What is meant by promissory note | promissory note process in Pakistan
Promissory note meaning in urdu
A promissory note is a written, unconditional promise by one party (the issuer or maker) to pay a specific sum of money to another party (the payee) either on demand or at a specified future date. It serves as a legal instrument acknowledging a debt and the commitment to repay.
ایک وعدہ نامہ ایک فریق (جاری کنندہ یا بنانے والے) کی طرف سے ایک تحریری، غیر مشروط وعدہ ہے کہ وہ کسی دوسرے فریق (ادا کنندہ) کو یا تو مطالبہ پر یا مستقبل کی مخصوص تاریخ پر رقم کی ایک مخصوص رقم ادا کرے۔ یہ ایک قانونی آلے کے طور پر کام کرتا ہے جو قرض کو تسلیم کرتا ہے اور اس کی ادائیگی کے عزم کو۔
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Case laws on promissory note
SUPREME COURT OF PAKISTAN
(Appellate Jurisdiction)
PRESENT:
MR. JUSTICE MUNIB AKHTAR
MR. JUSTICE SHAHID WAHEED
MS. JUSTICE MUSARRAT HILALI
Civil Appeal No.317-L of 2011
(On appeal against the judgment dated
31.03.2008 passed by the Lahore High
Court, Bahawalpur Bench, Bahawalpur in
RFA No.10 of 1997)
Mehr Noor Muhammad
…Appellant(s)
Versus
Nazir Ahmed
…Respondent(s)
For the Appellant(s)
: Mrs. Tabinda Islam, ASC
For the Respondent(s)
: Mian Shah Abbas, ASC via
video link from Lahore
Date of Hearing
: 06.11.2023
JUDGMENT
Shahid Waheed, J. One swallow does not a summer make. This
case is illustrative of this adage.
2.
This appeal arises in this way. The appellant before
us is the plaintiff, who by a summary suit had sued upon a
promissory note claiming that the defendant, respondent herein,
owed him Rs.800,000. The defendant traversed the claim and
posited that he used to purchase pesticide from the plaintiff and
as he was illiterate, some blank papers thumb-marked by him
were obtained by the plaintiff in business dealing, which he had
now made a promissory note. He specifically denied making any
promissory note and receiving Rs 800,000 thereunder from the
plaintiff. On these assertions, issues were settled, and parties
were called upon to produce evidence. During evidence, the
objection was raised that the promissory note was not
admissible in evidence: for, firstly, some of its revenue stamps
were not cancelled, and secondly its second marginal witness in
terms of Articles 17 and 79 of the Qanun-e-Shahdat, 1984, was
not produced before the Court. These objections were counted
CA No.317-L of 2011
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against the plaintiff. The facts pleaded by the plaintiff were also
found to be disproved. The suit failed and was dismissed. The
plaintiff could not succeed in appeal either. Now, with our leave,
the plaintiff is before us.
3.
We have to first decide on the admissibility of the
promissory note and, secondly, whether, in the given
circumstances, the promissory note had been proved. The first
question has two facets, and the law applicable to each is
misconstrued and misapplied. We will explain how. The second
question will illustrate the prefatory adage.
4.
So far as the question of admissibility is concerned,
the first objection was that since two witnesses attested the
promissory note and one of them was not produced in Court, in
terms of Article 79 of the Qanun-e-Shahadat, 1984, it had to be
excluded from evidence. This statement is not correct. It may be
noted that as per Section 4 of the Negotiable Instruments Act,
1881, a promissory note is required to contain four essential
ingredients: (i) an unconditional undertaking to pay, (ii) the sum
should be the sum of money and certain, (iii) the payment
should be to or to the order of a person who is certain, or to the
bearer, of the instrument, and (iv) the maker should sign it. If an
instrument fulfils these four conditions, it will be called a
promissory note, and the requirement of attestation of a
document provided under Article 17(2)(a) of the Qanun-eShahdat,1984, does not apply to a promissory note.1 That apart,
two more things also need to be clarified here. First, if an
instrument, notwithstanding the provisions of Section 4 of the
Negotiable Instruments Act,1881, is attested by witnesses, the
nature and character thereof shall not be affected. It shall
remain a promissory note and shall not be converted into a bond
within the meaning of section 2(5)(b) of the Stamp Act, 1899.2
Secondly, if a promissory note is not witnessed, it does not
appear that any third person saw it signed, in which case, the
best evidence is the handwriting of the parties. But if it is
1Shiekh Muhammad Shakeel v. Shiekh Hafiz Muhammad Aslam (2014 SCMR
1562);
2 Muhammad Ashraf v. Muhammad Boota (PLJ 2016 SC 169).
CA No.317-L of 2011
3
witnessed, then it appears, on the face of the promissory note,
that there is better evidence behind it; and the best evidence
that the nature of the case admits of, the law requires.3
5.
There is no denying that in this case, two persons,
namely Khalil Ahmed and Ghulam Hussain, were shown as
witnesses of the promissory note, but only Ghulam Hussain
(PW.2) was produced in the witness box. As stated above, the
attestation of the promissory note was not a requirement of law;
the non-appearance of the second witness could not be made a
ground for excluding the promissory note from evidence. It
follows, therefore, that the courts erred in law in holding that
the promissory note was not admissible in evidence.
6.
The second objection to the admissibility of the
promissory note was that some of its adhesive stamps were not
cancelled. A perusal of the record reveals that Bashir Ahmad
(PW-1), stamp vendor and deed writer, tendered the promissory
note in his examination-in-chief, and immediately after his
tender, counsel for the defendant objected that all its stamps
were not cancelled and, thus, it was not admissible in evidence.
The Trial Court, after noting this objection, held that it would be
decided while making a final judgment, marked the promissory
note as Ex.P.1and proceeded with the trial. The promissory note
was then used by the parties in examination and crossexamination. The record shows that the Trial Court, in its final
judgment, after reviewing the evidence, held that the objection of
non-admissibility of the promissory note was valid and
dismissed the suit. This leads us to consider whether the
procedure adopted by the Trial Court was correct and whether,
in such circumstances, the promissory note could not be held to
be admissible in evidence. To find the answer to these questions,
a quick but careful look at Section 36 of the Stamp Act, 1899,
will be helpful. Section 36 is in these terms:
36. Admission of instrument where not to be
questioned: Where an instrument has been admitted in
evidence, such admission shall not, except as provided
in section 61, be called in question at any stage of the
3 January v. Goodman [1 U.S 2008 (1787)
CA No.317-L of 2011
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same suit or proceeding on the ground that the
instrument has not been duly stamped.
This section is categorical in its terms that when a document
has once been admitted in evidence, such admission cannot be
called into question at any stage of the suit or in proceedings, on
the ground that the instrument has not been duly stamped. The
only exception the section recognizes is the class of cases
contemplated by Section 61, which is not material to the present
moot. Section 36 does not admit other exceptions. It is now well
settled that where a question as to the admissibility of a
document is raised on the ground that it has not been stamped
or has not been properly stamped, it has to be decided there and
then when the document is tendered in evidence. Once the
Court, rightly or wrongly, admits the document in evidence and
allows the parties to use it in examination and crossexamination, so far as the parties are concerned, the matter is
closed. It is, therefore, essential that parties to litigation, where
such a controversy is raised, must be cautious, and the party
challenging the admissibility of the document must be alert to
see that the document is not admitted in evidence by the Court.
The Court is also required to judicially determine the matter as
soon as the document is tendered in evidence and before it is
marked as an exhibit in the case. On the contrary, the record in
this case discloses that, notwithstanding the defendant’s
objection, the promissory note was marked as Ex.P.1 under the
signature of the Court. It is not, therefore, one of those cases
where a document had been inadvertently admitted. So, once
the promissory note had been marked as an exhibit and the trial
had proceeded along the footing that the promissory note was
made an exhibit, and had been used by the parties in the
examination and cross-examination of their witnesses, then
Section 36 of the Stamp Act, 1899, will come into operation.
Inasmuch as the promissory note had been admitted in
evidence, as aforesaid, it was not open to the Trial Court to
exclude it from consideration while writing the final judgment,
nor to the appellate Court. It is clarified that the admission of
the document in terms of Section 36 of the Stamp Act, 1899,
cannot be reviewed or revised by the same Court or a Court of
CA No.317-L of 2011
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superior jurisdiction.4So, we hold that the approach was
incorrect, and the Courts below had erred in law in refusing to
admit the promissory note in evidence.
7.
It is clear from the above discussion that in the
present circumstances of the case, the promissory note was
admissible and could not be excluded from evidence. But was
this enough for the plaintiff's claim to succeed? In our opinion,
this was not sufficient, and he had yet to discharge another
burden, and that was to prove that the promissory note was
valid. This was because the defendant had pleaded non est
factum to the promissory note. He had stated in his written
statement that he had neither borrowed any money from the
plaintiff nor executed any promissory note to repay the alleged
amount. Explaining this, the defendant said that he was an
illiterate person, the plaintiff was in the business of lending
pesticides at double cost, and he thumbed several blank papers
while procuring the pesticides from him, and it could be that the
plaintiff had used these documents to make a promissory note.
This statement indicates that the matter to be resolved here is
not one where one person knowingly signs and delivers to
another paper stamped in accordance with the law, either wholly
blank or having written thereon an incomplete negotiable
instrument, in order that it may be made or completed into a
negotiable instrument. Therefore, the principle governing such
cases, explained in different case law,5 would be inapplicable
here.
8.
On the stance of the defendant stated above, the
Trial Court framed issue No.1, by which it was to prove whether
the promissory note in question was a forged document. The
initial onus to prove issue No.1 was upon the defendant. He
discharged the onus to prove this negative fact and
substantiated his allegations by making a statement, on oath,
4Javer Chand and others v. Pukhraj Surana (AIR 1961 SC 1655);
Rehmat Ali v. Wahid Bux (NLR 1979 Civil (SC) 809); and Union Insurance
Company of Pakistan Ltd. v. Hafiz Muhammad Siddique (PLD 1978 SC 279).
5Mian Rafique Saigol v. Bank of Credit & Commerce (PLD 1996 SC 749);
Muhammad Arshad v. Citibank N.A. (2006 SCMR 1347); and Muhammad
Azizur Rehman v. Liaquat Ali (2007 SCMR 1820)
CA No.317-L of 2011
6
while appearing before the Trial Court as DW-4. The onus was
then shifted to the plaintiff to prove that the transaction was
bona fide and that the promissory note was legal6. The plaintiff
appeared before the Trial Court as PW-2 and stated that he
accompanied the defendant and the witnesses to the Court
premises, where at the instance of the defendant, a deed writer
named Bashir Ahmad scribed the promissory note, upon which
the defendant had thumb-marked, and the witnesses had
signed, and then he gave Rs.800,000 to the defendant in the
presence of the witnesses. However, in his cross-examination, he
admitted that he had no business relationship with the
defendant or family ties with him. This statement causes
eyebrows to be raised and gives a fillip to ponder how the
plaintiff could lend a considerable amount to a stranger. This
necessitates examining the circumstances of this case more
carefully. Here, it must be noted that circumstantial evidence is
sufficient when it enables the Court to make reasonable
inferences about the ultimate facts in issue; it must be more
than mere conjecture, speculation, or guess.7 With this principle
in mind, we proceed. It is a matter of common knowledge that in
the course of the ordinary conduct of such a transaction, a twostep procedure is followed. Firstly, the document is written on a
paper (or the blanks of the printed document are filled in, as
happened in the present case) and then it is signed or thumbmarked. This is a standard mode of deed writing. According to
the plaintiff, the same procedure was adopted; however, the
defendant alleges that the plaintiff, while giving him pesticides,
had obtained his thumb mark on some blank papers on which
he had made the promissory note, so what is to be seen whether
the promissory note (Ex.P-1) was written on a paper on which
the thumb-mark was already present. This can be easily
deciphered by having a look at the promissory note. It is visible
to the naked eye that the blanks of a printed form of a
promissory note (Ex.P.1) are filled in with black ink, names of
6 Johnson v. The Duke of Marlborough (2 Stark. Rep 313); Henman v.
Dickinson (5 Bing. 183); and Simpson v. Stackhouse (9 Barr. 186)
7 Galloway v. United States (319 US 372); and Popken v. Formers Mut.
HomesIns. Co. (180 Neb.250).
No.317-L of 2011
7
the parties and witnesses are also written with black ink, while
the ink of the thumb mark is purple. It is also clear that black
ink superimposes the purple ink of the thumb mark, and this
depiction elucidates that the paper was first thumb-marked and
then written upon. In case otherwise, the purple ink of the
thumb mark would have overlapped the black ink of the writing.
From such a circumstance, we can fairly and reasonably draw
the only conclusion that the stance of the defendant that blank
documents thumb-marked by him had been converted to a
promissory note is correct. It is trite law that the witness may
lie, but circumstances/documents do not. There is nothing on
record to suggest that the defendant had, expressly or impliedly,
authorized the plaintiff to use the said blank papers as
promissory note. We are, therefore, poised to hold that the
promissory note was not executed in the manner described by
the plaintiff, and the probable inference is that the promissory
note was the result of knavery on the part of the plaintiff.
9.
We now focus on another aspect of the matter and
examine whether the preponderance of evidence brought on
record suggest a probability to conclude that any amount was
paid to the defendant. Be it noted here, no doubt, special rules
of evidence are provided for under the Negotiable Instrument
Act, 1881. Its section 118 says that until the contrary is proved,
inter alia the presumption that every negotiable instrument was
made for consideration shall be drawn. Such a presumption is
only a prima facie, and may be displaced by raising a probable
defence. Since the circumstantial evidence discussed above gave
rise to a probable defence and created a reasonable doubt
regarding the valid execution of the promissory note (Ex.P.1), the
burden was shifted to the plaintiff to prove the payment of
consideration of Rs.800,0008 and as such, we have to examine
the plaintiff’s evidence. The deed writer (PW-1) was one of the
plaintiff’s material witnesses. He, in his statement, admitted that
though he wrote the amount of Rs.800,000, but this fact was
reflected in his register by pencil. He was confronted with the
8 Reverend Mother Marykutty v. Reni C. Kottaram and another (2013) 1 SCC
CA No.317-L of 2011
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various entries made in his register in black ink and asked as to
why he wrote the amount of Rs.800,000 with pencil and not
black ink that he had used for the promissory note, and he had
no plausible explanation to give in his cross-examination. This
statement created the first reason for suspicion. The next
witness in the row was the plaintiff himself. He was PW.2. He, in
his cross-examination categorically stated that he had no
relation with the defendant, and neither was he in the business
of selling pesticides. This statement reflects some awkward
transactions and raises another severe doubt in the mind as to
how the plaintiff could lend a huge sum of money to a person
with whom he had no relation or acquaintance. The last witness
of the plaintiff was Ghulam Hussain (PW.3). This witness stated
that a sum of Rs.800,000 was given to the defendant in the form
of notes having denominations of 500 and 1000 in the Court
premises. Again, this is an unusual act and is another factor for
wariness because, normally, such dealing would take place in
private, where money can safely and securely be handed over
and counted by the other party; this clearly cannot be done in
Court premises, on the stall of a stamp vendor. The last but not
least aspect of the matter is that two persons were named as
witnesses in the promissory note (Ex.P.1), but only Ghulam
Hussain (PW.3) was produced, while the other witness, Khalil
Ahmad, was not produced in the Court. No explanation was
made available for the atypical circumstances described above.
Such evidence that draws a veil over truth or does not explain
the true intent and purpose of that transaction, which does not
take place in the manner in which it is done in the ordinary
course of human conduct, never inspires confidence and, thus,
does not serve to persuade the court to tip the scales in favour of
a person who is burdened to prove the fact. Given this scenario,
we return our findings against the plaintiff and declare that the
payment of any amount to the defendant has not been proved.
And so, as the prefatory adage suggests, the only fortune that
the plaintiff had was to get the thumb mark of the defendant on
the blank papers, but his ploy could not set sail in Court
317-L of 2011
9
10.
The above discussion concludes that the plaintiff
had failed to prove that the promissory note was not forged;
consequently, he was not entitled to the decree as he sought in
his plaint, for contemporaneous payment was also not proved.
Therefore, we are not inclined to disturb the dismissal of the
suit, not for the reasons given by the Courts below, but for what
we have stated above.
11.
This appeal fails, and accordingly, it is dismissed.
Judge
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