Promissory Note Format in English India

PROMISSORY NOTE (INDIA)

DOCUMENT CONTROL

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STATUTORY & LEGAL COMPLIANCE NOTICE

This document is intended to function as a "Promissory Note" as defined under Section 4 of the Negotiable Instruments Act, 1881. To be legally enforceable in a court of law in India:

1. It must be executed on paper of appropriate value or affixed with the requisite Revenue Stamps (currently INR 1.00 for notes of any value, though state-specific variations may apply to related indemnity bonds).
2. It must be an unconditional undertaking.
3. It must be signed by the Maker (Borrower).
4. For corporate entities, a Board Resolution must authorize the signatory. DISCLAIMER: This template is provided for informational purposes. Users should consult with legal counsel to ensure compliance with the Interest Act, 1978, and various State Money Lenders Acts which may cap interest rates.

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1. PARTIES & RECITALS

1.1 THE MAKER (BORROWER): [Full Legal Name of Individual / Company], [PAN Number], residing at / having its registered office at [Principal Address] (hereinafter referred to as the "Maker").

1.2 THE PAYEE (LENDER): [Full Legal Name of Individual / Company], [PAN Number], residing at / having its registered office at [Principal Address] (hereinafter referred to as the "Payee").

1.3 RECITALS: WHEREAS the Maker has requested and the Payee has agreed to provide a loan/credit facility in the amount of [Amount in Words] ([Amount in Numerical - e.g., ₹00,00,000]) for the purpose of [Specific Purpose of Loan - e.g., Business Expansion/Personal Use]. The Maker acknowledges receipt of the full Principal Amount and hereby executes this Note as evidence of the debt and an unconditional promise to repay the same.

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2. OPERATIVE CLAUSES & LEGAL TERMS

2.1 PROMISE TO PAY

For value received, the Maker hereby unconditionally promises to pay to the order of the Payee, at the address specified above or such other place as the Payee may designate in writing, the principal sum of [Principal Amount in INR] (the "Principal"), together with interest on the unpaid principal balance at the rate of [Interest Rate, e.g., 12%] per annum, calculated from the Effective Date until the date of full and final repayment.

2.2 COMPENSATION & PAYMENT TERMS

• Repayment Schedule: The Principal and Interest shall be paid in [Number] installments of [Amount] every month, or as a lump sum "Bullet Payment" on or before [Maturity Date].
• Late Interest: Any payment not received within [Number] days of its due date shall bear a default interest rate of [Percentage, e.g., 2%] per month, compounded monthly, in addition to the standard interest rate.
• Mode of Payment: Payments shall be made via NEFT/RTGS/IMPS to Account No: [Account Number], IFSC: [IFSC Code], Bank: [Bank Name].
• Taxes: All payments shall be made free and clear of and without deduction for any taxes, except for Tax Deducted at Source (TDS) as per the Income Tax Act, 1961, provided the Maker furnishes a valid TDS certificate to the Payee.

2.3 TERM & TERMINATION (ACCELERATION)

This Note shall remain in effect until the Principal, Interest, and any other charges are paid in full. The Payee reserves the right to "Accelerate" the debt, making the entire unpaid balance immediately due and payable without notice, if:

1. The Maker fails to pay any installment within [Number] days of the due date.
2. The Maker becomes insolvent, files for bankruptcy, or undergoes liquidation.
3. A material adverse change occurs in the Maker’s financial condition.

2.4 INTELLECTUAL PROPERTY & CONFIDENTIALITY

• Confidentiality: Both Parties agree to keep the terms of this Note and any financial information exchanged during the due diligence process strictly confidential, except as required by law or to enforce the terms of this Note.
• IP Ownership: Any proprietary financial models, data, or documents shared by the Payee to the Maker for the purpose of this transaction remain the exclusive Intellectual Property of the Payee.

2.5 REPRESENTATIONS & WARRANTIES

The Maker represents and warrants that:

1. They have the legal capacity and authority to execute this Note.
2. The execution of this Note does not violate any existing agreement with third parties.
3. The debt evidenced by this Note is a legal, valid, and binding obligation.

2.6 LIMITATION OF LIABILITY & INDEMNIFICATION

The Maker agrees to indemnify and hold the Payee harmless from any and all claims, losses, liabilities, and expenses (including reasonable attorney fees) arising out of the Maker's breach of any covenant in this Note. The Payee’s liability under this agreement, if any, shall be limited strictly to the amount of the Principal actually received.

2.7 DISPUTE RESOLUTION & ARBITRATION

Any dispute, controversy, or claim arising out of or relating to this Note shall be referred to and finally resolved by arbitration in accordance with the Arbitration and Conciliation Act, 1996.

• Seat of Arbitration: [City, e.g., Mumbai/New Delhi].
• Language: English.
• Arbitrator: A sole arbitrator appointed by mutual consent, or failing which, by the High Court of [State].

2.8 GOVERNING LAW & JURISDICTION

This Note shall be governed by and construed in accordance with the laws of India. Subject to the Arbitration clause, the courts at [City, State] shall have exclusive jurisdiction over any matters arising from this Note.

2.9 MISCELLANEOUS PROVISIONS

• Severability: If any provision of this Note is held invalid or unenforceable, the remaining provisions shall continue in full force.
• Entire Agreement: This Note constitutes the entire agreement between the parties regarding the subject matter and supersedes all prior discussions.
• Amendments: No waiver or modification of this Note shall be valid unless in writing and signed by both parties.
• Counterparts: This Note may be executed in counterparts, each of which shall be deemed an original.

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3. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Maker has executed this Promissory Note on the date first above written.

FOR THE MAKER (BORROWER): Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [e.g., Managing Director / Individual] Company: [Company Legal Name, if applicable] Date: [Date] PAN: [PAN Number]

FOR THE PAYEE (LENDER): (Acknowledged and Accepted) Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

WITNESSES:

1. Signature: __________________ Name: __________________ Address: __________________
2. Signature: __________________ Name: __________________ Address: __________________

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4. STEP-BY-STEP EXECUTION & FILING GUIDE

Step 1: Customization

• Open this document in Microsoft Word or Google Docs.
• Use the Find and Replace function to fill all bracketed fields [...].
• Ensure the Principal Amount and Interest Rate are double-checked for numerical accuracy.

Step 2: Stamping (Crucial for India)

• Print the final document on plain A4 paper.
• Affix a Revenue Stamp of INR 1.00 in the designated box.
• The Maker must sign across the stamp so that part of the signature is on the stamp and part is on the paper. This prevents reuse of the stamp.

Step 3: Execution

• Signatory Authority: If the Maker is a company, ensure the person signing has a Board Resolution or Power of Attorney (PoA) authorizing them to borrow money.
• Witnesses: While not strictly required by the Negotiable Instruments Act, having two witnesses is highly recommended for evidentiary purposes in Indian courts to prove the Maker's signature.

Step 4: Digital Execution (Optional)

• If executing via DocuSign or Adobe Sign, ensure a "Digital Stamp Duty" payment is made if your state provides for electronic stamping (e.g., GRAS in Maharashtra). Pure digital signatures without physical or e-stamping may face admissibility hurdles in Indian courts for Negotiable Instruments.

Step 5: Record Retention

• The Original Promissory Note must be held by the Payee (Lender) until the debt is paid in full.
• Once the debt is paid, the Payee should mark the note as "CANCELLED / PAID IN FULL" and return the original to the Maker.
• Maintain a digital scan in a secure environment (e.g., encrypted cloud storage).