Promissory note
Rituraj kalita
(Querist) 08 September 2011
This query is : Resolved
A promissory note typed in a 50 rupee stamp paper and just below the stamp a heading is typed as "promissory note" and just below it the date of its execution is typed and below it "I........here by Borrowed a sum of money worth Rs100000 from Sri............and which i shall promise to return him on such and such date or with in period of the said date" and below it the man who borrowed the money put his signature and the same is also signed by a independant witness, now the dispute is that is this a promissory note or bond? the matter is in the court will you help me with case laws?, and if it turns out to be a bond then what will be its implications?
Raj Kumar Makkad
(Expert) 08 September 2011
It is a promissiory note and not a bond. Merely affixing a stamp paper do not make it a bond. It is clearly a promise to re-pay within a certain period the definite csh received herein in the presence of the witnesses.
You have not mentioned whether he has also signed the receipt of money or not on the same note at the fag end of note in the presence of witness or not?
Raj Kumar Makkad
(Expert) 08 September 2011
A promissory note is essentially a contract between two organizations, or between an issuer and a lender or investor, governing a one-time loan. The note specifies the terms of the loan, including the interest and maturity date, and binds both parties to a contract. This type of instrument is primarily used by businesses who cannot get loans from major lenders like banks and must investigate alternate means of financing.
Bonds, on the surface, are very similar to promissory notes, and they are often classified as types of promissory notes. However, there are a couple of key differences. First, bonds tend to have much longer maturity terms, often in excess of five years. Technically a promissory note is usually for less than five years, although these notes are still often called bonds. Second, bonds are released in an official, stamped and certified series, each bond being for a similar amount and on similar terms, while promissory notes are made on an individual basis.
M/s. Y-not legal services
(Expert) 09 September 2011
.Am little differ from mr.makkad.. Here its can be treated as a promissory note.
prabhakar singh
(Expert) 09 September 2011
A document has to be decided from its own language as what and who it is ,is the rule of law established by courts repeatedly,and testing from that angel it is a promissory note as rightly pointed out by both experts albeit in their own style.
Guest
(Expert) 09 September 2011
it is receipt of acknowledgement of debt. Though it is typed in stamp paper it is not a promissory note. but the suit for recovery can be filed as per terms of the deed. limitation and other aspects will follows normally. secton 20 N.I act will not normally apply
Guest
(Expert) 09 September 2011
Since the document contains merely a promise of the executing party to pay a certain sum, it is a promisory note, not a bond. The language of bond is a type of binding put on the party or his hiers necessarily to perform the act or fulfil conditions for a particular contract. HOWEVER, had the document contained any condition of forefieture of some mortgaged property on failure to pay, the same would have taken a shape of bond.
In fact a bond is a written agreement by which a person undertakes to perform certain act or abstain from performing an act (e.g., committing a crime) with the condition that FAILURE to perform or abstain WILL OBLIGATE the person or his surety to pay a sum of money or will result in the forfieture of money put up by the person or surety.
R.Ramachandran
(Expert) 09 September 2011
The wordings "I shall promise to pay" instead of "I promise to pay" is a cause for concern. If one really looks at the wording, in fact there is no promise to pay at all, which is one of the essential ingredients of a Promissory Note. It is in futuretence that "I shall promise to pay".
Raj Kumar Makkad
(Expert) 09 September 2011
'Shall promise to pay' is definitely a thinner distance and so it may be one of the bonds.
girish shringi
(Expert) 11 September 2011
"within period of such date"
Clearly indicates the word shall be is used with proper grammar,hence the person is bound to pay it.
Guest
(Expert) 12 September 2011
Dear Girish,
If I am not wrong to interpret, please try to understand, what Shri Ramachandran intends to communicate. Indeed, Mr. Ramachandran's analysis of the language used in the stamp paper is commendable, as the paper neither does falls within the purview of a promisory note, nor that can be said to be a bond. In fact, the maker of the promise has not promised to pay the amount, BUT by use of the word "SHALL" has just agreed to make a promise on some indefinite future date to pay the amount on the agreed date. That makes the stamp paper, itself, as invalid in terms of the NI Act.
Section 4 of the NI Act clearly defines Promisory Note as follows:
"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."
So, in this document, "SHALL" is a sort of condition just to postpone a promise for some future date.
girish shringi
(Expert) 14 September 2011
Dhingraji,
You got the point rightly.
