Promissory note
Also called: Pronote
A written instrument, not a bank-note or currency-note, containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person or the bearer.
Explained
Section 4 of the Negotiable Instruments Act, 1881 defines a promissory note as 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 only to, or to the order of, a certain person, or to the bearer of the instrument. Section 13 lists it, with the bill of exchange and the cheque, as a negotiable instrument.
The essentials are writing; an express undertaking to pay, so that a mere acknowledgment of debt is not enough; an unconditional undertaking; signature of the maker; a certain maker and a certain payee; a sum of money that is certain; and payment of money only. The Illustrations show the line: I promise to pay B or order Rs. 500 is a promissory note, while I O U Rs. 1,000, a promise to pay seven days after my marriage with C, or a promise to pay money and also deliver a horse is not. Under Section 5 a promise is not conditional merely because payment is fixed after an event certain to happen, and the sum remains certain though it includes future interest. Section 31 of the RBI Act, 1934 bars anyone other than the Reserve Bank or the Central Government from making a promissory note payable to bearer on demand.
A promissory note has two original parties, the maker and the payee, whereas a bill of exchange is an order by the drawer to the drawee and has three. Under Section 118(a) every negotiable instrument is presumed, until the contrary is proved, to have been made for consideration. In procedure, a suit on a promissory note may be brought as a summary suit under Order XXXVII of the CPC, where the defendant must obtain leave to defend. The Limitation Act, 1963 has its own definition in Section 2(k): an instrument whereby the maker engages absolutely to pay a specified sum to another at a fixed time, on demand or at sight.
Examiners usually give a set of writings and ask which is a promissory note, so the Illustrations to Section 4 repay close study.
What the law says
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 only to, or to the order of, a certain person, or to the bearer of the instrument.
Illustrations
Defines promissory note with Illustrations
A “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.
A promise or order to pay is not “conditional”, within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified even which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.
The sum payble may be “certain”, within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instalment, the balance unpaid shall become due.
Rules on conditional promise and certain sum
[(1) A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer.
Explanation (i)—A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it shall not be transferable.
Explanation (ii)—A promissory note, bill of exchange or cheque is payble to bearer which is expressed to be so payable or on which the only or last indorsement is an indorsement in blank.
Promissory note is a negotiable instrument
(f) as to stamp:— that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course:—that the holder of a negotiable instrument is a holder in due course: provided that, where the instrutment has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
Presumption of consideration
[(1)] No person in [India] other than the Bank, or, as expressly authorised by this Act the [Central Government] shall draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person:
Provided that cheques or drafts, including hundis, payable to bearer on demand or otherwise may be drawn on a person’s account with a banker, shroff or agent.
[(2) Notwithstanding anything contained in the Negotiable Instruments Act, 1881, (26 of 1881) no person in [India] other than the Bank or, as expressly authorised by this Act, the Central Government shall make or issue any promissory note expressed to be payable to the bearer of the instrument.]
Bar on bearer notes payable on demand
(k) “promissory note” means any instrument whereby the maker engages absolutely to pay a specified sum of money to another at a time therein limited, or on demand, or at sight;
Section 2(k) defines promissory note for limitation
Example
Illustration to Section 4 of the NI Act: 'I acknowledge myself to be indebted to B in Rs. 1,000, to be paid on demand, for value received' is a promissory note, but 'Mr. B, I O U Rs. 1,000' is not.
For the exam
- Section 4 NI Act: written, unconditional undertaking to pay a certain sum of money only.
- An acknowledgment of debt such as 'I O U' is not a promissory note.
- Bank-notes and currency-notes are excluded.
- Bearer notes payable on demand only by RBI or Central Government (Section 31 RBI Act).
- Suits on promissory notes may proceed summarily under Order XXXVII CPC.
296 questions in the Law Maker question bank use this term. Practise Negotiable Instruments Act, 1881 questions
Related terms
- Negotiable instrumentA promissory note, bill of exchange or cheque payable either to order or to bearer (Section 13(1) of the Negotiable Instruments Act, 1881).
- Bill of exchangeAn instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer (Section 5, NI Act).
- ChequeA bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand, including the electronic image of a truncated cheque and a cheque in electronic form. Section 6 of the NI Act.
- Holder in due courseOne who for consideration becomes possessor of a bearer instrument, or payee or indorsee of an order instrument, before maturity and without cause to believe the transferor's title defective. Section 9, NI Act.
- ConsiderationAn act, abstinence or promise done or made at the desire of the promisor by the promisee or any other person, which is the price for the promise (Section 2(d) of the Contract Act).
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.