2009 (4) TMI 1035 - HC - Indian Laws

Dishonor of Cheque - discharge of legally enforceable debt or not - acknowledgment of debt in terms of Section 18 of Limitation Act 1963 or not - time limitation - HELD THAT - 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 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. On perusal of the complaint and other documents show that the complainant had paid a sum 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. It is 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 bearing No. 817773 dated 30-08-2006 and another cheque bearing No. 350562 dated 05-05-2007. Section 18 of the Limitation Act 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. 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 and Anr. 1999 (2) TMI 699 - BOMBAY HIGH COURT 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. 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.

Summary

Issues Involved:
1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act.
2. Sustainability of the summoning order in light of the Apex Court's judgment in SLP (Crl.) 1785/2001.

Issue-wise Detailed Analysis:

1. Maintainability of the complaint under Section 138 of the Negotiable Instruments Act:

The core issue was whether the complaint dated 13.12.2007 under Section 138 of the N.I. Act was maintainable, given that the cheque in question was issued for a debt that was allegedly not legally recoverable at the time of issuance.

The facts revealed that the accused had borrowed Rs. 6,00,000 from the complainant in January 2002, which was to be repaid within six months. However, the repayment did not occur within the stipulated time, and subsequent cheques issued by the accused were dishonored. The complainant issued a legal notice within the stipulated period after the cheque was dishonored, but the accused failed to comply.

It was noted that neither the complaint, the notice, nor the affidavit mentioned any acknowledgment of the debt within the limitation period to keep the liability alive. The loan had become time-barred as of 31.08.2002, and the cheques issued later were beyond the limitation period.

The court emphasized that under Section 138 of the N.I. Act, an offence is committed only if the dishonored cheque was issued in discharge of a legally recoverable debt. The judgment of the Apex Court in Sasseriyil Joseph v. Devassia was cited, which held that a cheque issued for a time-barred debt does not attract penal provisions under Section 138 of the N.I. Act.

2. Sustainability of the summoning order in light of the Apex Court's judgment in SLP (Crl.) 1785/2001:

The summoning order dated 21.01.2008 was challenged on the grounds that it was not sustainable in view of the Apex Court's judgment in SLP (Crl.) 1785/2001. The Apex Court had affirmed that penal provisions under Section 138 of the N.I. Act are not applicable if the cheque was issued for a debt that was barred by limitation.

The complainant's counsel argued that under Section 25 of the Contract Act, the issuance of a cheque in lieu of an admitted liability constitutes an acknowledgment, thus making the debt legally enforceable. However, the court referred to Section 18 of the Limitation Act, which requires an acknowledgment of liability to be made in writing before the expiration of the limitation period.

The court also referenced a similar judgment by the Bombay High Court in Smt. Ashwini Satish Bhat v. Shri Jeevan Divakar Lolienkar, where it was held that a cheque issued beyond the limitation period does not constitute a legally enforceable debt, and thus, does not attract Section 138 of the N.I. Act.

In conclusion, the court found that the debt in question was time-barred, and no acknowledgment was made within the limitation period to revive the liability. Therefore, the complaint under Section 138 of the N.I. Act was not maintainable, and the summoning order was unsustainable.

Judgment:

The petition was allowed, and the complaint dated 13.12.2007, along with all proceedings emanating from it, was quashed. The applications Crl. M.A. Nos. 6167/2008 and 12878/2008 were disposed of accordingly.