Inadmissible promissory notes and original debt: lender may proceed only if the writing does not exhaust the contract.

A lender cannot bypass an inadmissible promissory note by suing on an implied original debt if the note embodies the whole loan contract, because Section 91 of the Evidence Act bars proof of the bargain otherwise than by the written instrument and Section 35 of the Stamp Act excludes an improperly stamped note from evidence. Where, however, the note does not contain the entire bargain, or was taken only as collateral security or conditional payment, the surrounding circumstances may be proved and the underlying debt enforced. Whether the note exhausts the contract depends on the facts, so the matter was remanded for fresh consideration.

---

---

Issues: Whether, when money is lent on a promissory note which is inadmissible for want of proper stamp, the lender can sue on the original debt apart from the note where the note embodies the terms of the contract.

Analysis: Section 91 of the Indian Evidence Act excludes proof by evidence aliunde where the terms of the contract have been reduced to writing, and Section 35 of the Stamp Act prevents an improperly stamped instrument from being used in evidence. If the promissory note embodies the whole contract, the lender cannot ignore the writing and sue on an implied or original promise. But if the note does not contain the whole bargain, or is shown to have been given only as collateral security or by way of conditional payment, the true nature of the transaction may be proved and the lender may proceed on the debt. Whether the note represents the whole contract is therefore a question of the surrounding circumstances.

Conclusion: A suit on the debt is not maintainable where the unstamped promissory note contains the whole contract, but it may be maintainable where the note is not the entire contract or was taken only as collateral security or conditional payment. The matter was remanded for fresh consideration on that basis.

Ratio Decidendi: Where a loan transaction is embodied wholly in an inadmissible promissory note, Section 91 of the Indian Evidence Act bars proof of the contract otherwise than by the document, but if the note does not exhaust the contract, the lender may sue on the underlying obligation.

---