Product S.No.

1109749229
This judgement ranked 1 in the hitlist.

Manjit Kaur v. Vanita (P&H) : Law Finder Doc Id # 210948

2010(3) CivCC 896 : 2010(3) R.C.R.(Criminal) 574 : 2010(3) R.C.R.(Civil) 693

PUNJAB AND HARYANA HIGH COURT

Before :- Harbans Lal, J.

C.A. No. 1477-SBA of 2006. D/d. 26.11.2009.

NUTSHELL

Cheque issued to repay time barred debt - Dishonour of cheque - Accused not liable under
Section 138 of Negotiable Instruments Act.

I-RULE
Manjit Kaur - Appellant
Versus
Vanita - Respondent

For the Appearing Party :- None.

Negotiable Instruments Act, 1881, Section 138 - Limitation Act, 1963, Section 18 -
Legally enforceable debt or liability - Dishonour of cheque - Loan of Rs. 95,000/-
was advanced in year 1999 to the accused - Accused did not repay the amount but
issued a cheque for repayment in 2003 - No acknowledgement was obtain before
the expiry of 3 years from the date of loan - Held, the debt was not legally
enforceable at the time of issuance of cheque and the accused could not be
punished under Section 138 of Act of 1881.

Further held;

In case a cheque is issued for time barred debt and it is dishonoured, the accused
cannot be convicted under Section 138 on the ground that the said debt was not
legally recoverable - 2000(1) RCR (Criminal) 829 relied on.

[Para 9]

Cases Referred :

Ashwini Satish Bhat (Mrs.) v. Jeevan Divakar Lolienkar, 2000(1) R.C.R.(Rent) 214 : 2000(1)
RCR(Criminal) 829.

JUDGMENT
Harbans Lal, J. - This appeal is directed against the judgment dated 22.7.2005 passed by
the Court of learned Addl. Chief Judicial Magistrate, Kapurthala whereby he dismissed the
complaint and acquitted Vanita accused of the charge framed against her.

2. The facts in brief are that the accused Vanita secured loan to the tune of Rs. 95,000/-
from the complainant Manjit Kaur for household management, but she failed to repay the
same despite repeated requests made by the latter. In order to repay the said amount, the
accused issued a cheque bearing No. 117716 dated 28.6.2003 for Rs. 95,000/- in favour of
the complainant drawn on her saving bank account No. 1694 being maintained with Capital
Local Area Bank Limited, Jalandhar Road Kapurthala. The said cheque on being presented
by the complainant through her bankers i.e. Central Bank, Kapurthala was dishonored and
received back with memo dated 28.6.2003 issued by the bankers of the accused bearing
remarks "Insufficient Funds". Thereafter, the complainant approached the accused and
informed her about the fact that the cheque has been bounced and demanded the amount
of cheque, but she refused to pay the same. Notice dated 9.7.2003 was issued by the
complainant calling upon the accused to make the payment of the said amount. Such notice
has been received by the accused, but nonetheless she did not pay the said amount.
Sequelly, the complaint was lodged on 30.7.2003 in the Court.

3. After appearance of the accused, the complainant examined Sanjiv Kumar Bhagi,
Executive Capital Bank, Kapurthala P.W.2 in addition to her own statement as P.W. 1. When
examined under Section 313 of Criminal Procedure Code , the accused denied the
incriminating circumstances appearing in the prosecution evidence against her and put forth
as under :-

"Yes. The cheque has been forged by the complainant which was never filled
by me, nor given to the complainant. In fact complainant obtained this
cheque from one Mr. Toni to whom I had given this blank cheque in
connection with some loan transaction duly signed by me. The complainant
used the said cheque in connivance with Toni and in connivance with other
person. I am innocent."

4. She did not adduce any evidence in defence. After hearing the learned counsel for the
parties and examining the evidence on record, the learned trial Court acquitted the accused
of the charged offence as noticed at the outset. Feeling aggrieved with her acquittal, this
appeal has been preferred by the complainant - Manjit Kaur.

5. This case was adjourned from time to time for arguments, but none had been putting in
appearance on behalf of the parties despite the fact that this matter for hearing was also
displayed on the net. However, I have perused the record with due care and circumspection.

6. As pleaded in the grounds of appeal, that although the appellant led sufficient evidence to
prove her case, but the learned trial Court dismissed the complaint on the ground that the
recovery of amount could have been made by the appellant within a period of three years.
The learned trial Court has failed to appreciate the evidence available on the record and
simply dismissed the complaint on the ground of limitation. The learned trial Court has held
that the time barred debt is not covered under this provision, since liability has not been
acknowledged within a period of limitation by the respondent. Therefore, it does not amount
to acknowledgment on her part. The learned trial Court did not appreciate this fact that the
cheque was issued by the respondent in favour of the appellant and when the said cheque
was presented for encashment, the same was dishonored due to insufficient funds. The
respondent has not denied that the cheque was not issued by her to the appellant.
7. I have given a deep and thoughtful consideration to these grounds taken up in the
appeal.

8. Manjit Kaur - appellant as P.W. 1 has testified that "I know the accused present in Court.
Accused has borrowed a sum of Rs. 95,000/- from me. I demanded the money so many
times, ultimately the accused issued a cheque dated 28.6.2003. I have seen the original
cheque which is Ex. P. 1." Obviously, she has not disclosed the date, month and year when
she had advanced this amount as loan to the accused- respondent. It is in her cross-
examination that "The accused has not returned the money for about four years when she
had taken the same from me as loan and after four years she issued the cheque in dispute.
I have not given any money as loan to any other person. The accused is not my relative. No
writing work was done when I had given money to the accused." It emanates from this
evidence that when the alleged cheque Ex. P.1 was issued at that point of time, a period of
more than four years had already elapsed since the day of advancement of the disputed
amount as loan. In re : Ashwini Satish Bhat (Mrs.) v. Jeevan Divakar Lolienkar,
2000(1) R.C.R.(Rent) 214 : 2000(1) Recent Criminal Reports (Criminal) 829, it has
been observed as under :-

"The ruling upon which reliance has been placed by the learned Advocate for
the respondent is applicable on all fours. In that case loan was advanced in
the year 1985 and the cheque was issued in the year 1990. By the time the
cheque was issued, the debt was barred by limitation because no
acknowledgment was obtained before the expiry of 3 years from the date of
loan. In these circumstances, it was held there that the debt was not legally
enforceable at the time of issuance of cheque and the accused could not be
punished under section 138 of the said Act. In the light of Explanation to the
said section, it was further held therein that in case a cheque is issued for
time barred debt and it is dishonoured, the accused cannot be convicted
under Section 138 on the ground that the said debt was not legally
recoverable."

9. Adverting to the facts of the instant case, the cheque was issued on 28.6.2003. On
reckoning, it works out that the loan was advanced somewhere in June, 1999. A meticulous
perusal of the evidence on record would reveal that the appellant has not produced any
document or other evidence revealing that the accused-respondent had acknowledged the
debt within three years from the date of loan. Thus, by the time, the cheque was issued, the
debt became barred by limitation because no acknowledgment was obtained before the
expiry of three years from the date of loan. Section 18 of the Limitation Act, 1963 deals
with the theory underlying the doctrine of acknowledgment. The true principle underlying an
acknowledgment is that it merely renews the liability and gives the creditor or claimant a
fresh period of limitation according to the nature of the liability which exists at the date of
the acknowledgment. An acknowledgment cannot be regarded as evidentiary of the debt but
an acknowledgment that a person owes money to another, a specified person is good
evidence of his owing money to another. The dishonoured cheque Ex. P1 cannot be treated
as acknowledgment under Section 18 of the Limitation Act, since the acknowledgment
should be before the period of limitation is over and that it should be in writing. Thus, it
cannot be said that the appellant has been able to prove that Ex. P1 was in relation to a
legally enforceable debt or liability in law as the same was admittedly issued after more
than three years of the advancement of the alleged amount as loan. So, if the matter is
viewed in the background of the observations rendered in re: Ashwini Satish Bhat (Mrs.)
(supra), it turns out that the accused- respondent had issued the cheque in 2003 when the
debt had already become time barred. The acknowledgment of the alleged amount in 2003
was not valid acknowledgment under Section 18 of the Limitation Act and consequently it
was not a legally enforceable debt.

10. For the reasons recorded hereinbefore, I do not find any merit in this appeal and the
same is dismissed.

11. Disposed of accordingly.

Product S.No.1109749229
This judgement ranked 1 in the hitlist.

Sureshchandra Chandrashankar Joshi v. State of Gujarat (Gujarat) : Law Finder Doc Id #

209127

2010(4) AICLR 86 : 2010(2) R.C.R.(Criminal) 590 : 2010(2) R.C.R.(Civil) 637 :

2010(89) AIC 912 : 2010(2) BankJ 445 : 2010(2) CivCC 691 : 2010(2) Cri.CC 803 :
2010(1) GLR 601

GUJARAT HIGH COURT

Before :- D.H. Waghela, J.

Criminal Appeal No. 1118 of 2009 with Criminal Appeal No. 1119 of 2009 to Criminal Appeal
No. 1140 of 2009. D/d. 7.10.2009.

Sureshchandra Chandrashankar Joshi - Appellant

Versus

State of Gujarat - Opponent

For the Appellant :- Mr. A.J. Shastri, Advocate.

For the Opponent No. 1 :- Ms. Trusha Patel Addl. Public Prosecutor.

For the Opponent No. 2 :- Mr. Sanjanwalla with Mr. Dilip L. Kanojiya, Advocates.

IMPORTANT
Cheque issued by accused in respect of loan which he had taken 5 years earlier - Dishonour
of Cheque - Accused not liable - Debt was not legally recoverable on the date when Cheque
was issued.

Negotiable Instruments Act, Sections 138 and 139 - Legally enforceable debt or
liability - Cheque issued by accused in respect of loan which he had taken 5 years
earlier - Dishonour of Cheque - Accused not liable - Debt was not legally
recoverable on the date when Cheque was issued - Date in the Cheque was filed
up in different hands.

[Para 9]

Cases Referred :

Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008(1) R.C.R.(Criminal) 695 : 2008(1)

R.C.R.(Civil) 498 : 2008(1) R.A.J. 279 : AIR 2008 Supreme Court 1325.

M.S. Narayana Menon v. State of Kerala, 2006(3) R.C.R.(Criminal) 504 : 2006(2) Apex
Criminal 531 : (2006)6 SCC 39.

John K. John v. Tom Varghese, 2007(4) R.C.R.(Criminal) 807 : 2007(4) R.C.R.(Civil) 724 :
2007(5) R.A.J. 676 : (2007)12 SCC 714.

Kamala S. Vidhyadharan M.J., 2008(1) GLR 423.

JUDGMENT

D.H. Waghela, J. - These 23 appeals have arisen from the judgments and orders dated
27.3.2009 of learned Chief Judicial Magistrate, Rajpipla in 23 separate cases, out of which,
by consent, the facts and judgment of the first case, i.e. Criminal Case No. 2015 of 2005, is
taken as representative and main judgment, all the cases having similar facts and common
issues. The criminal cases were initiated by the present appellant on the basis of dishonour
of cheques admittedly signed and issued by the respondent-accused person and, in each
case, the accused person is acquitted of the offence under section 138 of the Negotiable
Instruments Act, 1881 (for short, 'the Act') mainly on the ground that the complainant had
failed to prove enforceable debt or legal liability on the part of the accused person.

2. The backdrop of indisputable relevant facts is that, in all, 23 cheques bearing dates of
14th, 15th and 16th July, 2005 were presented for clearance and returned by the bank.
Again they were presented on 08.08.2005 and upon being dishonoured again, notice was
issued and then the complaints were filed. It was stated by the appellant in the complaint
that he had lent approximately an amount exceeding Rs. 22 lakhs and the accused person
had not repaid any amount towards the principal and hence issued 23 cheques in question.
It is averred in the complaint that the accused person had given assurance when the
amounts were lent to him that he would repay the amount in installments but having failed
to abide by his promise, he had also committed offence under section 420 of IPC.

3. During the course of evidence, the complainant examined himself at Ex. 15 to reiterate
the averments of the complaint on oath and during the extensive cross-examination, he,
inter alia, stated that he had the record of monies lent by him to the accused and the
amounts received by him; that the transactions were spread over the period from 1997 to
2000; that he had paid or lent money to the accused person by cheque and by cash; that he
had approached D.S.P., Bharuch with a complaint in respect of the same; that the dates of
the cheques were filled up by him; that there was a condition that the accused person would
give to the complainant fresh set of cheques every five months and he denied the
suggestions that the accused had already repaid total sum of Rs. 34 lakhs and the debt, if
any, was, in any case barred by limitation for recovery thereof in a civil court.

3.1. The complaint dated 15.6.2005 made by the appellant to D.S.P., Bharuch
(Ex. 31) stated that the complainant had given to the accused total sum of
Rs. 22 lakhs in several parts during the period of 4 years and thereafter the
accused has, by whiling away the period of 4 and a half years in making
payment and betraying the friendship, given 23 cheques which have been
dishonoured. By letter dated 14.7.2005 (Ex. 30), Police Inspector of Valia,
Dist. Bharuch, informed the complainant that, as against the aforesaid
complaint dated 15.6.2005, the accused person has also given an application
dated 22.6.2005 along with an audio cassette of the conversations which took
place between the parties. It is further stated that, as it transpires from the
hearing of the audio cassette, the accused has already repaid the amount due
to him and having regard to several aspects, the complainant was required to
pursue his remedies in the court of law. Significantly, the proceedings before
the police have taken place before the date of dishonour of cheques while,
according to the complaint and the complainant, he was asked by the accused
person to present the cheques again for realization. And that creates a
genuine doubt about veracity of the version of the complainant.

4. With the above background of facts, the trial Court recorded the finding of fact and came
to the conclusion that the financial transactions between the parties clearly appeared to
have taken place during the period from 1997 to 2000 and the complainant had failed to
prove, beyond reasonable doubt, that there was a legally enforceable debt or legal liability
against which the cheques could be said to have been drawn or issued.

5. Learned counsel Mr. Shastri, appearing for the appellant, submitted that there was a
continuing liability existing against the accused for discharge of which the accused was in
the practice of giving sets of cheques to the complainant and, when the complainant sought
to realise the amount of continuing debt in July 2005, the offences were committed in which
the appellant stood to lose the amounts legally due from the accused person. He submitted
that in the facts and by virtue of the presumptions of law and in absence of any evidence of
any amount having been repaid by the accused as also in absence of any dispute about
signature of the accused person on the cheques, Court was required to uphold the sanctity
of the cheque and impose appropriate punishment on the accused person. He also
submitted that the accused person also being a trader and money-lender, he was bound to
have the knowledge of dishonour of the cheques in the first instance and presentation of the
cheques again. Therefore, the version of the complainant that he was advised and
instructed by the accused person himself to present the cheques again for realisation was
believable and could not be discarded. He also submitted that the accused person could
have adduced necessary oral and documentary evidence to show any repayment by him and
in absence of such evidence, the cheques were required to be presumed to be in discharge
of the existing legal liability. He also submitted that even a man of ordinary prudence would
have demanded the cheques back while repaying the amount of the debt. Instead, it was
not even the defence of the respondent that he ever demanded the cheques back or
intimated the complaint not to present the cheques again and again as those cheques were
not intended to make any payment towards any liability.
6. As against the above submissions of Mr.Shastri, learned counsel Mr. Sanjanwalla,
appearing for the respondent, submitted that, admittedly, the cheques were proposed to be
appropriated towards the principal amount which had fallen due during the period between
1997 to 2000 and the complainant had failed to adduce any evidence as to how it remained
an enforceable debt. He submitted that the primary burden of proving all the ingredients of
the offence was upon the complainant and he had admittedly failed to prove even the
payments which were made by him to the respondent. Relying upon deposition of Branch
Manager (Ex. 35) of the bank concerned, it was pointed out that the cheque books from
which the cheques were drawn were issued on 12.7.1999 by the bank.

7. The issues arising in the facts of the present cases having been partly decided by this
Court very recently on 06.10.2009 in Criminal Appeal No. 1189 of 2009, learned counsel on
both sides relied upon the following observations made therein :

"8.1. No contract gives rise to any liability, unless the transaction is supported
by consideration. However, an important distinction in the case of negotiable
instruments is to be noticed. These instruments being mercantile instruments
intended for free circulation like cash, the Law Merchant lays down
restrictions as to the defence of want of consideration. If a negotiable
instrument is made, drawn, accepted, indorsed or transferred without
consideration or for a consideration which fails, it creates no obligation
between the parties to the transaction. Partial absence or partial failure of
consideration consisting of money stands on the same footing as its total
absence or failure. Hence, the payee is not entitled to recover to the extent to
which the consideration has failed or is absent, but in case of partial absence
or failure of consideration not consisting of money, such part of the
consideration must be ascertainable in money without collateral inquiry;
otherwise it will not bar the recovery of the whole amount. The general rules
of evidence relating to negotiable instruments are those contained in the
Indian Evidence Act, but some special presumptions arising out of the peculiar
incidents attached to negotiable instrument are set out in the Act.
9. The presumption under section 139 is mandatory but rebuttable by proof of
facts contrary to the receipt of cheque for discharge of any debt or other
liability. The initial burden, however, of proving that the cheque was drawn by
the drawee for payment of any amount of money and it being returned by the
bank unpaid remains with the complainant. The presumptions under section
118 are also mandatory but rebuttable and could be availed only until the
contrary is proved. Even as a bill of exchange, by definition, requires
signature of the maker as also direction to pay a certain sum of money only
to or to the order of a certain person or to the bearer of the instrument, the
provisions of section 20 permits signature and delivery of an incomplete
negotiable instrument and provides that the maker thereby gives prima facie
authority to the holder thereof to make or complete it into a negotiable
instrument and makes the signatory of such instrument liable to any holder in
due course to the extent of the amount intended to be paid thereunder.
Therefore, harmonious reading of the provisions of sections 5, 6, 20, 118 and
139 would clearly indicate that a cheque could be drawn, delivered and
received by the payee or holder in due course and could legally be completed
under a legal authority and when such inchoate instrument is completed to
make it a negotiable instrument, it would fall within the definition of "bill of
exchange" and would render the signatory liable upon such instrument to the
extent the amount mentioned therein is intended by him to be paid
thereunder. Unless and until contrary is proved, such negotiable instrument
would be presumed to be made or drawn for consideration and receipt thereof
would be presumed to be for discharge, in whole or in part, of any debt or
other liability. However, such debt or other liability is not by any legal
presumption presumed to be a legally enforceable debt or other liability.
Therefore, the onus of proving that the presumed or proved debt or legal
liability was legally enforceable remains with the complainant. Consequently,
in all given fact-situations, the Court is required to examine whether the
presumptions regarding consideration and there being any debt or other
liability are rebutted by the accused person by preponderance of probabilities
and whether the complainant has proved that the debt or other liability,
presumed or proved by overwhelming evidence, was legally enforceable.
Although there is no presumption as regards any debt or other liability being
legally enforceable, it would be found that once a debt or other liability is
presumed and not properly rebutted, it would be legally enforceable, unless
and until it is shown to be legally unenforceable. Such scheme of the
provisions of law clearly indicates the object of serving the purpose of
realisation of the promise apparently contained in a negotiable instrument,
which is that the amount for payment of which the bill of exchange was
intended to be made will be paid to the payee or the holder in due course.
9.1. Any material alteration of a negotiable instrument, however, renders it
void as against any one who is a party thereto at the time of making such
alteration and does not consent thereto, unless the alteration was made in
order to carry out the common intention of the original parties. The provision
to that effect contained in section 87 has to be read in harmony with section
20 which permits and authorizes the holder of a negotiable instrument to
complete the instrument for any amount and renders the drawer liable to the
holder in due course to the extent of the amount intended by the drawer to
be paid under such instrument. It is clear from plain reading of provisions of
section 20 and 87 that the injunction, under the pain of invalidating a
negotiable instrument, against alteration operates only after an inchoate
instrument is completed or a complete instrument falls within the definition of
"negotiable instrument". Therefore, the legally permissible completion of an
inchoate instrument cannot be construed as material alteration of a
negotiable instrument.
10. The above analysis of the statutory provisions leads to the conclusion
that, when a cheque bearing only signature of the drawer is delivered and
received by a payee for the discharge, in whole or in part, of any debt or
liability, there is an implied authority for the person receiving such cheque to
complete it by filling the blanks and the amount having been filled up under
such implied authority would be the amount intended by him to be paid
thereunder. The focus in such cases would shift to the aspect of such amount
being for the discharge, in whole or in part, of any legally enforceable debt or
other liability. Therefore, even with the props of legal presumptions, the onus
of proving legally enforceable debt or other liability for the discharge of which
a cheque must have been drawn has to be discharged by the prosecution for
bringing home the charge of dishonour of cheque. It may, however, be
facetious to hold that a blank cheque, drawn by a person on an account
maintained by him with a banker, for payment of any amount of money to
another person, by merely putting his signature on it, would not be a
"cheque" in the first place, because of not being a "bill of exchange" as it did
not contain direction to a certain person to pay a certain sum of money to or
to the order of a certain person or to the bearer of the instrument. When the
Negotiable Instruments Act expressly permits and authorizes by a substantive
 provision the completion of an inchoate instrument by section 20 with the
safe-guard provided in section 87, provisions of sections 5 and 6 defining "bill
of exchange" and "cheque" have to be harmoniously read to mean that an
instrument which was initially not a "cheque" falling within the definition of
section 6 would become a "cheque" when it was completed by filling the
blanks and its dishonour shall have all the legal consequences of dishonour of
a cheque proper".

8. Applying the ratio of the above judgment in the facts of the present case, it was seen
that, while the accused person had not disputed his signature on the cheques in question,
his specific defence was that the amounts in excess of the amount of cheques were repaid
by him. It is true that the accused person did not lead any evidence to prove any payment
by him but the liability was clearly disputed in defence and an added burden was cast upon
the complainant to prove not only that there was an existing debt or liability but that debt
or other liability was legally enforceable, particularly in view of the fact that the dates in the
cheques were filled up in different hands for the purpose of recovering the debt which had
admittedly arisen five years before that date. Except the assertions on oath of the
complainant, there was no other evidence to prove that the parties were in the practice of
exchanging fresh batches of cheques every five months and the parties have apparently
refrained from adducing any documentary evidence regarding the financial transactions
taking place between them. It is under such circumstances that, after an elaborate
examination and discussion of the entire evidence, the trial Court had come to the
conclusion that the complainant had failed to prove beyond reasonable doubt that there
was, at the time of dishonour of the cheques, a legally enforceable liability against the
accused person, in discharge of which the cheques could have been drawn or issued in
favour of the complainant.

9. As observed by the Supreme Court in Krishna Janardhan Bhat v. Dattatraya G.

Hegde 2008(1) R.C.R.(Criminal) 695 : 2008(1) R.C.R.(Civil) 498 : 2008(1) R.A.J.
279 : [ AIR 2008 Supreme Court 1325], existence of legally recoverable debt is not a
matter of presumption under section 139 of the Act. It merely raises a presumption in
favour of the holder of a cheque that the same has been issued for discharge of any debt or
other liability. And, as held by the Apex Court in M.S. Narayana Menon v. State of
Kerala 2006(3) R.C.R.(Criminal) 504 : 2006(2) Apex Criminal 531 : (2006) 6 SCC
39, it is not necessary for the defendant to disprove the existence of consideration by way
of direct evidence. The standard or proof evidently is preponderance of probabilities and
necessary inference could be drawn not only from the materials on record but also by
reference to the circumstances upon which the accused relies. In Kamala S.
Vidhyadharan M.J. [2008 (1) GLR 423], the Supreme Court also held it to be well-
settled that when two views were possible, the High Court exercising its appellate power
against a judgment of acquittal shall not ordinarily interfere. In John K. John v. Tom
Varghese 2007(4) R.C.R.(Criminal) 807 : 2007(4) R.C.R.(Civil) 724 : 2007(5)
R.A.J. 676 : [(2007) 12 SCC 714], the Supreme Court held that the High Court was
entitled to take notice of the conduct of the parties and draw its own conclusion. If, upon
analysis of the evidence brought on record by the parties, a finding of fact has been arrived
at that the cheque had not been issued by the respondent in discharge of any debt, it could
not be said to be perverse. Therefore, even assuming in favour of the complainant that
there was an existing debt or liability for payment of which the cheques were drawn, or
allowed to remain with the complainant, it was not perverse for the trial Court to conclude
that the complainant had failed to prove beyond reasonable doubt that the debt was legally
recoverable on the date of the cheques in question. Under such circumstances, the Court
has no alternative but to dismiss all the appeals and accordingly they are dismissed.
Appeals dismissed.

Product S.No.1109749229
This judgement ranked 1 in the hitlist.

M/s. Vijay Polymers Pvt. Ltd. v. M/s Vinnay Aggarwal , (Delhi) : Law Finder Doc Id #
198548

2009(4) Crimes 29 : 2010(5) R.C.R.(Criminal) 728 : 2009(5) AD(Delhi) 70 :

2009(2) JCC 143 : 2009(162) DLT 23 : 2010(1) CivCC 197 : 2009(4) PLR (Delhi) 1
: 2010(2) DCR 534 : 2009(110) DRJ 592

DELHI HIGH COURT

Before :- Mool Chand Garg, J.

Crl.M.C.1682 of 2008 & Crl.M.A. Nos. 6167 of 2008 & 12878 of 2008. D/d. 21.04.2009.

M/s. Vijay Polymers Pvt. Ltd. & Anr. - Petitioners

Versus
M/s Vinnay Aggarwal - Respondent

For the Petitioner :- Mr. P.D. Gupta, Mr. Kamal Gupta and Mr. Abhishek Gupta, Advocates.

For the Respondent :- Mr. Balwinder Ralhan, Advocate.

Limitation Act, 1963, Section 18 - Negotiable Instruments Act, 1881, Sections 138
and 141 - Dishonour of cheque- Time barred debt - Acknowledgment - Neither in
the Complaint nor in the notice nor in the affidavit it has been stated that debt
which became time barred paid by complainant to petitioner was ever
acknowledged within the period of limitation so as to keep the liability alive -
Cheques paid after three years of friendly loan having became time barred -
Cheques issued in lieu of debt which was not legally recoverable at the time of
issuance of cheque - Complaint as well as proceedings quashed.

[Paras 5, 6, 12 and 14]

Cases referred :

Sasseriyil Joseph v. Devassia, SLP (Crl.) 1785/2001.

Smt. Ashwini Satish Bhat v. Shri Jeevan Divakar Lolienkar [2000(5) Bom CR 9].

Girdhari Lal Rathi v. P.T.V. Ramanujachari and another, 1998 Bank J. 127 : 2000 DoCh.
(A.P.)420.
 JUDGMENT

Mool Chand Garg, J. - The basis issues which involved in this case are :-

(i) Whether the complaint dated 13.12.2007 (Annexure P-4) filed under
Section 138 of the Negotiable Instruments Act (for short "the Negotiable
Instruments Act") by respondent against the petitioner is not maintainable in
law inasmuch as, it is pleaded, that the same is based upon the dishonor of a
cheque which was issued by petitioner No.2 in lieu of a debt which was not
legally recoverable as alleged at the time of issuance of the said cheque ?
(ii) Whether the summoning order is sustainable in the facts of this case in
view of the judgment of Apex Court delivered in Special Leave to Appeal
being SLP (Crl.) 1785/2001 decided on 10.9.2001.

2. This petition has been filed by the accused persons who were summoned to face the trial
in this case of a charge under Section 138/141 of the Negotiable Instruments Act vide order
dated 21.01.2008, which order was passed by the trial Court taking note of the averments
made in the complaint which was filed in support of the complaint. The same reads as under
:-

Complainant examined by way of affidavit. Documents filed along with complaint perused.
Material on record prima facie discloses commission of an offence under Section 138
Negotiable Instruments Act by accused. Let accused be summoned on filing of PF/RC,
approved courier, dasti for 25.03.08. Steps be taken within a week.

3. To appreciate the factual matrix of this case, it would be necessary to take note of some
of the paragraphs of the complaint which are reproduced hereunder :-

1-2. That the accused no.2 in the month of Jan 2002 approached and asked
from the complainant for a sum of Rs. 6,00,000/- (Rs. Six Lakhs Only) for the
personal needs/friendly loan as the accused was facing some financial crises.
On the accused's request the complainant gave you a sum of Rs. 6,00,000/-
(Rs. Six Lakhs Only) through cheque No. 340787 drawn on Punjab National
Bank, Lawrence Road Branch, to the accused No. 2 as friendly loan. The said
cheque was issued in favour of notice No. 1 and was debited in the account of
the complainant on 01-02-2002.
3. That thereafter the complainant waited for some time as the accused had
promised to repay the friendly loan after six months but he failed to do so.
After considerable persuasion from the complainant the accused No. 2 in lieu
of the above mentioned friendly loan, issued two cheques bearing no.817758
dated 27-04-2006 and another bearing No. 817760 dated 31-05-2006 each
for a sum of Rs. 50,000/- (Fifty Thousand Only) each, each drawn on Bank of
India Rajendra Place Delhi, Branch in favour of the complainant towards the
part payment against the outstanding dues towards the accused. The said
cheques were however enchased on presentation.
4. That thereafter the complainant again waited for some time and after
considerable persuasion from the complainant the accused No. 1, again in lieu
of above mentioned friendly loan, issued two cheques bearing Nos. 817772
dated 14-08-2006 and another cheque bearing No. 817773 dated 30-08-2006
each for a sum of Rs. 50,000/- (Fifty Thousand Only) each, each drawn on
Bank of India Rajendra Place Delhi, Branch in favour of the complainant
towards the part payment against the outstanding dues towards the accused.
 The said cheques were dishonored on presentation but however the
complainant did not take any action on the request of the accused that the
entire payment will be cleared very shortly.
5. That again after great persuasion from the complainant the accused No. 2
issued one cheque bearing No. 350562 dated 05-05-2007 drawn on ICICI
Bank Limited, Punjabi Bagh branch, New Delhi for a sum of Rs. 50,000/-
towards the part payment against the outstanding dues towards the accused.
That the complainant presented the said cheque with the banker but the
same was returned unpaid by the accused banker with the remarks "Funds
Insufficient" vide memo dated 07-05-2007. The complainant contacted the
accused and the accused requested the complainant to present the same
after some time. The complainant again presented the above cheque with his
banker but the same was again returned unpaid by the accused's banker with
the remarks "Funds Insufficient" as per memo dated 09-10-2007 of the
accused bank and as per memo dated 12-10-2007 the complainant's bank
which was received by the complainant on 15-10-2007.
6. That the above said cheque bearing No. 350562 dated 05-05-2007 drawn
on ICICI Bank Limited, Punjabi Bagh branch, New Delhi for a sum of Rs.
50,000/- was issued by the accused No. 2 to the complainant with the clear
understanding that the same will be encashed on presentation.
7. That upon return of the said cheques, the Complainant issued a notice
dated 12-11-2007 i.e. within a stipulated period from the date of dishonoured
cheques having been handed over by the Complainant's banker to her. The
said notice was duly serve duly served upon the Accused/Respondent.
However, the Accused/Respondent neither complied with the terms of the
said notice nor replied the same.

4. A perusal of the affidavit annexed with the complaint which has been relied upon by the
Metropolitan Magistrate while passing the impugned order also shows that only the
averments made in the complaint have been reiterated by the deponent.

5. One thing which is important and can be taken note of is that neither in the complaint nor
in the notice nor in the affidavit it has been stated that the debt which became time barred
i.e. the amount of Rs. 6 lakhs which was paid by the complainant to petitioner No. 1 at the
asking of petitioner No. 2 on 1.2.2002 was ever acknowledged within the period of limitation
so as to keep the liability alive.

6. A perusal of the complaint and other documents as referred to above goes to show that
the complainant had paid a sum of Rs. 6 lakhs by way of cheque to petitioner No. 1 at the
asking of petitioner No. 2 somewhere in January, 2002 and the said cheque was credited in
the account of petitioner No.1 on 1.2.2002 and was payable after six months and was not
paid within three years from 31.8.2002 that is the period within which it was under
limitation and as such the loan became time barred as on 31.8.2002. A perusal of the
complaint also clarified that first two cheques which stated to have been paid to the
complainant by the petitioners were paid on 27.4.2006 and 31.5.2006. Thus those cheques
were paid after three years of the friendly loan having became time barred. Similarly, the
cheques issued in lieu of the original cheque i.e. a cheque of Rs. 50,000/- bearing No.
817773 dated 30-08-2006 and another cheque bearing No. 350562 dated 05-05-2007.

7. It is submitted on behalf of learned counsel for the petitioners that in view of provisions
of Section 138 of the Negotiable Instruments Act and if the same read along with
explanation, it is apparent that the offence under Section 138 of the Negotiable Instruments
Act as per the scheme of the Act can be fastened on an accused only if he commits a default
in repayment of the dishonoured cheque which was issued in discharge of a legally
recoverable debt.

8. Counsel for the petitioners relies upon a judgment delivered by the Apex Court in SLP
(Crl.)1785/2001 reported in Sasseriyil Joseph v. Devassia decided on 10.09.2001.
The same is reproduced hereunder :-

We have heard learned counsel for the petitioner. We have perused the
judgment of the High Court of Kerala in Criminal Appeal No. 161 of 1994
confirming the judgment/order of acquittal passed by the Addl. Sessions
Judge, Thalassery in Criminal Appeal No. 212 of 1992 holding inter alia that
the cheque in question having been issued by the accused for due which was
barred by limitation the penal provision under Section 138 of the Negotiable
Instruments Act is not attracted in the case.
On the facts of the case as available on the records and the clear and
unambiguous provision in the explanation to Section 138 of the Negotiable
Instruments Act the judgment of the lower appellate Court as confirmed by
the High Court is unassailed. Therefore, the special leave petition is
dismissed.

9. Counsel for the complainant/respondent on the other hand tried to suggest that in view
of Section 25 of the Contract Act, once the cheque was issued by the petitioners in lieu of
their admitted liability, the dishonor of a cheque issued by them and non-payment thereof
despite receipt of the notice makes out a case against them under Section 138 of the
Negotiable Instruments Act and therefore, the complaint filed by the complainant was
maintainable in accordance with law.

10. To appreciate the contentions of parties, the provisions contained under Section 138 of
the Negotiable Instruments Act are reproduced hereunder :-

Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the

account
Where any cheque drawn by a person on an account maintained by hi m with
a banker for payment of any amount of money to another person from out of
that account for the discharge, in whole or in part, of any debt or other
liability, is returned by the bank unpaid, either because of the amount of
money standing to the credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be paid from that account
by an agreement made with that bank, such persons all be deemed to have
committed an offence and all, without prejudice to any other provisions of this
Act, be punished with imprisonment for [ a term which may be extended to
two years], or with fine which may extend to twice the amount of the cheque,
or with both: Provided that nothing contained in this Section, all apply unless
(a) the cheque has been presented to the bank within a period of six months
from the date on which it is drawn or within the period of its validity,
whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be,
makes a demand for the payment of the said amount of money by giving a
notice in writing, to the drawer of the cheque, [within thirty days] of the
receipt of information by him from the bank regarding the return of the
cheque as unpaid; and
 (c) the drawer of such cheque fails to make the payment of the said amount
of money to the payee or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the said notice.
Explanation.- For the purposes of this section, "debt or other liability" means
a legally enforceable debt or other liability.]

11. At this juncture, it would also be appropriate to take note of Section 18 of the Limitation
Act which deals with acknowledgement and explanation of limitation which reads as under :-

Section 18 - Effect of acknowledgment in writing (limitation act)

(1) Where, before the expiration of the prescribed period for a suit or
application in respect of any property or right, an acknowledgment of liability
in respect of such property or right has been made in writing signed by the
party against whom such property or right is claimed, or by any person
through whom he derives his title or liability, a fresh period of limitation shall
be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral
evidence may be given of the time when it was signed; but subject to the
provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its
contents shall not be received.
Explanation. For the purposes of this section, -
(a) an acknowledgment may be sufficient though it omits to specify the exact
nature of the property or right, or avers that the time for payment, delivery,
performance or enjoyment has not yet come or is accompanied by a refusal
to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-
off, or is addressed to a person other than a person entitled to the property or
right;
(b) the word "signed" means signed either personally or by an agent duly
authorised in this behalf; and
(c) an application for the execution of a decree or order shall not be deemed
to be an application in respect of any property or right.

12. A perusal of the aforesaid provision clearly goes to show that for analyzing the limitation
of a civil liability beyond a period of three years, the acknowledgement, if any, must be
there before period of limitation is over, which is not the case.

13. It may also be relevant to take note of the judgment delivered by the Bombay High
Court in Smt. Ashwini Satish Bhat v. Shri Jeevan Divakar Lolienkar & Another
[2000(5) Bom CR 9], wherein also in a similar case when a cheque was dishonoured
which issued beyond the period of limitation the appeal filed by the complainant was
dismissed. The relevant observations made in this regard in the aforesaid judgment are
reproduced hereunder :-

3. On the other hand, learned Advocate Shri C.A. Ferreira, appearing for the
respondent, submitted before me that the dishonoured cheque in question
was not in respect of a legally enforceable debt and in view of Explanation to
Section 138 of the said Act, the Magistrate has rightly acquitted the
respondent on the said count as well as on the ground that there was doubt
as to whether the amount mentioned in the said cheque was in the
handwriting of the respondent as the defence of the respondent is that he had
handed over to the appellant a blank cheque. In support of his submission
that the dishonoured cheque in question is not in connection with any legally
enforceable debt, reliance was placed by him on Girdhari Lal Rathi v. P.T.V.
Ramanujachari and another, 1998 Bank J. 127 : 2000 DoCh.
(A.P.)420. He, therefore, submits that there is no case for interference with
the acquittal.
4. The complainant, respondent and one Shankar Prabhudessai had entered
into partnership vide Partnership Deed Exhibit P.W.1/D on 24th August 1990.
This partnership was dissolved on 13th June 1991 after an agreement was
executed between the parties under which the respondent agreed to pay a
sum of Rs. 1,53,724 to the appellant/complainant within 12 months and in
case he fails to make the said payment during the said period, the said
amount was to carry bank interest from the date of the agreement. The case
of the complainant further is that the respondent did not pay the amount as
agreed under the said Agreement dated 13th June, 1991, but on 19th July,
1996 the respondent issued cheque for Rs. 3,87,500/- and this cheque has
bounced.
5. The defence had taken the stand that the dishonoured cheque was not in
relation to any legally enforceable debt and, as such, the respondent could
not be held guilty under Section 138 of the said Act. The contention of
learned Advocate for the appellant is that this cheque dated 19th July 1996
itself is an acknowledgement of debt and, as such, there is no merit in the
submission of the defence that the liability under dishonoured cheque is not
on account of legally enforceable debt. Insofar as the dishonoured cheque is
concerned, the stand taken by the respondent is that the cheque was not
written by him and it is not in his handwriting and that he had, in fact, issued
a blank cheque in favour of the appellant for certain purpose. This stand was
specifically taken by the respondent in the course of the trial and, as such, it
was necessary for the complainant to have sought the opinion of handwriting
expert in case her case was that the cheque in question was in the
handwriting of the respondent, so as to rebut the theory of blank cheque
taken by the respondent. It is in these circumstances that the Magistrate had
come to the conclusion that the dishonoured cheque in question cannot be
treated as acknowledgement under Section 18 of the Limitation Act, since the
acknowledgement should be before the period of limitation is over and that it
should be in writing. In view of this position, the Magistrate was right in
coming to the conclusion that it had not been proved that the dishonoured
cheque was in relation to a legally enforceable debt or liability in law. The
dishonoured cheque admittedly was issued after 5 years of the said
Agreement dated 13th June 1991.
6. The ruling upon which reliance has been placed by the learned advocate for
the respondent is applicable on all fours. In that case loan was advanced in
the year 1985 and the cheque was issued in the year 1990. By the time the
cheque was issued, the debt was barred by limitation because no
acknowledgement was obtained before the expiry of 3 years from the date of
loan. In these circumstances, it was held there that the debt was not legally
enforceable at the time of issuance of cheque and the accused could not be
punished under Section 138 of the said Act. In the light of Explanation to the
said section, it was further held therein that in case a cheque is issued for
time barred debt and it is dishonoured, the accused cannot be convicted
under Section 138 on the ground that the said debt was not legally
recoverable.
7. For the aforesaid reasons, I do not find any merit in this appeal and the
appeal is liable to be dismissed. The appeal is accordingly dismissed.
14. No contrary judgment has been cited on behalf of the complainant/respondent.
Accordingly the petition is allowed. The complaint dated 13.12.2007 and all the proceedings
emanating therefrom are hereby quashed.

Crl.M.A.Nos.6167/2008 and 12878/2008

In view of the orders passed, applications are disposed of.

Petition Allowed.