay 234), the High Court of Allahabad in Kartey Singh v. Istikhar Ahma (AIR 1981 All.386) and the High Court of Jammu & Kashmir in Suraj Parkash Kapur v. Om Prakash Kapoor (AIR 1983 NOC 88). 14. The law on the point may be explained with illustrations. A executed the following documents 1. I promise to pay B Rs.One lakh, which I have borrowed from him today. This is a promissory note though it does not contain the words to the order or bearer. (See illustration (b) in Section 4 of the Negotiable Instruments Act). 2. I promise to pay B or the order of B or the bearer Rs. One lakh which I have borrowed from him today. This is a promissory note. 3. I promise to pay B or the order of B or the bearer Rs. One lakh I borrowed from him today. It is attested by a witness. This is a promissory note because though it is attested by a witness it contains the words the order of B or the bearer of the instrument. 4. I promise to pay B Rs. One lakh I have borrowed from him today. It is attested by a witness. This is a bond because it does not contain the words order of B or the bearer and at the same time it is attested by a witness. 15. In the instrument produced by the respondent the petitioner has made an unconditional undertaking that he would pay Rs.2,00,000/- to the respondent. It is not payable to the order of the respondent or the bearer. It is attested by two witnesses. It is a bond. The lower court went wrong in holding that the instrument is a promissory note. The order is liable to be set aside. In the result, this Original Petition is allowed. The impugned order is set aside.