2019 Supreme(AP) 12
IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
T. RAJANI, J.
Padala Veera Venkata Satyanarayana Reddy - Petitioners
Versus
State of Andhra Pradesh and Ors. - Respondents
Crl. P. No. 12652 of 2018
Decided On : 12-02-2019
For the Petitioner: S.V.S.S. Siva Ram
For the Respondents: Public Prosecutor and T.M.K. Chaitanya
Headnote:
Negotiable Instruments Act, 1881 – Sections 138 and 142 – Seeking quash of proceedings against respective petitioners – Held, Cheque issued for discharge of debt no doubt carries a promise to discharge time barred debt but, for a prosecution under Section 138 N.I. Act,should be legally enforceable debt by date of issuance of cheque – Such cheque becomes an agreement between promisor and promised becomes enforceable, but does not allow prosecution – Unless there is legally enforceable debt, cheque issued, promising to discharge time barred debt will not make promisor liable under Section 138 of N.I – Therefore limitation for enforcing promissory notes expired much prior to issuance of cheques in question – Impugned complaints not be sustained and that these are fit cases for quashing of proceedings against petitioners – Petitions allowed – [Para 8,10,11]
Facts of the case:
Seeking quash of proceedings against respective petitioners
Findings of the court:
Cheque issued for discharge of debt no doubt carries a promise to discharge time barred debt but, for a prosecution under Section 138 N.I. Act, there should be a legally enforceable debt by date of issuance of cheque – Such cheque becomes an agreement between promisor and promised becomes enforceable, but does not allow prosecution – Unless there is legally enforceable debt, cheque issued, promising to discharge time barred debt will not make promisor liable under Section 138 of N.I – Therefore limitation for enforcing promissory notes expired much prior to issuance of cheques in question – Impugned complaints not be sustained and that these are fit cases for quashing of proceedings against petitioners
Result: Petitions allowed
T. RAJANI, J.
1. Since the subject-matter of these petitions are one and the same, these petitions are being disposed of by this common order.
2. These petitions are filed seeking for quash of the proceedings against the respective petitioners in CC Nos. 250, 255 and 254 of 2018 on the file of the Court of IV Special Magistrate, Visakhapatnam and CC No. 1346 of 2017 on the file of the Court of I Additional Chief Metropolitan Magistrate at Visakhapatnam and CC Nos. 681 and 644 of 2017 on the file of the Court of II Additional Chief Metropolitan Magistrate at Visakhapatnam respectively. The offences alleged are under Sections 138 and 142 of the Negotiable Instruments Act, 1881.
3. For the sake of convenience, the respective petitioners and the respective complainants i.e., the 2nd respondent in these petitions will be referred to as 'petitioners' and 2nd respondent' respectively.
4. Heard the Counsel for the petitioners as well as the Public Prosecutor appearing for the 1st respondent and the Counsel appearing for the 2nd respondent.
5. The prime ground, on which the relief of quash is based for, is that the cheques issued by the petitioners are towards a time barred debt and hence, no prosecution can lie against them. According to the averments in the complaint, the petitioners approached the 2nd respondent and there were business transactions between them. The 2nd respondent is a medical practitioner while the petitioners have medical shops. The petitioners borrowed amounts from the 2nd respondent for different purposes and the petitioners failed to discharge the amounts taken by them from the 2nd respondent. The petitioners executed a demand promissory note, agreeing to pay the amount with interest at 24% per annum. The petitioners did not pay the said amounts and later issued cheque towards the discharge of the said amounts. The promissory note is also filed along with the complaint. The list of documents shows that the promissory notes are of the year 2012, while the cheques are issued in the year 2017. The date of issuance of cheques is beyond three years from the date of issuance of the promissory note. Hence, on the face of it, the cheques can be understood to have been issued towards a time barred debt.
6. The Counsel for the 2nd respondent relies on a judgment of the Hon'ble High Court of Bombay in between Pragati Credit Co-operative v. Suresh, Criminal Application No. 2933 of 2007 and Batch. The High Court of Bombay dealt with two questions which are formulated by the Sessions Judge therein, which are as follows:
"(i) Does the issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of Section 25(3) of the Indian Contract Act, 1872?
(ii) If it amounts to such a promise, does such a promise, by itself, create any legally enforceable debt or other liability as contemplated by Section 138 of the Negotiable Instruments Act, 1881?"
By relying on the judgment of the Apex Court in National Insurance Company Limited v. Seema Malhotra and others, 2001 (2) ALD 68 (SC) : (2001) 3 SCC 151, the Bombay High Court held that the drawer of the cheque promises to the person in whose favour the cheque is drawn or to whom a cheque is endorsed, that the cheque on presentation would yield the amount in cash. When a cheque is drawn to pay wholly or in part, a debt which is not enforceable only by reason of bar of limitation, the cheque amounts to a promise governed by the sub-section (3) of Section 25 of the Contract Act. Such promise which is an agreement becomes exception to the general rule that an agreement without consideration is void. It further held that though on the date of making such promise by issuing a cheque, the debt which is promised to be paid may be already time barred, in view of sub-section (3) of Section 25 of the Contract Act, the promise/agreement is valid and, therefore, the same is enforceable.
7. The Apex Court in National Insurance Company's case (s