Muthu Gounder vs Perumayammal

Ramachandra Iyer, J.—These appeals involve the decision of a common and only question, viz, whether the document on which the

respective suits are laid is inadmissible by reason of the provisions of Section 35 of the Stamp Act. The trial Court gave the answer in the

affirmative and dismissed the suits while the appellate Court Came to the opposite conclusion and decreed them.

The operative terms of the documents in the two appeals are identical and they ate to the following effect:-

The on demand executed on 21-2-1950 by ...... I promise to pay you or your order after a period of two years on demand by you the principal

together with interest the sum of Rs. .......

The documents are stamped with four anna revenue stamps. It is not disputed that if the documents were held to be promissory notes within the

definition contained in Section 2, Sub-clause (22) of the Stamp Act, they must be held to be insufficiently stamped; they being payable otherwise

On demand, the proper duty would be governed by Article 49 (b) of the Act, that is, duty as on a bill of exchange for the amounts covered by

them. The question is whether the suit documents could be said to be promissory notes.

u/s 2(22) of the Stamp Act, a promissory note is one that would come within the definition contained in Section 4 of the Negotiable Instruments

Act and would include a note promising 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, A promissory note may be payable on demand or at a fixed

determinable point of time. But in every case there should be an unconditial undertaking to pay a certain sum of money to or to the order of a

certain person or bearer.

The suit documents are not on their terms ones which stipulate payment on demand simpliciter. Nor are they ones which are payable at the end

of a fixed period. They are a combination of both, that is, payment is to be made after two years on a demand being made. Further, if the

documents are to be construed strictly, it would mean that even if there has been an order to pay them to another person there should be a demand

by the original payer.

The expression ""on demand"" in a promissory note has a technical meaning, viz., payable immediately or forthwith. In such cases, no actual

demand is necessary to make the money due under the promissory note exigible. Similarly, if the amount of the promissory note is made payable at

the end of a fixed period, it will still be a promissory note as the date of payment is certain and thereafter the liability would he unconditional. No

further demand would be necessary to make the amount due.

Now, in the present case, the unconditional promise to pay, which would otherwise exist if the promisor had merely agreed to pay on demand, is

qualified and made into a conditional one by making it payable after a period of two years; or conversely the unconditional promise which would

exist even if the money is made payable at the end of two years is made conditional by the stipulation for a demand thereafter. It cannot be said

that the words ""on demand"" contained in the suit promissory notes have the technical meaning of being payable immediately, as they are conditional

upon not being; payable for a period of two years.

Further, the demand contemplated is one to be made after a period of two years. The making of a demand in such a case would be a condition

precedent to the payment and, therefore, there would be no unconditional promise to pay in the documents. It will follow that the suit documents

will not be promissory notes within the meaning of the expression in Section 2(22) of the Stamp Act.

Reliance however is placed upon the decision in Alamelu Ammal Vs. P. Rangai Gounder, . That was a case where it was agreed that the

amount would be paid in two years. There was no stipulation for a demand after that period. It was held that the document in that case was a

promissory note though not payable on demand. In the present case, the documents make it clear that the amounts due were not payable within the

period of two years, and further there should be a demand after such a period.

In the circumstances, it cannot be held that the expression ""on demand"" contained in the documents was to mean ""forthwith"" or ""immediately"". The

documents therefore contain stipulations more than what should ordinarily be in a promissory note. I am, therefore, of opinion that the learned

District Judge was right in his view that the suit documents are not promissory notes and that they could be received in evidence on being validated

after payment of the proper stamp duty (which had been done). The appeals fail and are dismissed with costs. Leave refused.