A promissory note giving the payer the right to recover as per the law doesn’t affect the unconditional commitment: Karnataka HC

Case: D L Ramesh v. Marilingaiah

Coram: Justice Sachin Shankar Magadum

Case No.: Regular Second Appeal No 151 OF 2016

Court Observation: “What can be inferred from the wordings in Section 4 of the Act is that there should be an “unconditional undertaking”; the promise must not depend upon the happening of some outside contingency or events. It must be payable absolutely and the maker must be certain. The note itself must show clearly who is the person agreeing to undertake the liability to pay the amount. The promise should be to pay money and money only and the amount should be certain…The trial Court though has culled out the relevant portion of the promissory note, but, however, has misread the provisions of Section 4 of Act and has also misread and misunderstood the object of securing an unconditional undertaking from the maker.”

“…it nowhere indicates that it contravenes the provisions of Section 4 of the Act. What the maker has stated while offering an undertaking is that in the event he fails to pay the amount, the payer is at liberty to proceed against his property. This latter part of the undertaking does not alter the express undertaking given by him. The latter part of the undertaking even otherwise is available to the payer in the event the maker of the instrument fails to honour the undertaking given under the instrument.”

“What Section 4 contemplates is that the promissory note should contain an unconditional undertaking signed by the maker to pay a certain sum of money. This unconditional undertaking is found in the present promissory note. However, the maker, i.e., the defendant herein, has further indicated that the payer is at liberty to proceed against the property in the event he fails to repay the amount. This additional condition, which is found in the latter part of the document, does not, in my view, contravene the provisions of Section 4 of the Act.”

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Keywords

A promissory note giving the payer