The main legal point established is the need to consider both the requirements of a promissory note under the Negotiable Instruments Act and the definition of 'promissory note' under the Indian Stamp Act for the admissibility of a document as a promissory note.

1. The question before the court below was whether the document dated 1-4-1980 was a promissory note, admissible in evidence as a properly stamped instrument; and it took the view that the document was just an agreement, and not a promissory note. It is that view which is now being questioned in this revision.

2. The document was executed by the respondents in favour of the plaintiff, and its contents disclosed the following:

(i) the defendants had received Rs.20,000/- from the plaintiff in cash, as a loan;

(ii) the defendants would regularly pay interest on the principal amount, every month, at 12 per cent;

(iii) the principal amount would itself be repaid on receipt of a month's notice; and

(iv) if payment was not made as above, the liability could be enforced against the defendants' properties:

The recitals in the documents were also to the effect that the parties were construing the document as a promissory note.

3. One of the contentions of the defendants was that the document had not specified that the amount was payable "to the order" of the plaintiff, and that playability "to the order" was one of the essential elements of a promissory note, under S.4 of the Negotiable Instruments Act. The Section reads:

" "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, 10 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 thereout 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 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 1st 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."

What the Section requires is that the instrument should contain an undertaking to pay a certain sum of money to:

(i) a certain (or specified) person; or (ii) the order of such of a person; or (iii) to the bearer of the instrument.

The word "or" in the last part of the Section, denoting the person to whom payment is to be made, is evidently used in a disjunctive sense; and if there is any doubt in the matter, Illustration. (b) should remove it. This is the view taken in Hameed Haji v. Appukutty (1968 KLT 869), though another part of the reasoning therein, based on Explanation.(i) to S.13 of the Negotiable Instruments Act, did net meet with the approval of a Full Bench in Santsingh v. Madandas (AIR 1976 MP 144). S.13 probably indicates when a promissory note could be held to be negotiable, and the Explanation also is apparently more concerned with negotiability under the Act, than with the definition of 'promissory note'.

4. The court below was therefore right in placing reliance on Hameed Haji (1968 KLT 869) and holding that the absence of the expression "to the order" was not by itself sufficient to hold that the document in question was not a promissory note.

5. It was however of the view that the document did not contain "an unconditional undertaking to pay" as required by S.4, because, in its opinion, repayment of the amount advanced was to be made only after a month's notice, which was a "condition precedent", and different from a case where the undertaking was to pay after a month. It is complained that the above approach of the court below overlooks two important aspects.

6. The first is that under second paragraph of S.5 of the Negotiable Instrum