Issuance of a cheque acknowledges a legally enforceable liability, making the drawer liable under Section 138 of the NI Act, even if the debt is time-barred.

JUDGMENT :

(Sophy Thomas, J.)

This appeal is at the instance of the complainant in CC No.595 of 2001 on the file of Judicial First Class Magistrate Court-II, Sulthan Bathery, challenging acquittal of the accused under Section 138 of the Negotiable Instruments Act (hereinafter referred as ‘the NI Act’), vide judgment dated 03.05.2002.

2. The case of the complainant is that the accused purchased ginger from him for a sum of Rs.94,500/- during 1996. He failed to pay that amount, in spite of repeated demands. Finally, he issued Ext.P1 cheque for that amount, assuring that it would be honoured on presentation before the bank. But the cheque was returned dishonoured for the reason ‘funds insufficient’. Complainant sent registered lawyer notice to the accused intimating dishonour of the cheque, and demanding the cheque amount. In spite of receipt of notice, the amount has not been repaid, and hence the complaint.

3. On taking cognizance, and on appearance of the accused before the trial court, particulars of offence was read over and explained, to which he pleaded not guilty and claimed to be tried. PW1 was examined and Exts.P1 to P6 were marked from the side of complainant to prove his case.

4. On closure of complainant’s evidence, accused was questioned under Section 313 of Cr.P.C. He denied all the incriminating circumstances brought on record. But no defence evidence was adduced.

5. On analysing the facts and evidence, and on hearing the rival contentions from either side, the trial court acquitted the accused finding that Ext.P1 cheque was issued by the accused towards discharge of a time barred debt. Aggrieved by the acquittal of the accused, complainant preferred this appeal.

6. Heard learned counsel for the appellant/complainant and learned counsel for the 1st respondent/accused.

7. Learned counsel for the appellant would contend that though the transaction between the complainant and the accused was in February 1996, he failed to pay the amount in spite of repeated demands. Later, he issued Ext.P1 cheque dated 30.05.1999, assuring that there would be sufficient funds in his account to honour that cheque. But the cheque was returned dishonoured for the reason ‘funds insufficient’. In spite of lawyer notice, he did not pay that amount.

8. Relying on the Division Bench decision of this Court, in Dr.K.K.Ramakrishnan v. Dr.K.K.Parthasaradhy and Another [2003 (2) KLJ 513], learned counsel for the appellant would contend that the trial court ought not have acquitted the accused, since he issued Ext.P1 cheque promising to pay the due amount, as envisaged under Section 25(3) of the Indian Contract Act, 1872. The delivery of the cheque to the drawee creates a right to recover the money. On the cheque being dishonoured, the person concerned becomes liable for prosecution. The execution of the cheque is an acknowledgement of a legally enforceable liability and when it is dishonoured, the consequences of prosecution and punishment will follow.

9. The only question to be answered in this appeal is, whether prosecution under Section 138 of the NI Act would lie, if Ext.P1 cheque was issued for a time barred debt?

10. True that the transaction between the complainant and the accused was in February 1996 and Ext.P1 cheque was issued on 30.05.1999. So, obviously, the cheque was issued after three years of the transaction. Explanation to Section 138 of the NI Act says that for the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability. As per Section 25(3) of the Indian Contract Act, 1872, an agreement made without consideration is void unless, “it is a promise, made in writing and signed by the 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 the creditor might have enforced payment but for the law for the limitation of suits.” Even in a case, where a claim for recovery through a civil suit has become barred