HON’BLE Dr. JUSTICE K.G.SHANKAR Civil Revision Petition No.5562 of 2012 Date: 12-9-2014 Between Jonnalagadda Ramachandra Prakash Rao … Petitioner/Plaintiff and Sree Vijaya Krishna Traders (New Firm), Proddatur, Kadapa District, Rep. by its Partner Tellakula Santhosh Kumar; and 4 others … Respondents/Defendants HON’BLE Dr. JUSTICE K.G.SHANKAR Civil Revision Petition No.5562 of 2012 Order:
When the plaintiff in O.S.No.147 of 2011 on the file of the Senior Civil Judge, Proddatur, Kadapa District sought to exhibit a document purporting to be a pronote signed by the 4th defendant on behalf of the 1st defendant-Firm, the Court took an objection regarding the stamp duty. The plaintiff invited the Court to pass a reasoned order on the admissibility of the document. Through orders dated 26-3-2012, it was held that the document in question was a bond and was not a pronote and that stamp duty and penalty is liable to be paid on the same. Questioning the same, the present revision is laid.
2. The plaintiff contended that the document in question is a pronote and is not a bond or a receipt. Section 2(5) of the Indian Stamp Act, 1899 defines bond. It reads:
“(5) “Bond”:-- “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;”
3. Section 2(23) of the Indian Stamp Act defines a receipt. Section 2(23) reads:
“(23) “Receipt”:-- “Receipt” includes any note, memorandum or writing—
(a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received ; or
(b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt ; or
(c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged ; or
(d) which signifies or imports any such acknowledgment, and whether the same is or is not signed with the name of any person ;”
4. It is convenient to refer to Section 2(22) of the Indian Stamp Act, which defines the promissory note. The Indian Stamp Act defines a promissory note as the pronote as defined in the Negotiable Instruments Act, 1881 (the N.I. Act, for short). Section 4 of the N.I. Act defines the promissory note. A promissory note is defined under Section 4 of the N.I. Act as an instrument in writing (not being a bank-note or a currency-note) containing 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.
5. Questions arose regarding instruments as to whether the instruments are bonds, receipts, promissory notes or otherwise. Under Section 2(5) of the Indian Stamp Act, the necessary ingredients of a bond are:
(1) There must be an undertaking to pay
(2) Sum should be ascertained in money
(3) The payment is to be made by one person to another person named in the instrument
(4) Document should be signed by promise
(5) Document must be attested by a witness with address and it should not be payable to order or bearer.
In other words, once there is an order to pay to the bearer or to the order of the bearer, the instrument would be a promissory note as it becomes a negotiable document and would be within Section 4 of the N.I. Act.
6. On the other hand, a promissory note bears the following conditions:
(1) An unconditional undertaking to pay
(2) The sum should be a sum of money and should be certain
(3) The payment should be to the order of a person who is certain or to the bearer of the instrument and
(4) The maker should sign it.
7. In Bolisetti Bhavannarayana v. Kommuru
[1]
Vullakki Cloth Merchant Firm, Tenali , a Full Bench of this Court had occasion to consider the distinction between a promissory note and a bond and held that if the instrument did not contain endorsement as to negotiability, the instrument would be a bond and not a negotiable instrument.
8. In Kotla Sudheer Kumar v. Mallavarapu
[2]
Jojayya @ Jojaiah Chaudhary , this Court observed that the words “pay to or to the order of a certain person” or “to the bearer of the instrument” should necessarily be incorporated in the instrument for the instrument to be treated as a promissory note.
9. In B.JAYA RAGHAVA NAIDU v. B.RAMA
[3]
SUBBA REDDY , this Court had occasion to consider the distinction between a promissory note and a receipt of acknowledgment. The Court referred to decisions on this point and held that a receipt cannot be treated as a promissory note merely because the receipt contained more words than needed for a receipt. The Court also referred to Sections 2(5), 2(22) and 2(23) of the Indian Stamp Act dealing with a bond, promissory note and a receipt.
10. From Kotla Sudheer Kumar (2 supra), it is evident that an instrument becomes a promissory note if it contains recitals of negotiability such as that the amount is payable to the bearer or to the order of the promisee. The document in question recites that the 1st defendant-Firm borrowed Rs.One lakh from the plaintiff and is ready to pay back the same with interest at 15% per annum. There is no recital in the document that the amount is payable to the bearer or to the order of the payee.
11. As clarified in various decisions referred to above, if an instrument does not contain recital as to negotiability, the document would not be a negotiable instrument. Where the executant undertook to discharge the amount borrowed from the plaintiff under the document in question, it would be a bond so long as the same is attested. Admittedly, the document in question is attested. I therefore agree with the finding of the Trial Court that the document in question is a bond within the meaning of the Indian Stamp Act and is not a promissory note and that the stamp duty and penalty are payable on the said instrument. In that view of the matter, I see no error in the order of the Trial Court.
12. This civil revision petition consequently is devoid of merits and is accordingly dismissed.
The miscellaneous petitions, if any, pending in this revision shall stand closed. No costs.
Dr. K.G.SHANKAR, J.
12th September, 2014. Ak HON’BLE Dr. JUSTICE K.G.SHANKAR Civil Revision Petition No.5562 of 2012 12th September, 2014. (Ak)
[1] 1996 (1) ALT 917
[2] AIR 2002 AP 170
[3] 2010 (11) LAWS (APH) 43