TaxTMI 
TaxTMI 
2010 (11) TMI 1114
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The true translation of the document in question is as under: "On 7-5-2005 I have borrowed Rs. 5,00,000/- from B.Jaya Raghava Naidu, s/o.Tirupalu. I will repay in six months". On the foot of this document, the plaintiff filed the above mentioned suit for recovery of the alleged debt from the defendant. In the plaint, the document is described as a 'receipt'. In his written statement the defendant maintained that the said document is a rank forgery as he never executed "the suit receipt in favour of the plaintiff". The defendant further pleaded that the plaintiff created the suit receipt by forging his signature; and that to the suit notice he has sent a suitable reply. A perusal of the reply notice sent by the defenda....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cludes a note promising the 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". As the definition of promissory note in the Negotiable Instruments Act, 1881 (for short "the 1881 Act") is adopted by incorporation, the relevant provisions of the said Act need to be referred to. Section 4 of the 1881 Act defined "Promissory Note" as "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". Section 13(1) defined the "negotiable instrument"....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtain person or to the bearer of the instrument. In contrast, a receipt relates to acknowledgment of (1) receipt of any money or any bill of exchange, cheque or promissory note; (2) receipt of any other movable property in satisfaction of a debt; (3) satisfaction or discharge of any debt or demand or any part of debt or demand or which signifies or imports any such acknowledgment and whether the same is or is not signed with the name of any person. Let me see the suit document satisfies the requirements of which of the two documents. In State Bank of Hyderabad Per V.V.Shastri Vs. Ranganath Rathi [AIR 1966 Andhra Pradesh 215], a learned Single Judge of this Court considered a document, which is reproduced hereinbelow and held that the sam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndeavored to distinguish the decisions of the various High Courts, all of which have taken the view that negotiability is the test of a promissory note. We find on a careful review of the decisions rendered by the High Courts of Bombay, Allahabad, Patna and Madras, that in some of them the words 'on demand' were there but notwithstanding the existence of those words, the Courts had taken the view that the documents did not satisfy the test of negotiability and that they were not promissory notes. The expression 'on demand' in a promissory note has a technical meaning. It means, 'payable immediately or forthwith'. But every document which contains a promise to pay on demand is not necessarily a promissory note." In conclusion, the Divisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ferable." The legal position that emerges from the case law discussed above is that negotiability of the document is the main feature of a promissory note while the certainty of the sum payable and an unconditional undertaking signed by the maker are the other two important requirements to be satisfy for the document to fall within the description of the promissory note. A close and careful examination of the document in question would reveal that the same contains two sentences. In the first sentence, the fact of the defendant receiving the sum of Rs. 5 lakhs on 01.07.2005 from the plaintiff is acknowledged. In the second sentence, which is rather cryptic, it is mentioned that he will pay the amount in six months. While the requireme....