India Promissory Note
Also known as: PN · Hundi
Generate a promissory note tailored to India law. Our AI incorporates India-specific statutory requirements, disclosure obligations, and legal standards into every clause.
Promissory Note
Also called: PN, Hundi
Legal Requirements
India Legal Requirements
Key India statutes and obligations that apply to your promissory note.
Governed by the Negotiable Instruments Act 1881 (NI Act)
Must contain: unconditional promise in writing to pay a definite sum, signed by the maker, to a specified payee or bearer
Stamp duty is mandatory under the Indian Stamp Act 1899 — rate varies by state and note value
Unstamped or inadequately stamped promissory notes are inadmissible in Indian courts as evidence
Interest must be specified clearly — compound interest requires express agreement in writing
Limitation period: 3 years from the date the note falls due (Limitation Act 1963, Article 37)
Restrictions & Key Considerations
Section 138 of the NI Act: dishonour of a cheque is a criminal offence; the same does not apply directly to a promissory note dishonour (civil remedy only)
A promissory note payable to bearer on demand is treated as currency and is regulated by the RBI Act
Usurious Loans Act 1918: courts may reopen loans with excessive interest — applicable in some states
Notes executed outside India must meet the stamp requirements of the state where they are first used in India
FAQ
India Promissory Note FAQ
Common questions about the promissory note under India law.
Is stamp duty required on a promissory note in India?
Yes. The Indian Stamp Act 1899 mandates that promissory notes be stamped at the prescribed rate, which varies by state and the amount of the note. An unstamped or inadequately stamped promissory note cannot be admitted as evidence in civil court proceedings, making it effectively unenforceable until stamp duty and penalty are paid.
What is the limitation period for a promissory note in India?
Under the Limitation Act 1963, Article 37, the limitation period for a suit on a promissory note payable at a fixed time is 3 years from the date the note falls due. For a demand note, the period starts from the date of the note. Part payment or written acknowledgement of the debt before expiry restarts the limitation period.
Can interest be claimed on a promissory note in India?
Yes, if stated in the note. Simple interest can be included expressly. Compound interest requires explicit written agreement — it is not implied. Courts may grant simple interest under Section 34 of the Code of Civil Procedure even if not specified in the note, but compound interest requires the note to provide for it.
Does the NI Act Section 138 apply to promissory notes?
No. Section 138 of the Negotiable Instruments Act (which creates a criminal offence for cheque dishonour) applies only to cheques, not to promissory notes. If a promissory note is dishonoured, the holder's remedy is a civil suit for money due within the limitation period. There is no criminal exposure for the maker of a dishonoured note.
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Promissory Note by Country
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