Is notarised promissiory note a negotiable instrument?
Bhumika
(Querist) 10 January 2018
This query is : Resolved
can Notarised Promissiory note on laser paper without revenue stamp be considered in evidence as a negotiable instrument?
Vijay Raj Mahajan
(Expert) 11 January 2018
Negotiable Instruments Act, 1881 provides :
Section 4. "Promissory note"
A "promissory note" is 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.
Illustrations
A signs instruments in the following terms:
(a) "I promise to Pay B or order Rs.500".
(b) "I acknowledge myself to be indebted to B in Rs.1,000, to be paid on demand, for value received."
(c) "Mr B I.O.U Rs.1,000."
(d) "I promise to pay B Rs. 500 and all other sums which shall be due to him."
(e) "I promise to pay B Rs. 500 first deducting there out any money which he may owe me."
(f) I promise to pay B Rs. 500 seven days after my marriage with C.
(g) I promise to pay B Rs. 500 on D's death, provided D leaves me enough to pay that sum.
(h) I promise to pay B Rs. 500 and to deliver to him my black horse on lst January next.
The instruments respectively marked (a) and (b) are promissory notes. The instruments respectively marked (c), (d), (e), (f), (g) and (h) are not promissory notes.
Section 13. "Negotiable instrument"
(1 ) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer.
Explanation 1 : A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable.
Explanation 2 : A promissory note, bill of exchange or cheque is payable to bearer which is expressed to be so payable or on which the only or last endorsement is an endorsement in blank.
Explanation 3 : Where a promissory note, bill of exchange or cheque, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option.]
(2) A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees.
The simple piece of paper, duly Signed mentioning "IOU the amount" is good enough to be a promissory note without being notarised and its a negotiable instrument.
N.K.Assumi
(Expert) 11 January 2018
Legally speaking, the experts are correct. But the contents of the instruments itself will speak, whether it is negotiable instruments or memorandum of agreement or a bond or unconditional undertaking to pay a sum of money etc; as the words used in the instrument is the determining factor. Moreover, promissory note in the stamp act goes further than the NIA.
R.Ramachandran
(Expert) 11 January 2018
Dear Bhumika,
Do not get confused by some of the answers.
You have raised a very pertinent doubt.
A Promissory Note is required to be stamped. In your case, it has not been stamped. Notorisation of the promissory note is not a substitute for Stamping. Therefore, it is an invalid promissory note.
BAALASUBRAMANNYAMM
(Expert) 11 January 2018
Mr. Ramachandran has simplified his answer, you can easily understand "where you are".
Bhumika
(Querist) 11 February 2018
thank you all
i got my solution
