Promissory Note Format in Karnataka

PROMISSORY NOTE (DEMAND / FIXED TERM)

Document ID: PN-KN-2024-[Unique Reference Number] Effective Date: [Date of Execution] Version: 1.0 Governing Jurisdiction: Karnataka, India

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STATUTORY & LEGAL COMPLIANCE NOTICE

Disclaimer: This Promissory Note is drafted in accordance with the Negotiable Instruments Act, 1881, and the Karnataka Stamp Act, 1957. The enforceability of this document is contingent upon the affixation of the appropriate non-judicial stamp paper of a value prescribed by the Karnataka State Schedule of Stamp Duty. Execution on insufficient stamp paper may render this instrument inadmissible as evidence in court proceedings under Section 34 of the Karnataka Stamp Act. Parties are advised to consult with local legal counsel to verify current stamp duty requirements based on the loan amount.

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1. PARTIES

This Promissory Note (the "Note") is made and entered into on this [Date] day of [Month], [Year] by and between:

THE MAKER: [Borrower Full Legal Name], residing at / having its registered office at [Complete Address], hereinafter referred to as the "Maker."

THE PAYEE: [Lender Full Legal Name], residing at / having its registered office at [Complete Address], hereinafter referred to as the "Payee."

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2. PROMISE TO PAY

For value received, the Maker hereby unconditionally promises to pay to the order of the Payee the principal sum of [Amount in INR/USD] (the "Principal Amount"), together with interest on the unpaid principal balance at the rate of [Percentage]% per annum.

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3. REPAYMENT TERMS

The Principal Amount and accrued interest shall be payable as follows: (a) Maturity Date: The total outstanding balance shall become due and payable on [Date of Maturity]. (b) Installments: [Optional: State if repayable in monthly/quarterly installments]. (c) Payment Method: Payments shall be made via [Bank Transfer/NEFT/RTGS/Cheque] to the account designated by the Payee.

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4. INTEREST ON DELAYED PAYMENTS

In the event that any installment or the final principal amount is not paid on or before the due date, the Maker shall pay interest at the rate of [Percentage]% per annum (default interest) on the overdue amount from the date of default until the date of actual payment.

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5. PREPAYMENT

The Maker reserves the right to prepay the Principal Amount, in whole or in part, at any time without penalty, provided that all accrued interest up to the date of such prepayment is settled in full.

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6. DEFAULT AND ACCELERATION

If the Maker fails to make any payment when due, or becomes subject to insolvency, bankruptcy, or liquidation proceedings, the Payee may, at their sole discretion, declare the entire unpaid principal balance and all accrued interest immediately due and payable, notwithstanding the original Maturity Date.

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7. GOVERNING LAW AND JURISDICTION

This Note shall be governed by and construed in accordance with the laws of the State of Karnataka, India. Any disputes arising out of or in connection with this Note shall be subject to the exclusive jurisdiction of the courts located in [City, e.g., Bengaluru], Karnataka.

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8. MISCELLANEOUS

(a) Entire Agreement: This Note constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements. (b) Amendments: No modification or amendment to this Note shall be valid unless in writing and signed by both parties. (c) Severability: If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the fullest extent permitted by law.

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9. EXECUTION AND SIGNATURE BLOCKS

FOR THE MAKER: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

FOR THE PAYEE: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

WITNESS 1: Signature: __________________ Name: __________________ Address: __________________

WITNESS 2: Signature: __________________ Name: __________________ Address: __________________

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STEP-BY-STEP EXECUTION & FILING GUIDE

1. Stamp Duty Verification: Determine the exact stamp duty for the loan amount under the Karnataka Stamp Act. Purchase an e-Stamp paper from the Stock Holding Corporation of India (SHCIL) or a designated vendor in Karnataka.
2. Drafting: Copy the text above into a word processor. Replace all bracketed [ ] fields with the actual legal data. Ensure names match PAN cards or Incorporation documents exactly.
3. Printing: Print the agreement on the e-Stamp paper (or append the e-Stamp certificate to the first page of the printed document).
4. Execution:
   • Ensure the Maker and Payee sign every page of the document at the bottom margin.
   • The final page must be signed by both parties and two witnesses in the presence of one another.
5. Digital Execution: If using DocuSign or Adobe Sign, ensure the platform settings are configured to capture "Audit Trails" (IP addresses, timestamps). Note: Even with digital signatures, for high-value loans, physical execution on stamp paper is strongly recommended for court admissibility in India.
6. Record Retention: Maintain the original hard copy in a fire-proof, secure cabinet. Scan a high-resolution PDF for digital backups. Do not discard the original, as it is a "negotiable instrument" required for potential legal enforcement.