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2019 (9) TMI 1610 - HC - Indian LawsDishonor of cheque - insufficiency of funds - legally enforceable debt or not - service of statutory demand notice - time limitation - HELD THAT:- Admittedly, the period of limitation for filing a suit is three years from the date of the debt. In this case, the debt was in January 2001 and the period of limitation expired in January 2004. In the opinion of this Court, since a plea of limitation is a legal issue based on proved facts, it can be raised at the revision stage also. Under Section 18 of the Limitation Act, 1963, if an acknowledgment of liability is given before the expiry of the period of limitation, the period of limitation will stand further extended - Consideration is an essential pre-requisite for a valid contract. While interpreting a penal provision, the normal rule is that, the interpretation that favours the accused would merit consideration. Of course, there are certain exceptions to this rule. The object of Section 138 of the N.I. Act is to protect the interest of diligent payees in commercial transactions. By virtue of the explanation extracted above, the expression “debt” means legally enforceable debt. It is axiomatic that the cheque should have been issued for a legally enforceable debt. When a cheque is issued for a time barred debt, it does not satisfy this minimum requirement - the cheque which gave birth to a fresh contract resurrects a time barred debt and the dishonour of such a cheque entails prosecution of the drawer under Section 138 of the N.I. Act, is too large a pill for the penal law to swallow. The cheque in this case has been issued after the expiry of three years from the date of the debt and therefore, the debt in this case was not a legally enforceable debt when the cheque was issued. A fortiori the prosecution founded under Section 138 of the N.I. Act on such a cheque is not maintainable and the accused deserves to be acquitted. The Criminal Revision Case is allowed.
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