Facts of the Case
- Mr. X executes a document stating:
“I promise to pay a sum of Rs.10,000 after three months.” - The note is assumed to be signed by Mr. X, with no specific payee mentioned.
- The issue is whether this document satisfies the requirements of a valid promissory note under Indian law.
Issues in the Case
- Does the document contain an unconditional promise to pay?
- Is the amount certain and the time of payment fixed?
- Can a promissory note be valid without naming a payee?
Principles Associated With It
- Under Section 4 of the Negotiable Instruments Act, 1881, a valid promissory note must:
- Be in writing
- Contain an unconditional promise to pay
- Be signed by the maker
- Be for a certain sum of money
- Be payable to or to the order of a certain person, or to bearer
- The promise in this case is unconditional and the amount (Rs.10,000) is certain.
- The time of payment (after three months) is definite and legally valid.
- However, a valid payee must be named for the instrument to be complete.
Judgement
- Although the document contains a valid promise, definite amount, and time of payment, it fails to name a payee.
- A promissory note must be payable to a specific person, their order, or bearer.
- Therefore, this is not a valid promissory note unless a payee is specified.