What is a Promissory Note under Section 4?
A promissory note is a written instrument by which its maker gives an unconditional undertaking to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. A bank-note or currency-note is expressly excluded from this definition.
Section 4 - "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.
Essential requirements of a Promissory Note
The statutory definition in Section 4 identifies the basic requirements of a promissory note. The document should be read as a whole to determine whether these requirements are satisfied.
- Instrument in writing: the promise must be recorded in writing.
- Unconditional undertaking: there must be an undertaking to pay, and the undertaking must not depend upon an uncertain condition.
- Signature of the maker: the person undertaking payment must sign the instrument.
- Certain sum of money: the amount payable must be certain and the undertaking must be to pay money only.
- Certain payee: payment must be to, or to the order of, a certain person, or to the bearer as stated in Section 4.
- Not a bank-note or currency-note: these are expressly excluded by the statutory definition.
Statutory illustrations to Section 4
The illustrations in Section 4 show the distinction between an enforceable promise of the statutory kind and language that does not satisfy the definition.
| Illustration | Terms of instrument | Result under Section 4 |
|---|---|---|
| (a) | "I promise to pay B or order Rs. 500." | Promissory note |
| (b) | "I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received." | Promissory note |
| (c) | "Mr. B, I O U Rs. 1,000." | Not a promissory note |
| (d) | "I promise to pay B Rs. 500 and all other sums which shall be due to him." | Not a promissory note |
| (e) | "I promise to pay B Rs. 500, first deducting thereout any money which he may owe me." | Not a promissory note |
| (f) | "I promise to pay B Rs. 500 seven days after my marriage with C." | Not a promissory note |
| (g) | "I promise to pay B Rs. 500 on D's death, provided D leaves me enough to pay that sum." | Not a promissory note |
| (h) | "I promise to pay B Rs. 500 and to deliver to him my black horse on 1st January next." | Not a promissory note |
Why illustrations (a) and (b) qualify
Illustration (a) contains an express promise to pay a specified amount to B or order. Illustration (b), although framed as an acknowledgement of indebtedness, also states that the specified amount is "to be paid on demand." Section 4 itself declares both instruments to be promissory notes.
Why illustrations (c) to (h) do not qualify
The remaining illustrations demonstrate defects such as the absence of an undertaking to pay, uncertainty in the amount, a conditional promise, or an undertaking involving something in addition to money. Section 4 expressly states that instruments (c), (d), (e), (f), (g) and (h) are not promissory notes.
Official source
The authoritative Central legislation may be checked on India Code, the Government of India legislative database.
India Code - Government of India