IMPORTANT POINT
There can be an acknowledgement for a time-barred debt, but drawing of a cheque itself is not an acknowledgement unless the debt was enforceable on the date of issuance of a cheque.

G.M. Akbar Ali, J.—The petition is filed seeking a direction to call for the records pertaining to the case in STC No.1126/2010 on the file of the learned Judicial Magistrate No.1, Mettur Dam and quash the same.

2. The respondent filed a private complaint under Section 138 of Negotiable Instruments Act stating that the petitioner had business transaction with the complainant’s wife Madheswari and she invested a sum of Rs.5,00,000 to start a cloth store and the petitioner joined in the shop in order to help the complainant’s wife. It is further submitted that the petitioner took over the business but has not furnished any accounts to the complainant’s wife. The said Madheswari preferred a complaint and the petitioner came forward for a settlement and agreed to pay a sum of Rs.10,00,000 and gave a post-dated cheque for the same amount on 20.3.2010. However, the cheque was issued in the name of the complainant. The complainant deposited the cheque on 6.4.2010 with the State Bank of India, Mettur and on 13.4.2010, the cheque returned with an endorsement “Funds insufficient”. The complainant issued a notice dated 27.4.2010 and the petitioner failed to pay the amount due under the cheque. Therefore, the proceeding has been initiated under Section 138 of Negotiable Instruments Act.

3. Aggrieved by taking cognizance of the private complaint the petitioner is before this court to quash the proceedings on the following grounds:

(i) There was no subsisting liability with the complainant and the cheque was not supported by any consideration.

(ii) The petitioner never borrowed any money from the respondent and did not issue any cheque to discharge any existing liability.

(iii) For the amount due to the respondent’s wife, the respondent cannot receive the cheque and maintain a criminal complaint.

(iv) The alleged transaction took place in the year 2003 and therefore, it is time-barred debt which is not legally enforceable debt.

4. Mr. S. Shanmugavelayutham, learned senior counsel for the petitioner submitted that even according to the complainant, the amount was due and payable only to one Madheswari, the wife of the complainant, but the cheque was issued in the name of the complainant and there is no legally enforceable debt. The learned senior counsel further pointed out that the complainant has claimed settlement of accounts for the business of the year 2003 and only in the year 2008 a demand was made and the

alleged cheque was issued only in the year 2010 and therefore, the alleged amount itself is time-barred debt and the proceedings are not maintainable.

5. The learned senior counsel relied on Giridhari Lal Rathi v. P.T. v. Ramanujachari & Anr.1, wherein the Single Judge of Andhra Pradesh High Court has held as follows:

“7. The alleged loan was advanced in the year 1985 and the cheque was issued in year 1990. By the time the cheque was issued, the debt appears to have been barred by limitation because no acknowledgement is alleged to have been obtained by the appellant from the first respondent-accused before expiry of three years from the date of loan. Thus it is crystal clear that the debt was not legally enforceable at the time of issuance of the cheque and therefore, vide explanation to Section 138 of the Negotiable Instruments Act, which reads as under:

Explanation: Until the debt is legally recoverable the drawer of the cheque cannot be fastened with the liability under Section 138 of the Act.

There appears to be no force in the contention of the learned counsel of the appellant that by issuance of the cheque, the limitation for realising the loan amount was extended, because at the time of issuance of the cheque the debt should be a legally recoverable debt. In case a cheque is issued for a time-barred debt and it is dishonoured, the accused cannot be convicted under Section 138 of the Negotiable Instruments Act simply on the ground that the debt was not legally recoverable.”

6. He also relied on Joseph v. Devassia2