JUDGMENT
B. Seshasayana Reddy, J.
1. This matter is listed before us on the order of reference made by learned single Judge as to “Whether an instrument to be a promissory note, requires a recital which conjunctively incorporates a promise to pay not only a certain person, but also to the order of a certain person and to the bearer of the instrument, as well”.
2. Apparently, the learned single Judge referred the matter to the Division Bench doubting the correctness of the decision rendered by another learned single Judge of this Court in Kotla Sudheer Kumar v. Mallavarapu Jojayya @ Jojaiah Chowdary 2002 (2) ALD 715 as to the reading of the proposition of law laid down by the Full Bench in Bolisetti Bhavannarayana @ Venkata Bhavannarayana v. Kommuri Vullakki Cloth Merchant Firm, Tenali and Ors. 1996 (2) ALD 424 (FB).
3. Before answering the reference, we deem it appropriate to refer the facts of the case, in brief, which led to the reference:
A.Chitharanjan Reddy, the respondent herein, filed O.S. No. 9 of 2003 on the file of Senior Civil Judge, Hindupur for recovery of an amount of Rs. 6,90,000/- on an instrument dated 3.2.2002 executed by M.D. Nyamathulla, the petitioner herein. The instrument reads as hereunder:
Today 03.02.2002 I, Md. Nyamatullah s/o M.A. Jabbar Sab, Hasnabad, Hindupur.
I, promise to pay A.Chittaranjan Reddy, s/o A. Kesava Reddy, Hindupur.
To pay Rs. 6,90,000/- (Rupees six lakhs ninety thousands only). This amount will be paid on or before March, 2002
The instrument is signed by the respondent herein and duly witnessed.
4. The plaintiff sought to mark the instrument as Ex.A1. The defendant raised objection to the admission of the instrument on the ground that it does not constitute a promissory note. The Court below overruled the objection and permitted the plaintiff to mark the instrument as Ex.A1. Hence, the defendant filed this revision. The matter came to be listed before the learned single Judge “for admission”. The learned single Judge while admitting the Civil Revision Petition opined that the interpretation of the decision of the Full Bench in Bolisetti Bhavannarayana @ Venkata Bhavannarayana v. Kommuri Vullakki Cloth Merchant Firm, Tenali and Ors.’s case (2nd cited) by Sri S. Ananda Reddy. J., in Kotla Sudheer Kumar v. Mallavarapu Jojayya @ Jojaiah Chowdary (1st cited) requires consideration afresh. The learned single Judge in the reference order is of the opinion that to categorize an instrument as a promissory note all the three essential conditions are not required to be satisfied cumulatively in view of the disjunctive phraseology employed in the statute, on a grammatical construction of the statutory language. For better understanding, we may refer the relevant portion of the reference order and it is thus:
A learned single Judge of this Court in Kotla Sudheer Kumar’s case (2nd supra) interpreted the decision of the Full Bench of this Court in Bolisetti Bhavannarayana’s case (one supra) to mean that all the terms as to payment, recorded in Section 4 of the Negotiable Instruments Act, 1881 should be found in the recitals of an instrument to justify its classification as a promissory note.
It does not prima facie appear that the Full Bench of this Court in Bolisetti Bhavannarayana’s case (one supra) has laid down the principle, that to be a promissory note the instrument in question must contain all the 3 recitals i.e. (1) the promise to pay a certain person (2) or to the order of a certain person, (3) or to the bearer of the instrument. Section 4 of the Act defines a “promissory note” as an instrument in writing, other than a bank note or a currency note, containing an unconditional undertaking singed 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.
Having regard to the disjunctive phraseology employed in the statute, on a grammatical construction of the statutory language, it would appear that, other conditions under Section 4 of the Act being satisfied as to the nature of the instrument and the unconditional undertaking signed by the maker, it is not necessary that the promise to pay should be in favour not only of a certain person, but to the order of a certain person and to the bearer of the instrument as well. On a true and fair construction of the decision of the Full Bench no such inference appears suggested.
5. Heard learned Counsel appearing for the petitioner/ defendant. None appears for the respondent/appellant.
6. Learned counsel appearing for the petitioner submits that the Full Bench judgment of this Court is very clear that an instrument to be a promissory note must satisfy all the ingredients enunciated in Section 4 of the N.I. Act r/w Section 2(22) of the Stamp Act. The Full Bench made such an observation having taken note of the definition of a promissory note as defined in Section 4 of the N.I. Act and also Section 2(22) of the Stamp Act. Section 4 of the N.I. Act reads as hereunder:
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 1st January next”.
The instruments respectively marked (a) and (b) are promissory notes. The instruments respectively marked (c), (d), (e), (g) and (h) are not promissory notes.
7. Section 2(22) of the Stamp Act defines ‘promissory note’ as follows:
“Promissory note” means a promissory note as defined by the Negotiable Instruments Act, 1881:
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.
8. Essential requisite of a negotiable instrument is certainty (1) as to the person to make the payment; (2) as to the person receive it; (3) as to the time and place of payment; (4) as to the condition of liability; and (5) as to the amount be paid.
9. A close reading of the definition of promissory note indicates that it must contain 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. The question is – if the omission in the instrument the words ‘to the order of’ does stand outside the definition of promissory note?
10. In the reference order, the learned single Judge has expressed a prima facie view that the ingredients are to be read disjunctively and not conjunctively. Full Bench of this Court in Bolisetti Bhavanarayana v. Kommuru Vullakki Cloth Merchant Firm (2 supra) had an occasion to deal with the ingredients of the promissory note. It is profitable to refer the relevant portion of the judgment, which reads hereunder:
This definition of promissory note itself indicates that there may be several types of promissory notes. Out of these various categories of promissory notes, some may be treated as ‘negotiable instrument’ within the meaning of Section 13 of the Negotiable Instruments Act and some others may not be so treated, but by that very fact, the nature of the document will not change, if it is otherwise a promissory note. In other words, if a document is a ‘promissory note’ within the meaning of Section 4 of the Act, it will continue to be ‘promissory note’, whether it comes or does not come within the meaning of the term ‘negotiable instrument’ as defined in Section 13 of the Act. For this reason, we are of the view that Section 13 of the Negotiable Instruments Act, or the definition of the term ‘negotiable instrument’ is wholly irrelevant when it comes to deciding the nature of a particular document as a promissory note, or otherwise. Similarly and for similar reasons, it is wholly irrelevant to refer to the provisions of Section 13 of the Act while deciding the nature of any document as a ‘bond’ or otherwise. Accordingly, thing to the contrary held in any of the authorities referred to in the orders of reference is not a good law.
Learned single Judge of this Court in Kotla Sudheer Kumar v. Mallavarapu Jojayya @ Jojaiah Chowdary (1 supra), after referring the decision of the Full Bench in Bolisetti Bhavanarayana v. Kommuru Vullakki Cloth Merchant Firm (2 supra) came to the conclusion that all the ingredients are to be read conjunctively and not disjunctively. In a way the learned single Judge came to the conclusion that the ingredients are to be satisfied cumulatively. We are more concerned with the words ‘to the order of’. The definition of promissory note and illustrations thereto have been referred in the aforesaid paragraphs of the judgment.
11. The Comma (,) needs the most care in its use, but, in majority of cases, the exercise of a little common sense will determine where it ought and where it ought not to be placed. The chief use of the comma is to divide a sentence into its natural sections i.e., where a portion is added to the main idea. As an example, let us take the sentence. The man entered into the shop. Then, suppose we want to say that he needed some cigarettes, we might piece the fact into the sentence thus: “the man needing some cigarettes, went into the shop”. Commas, it will be seen are required at both ends of the inserted matter. If this extra portion had been placed at the beginning or end of the original passage, only one comma would have been required. Thus, “Needing some cigarettes, the man went into the shop. The man went to the shop, needing some cigarettes.” A comma is required where words are omitted to avoid repetition and, at the same time, to add strength or balance to the passage. When the sense suggests a repetition of the same conjunction several times, the conjunction is replaced by a comma in all instances, but the last.
12. The sentence in the definition of “promissory note” i.e. to pay a certain sum of money only to, or to the order of” is read to be one sub-clause. The clear intention of the legislative is the unconditional undertaking is to pay a certain sum of money only to or to the order of. The sentence cannot be split into two and read that the unconditional undertaking may be either to the person in the name therein or to the order. If the clause is split into two, it produces unintelligible and incongruous result. The comma succeeding and preceding the word ‘to the order of indicates that a certain sum of money must be paid to or to the order of. If that reading is not permissible, there would not have been any difference between a bond and a promissory note.
13. A division bench of this Court in Ramakistiah v. Yellappa referred Section 4 of the Indian Negotiable Instruments Act and observed as hereunder:
Section 4 of the Indian Negotiable Instruments Act defines a promissory note in the following terms:
‘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 order of a certain person, or to the bearer of the instrument.
The learned Counsel for the appellant relaying on this definition of a promissory note in Section 4 of the Indian Negotiable Instruments Act contends that the suit sircath falls within this definition. We are not inclined to accept the contention of the learned Counsel for the appellant. The suit sircath is not payable to order to bearer. It is not payable on demand and it has been attested by a witness. The definition of a bond in the Hyderabad Stamp Act clearly shows that a document which is attested by a witness and which is not payable to order or bearer is a bond.
The division Bench has pointed out that a document, which is not payable to bearer or order and which is attested by a witness, clearly falls within the definition of ‘bond’. The learned Judges reached this conclusion after a careful consideration of the material provisions of the Hyderabad Stamp Act and the Hyderabad Negotiable Instruments Act. They have held that Explanation I to Section 13(1) of the Indian Negotiable Instruments Act, cannot be read into the definition of ‘bond’ as contained in Section 2(4)(b) of the Hyderabad Stamp Act, so as to make the instrument which on the face of it is not payable to order by virtue of the said, explanation. In arriving at this conclusion, the learned Judges followed a series of decisions of the High Courts of Calcutta, Madras and Nagpur and the decision rendered by this Court in Sitharama Ratna Ranganayakamma v. Venkata Subba Rao AIR 1957 A.P. 779. A division bench of this Court in State Bank of Hyderabad v. Ranganath has quoted the earlier decision in Sitharama Ratna Ranganayakamma’s case (4 supra) and approved the proposition of law laid down therein. It has been held by the Division Bench of this Court in Ranganath’s case (5 supra) that negotiability is the test of a promissory note. The expression ‘on demand’ in a promissory note has a technical meaning. It means ‘payable immediately or forthwith’. But every document which contains a promise to pay on demand is not necessarily a promissory note. Where notwithstanding the existence of the words “on demand”, the documents did not satisfy the test of negotiability, they were not promissory notes.
14. Bond is defined in Section 2(5) of the Indian Stamp Act, 1899, which reads hereunder:
“Bond” includes-
a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;
b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and
c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another;
15. The principle ingredient, which makes a difference lot between the bond and the promissory note, is that if the instrument is an unconditional undertaking to pay or to the order of a certain person, it is to be classified as a promissory note. The learned single Judge of this Court in Kotla Sudheer Kumar v. Mallavarapu Jojayya @ Jojaiah Chowdary (1 supra) has dealt the definition of ‘promissory note’ and ‘bond’ very exhaustively and came to the conclusion that all the ingredients stated above are required to be satisfied to classify an instrument as a promissory note. We approve the view taken by the learned single Judge of this Court in Kotla Sudheer Kumar v. Mallavarapu Jojayya @ Jojaiah Chowdary (1 supra).
Accordingly, the reference is answered as follows:
An instrument to be a promissory note, must necessarily contain the words “to the bearer, or to the order”. In a way these two words i.e. “to the bearer, or to the order” are to be read conjunctively and not disjunctively.
16. Registry is directed to post the matter before the appropriate bench after obtaining necessary orders from The Hon’ble Chief Justice.
