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TMI Blog2024 (9) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. Factual background 2. The said complaint was filed by complainant/appellant under section 138 of NI Act against accused/respondent no. 2. The gravamen of the complaint was that the father of the complainant, Late Sh. Narain Dass and accused were colleagues, working in the same bank and branch, when the accused had approached the father of the complainant for a loan of Rs. 3,50,000/-. The said interest-free loan was advanced by the complainant's father in about October 2011, and in discharge of its liability the accused issued a cheque for a sum of Rs. 3,50,000/- in the name of the father of the complainant in January 2014, as refund of the loan amount. However, subsequently, the father of the complainant passed away in July 2014 before presenting the cheque for encashment, after which accused issued a new cheque bearing No. 201465 dated 31st December 2015 for a sum of Rs. 3,50,000/- ('the cheque in question') in the name of the complainant for repayment of the loan amount. The cheque in question, on presentation, was dishonoured twice with the remarks "funds insufficient" vide separate return memos dated 3rd March 2016 and 9th March 2016. Thereafter, pursuant to legal n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant and his late father and only Rs. 75,000/- was left to be paid. In contrast, at the time of his testimony in chief and during cross-examination dated 12th July 2019, respondent no. 2 stated that he paid the entire amount collectively to appellant and his late father and the cheque in question was given in exchange for the first cheque to resolve the 'family dispute' of appellant. 7. Respondent no. 2 took the defence that the cheque in question was issued in exchange of cheque already handed over to the late father of appellant, in order to resolve a 'family dispute' that arose in the appellant's family at that time. However, respondent no. 2 being a banker himself is aware of consequences of issuing a cheque and failed to bring on record what the 'family dispute' was that forced him to take the liability on his head, despite paying the entire loan amount (as per respondent no. 2 himself). He failed to prove that the cheque in question was not issued for an existing liability. 8. Counsel for appellant further contends that respondent no. 2 failed to establish that the record of bank transactions from 1st September 2012 to 5th June 2014 by respondent no. 2, were payments toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque in question is dated 31st December 2015, which makes it a time-barred debt. Analysis 14. Having considered the respective contentions of the parties and on perusal of the record, particularly the testimonies recorded, this Court is of the view that the acquittal of the accused/respondent no. 2 was not merited inter alia for the following reasons. 15. The testimony of the accused itself ex facie was not believable and was inherently contradictory. The accused states in its examination by way of chief that he had taken a loan of Rs. 3,50,000/- from the father of the complainant in October 2011. He then states that he repaid the amount of Rs. 2,55,000/- in the period of May 2012 to June 2014 in his bank account. Even as per respondent no. 2, this would amount to extinguishment of his debt liability to the extent of Rs. 2,55,000/- and would leave a repayment obligation of Rs. 95,000/- at best. However, he then states, that he gave a security cheque of Rs. 3,50,000/- as demanded by the father of the complainant due to some 'family dispute'. 16. Firstly, considering that the respondent no. 2 was a bank official, it is inconceivable that these transactions were happening w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- was given subsequently on 31st December 2015. The father of the complainant having passed away, there was no way the complainant himself could explain as to why small driblets of Rs. 10,000/- and Rs. 20,000/- were being given to his father by the respondent no. 2. It was submitted that due to the friendly relationship between the appellant's father and the respondent no. 2, there could have been small advances which might have been given to each other in times of need. However, as per the jurisprudence under Section 138 of NI Act read with Sections 139 and 118 of the NI Act, where the presumption of liability is on the accused and it was not for the complainant to prove the liability. The reliance by the impugned order to the lack of proof furnished by the complainant in respect of these amounts, is unmerited. 19. In para 27 of the impugned order, the Trial Court states, "However, the complainant has nowhere furnished any material on record suggesting that there was another liability apart from the present one. The complainant has not brought on record the fact of any liability of the accused towards the complainant or his father, apart from the present one, against which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its. ... (e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract." 22. The Division Bench of Kerala High Court in Dr. K.K. Ramakrishnan v Dr. K.K. Parthasaradhy & Anr. 2003 SCC OnLine Ker 420 in dealing with a similar issue stated as under: "10. Learned counsel for the petitioner submits that Section 25 (3) of the Contract Act cannot be invoked to interpret the provisions of Section 138 of the Negotiable Instruments Act. 11. The contention cannot be accepted. Section 138 provides for a penalty in a case where a cheque is dishonoured on account of insufficiency of funds. The cheque has to be by way of payment of a "legally enforceable debt or aliability". The liability may arise out of a contract or otherwise. Thus, to determine as to whether or not a liability is legally enforceable, the provisions of the Contract Act cannot be said to be irrelevant. These can provides a cause for a legal liability. Resultantly, when a person writes a cheque and delivers it to a person, the drawee not only gets the civil right to present the cheque and recover the amount, but in the event of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue of the cheque. When examined in this light, the dismissal of the SLP in Joseph's case cannot be said to be the enunciation of law which may be binding under Article 141. In fact, a perusal of the order shows that it was wholly on "the facts of the case as available on the records" that their Lordships had dismissed the Special Leave Petition." (emphasis supplied) 23. The Supreme Court in A.V. Murthy v B.S. Nagabasavanna (2002) 2 SCC 642 recognized the application of Section 25 (3) of the ICA while disallowing a dismissal of a complaint under section 138 of NI Act, at the behest of a complainant, where a cheque had been given for a liability which was time-barred. The relevant portion is extracted as under: "5. As the complaint has been rejected at the threshold, we do not propose to express any opinion on this question as the matter is yet to be agitated by the parties. But, we are of the view that the learned Sessions Judge and the learned Single Judge of the High Court were clearly in error in quashing the complaint proceedings. Under Section 118 of the Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11) 1 SCC (Cri) 184], the legal question before this Court pertained to the proper interpretation of Section 139 of the NI Act which shifts the burden of proof on to the accused in cheque bouncing cases. This Court observed that the presumption mandated by Section 139 of the NI Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. This Court further observed that Section 139 of the NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. This Court clarified that the reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. This Court, then, explained the manner in which this statutory presumption can be rebutted. Thus, in cheque bouncing cases, the initial presumption incorporated in Section 139 of the NI Act favours the complainant and the accused can rebut the said presumption and discharge the reverse onus by adducing evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the following conditions must be satisfied: - 1. It must be referred to a debt which the creditor but for the period of limitation, might have enforced; 2. There must be a distinct promise to pay wholly or in part such debt and 3. The promise must be in writing signed by the person or by his duly appointed agent. ... 63. Cheque is defined under section 4 of the Negotiable Instruments Act as a "bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand". Cheque is therefore a negotiable instrument carrying the promise implicitly, unlike a pro-note where the promise is explicit and mandatory. Therefore, limitation has to be reckoned from the the date the cheque and not on the fact 'whether the cheque was honoured or dishonoured'. Under the Negotiable Instruments Act, the issuance of cheque is to be presumed to be issued for discharge of debt. The consequence event whether the said cheque on presentation honoured or not, is immaterial. 64. In the opinion of this Court, even if the said cheque is not presented in time and become stale, but it is proved that the cheque was issued with intention to discharge the debt or part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the Trial Court held in favour of the accused, that they were able to rebut the statutory presumption that there was no legally enforceable debt. 30. Considering that the Trial Court has considered the evidence, the principles in S. Natarajan (supra) & Yogesh Jain (supra) may not be fully applicable at this stage. The matter is now in appeal against the acquittal and the Court has perused the evidence on record. Based on the analysis above and that the Trial Court itself found it unbelievable that a cheque of Rs. 3,50,000/- would be given in 2015, despite the accused having asserted in the trial that he had repaid the debt of the father, the only question remains is on the legal enforceability of the debt. 31. In the opinion of this Court, the provisions of Section 25 (3) of ICA are squarely applicable. A cheque as per section 6 of the NI Act is a "bill of exchange", which in turn is defined in section 5 of the NI Act as an instrument in writing signed by the maker directing payment of certain sum of money to a certain person. The maker of the cheque is the 'drawer' and the person to be paid is the 'drawee' as per section 7 of the NI Act. 32. Therefore, a priori the cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is dated 1-3- 1999. He submits that the complainant seeks to recover the barred debt. He also submits that there is no acknowledgment at all of the debt within limitation and hence the debt is completely barred on the date of issue of cheque. The argument has no force for two reasons. Firstly complainant along with the complaint has filed a deposit receipt said to be issued by the accused. It shows that it was first renewed in 1996 and then in 1997. It is renewed under the signature of the accused. The said acknowledgment mentions that the date of repayment was extended upto 1998. Finally there is an endorsement that the contract is renewed upto 1-3-1998. As said earlier it is under the signature of the accused. It is obvious that the accused acknowledged the debt by making endorsement on the same document that the contract is renewed. Thus if this acknowledgment is taken into consideration the debt could be recovered even under the civil law within 3 years from 1- 3-1997. The time of three years from 1-3-1997 would expire on 1-3-2000. The cheque was tendered in bank on 10-3- 1999. Even complaint under section 138 is filed in April, 1999. Obviously even on date of institution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt could be enforced by a suit, it means that it still has the character of legally enforceable debt as contemplated by the explanation below section 138 of the Act. As far as this aspect of the case is concerned, the learned Division Bench observed that to determine as to whether or not a liability is legally enforceable, the provisions of the Contract Act cannot be said to be irrelevant. This can provide a cause for a legal liability. Although the primary question answered by the Division Bench was that a cheque becomes a promise to pay under section 25 (3) of the Contract Act, this view need not be followed by this Court in the light of the Judgment of this Court in the case of Ashwini Satish Bhat v. Shrijeevan Divakar Lolienkar (supra) and the other two judgments referred to hereinabove. Nevertheless, the Division Bench Judgment is relevant to the extent that it holds that a promise to pay in writing as per section 25 (3) of the Indian Contract Act, 1872, matures into an enforceable contract, which can be enforced by filing a Civil Suit. If a suit could be filed pursuant to a promise made in writing and signed by the person to be charged therewith, as contemplated by Clause (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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