A cheque issued for discharging a time-barred debt constitutes a fresh promise and creates a legally enforceable debt, making the complaint under Section 138 of the N.I. Act maintainable.

Indira Jain, J.

The present appeal takes an exception to the judgment and order dated 30.3.2012 passed by the learned Judicial Magistrate, First Class, Katol in Summary Criminal Case No.912/2009.

2. The facts giving rise to the appeal may be stated in nutshell as under :

(a) Appellant is a registered co-operative society. Respondent no.1 was in need of money and in the year 2003, he approached the appellant-society for loan of Rs.30,000/-. On 3.9.2003, loan of Rs.30,000/- was sanctioned to respondent no.1. He agreed to repay the loan with interest thereon in monthly instalments. He was irregular in repayments.

(b) On 7.9.2009, respondent no.1 issued cheque for Rs.82,000/- drawn on Shikshak Sahakari Bank, Katol in favour of appellant-society. The cheque was presented for encashment. On 11.9.2009, cheque was returned by the banker with endorsement "insufficient funds". In turn, banker informed appellant-society. On receipt of memo from the bank, appellant-society issued statutory notice to respondent no.1 on 8.10.2009. Since respondent no.1 did not comply with the demand in the notice, criminal proceedings under Section 138 of the Negotiable Instruments Act (for short "N.I. Act") were instituted on 25.11.2009.

3. Particulars of accusations were explained to accused/respondent no.1. He denied the accusations. Complainant examined its duly authorised signatory as a sole witness. Accused did not examine himself or any other witness in favour of his defence. After scrutiny of the evidence and documents produced by complainant-society, trial court came to the conclusion that penal liability under Section 138 of the N.I. Act does not arise, as claim of complainant was barred by limitation and cheque was not issued in the discharge of legal liability. In consequence thereof, trial court acquitted the accused of the offence punishable under Section 138 of the N.I. Act.

4. Being aggrieved thereof, appellant-society has preferred the instant appeal. Submission is that, in calculating the period of limitation from the date of disbursement of loan, trial court committed a gross error and totally ignored the settled legal position that a cheque issued towards the time barred debt is enforceable by virtue of Section 25 (3) of the Contract Act and hence it cannot be said that there is no legally enforceable debt or liability in terms of Section 138 of the N.I. Act.

5. Heard Shri J.D. Bastian, learned counsel for appellant. He placed reliance on the decision of this Court in Mr. Dinesh B. Chokshi v. Rahul Wasudeo Bhatt and another (2012 ALL MR (Cri) 3656) and submitted that cheque was issued by respondent no.1 on 7.9.2009. It was presented to the bank and dishonoured on 11.9.2009. He submits that by issuing cheque in the year 2009, respondent no.1 admitted the dues and extended the period of limitation. The learned counsel submitted that this important aspect has been totally lost sight of by the trial court and prays to quash and set aside the impugned judgment and order and further convict respondent no.1 in accordance with the law.

6. Despite service of notice, none appeared for respondent no.1. Respondent no.2 is a formal party. Shri I.J. Damle, A.P.P. represents respondent no.2-State.

7. Before adverting to the facts of the present case, it will be necessary here to make a reference to paragraphs 19 to 21 of the decision of this court in Mr. Dinesh B. Chokshi (supra), as follows :

19. Under the Explanation to Section 138, the debt or other liability referred to in the main Section has to be a legally enforceable debt or liability. Merely because a cheque is drawn for discharge, in whole or in part of the debt or other liability, Section 138 of the said Act of 1881 will not be attracted. The provision will apply provided the debt or other liability is legally enforceable. Thus, Section 138 will not apply to a cheque drawn in discharge of a debt or liability which is not legally enforceable. There may be several categories of debts or other