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Section 4: Promissory note defined

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Civil Contract
Negotiable Instrument
Civil / Commercial Court
Act 1881
Section 3 All 148 Sections of Negotiable Instruments Act Section 5

Legal Commentary & Landmark Judgments: Section 4

Section 4 defines a 'promissory note' as an unconditional written 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.

  • Unconditional Written Undertaking: Must contain an express, unequivocal promise to pay; a mere acknowledgment of debt (such as an IOU) without an undertaking to pay does not qualify.
  • Certainty of Parties & Sum: The maker, payee, and monetary amount must be defined with absolute certainty; contingent payments invalidate the note's negotiability.
  • Execution & Stamp Compliance: Must be duly signed by the maker and stamped in strict conformity with the Indian Stamp Act, 1899; unstamped or deficiently stamped notes cannot be admitted in evidence.
Key Landmark Precedents:
  • Central Bank of India v. Gopinathan Nair (AIR 1970 Ker 74): Held that the essence of a promissory note is an express promise to pay money; words merely acknowledging indebtedness do not satisfy the statutory mandate of Section 4.
  • Bachoo Lall v. Raghunath (AIR 1950 Pat 288): Affirmed that any contingency or condition attached to the payment obligation destroys the negotiability and character of an instrument under Section 4.
Courtroom Practice & Strategic Litigation Guidance:

In commercial debt recovery, counsel drafting or evaluating a promissory note must ensure it contains direct words of obligation ('I promise to pay') rather than mere recitals. If stamped improperly, Section 35 of the Stamp Act completely bars curing the defect by penalty, unlike other documents.

Section 3 All 148 Sections of Negotiable Instruments Act Section 5