Ravi Enterprises issued a written instrument to Mehta Traders stating: "I owe you (I.O.U.). ₹500 and will pay you as soon as possible". Mehta Traders treated this document as a promissory note and sought to enforce it un

According to Section 4 of the Negotiable Instruments Act, 1881 (the Act), 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 to, or to the order of a certain person or only to bearer of the instrument. Essentials of a Promissory Note To be a promissory note, an instrument must possess the following essentials: It must be in writing. An oral promise to pay will not do. It must contain an express promise or clear undertaking to pay. A promise to pay cannot be inferred. The promise or undertaking to pay must be unconditional. A promise to pay "when able", or "as soon as possible", or "after your marriage to D", is conditional. But a promise to pay after a specific time or on the happening of an event which must happen, is not conditional, e.g. "I promise to pay ₹1,000 ten days after the death of B", is unconditional. The maker must sign the promissory note in token of an undertaking to pay to the payee or his order. The maker must be a certain person, i.e., the note must show clearly who the person is engaging himself to pay. The payee must be certain. The promissory note must contain a promise to pay to some person or persons ascertained by name or designation or to their order. The sum payable must be certain and the amount must not be capable of contingent additions or subtractions. If A promises to pay ₹100 and all other sums which shall become due to him, the instrument is not a promissory note. Payment must be in legal money of the country. Thus, a promise to pay ₹500 and deliver 10 quintals of rice is not a promissory note. It must be properly stamped in accordance with the provisions of the Indian Stamp Act, 1899. Each stamp must be duly cancelled by maker's signature or initials. It must contain the name of place, number and the date on which it is made. However, their omission will not render the instrument invalid, e.g., if it is undated, it is deemed to be dated on the date of delivery. In the given situation, Ravi Enterprises issued a written instrument to Mehta Traders stating: "I owe you (I.O.U.) ₹500 and will pay you as soon as possible". In this statement "I owe you (I.O.U.) ₹500", there is no promise to pay and this is mere acknowledgement of debt and "will pay you as soon as possible" is conditional. Hence, the instrument issued does not qualifies as a valid promissory note under the Act.