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Karnataka High Court
H.NARASIMHA RAO - Appellant
Versus
VENKATARAM R. - Respondent
Decided On : 10-11-06
Criminal Appeal No. 377 of 2002
Negotiable Instruments Act, 1881-Presumption under - Section 118 - Presumption under - Until contrary is proved, it is presumed that, every negotiable instrument was drawn for consideration -Settled Principle (2002 AIR SCW 694).
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Indian Contract Act, 1872 -Section 2 -Promise -Where a person is under a legal or equitable obligation to pay, law implies a promise, though none was ever actually made. Settled Principles: Afortiori, a legal or equitable duty is a sufficient consideration for an actual promise. Where a man is under a moral obligation, which no Court of Law or Equity can enforce, and promises, the honesty and rectitude of the thing is a consideration. As if a man promises, to pay a just debt, the recovery of which is barred by the Statute of Limitations; or; if a man, after he comes of age, promises to pay a meritorious debt contracted during his minority, but not for necessaries; or if a bankrupt, in affluent circumstances after his certificate, promises to pay the whole of his debts; or if a nam promises to perform a secret trust, or a trust void for want of writing, by the Statute of Frauds. In such and many other instances, though the promise gives a compulsory remedy, where there was none before either in law or equity; yet as the promise is only to do what an honest man ought to do, ties of conscience upon an upright mind are a sufficient consideration((1782) 98 ER 1091). Narasimha Rao H. Vs. Venkataram R., 2006 (4) KLO 3592: ILR 2006 Kar 4242; Cri. Appeal No. 377/2002, Decided on 11-10-2006.
Dishonour of Cheques -Offence of -Whether dishonour of Cheques issued against time barred debt would constitute an offence.
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Negotiable Instrumenst Act, 1881- Cheque - Section 138 - Cheque -Presumption flowing from -Settled principle (2002 AIR SCW 694). See, Sections 118 & 139.
Negotiable Instrumenst Act, 1881- Presumption under - Section 139 -Presumption under -Unless contrary is proved, it is presumed that, holder of a cheque had received it in whole or in part of any debt or other liability -Settled principle (2002 AIR SCW 694).
Indian Contract Act, 1872- Promise - Section 25(3) - Promise - A promise, made in writing and signed by person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which creditor might have enforced payment but for law for limitation of suits, is a valid contract -Settled principle (2002 AIR SCW 694).
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Indian Contract Act, 1872 -Section 2 -Promise -Where a person is under a legal or equitable obligation to pay, law implies a promise, though none was ever actually made. Dilatory Settled Principles: Afortiori, a legal or equitable duty is a sufficient consideration for an actual promise. Where a man is under a moral obligation, which no Court of Law or Equity can enforce, and promises, the honesty and rectitude of the thing is a consideration. As if a man promises, to pay a just debt, the recovery of which is barred by the Statute of Limitations; or; if a man, after he comes of age, promises to pay a meritorious debt contracted during his minority, but not for necessaries; or if a bankrupt, in affluent circumstances after his certificate, promises to pay the whole of his debts; or if a nam promises to perform a secret trust, or a trust void for want of writing, by the Statute of Frauds. In such and many other instances, though the promise gives a compulsory remedy, where there was none before either in law or equity; yet as the promise is only to do what an honest man ought to do, ties of conscience upon an upright mind are a sufficient consideration((1782) 98 ER 1091).
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Dishonour of Cheques -Offence of -Whether dishonour of Cheques issued against time barred debt would constitute an offence.
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Negotiable Instrumenst Act, 1881- Rejection of complaint - Section 138 -Rejection of complaint-Complaint came to be rejected on ground that accused had issued cheques against time barred debt and there was no evidence to show that accused has acknowledged debt within 3 years of loan -Loan transaction took place in month of May, 1994 -Cheques issued on 12-6-1997 towards discharge of loan -But, there is no legal bar for debtor agreeing to pay time barred debt- No fresh consideration is required for debtor s promise to pay time barred debt -There is moral obligation on accused, who is none other than friend of the complainant, to refund loan amount -When signature is not disputed, cheques would constitute an agreement or promise by debtor to pay time barred debt- Since accused has not paid cheque amounts inspite of demand made by complainant accused has committed an offence.
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Negotiable Instruments Act, 1881- Cheque - Section 138 - Cheque -Presumption flowing from -Settled principle (2002 AIR SCW 694). See, Sections 118 & 139.
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
Negotiable Instruments Act, 1881- Presumption under - Section 139 -Presumption under -Unless contrary is proved, it is presumed that, holder of a cheque had received it in whole or in part of any debt or other liability -Settled principle (2002 AIR SCW 694).
Cases Referred: 2002 AIR SCW 946; 2003 (3) ICC 662; (1782) 98 ER 1091.
The short question that arises for consideration in this appeal is:
Whether the dishonoured cheques issued towards repayment of time barred debt does not constitute an offence under Section 138 of the Negotiable Instruments Act, 1881?
2. Heard Sri H.T. Nataraja, learned Counsel for the appellant/complainant and Sri B.C. Rajanna, learned Counsel for the respondent/accused.
3. For the purpose of convenience, the appellant and the respondent herein are referred to as 'the complainant' and 'the accused' respectively.
4. The complainant and the accused were friends and colleagues in the then Karnataka Electricity Board. When the accused was about to retire, he approached the complainant for a loan of Rs. 60,000/- and agreed to repay the same within a short period. The complainant advanced a sum of Rs. 60,000/- to the accused in this way that a sum of Rs. 200/- was paid in cash and the balance amount of Rs. 59,800/- was paid by three cheques. The accused has encashed the cheques. Though the loan amount was repayable within a short period, the accused took undue advantage of friendship with the complainant and agreed to repay the loan within six months with interest at the rate of8% p.a., but the accused failed to keep up his promise. On complainant's persistent demand, the accused issued two cheques, one bearing No. 152400, dated 15-5-1999 for a sum of Rs. 50,000/- and another cheque bearing No. 152921, dated 25-5-1999 for a sum of Rs. 10,000/- both drawn on the Bangalore City Co-operative Bank Limited, Bangalore, in favour of the complainant towards discharge of the loan amount stating that the cheques would be honoured on presentation to the Banker. But when the cheques were presented, they were bounced and returned on 1-6-1999 with an endorsement "funds insufficient". The complainant issued a demand notice dated 10-6-1999 calling upon the accused to pay the amount of dishonoured cheques within 15 days. The accused acknowledged the receipt of the same but sent an untenable reply dated 24-6-1999. Therefore, the complainant filed a private complainant against the accused for the offence under Section 138 of the Negotiable Instruments Act (in short, 'the Act'). The accused denied the accusation. The complainant has got him examined as P.W. 1 and got marked Exs. P. 1 to P. 10. In rebuttal, the accused has got him examined as D.W. 1 besides examining one Khalandar Baigh as D.W. 2.
5. The learned Magistrate has accepted the evidence of the complainant and held that in the year 1994, the complainant gave loan of Rs. 60,000/- to the accused, but rejected the complaint on the ground that the accused had issued the cheques in the month of May 1999 as against time barred debt, and there was no evidence to show that the accused had acknowledged the debt within 3 years of loan. Therefore, the Trial Court recorded an order of acquittal in favour of the accused. This is impugned in this appeal.
6. The learned Counsel for the complainant submitted that the learned Magistrate committed an error in dismissing the complaint. He cited the following decisions reported in:
(i) A.V. Murthy v. B.S. Nagabasavanna1;
(ii) Ramakrishnan v. Parthasarathy2.
7. The learned Counsel for the respondent/accused submitted that there is no illegality or infirmity in the impugned judgment.
8. The complainant has produced pass books at Exs. P. 8 and P. 9. AB per Exs. P. 8 and P. 9, the pass books of the complainant, issued by Union Bank of India and Syndicate Bank, it is crystal clear that the accused has drawn in all amounting to Rs. 59,800/- between 31-5-1994 and 12-6-1994. A sum of Rs. 200/- was paid in cash by the complainant to the accused. The learned Trial Judge rejected the contention of the accused that he drew the amounts and paid the complainant and held that the complainant had advanced hand loan of Rs. 60,000/- to the accused in the year 1994.
9. Section 138 of the Act, which was inserted by Amendment Act, 1988, and came into force from 1-4-1989 re
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