Back
Karnataka High Court
VISHNU UPENDRA SHET GOVEKAR - Appellant
Versus
SHESHAGIRI JTVOTTAM PRABHU DESAI BORUSKAR -Respondent
Decided On : 07-24-97
NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 2(10) - PROMISSORY NOTE - ESSENTIAL INGREDIENTS - UNCONDITIONAL UNDERTAKING TO PAY A SPECIFIC SUM OF MONEY TO THE OWNER OR BEARER OF THE INSTRUMENT - DOCUMENT LACKING THESE ELEMENTS IS A BOND, NOT A PROMISSORY NOTE.
Fact of the Case:
Plaintiff sued defendant for recovery of money based on a promissory note executed by the defendant. Defendant claimed that the note was not adequately stamped and could not be admitted in evidence under the Karnataka Stamp Act and the Indian Stamp Act. He also contended that the document was not a promissory note but a bond.
Finding of the Court:
The court held that the document in question, Ex. P-3, did not satisfy the definition of a promissory note under Section 2(10) of the Negotiable Instruments Act, 1881, as it contained clauses like payment of installments and how the payment would be made. Therefore, it could only be construed as a bond.
Issues: Whether the document in question was a promissory note or a bond.
Ratio Decidendi: The court relied on the definition of a promissory note under Section 2(10) of the Negotiable Instruments Act, 1881, which requires an unconditional undertaking to pay a specific sum of money to the owner or bearer of the instrument. The court found that Ex. P-3 did not meet these requirements and therefore could not be considered a promissory note.
Final Decision: The court dismissed the defendant's appeal and confirmed the judgment and decree of the trial court, holding that the document in question was a bond and that the plaintiff was entitled to a decree on the basis of the bond.
( 1 ) THE defendant is the appellant herein.
( 2 ) THE suit for recovery of money in Original Suit No. 71 of 1981 on the file of the learned Munsiff, Karwar was decreed on 21-9-1984. On appeal in Regular Appeal No. 70 of 1984, the learned Civil Judge, Karwar, dismissed the same on 12-11-1986 confirming the judgment and decree of the Trial Court. Hence this second appeal by the defendant.
( 3 ) THE suit for recovery of Rs. 9,315/- wherein Rs. 6,000/- is the principal and Rs. 3,315/- as the interest was instituted on the basis of the promissory note. It was alleged in the plaint the families of the plaintiff and the defendant knew each other since their forefathers and they had business transactions between them and were having thick friendly relationship with each other. In about 1974, for his plan of starting a beaten rice and floor mill at Majali Village, the defendant approached the plaintiff and offered to make the plaintiff a partner on the plaintiff investing an amount of Rs. 6,000/ -. The Mill was commissioned. But, later the defendant requested the plaintiff to withdraw from the partnership business and undertook to return the amount of Rs. 6,000/- with interest. Evidencing this, defendant executed a promissory note and sent it to the plaintiff. As the defendant could not pay the amount as promised by him, he executed another vachan patra and promissory note dated 19-12-1977 agreeing to pay the first instalment of Rs. 2,000/- by the end of December, 1978, Rs. 2000/- by the end of December, 1977 and the rest of the amount of Rs. 2,000/- by the end of december, 1980. The interest was to be Rs. 15 per hundred per annum. Since the defendant did not pay the amount under one pretext or the other, plaintiff issued him a notice. But the defendant did not reply nor did he pay the amount. Hence this suit for the recovery of the same".
( 4 ) IN the written statement the following contentions were raised: "absolutely there is no relationship between the plaintiff and the defendant except business relationship. The defendant was having a shop and he was dealing in coconut, banana and other articles. The plaintiff used to sell his products to the defendant as he was offering good price. However, there was slack of business in the year 1974 and the defendant could not pay the price of the commodities purchased previously. In the year 1974, the defendant agreed to execute a demand promissory note for Rs. 6,000/- which included the profit margin by way of interest though the actual repayment was to be less than Rs. 5,000/ -. It is not at all a fact that the defendant prepared to make the plaintiff as a partner in the Mill which was established as stated in the plaint para 2. It is true that the defendant could not run the mill and also other business for various reasons including on health ground. He incurred loss in such business. However, he paid some sum as and when he could pay. Between 1974 to 1977 he made repayment of at least Rs. 2,000/- to Rs. 3,000/ -. The plaintiff calculated profit-cum-interest again just like a Marwadi prepares an account and forced the defendant to execute in the style of vachan patra or promissory note dated 19-7-1997 again for Rs. 6,000/ -. In fact, in the year 1977 or on 19-12-1977 not a pie from the plaintiff was received and as such absolutely there is no consideration for this alleged vachan karar. The said vachan karar or pronote is not admissible in evidence.
( 5 ) I am giving the details of the pleadings as in the second appeal the question regarding the validity of the promissory is raised.
( 6 ) THE Trial Court decreed the suit and the Appellate Court confirmed that decree. In the second appeal the main question raised is that the suit promissory note Ex. P-3 was not adequately stamped and that the same could not be admitted in evidence under the provisions of Section 34 of the Karnataka stamp Act and Section 35 of the Indian Stamp Act. Before going into the question as to w
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
