A. V. RODRIGO. Appellant and W. D. A. F. RANASINGHE, Respondent

015-NLR-NLR-V-79-1-A.-V.-RODRIGO.-Appellant-and-W.-D.-A.-F.-RANASINGHE-Respondent.pdf


102
WIJAYATILAKE, J.—Rodrigo v. 7lanasinghe
Present: Wijayatilake, J., Ismail, J. and Sharvananda, J.• A. V. RODRIGO, Appellantand
W.D. A. F. RANASINGHE, Respondent
S. C. 142/70 (F)—D. C. Colombo, 29056/S.
Promissory Note—Document subject to conditions—Effect—Bills ofExchange Ordinance, sections 10 (1), 11(1), 85, 91—Stamp
Ordinance, section 41 and Schedule A, Part 1 thereto—Whetherdocument properly stamped—Can action thereon be maintained.The plaintiff filed action by way of summary procedure againstthe defendant for the recovery of a sum of Rs. 20,000 alleged to bedue to him on a document filed along with the plaint. The documentwas drawn in a printed form which is the ordinary form utilizedfor executing promissory notes. By this document the defendantpromised to pay on demand to the plaintiff a sum of Rs. 20,000 withinterest at 6% per annum subject to conditions which read asfollows : —
The note is given subject to the conditions that (1) The payeeshall accept any sum paid by me in reduction of the amount dueat any time on this note. (2) The payee will not file any action inCourt on the said note at any time during 3 years from the date ofthis note.
This document carried only a ten cents stamp.
, . Held : (Wijayatilake, J. dissentingj
That the document sued upon is a promissory note payable at
a determinable future time and does not fall into the categoryof a promissory note payable on demand. Accordingly thenote should have been appropriately stamped on the basisof a promissory no':e for the payment at any time otherwisethan on demand, viz. with a Rs. 10 stamp.
Since the promissory note is not sufficiently stamped it is not
admissible in evidence in terms of section 41 of the StampsOrdinance, and no action based on such a note is maintainable.
Cases referred to : —
Hemp v. Garland, (1843) 4 Q.B. 519 ; 12 L. J. Q.B. 134.
In re Homer, (1896) 65 L. J. Ch. 699.
Matheranayaicam v. Chelliah, 29 N.L.R. 394.
Norton v. Ellam, (1837) 2 M & W 461 ; 6 L. J. Ch. 121.
Scott v. Avery, (1896) 5 H. L. Cas. 811 ; 25 L. J Ex. 308.
A PPEAL from a judgment of the District Court, Colombo.
W. Athulathmudali, with Miss R. Morawaka, for theplaintiff-appellant.
Defendant-respondent, absent and unrepresented.
Cur■ adv. vult.
May 12, 1975. Wijayatilake., J.
The plaintiff filed this action against the defendant by way ofsummary procedure for the recovery of a sum of Rs. 20,000alleged to be due to him on the document filed along with theplaint marked * A ’ dated 26.6.1965 and bearing a 10 cents stamp.In his plaint he has averred that the said document is a promis-sory note and the defendant had paid him several instalmentsamounting to Rs. 3,400 out of the interest due on the said note,
WIJAYA'X'l LAKE, J.—Rodrigo v. Ranasinghe
103
namely 6% per annum. The defendant in his* answer onlyadmitted the signing of the said document and denied that anyconsideration passed thereon. He further denied that he paidany instalments as averred and by way of further answer hehas alleged that the signature to the said writing was obtainedunder duress and by the exercise of undue influence. As amatter of law the defendant pleaded that the writing sued uponis not a promissory note within the meaning of the Bills ofExchange Ordinance and/or is defective in law and/or i»improperly stamped and therefore the plaintiff is not entitled tomaintain this action.
At the trial despite the averment made by the plaintiff hatook up the position that the document was not a promissorynote and that any defect in stamping was curable under section41 of the Stamps Ordinance, and curiously the defendant havingpleaded that this was not a promissory note turned tables bycontending that it was in fact a promissory note not payableon demand but payable at a fixed or determinable future timeand that it was not duly stamped and therefore not admissiblyin evidence. At the trial issues 3, 4, 5 and 6 were tried aspreliminary issues. These issues are as follows :
(a) Is the document sued upon by the plaintiff a
promissory note payable on demand ?
If not, is the said document properly stamped ?
If issues 3(a) and (b) are answered in favour of the
defendant, is the plaintiff entitled to maintain thisaction ?
Is the document sued upon a promissory note ?
If not, is any defect in stamping curable under section 41
of the Stamps Ordinance ?
The learned District Judge held that the document sued uponis not a promissory note payable on demand and that thedocument is not properly stamped as it is payable at a determin-able future time and therefore the plaintiff is not entitled tomaintain this action.
The document in question dated 26. 6. 1965 is drawn on aprinted form which is ordinarily utilised for the execution ofpromissory notes. The wording is as follows :
“ June 26, 1965. Rs. 20,000Rs. 20,000
On demand I the undersigned W. D. A. F. Ranasinghe of
109, Telangapatha Road, Wattala.
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WIJAYATILiAKE, JRodrigo v. Ranasinghe
Promise tb pay to Mr. A. V. Rodrigo of 109 Sri San gar a j ahMawata, Colombo 10. Or order, the sum of Rupees TwentyThousand only Currency for value received with interestthereon at the rate of six per centum per annum from thedate hereof subject to conditions overleaf.
' WITNESSES.
Sgd.
W. D. A. F. Ranasinghe.
This note is given subject to the conditions that:
The payee shall accept any sum paid by me in reduction
of the amount due at any time on this note.
The payee will not file any action in Court on the said
Note any at time during three years from the date ofthis Note.
Sgd.
W. D. A. F. Ranasinghe. >y
Conditions 1 and 2 mentioned above are on the rear of the noteand the defendant has affixed his signature on both sides of thenote. On a scrutiny of this document there can be little doubtthat the parties intended this document to be a promissory note.At the stage the plaintiff instituted this action, he based hiscause of action on this document as a promissory note and hehas sought to file the proceedings by way of summary procedureunder Chapter 53 of the Civil Procedure Code. As I have alreadymentioned the defendant pleaded that this was not a promissorynote but later both parties at the trial changed their fronts.
Section 85? (1) of the Bills of Exchange Ordinance defines apromissory note as follows :
“ A promissory note is an unconditional promise in writingmade by one person to another signed by the maker,engaging to pay, on demand or at a fixed or determinablefuture time, a sum certain in money, to, or to the order of, aspecified person or to bearer ”.
Item 14 (1) Part 1 Schedule A of the Stamps Ordinance asamended provides :
Bill of Exchange payable on demand or at sight or onpresentation or within three days after date or sight should; be stamped with a 10 cts. stamp and a Bill of Exchange,promissory note, draft, or order for the payment at anytime otherwise than on demand or at sight or on presentationor within three days after the date or sight to the party
WIJAYATILAXFi, J.—Rodrigo v. Ranaainghe
105
named therein, or the bearer or to order, of any sum ofmoney should bear ad valorem duty as mentioned therein.If the document in question falls under this category thestamp duty would be Rs. 10.
The Stamps Ordinance also provides:
“ That a promissory note means a promissory note asdefined by the Bills of Exchange Ordinance’'.
Section 41 of the Stamps Ordinance provides :
“ No instrument chargeable with duty shall be admittedin evidence for any purpose by any person having by law orconsent of parties authority to receive evidence, or shallbe acted upon, registered, or authenticated by any suchperson or by any public officer, unless such instrument isduly stamped :
Provided that—
(a) any such instrument not being an instrument chargeablewith a duty of ten cents only or a bill of exchange orpromissory note shall, subject to all just exceptionsand to the provisions of section 42, be admitted inevidence on payment of the duty with which thesame is chargeable, or, in case of an instrument in-sufficiently stamped, of the amount required to makeup the duty, together with a penalty
Thus the question arises whether the document in question isa promissory note payable on demand and if not whether it is apromissory note payable at any fixed or determinable futuretime otherwise than on demand and therefore whether thisparticular document has satisfied the requirements of theprovisions I have referred to above.
On the face of this document there can be no doubt whateverthat it is a promissory note. The question is whether the condi-tions on the rear, either one or both, have in any way, changed thecharacter of this document and they have thereby nullified theintentions of the parties to execute a promissory note.
Mr. Athulathmudali, learned counsel for the plaintiff-appellantdespite the inconsistent positions taken up by the plaintiff submitsas a matter of law that this document is a promissory notepayable “ on demand ” and the fact that there is a condition thatthe payee will not file action in Court on the said note at any timeduring three years from the date of this note, merely postponesthe date on which Court action can be maintained but does not in
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WIJAYATTLAXE, J.—Rodrigo v. Remasingho
any way detract from the ability of the payee to demand and re-ceive the money and the liability of the debtor to pay. He submitsthat the first conditions on the rear fortifies this position that thedebtor has reserved his right to make payment at any time andthe creditor has bound himself to accept the same. It isaccordingly submitted that the second condition merely precludesthe plaintiff from taking any legal action until the period ofthree years has lapsed from the date of the note. He, however,submits that these conditions do not prevent the plaintiff fromdemanding payment or seeking a settlement by way of arbitra-tion or by way of a proceeding in the Conciliation Board. Hedraws our particular attention to the fact that this conditionrefers to a filing of an action in Court which would showthat although a cause of a charge may have arisen earlier theinstitution of the action is postponed for a period of three years.On the other hand, it may be submitted that although theobligation is to pay on demand the fulfilment of such obligationwould materialise for the benefit of the creditor only after expiryof three years ; so that in effect the payment can be enforcedonly after a period of three years and thereby the legal effectof the words “ on demand ” which appear on this note has beenwiped out. I do not think that the cause of action in this casearose at the time when the debt could first have been recoveredby action. I am inclined to the view that the cause of action aroseon demand but the institution of the action is postponed for aperiod of three years after the execution of the note. I do notthink the principle set out in Hemp vs. Garland, (1843) 4 Q.B.519 is of any avail to the defendant as the facts can be clearlydistinguished and it was a different legal principle that was setout therein. That was an action of assumpsit and the defendanthad given a warrant of attorney to secure a debt payable byinstalments. The plaintiff is at liberty, in case of any default, tohave judgment and execution for the whole as if all the periodsfor payment had expired. So that on a consideration of the termsof the document in the instant case, I am of opinion, that it isa promissory note payable “ on demand ” and therefore it hasbeen stamped correctly with a 10 cts. stamp as provided forunder the Stamps Ordinance.
In coming to this conclusion I have kept in mind the definitionof a bill of exchange payable on demand at sections 10 (1) and11 (1) of the Bills of Exchange Ordinance.
If this document does not satisfy the requirements of a promi-ssory note payable on demand the question does arise whetherit is a promissory note at all. The plaintiff’s present alternativeposition in law is that it is not a promissory note as it is notpayable at a fixed or determinable future time. On the other
WIJAYATILAKE, J.—Rodrigo v. Ranaeinghe
107
hand, the defendant pleads that the time for payment has beenclearly determined by the second condition on the back of thenote which provides that the payee will not file any action inCourt on the said note at any time during three years from thedate of this note ; so that the engagement to pay is only on theexpiry of three years and not before. In this context, I havealready discussed the first condition and I have expressed myview that it is only the institution of the action that has beenpostponed for a period of three years although the cause of actionmay have arisen within that period. Assuming that the amountdue on this note is not payable on demand could we say on theterms of this document that the engagement to pay was onlyon the expiry of the period of three years ? As it strikes me it isquite clear on a consideration of both conditions on the rear ofthis note that the engagement to pay was within the period ofthree years.
Learned counsel for the plaintiff has relied very strongly onthe judgment of Garvin, J. in Matherenayakam vs. Chelliah, 29N.L.R. 394 where the plaintiff sued the defendant upon a writingexpressed in the following terms :
“ We the undersigned agree to pay M the sum of Rs. 5,000within one year from this date on account of K.V.M. and
K.V.S. the late proprietors of the Pensylvania Oil Co. Thissum is due from them to us after our paying to tlie said M
It was held that the document is not a promissory note as defin-ed bv the Bills of Exchange Act of 1882. No doubt, in that case asGarvin, J. observes—the parties did not appear to intend this tobe a promissory note with the negotiability which attaches tothese notes, but merely as evidence of the agreement betweenthem. It was urged, nevertheless, that a document in this formcomes within the definition attached to the term “ promissorynote ” in the Bills of Exchange Act. Garvin, J. considered theprinciple set out in the case of In re Horner, (1896) 65 L. J. Ch699, and observed—that he cannot agree that the requirement ofsection 83 in the Bills of Exchange Act, that the sum certainin money shall be payable “ at a fixed or ascertainable futuretime ”, is satisfied when it is expressed to be payable at a fixedfuture time or at any time before that date.
The provisions of that Act relating to payment and the rightto discharge upon payment indicates that in the interpretationof this section one must have right not merely to the liability,but to the rights of the maker of the document under conside-ration. As Garvin, J. observes the signatories had an absolute
108
WIJAYATILAKE, J.—Rodrigo v. Ranaainghe
right to a discharge of the note and all obligations arisingthereunder upon payment to the payee at any time within theyear- In my opinion, the principle set out by Garvin, J. could wellapply to the facts in the instant case as the defendant had anabsolute right to a discharge of the note and obligations arisingthereunder upon payment to the payee at any time within theperiod of three years. In fact the first condition adds to theweight of this view. So that although the intention of the partiesmay have been to execute a promissory note, by the addition ofthe conditions on the reverse they would appear to have changedthe character of the note they had in mind and the documentwhich purported to be a promissory note would be in the resultmerely a written agreement and the defect in stamping if any,could be cured by stamping the document under penalty.
I would accordingly set aside the judgment and decree of thelearned District Judge and I answer the preliminary issues asfollows :
3 (a)—Yes.
(b) —Does not arise.
Does not arise.
vide answer to issue 3. In the alternative if the note is
not recognised as a promissory note payable on demandit only amounts to a written agreement and the defectin stamping is curable under section 41 of the StampsOrdinance.
J would accordingly send the case back for further trial on therest of the issues. As the plaintiff has taken inconsistent positionshe shall be entitled to only half the costs of the trial up to theentering of the decree on 1.6.70 and half the costs of this appeal.The costs of the further trial to abide the result of this action.
Ismail, J.
I have had the advantage of having had with me two ablejudgments by my brothers Wijayatilake, J. and Sharvananda, J.The facts are sufficiently reflected in these two judgments and itis not necessary for me therefore to recapitulate the facts.
The document marked ‘A ’ which is the note sued upon has onthe face c* it that a sum of Rs. 20,000 is payable on demand. Onthe reverse of the note there are two conditions which has givenrise to controversy between the parties
ISMAIL, J.—Rodrigo v. Ranasinghe
109
Condition 1 is : —
“ That the payee shall accept any sum paid by him inreduction of the amount due at any time on this note. ”
Condition 2: —
“ The payee shall not file any action in Court on the saidnote at any time three years from the date of this note. ”
Therefore, it will be seen that although on the face of it the■note is payable on demand, nevertheless the effect of condition 2is to postpone the legal enforceability of the note for a period ofthree years. In other words, the payee cannot legally be calledupon to make payment on the note until three years had expiredfrom the date the note had been drawn up. It, therefore, appearsto me that in view of condition 2, this note is not payable•on demand and is subject to the condition that the note will bepayable only after the three years of its execution and wouldtherefore be subject to that condition. Therefore this bill comeswithin the definition of section 11 (1) of the Bills of Exchange-Ordinance. There can therefore be no doubt that this is a billthat becomes payable at a determinable future time. It thereforeappears to me that the promissory note being not one payableon demand should have been appropriately stamped on the basisof a promissory note payable at a specified time, otherwise thanon demand. This note is stamped with only a ten cents stamp,whereas it should have, since it is a note subject to a condition,been stamped as provided in item 14(1) of Part I of Schedule Aof the Stamps Ordinance, as amended, and should have borne astamp duty of Rs. 10. Section 41 of the Stamps Ordinance clearlyindicates that since this document has not been stamped inaccordance with the aforementioned schedule it cannot beadmitted in evidence for any purpose, and has to be rejected.
The plaintiff himself had filed this action on the basis that thisis a promissory note and not on the basis that although it pur-ports to be a promissory note, it was in fact merely a writtenagreement. The plaintiff has further filed action by way ofsummary procedure. The note itself is on the form ordinarilyused for promissory notes.
I am, therefore, of the view that the learned District Judge hascorrectly come to the conclusion in this matter. I find that I amin agreement with the judgment of my brother Sharvananda, J.I would accordingly dismiss the appeal and I agree with mybrother Sharvananda, J. that the order for costs contained in theJudgment and the decree in the Lower Court should be deleted.
The appeal is accordingly dismissed without costs.
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SHARVANANDA, J.—Rodrigo v. Ranaainghe
Sharvananda, tT.
I regret my inability to agree with the judgment of my brotherWijayatilake, J. The plaintiff filed this action by way of summaryprocedure against the defendant for the recovery of a sum ofRs. 20,200 alleged to be due to him on document filed along withthe plaint marked ‘ A He referred to the document as a promis-sory note and pleaded that the defendant became liable to paythis sum on the said note as the period of 3 years stipulatedtherein had expired. In his application for leave to defend thedefendant averred that the endorsement on the back of the notemakes it a conditional note and hence the note was not properlystamped. The defendant was given leave to defend uncondi-tionally. In his answer the defendant averred that the documentsued upon is not a promissory note within the meaning of theBills of Exchange Ordinance and/or is not sufficiently stamped.
At the trial, however, the defendant took up the position thatthe said document was a promissory note and that it was notduly stamped. The plaintiff on the other hand took up theposition that the document was not a promissory note and thatany defect in stamping was curable under section 41 of theStamps Ordinance. The case proceeded to trial on the issueswhether the document sued upon was a promissory note and ifso whether it was a promissory note payable on demand or at afixed or determinable period and whether if it was a promissorynote it was properly stamped.
The document is drawn in a printed form which is the ordinaryform utilised for executing promissory notes. By that documentthe defendant promised to pay on demand to the plaintiff a stunof Rs. 20,000 with interest at 6% per annum subject to conditionsoverleaf. The conditions which are on the reverse of the docu-ment reads as follows : —
“ This note is given subject to the condition that:
The payee shall accept any sum paid by me in reduction
of the amount due at any time on this note.
The -payee will not file any action in Court on the said
note at any time during 3 years from the date of thisnote
and the document is signed both on its face and its reverse bythe defendant the maker.
The document has also complied with the provisions of section10 of the Money Lending Ordinance. There can be no doubt thatthe parties intended the document to be treated as a promissorynote. In fact, the plaintiff himself pleads in his plaint that thedocument is a promissory note and has instituted this actionunder Chapter 53 of the Civil Procedure Code on the basis thatthe document represented a promissory note.
SHARVANANDA, J.—Rodrigo v. Rcmaeinghe
in
Section 85 (1) of the Bills of Exchange Ordinance defines apromissory note as follows :
“ A promissory note is an unconditional promise in writingmade by one person to another signed by the maker, engagingto pay, on demand or at a fixed or determinable futuretime, a sum certain in money to or to the order of, a specifiedperson or to bearer
Item 14 (1), Schedule A of the Stamps Ordinance (Chapter 247as amended) provides that a Bill of Exchange payable ondemand or at sight should be stamped with a 10 cts. stamp anda bill of exchange or promissory note drawn or ordered for thepayment at any time otherwise than on demand or at sight shouldbear ad valorem duty. According to the Stamp Ordinance thepromissory note “ means promissory note as defined in the Billsof Exchange Ordinance ”,
Section 41 of the Stamps Ordinance provides that :
“No instrument chargeable with duty shall be admittedin evidence for any purpose by any person having by law
authority to receive evidence or shall be acted upon
unless such instrument is duly stamped provided that anysuch instrument not being an instrument chargeable witha duty of 10 cts. only or a Bill of Exchange or promissory noteshall, subject to all just exceptions and to the provisions ofsection 42, be admitted in evidence on payment of the dutywith which the same is chargeable, or, in the case of aninstrument insufficiently stamped, of the amount required tomake up the duty together with a penalty ”.
Thus under the provisions of the Stamps Ordinance a promissorynote payable on demand should be stamped with a 10 cts. stampand a promissory note for the payment at any time otherwisethan on demand should be stamped according to the scaleprovided in item 14 of Part 1, Schedule A of the Stamps OrdinanceIn terms of section 41 of the Stamps Ordinance a promissorynote of either category not so stamped is not admissible inevidence under whatever circumstances and hence no actionbased on such a note can be maintained.
It is abundantly clear that the document sued upon is a pro-missory note. The conditions referred to at the back of thedocument do not make what is on the face of the document anunconditional promissory note a conditional promise. By thatdocument the maker promises to pay the certain sum of Rs. 20,000only with interest at the rate of 6% per annum from the datethereof subject to the conditions overleaf. The obligation to pay
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SHARVANANDA, J.—Rodrigo v. Ranaainghe
the amount arises on the execution of the document. The promisecontained in the note creates an obligation to pay. The obligationis not dependent upon the occurrence of any event. Hence therecan be no doubt that the document sued upon is a promissorynote embodying an unconditional promise to pay.
In view of the conditions on the reverse of the documentinserted therein apparently for the benefit of the maker andaffecting the present enforceability of the promise, the questionarises whether the note is a note payable on demand or at afixed determinable period of time. The question is relevant todetermine the proper stamp duty exigible.
In this context, sections 10 and 11 of the Bills of ExchangeOrdinance have a bearing. Section 10 (1) states that a bill ispayable on demand—
which is expressed to be payable on demand, or at sight,
or at presentation ; or
in which no time for payment is expressed.
Section 11 (1) states that “ a bill is payable at a determinablefuture time, within the meaning of this Ordinance, which isexpressed to be payable—
“ (a) at a fixed period after date or sight;
(b) on or at a fixed period after the occurrence of a specifiedevent which is certain to happen though the time ofhappening may be uncertain ”.
Section 91 of the Bills of Exchange Ordinance makes the provi-sions of the Ordinance relating to Bills of Exchangeapplicable with necessary modifications to promissory notes. Inthe light of the definition contained in the aforesaid sections 10and 11 of the Bills of Exchange Ordinance, is the present note apromissory note payable on demand or at a determinable futuretime ?
A promissory note payable on demand is a present debt and ispayable forthwith without any demand and prescription beginsto run from the date of the instrument. The stipulation for com-pensation in the shape of interest makes no difference except thatthereby the debt is continuously increasing. De die in diem (videNorton vs. Ellam (1837) 2 M. & W. 461). But if any interest waspaid the running of the period of prescription would be postponedunder the rule relating to part payment. The Statute of Limitationruns from the date of the note. The liability comes into existenceas soon as the loan is made and the promise to pay on demandadds nothing to it. Ordinarily the words “ on demand ” may beneglected. Demand for payment before action brought is notnecessary to enforce payment. But where time for enforcing
SHARVANANDA, J.—Rodrigo v. Ranasinghe
11S
payment is postponed, the creditor cannot make_ any effectivedemand until after the time has expired. The limitation of thetime of payment does not suspend the obligation to pay but onlythe time of exacting or claiming the fulfilment. As the fixing ofthe time of payment is stipulated for the benefit of the debtor,he is at liberty to pay before the expiration of that time. Thecreditor is bound to accept the payment if the debtor insists onit provided it does not appear from surrounding circumstancesthat the fixing of the time of payment was meant for the benefitof the creditor as well as for the debtor. The cause of actionarises at the time when the debt could first have been recoveredby action (see Hemp vs. Garland (1843) 4 Q.B. 519). In the instantcase, the plaintiff could file action on the note sued upon, onlyafter three years from the date of the note. The obligation topay was incurred at once (dies cedit) but fulfilment of same couldbe claimed only after the expiry of three years (dies venit).“ Payment on demand ”, on the other hand means payableimmediately or forthwith. The payment can be enforcedimmediately. The performance of the obligation is due from theinstant at which the obligation arises, i.e., from the time of theexecution of the instrument, and, as stated above, it is neithernecessary nor incumbent on the payee to make the demandbefore institution of action. The word “ payable ” with referenceto time means in relation to a promissory note legally enforceable.
In terms of this note the payee or lender cannot institute anaction for the recovery of the amount for a period of 3 yearsfrom the date of the note and the note became due on the expiryof the said period of three years (section 6 of the PrescriptionOrdinance). The debt on the note therefore becomes payable inthe sense of, becoming legally enforceable, not on demand orforthwith but only after the expiry of the 3 years from the dateof the note. The maker of the note engaged to pay thus not ondemand but at a fixed or determinable future time. The loancould not be effectively called in before the period of 3 yearsand became due, not on demand or forthwith, but only at adeterminable future time. In that view of the matter, the notesued upon does not fall into the category of a promissory notepayable on demand and should have been appropriately stampedon the basis of a promissory note for the payment at any timeotherwise than on demand viz., a Rs. 10 stamp. The note suedupon carries only a ten cents stamp.
The defence that the document is not sufficiently stamped andhence barred from admission by section 41 of the Stamps Ordi-nance is entitled to succeed. I have not to determine whetherthe defence here set up is unconscionable or not but whetherit is good at law and I am of opinion that it is.
1U
SHAKYA1TANDA, J.—Rodrigo v. Ranaainghe
The plaintiff relied on the case of Matheranayakam vs. Chelliah29 N. L. R. 394, in support of his submission that the documentsued upon is not a promissory note within the meaning of theBills of Exchange Ordinance. The tenor of the document pleadedin that case differs in vital respects from the tenor of the docu-ment sued upon in the instant case and hence that decision canbe distinguished. Counsel for plaintiff-appellant submitted thatthe fact that the payee could not file action in Court on the noteat any time during the 3 years merely postponed the date ofrecovery but did not in any way detract from the ability ofthe payee to demand and receive the money and the correspond-ing liability of the maker to pay. I cannot agree with thissubmission. The fact that the obligation cannot be enforcedwithin the period of 3 years referred to in the note deflates thevalue of the note and deprives the note of its character of beingpayable on demand. Counsel’s reference to Scott vs. Avery (1856)5 H. L. 811 is not relevant to this case. In that case the award ofthe arbitrator was held to be a condition precedent to the accrual•of the cause of action. Under a Scott vs. Avery clause there isno right of action until an arbitrator has made his award. Fromthe point of prescription the effect of such a clause was that nocause of action arose until the award was made and that conse-quently time did not run until the making of the award. Thiscitation re-inforces the argument that the note sued upon is nota note payable on demand and that right of action on the noteaccrues only on the termination of the three years.
The plaintiff-appellant based his claim solely on the promissorynote referred to above. He did not prefer any alternative causeof action as for money lent and advanced. His present actionhas to fail as in terms of section 41 of the Stamps Ordinance thepromissory note cannot be admitted in evidence and the defaultin stamping cannot be cured.
For the reasons set out above, the judgment of the LowerCourt dismissing the plaintiff’s action is upheld. As the defenceset up though efficacious is not commendable I delete the orderfor costs contained in the judgment and decree of the LowerCourt. Subject to the variation regarding payment of costs I willdismiss the appeal without costs.
The case should serve as a warning against accepting promis-sory notes which are not ‘ payable on demand ’. In such instances,the security may turn out to be illusory if the document is notproperly stamped in terms of the provisions of the StampOrdinance.
Appeal dismissed.