The main legal point established is that the admissibility of a promissory note is contingent on the proper payment of stamp duty, as determined by the interpretation of the Stamp Act and relevant case law.

1. The plaintiff in O.S. No. 140 of 1953 of the Moovattupuzha Munsiff's Court, an endorsee of a document dated 3.2.1950, is the petitioner before us. The instrument reads as follows:

2. The lower court has stated:

"The admissibility of the pronote is objected to by the defendant on the ground that it is not properly stamped and that as such, it is inadmissible in evidence. The note is for Rs. 1,500 payable on demand after one year. Under Art. 49(b) of the Stamp Act, stamp duty, has to be paid on it as bond No. 14. Stamp duty on this note should therefore be Rs. 15/-. Only stamps to the value of 4 annas is affixed here. Since it is a promissory note there is no question of levying any penalty. (vide S. 37, Stamp Act). As such I hold, the pronote being insufficiently stamped is not admissible in evidence".

and it is this ruling that is challenged by this petition.

3. S. 3(22) of the Travancore-Cochin Stamp Act, 1125, which came into force on 4.10.1949, reads as follows:

"Promissory note" is an instrument in writing (not being a bank-note or a currency note) made on a specified date and 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.

It also includes a note promising the 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".

There can be not doubt that the instrument concerned is a promissory note coming within the definition and this point was not seriously disputed before us. The real contention of the petitioner was that even though the instrument is a promissory note it is a promissory note payable on demand and that it bears the necessary stamp calculated on that basis.

4. Art. 49 of the Travancore-Cochin Stamp Act, 1125 provides:

And it is clear that the instrument is properly stamped if it can be construed as a promissory note payable on demand. The words "payable on demand" occurring in a promissory note mean payable "at once", "forthwith" or "immediately" and a promissory note payable on a specified date or after a specified period or within a certain time can hence be considered only as a promissory note payable otherwise than on demand. A promissory note payable on demand is payable without any demand and the true import of the words "on demand" is that the debt is due and payable immediately.

5. In A.I.R. 1935 Madras 23, Varadachariar, J. had to deal with a "thavanai document", a type of document current among Nattukottai Chetties. He came to the conclusion that the document was a promissory note and then dealt with the contention that it was a promissory note payable on demand as follows:

"The second contention is that the reference to three months' thavanai is only a provision for calculation of compound interest with three monthly rests and does not make the document payable otherwise than on demand. There was at one time some difference of opinion in the reported decisions in this Court, as to whether in the case of these thavanai documents among Nattukottai Chetties, the money becomes due immediately on the expiry of the first thavanai or only upon an express demand after the expiry of the thavanai, but there was at no time any doubt whatever that during the first thavanai the money was not repayable. That this is the well established usage amongst chetties in the case of these thavanai documents is shown by the plaintiff's admission as his own witness in the case, that the document is not repayable within three months as it is given on three months' thavanai. This contention therefore also fails".

The case is analogous to the present, for here also no demand for payment was possible during the year immediately following the execution of the promissory note.

6. In A.I.R. 1945 Madras 42 the position was slightly different, the relevant clause in the promissory note being