K.R. Krishnan vs P. Shanmugam

Thanikkachalam, J.—The plaintiff is the petitioner herein. The plaintiff filed the suit on a promissory note dated August 15, 1990, to recover

a sum of Rs. 18,375. Before numbering the suit, it was posted before the court, since, according to the office, proper stamp duty was not paid on

the promissory note. The lower court came to the conclusion that it is a promissory note otherwise payable than on demand and, therefore, stamp

duty is payable as per article 49(b) of the Stamp Act. The trial court, therefore, directed the plaintiff to pay stamp duty and penalty before

admitting the plaint and before August 16, 1993. It is against that order that the present revision has been preferred by the plaintiff.

Learned counsel appearing for the plaintiff/petitioner herein submitted that the suit promissory note is properly stamped since it is not a

promissory note otherwise payable than on demand. According to learned counsel, even though the words ""on demand"" do not find a place in the

promissory note, it is a promissory note payable only on demand. Therefore, it will come under article 49(a) of the Stamp Act. There is no time

limit fixed in the promissory note for the payment of the amount due under the promissory note. Therefore, it cannot be considered as a promissory

note payable otherwise than on demand. Since it is a promissory note as per section 4 of the Negotiable Instruments Act, and since it is not a

promissory note otherwise payable than on demand, the plaintiff/petitioner cannot be directed to pay the stamp duty under article 49(b) of the

Stamp Act, and penalty leviable thereunder. It was, therefore, pleaded that the order passed by the trial court is liable to be set aside.

On the other hand, learned counsel appearing for the defendant/respondent herein while supporting the order passed by the trial court,

contended that since there are no words ""on demand"" found in the promissory note, it should be considered as a promissory note, otherwise

payable than on demand. In view of the decisions in Thenappa Chettiar Vs. Andiyappa Chettiar, and Devassaya v. Shamsuddin [1976] KLT 24,

the trial court was correct in directing the plaintiff to pay the stamp duty and penalty under the provisions of article 49(b) of the Stamp Act.

I have heard the rival contentions.

The suit was filed to the recover certain amount due on a promissory note. The trial court pointed out that in the promissory note the words ""on

demand"" are not found. Therefore, it is a promissory note ""otherwise payable than on demand"". Hence, according to the trial court, the stamp duty

is payable according to article 49(b) of the Stamp Act. The point for consideration in this revision is whether the suit promissory note is a

promissory note otherwise payable on demand. In the promissory note the words ""on demand"" do not find a place. Even then it can be considered

as promissory note. u/s 4 of the Negotiable Instruments Act, a ""promissory note"" is an instrument in writing not being a bank note or a currency

note containing an unconditional undertaking, signed by the marker, to pay a certain sum of money only to, or to the order of, a certain person, or

to the bearer of the instrument.

In Sreenivasan Vs. Subbarama Sastrikal, , it was held that ""a promissory note payable on demand is one payable without any demand and time

limit. The true import of the words ''on demand'' is that the debt is due and payable immediately. The instrument involved in this case satisfied the

rest even read along with the endorsement. The endorsement does not mean that it is not payable immediately or without any demand. Even the

words ''on demand'' are not necessary to make it on demand because u/s 19 of the Negotiable Instruments Act, a promote in which no time for

payment is specified is one payable on demand."" In order to make a promissory note ""on demand"", it must be payable ""at once"", ""forthwith"" or

immediately"". The expression ""on demand"" unlike in ordinary parlance, has, a technical connotation in the law of negotiable instruments. If any time

is fixed for payment then payment could be demanded and the amount becomes payable only after that period and in such a case, the instrument is

only one payable otherwise than on demand even though the words ""on demand"" are there. The decisions reported in Aiyappankutty v. Mathai

[1954] KLT 785, Thenappa Chettiar Vs. Andiyappa Chettiar, and Devassaya v. Shamsuddin [1976] KLT 24 were concerned with instruments

were periods were fixed for payment. When time for payment is fixed a promissory note cannot be payable ""on demand"" whatever be the

wording. But, in the present case, no period for payment was fixed under the promissory note and, therefore, the decisions relied upon by the trial

court are not applicable to the facts of this case. The promissory note in question is correctly stamped according to the provisions contained in

article 49(a) of the Stamp Act. Therefore, the order passed by the trial court in holding that the promissory note in question is a promissory note

payable otherwise than on demand and necessary stamp duty is payable according to article 49(b) of the Stamp Act is liable to be set aside. The

trial court is bound to number the plaint if it is otherwise in order.

In the result, the revision is allowed. The order passed by the trial court is set aside. The trial court is directed to number the plaint, if the same is

otherwise in order.