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IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.N. MANJULA, J.
G. Revathi - Petitioner
Versus
P.K. Ganeshwar - Respondent
Crl.O.P.No.1221 of 2021 and Crl.MP.Nos.746 & 747 of 2021
Decided On : 27-10-2022
Section 138 of the Negotiable Instrument Act - Time Barred Debt - 25(3) of the Indian Contract Act - A.V. Murthy v. B.S. Nagabasavanna (2002) 2 SCC 642 - S. Natarajan v. Sama Dharman (2021) 6 SCC 413 - P. Mohanraj & others v. Shah Brothers Ispat Pvt. Ltd. (2021) 1 MWN (Cr.) DCC 97 (SC) - The court discussed the issue of time-barred debt and its enforceability under Section 138 of the Negotiable Instrument Act, citing relevant legal provisions and precedents. The court emphasized the presumption in favor of the holder of the cheque and the need to prove the nature of the debt during trial, ultimately dismissing the petition and confirming the lower court's order.
Fact of the Case:
The petitioner, accused in a private complaint under Section 138 of the Negotiable Instrument Act, argued that the complaint was based on a time-barred debt, making it not legally enforceable. The respondent contended that the nature of the debt should be proven during trial and cited relevant legal provisions and precedents.
Finding of the Court:
The court emphasized the need to prove the nature of the debt during trial and dismissed the petition, confirming the lower court's order.
Issues: Validity of complaint based on time-barred debt under Section 138 of the Negotiable Instrument Act
Ratio Decidendi: The nature of the debt must be proven during trial, and there is a presumption in favor of the holder of the cheque. The court cited relevant legal provisions and precedents to support its decision.
Final Decision: The petition was dismissed, and the lower court's order was confirmed.
ORDER :
Prayer : This Criminal Revision Petition filed under Section 482 of Cr.P.C., praying to call for records in STC.No.337 of 2020 pending on the file of the learned Judicial Magistrate, Palladam, quash all further proceedings in the said case in STC.No.337 of 2020.
This Criminal Original Petition has been preferred to call for the records in S.T.C.No.337 of 2020 on the file of the learned Judicial Magistrate, Palladam and quash the same.
2. The petitioner is the accused in a private complaint filed by the respondent against the petitioner for the offence under Section 138 of the Negotiable Instrument Act.
3. The learned counsel for the petitioner submitted that the impugned cheque on which the complaint has been filed by the respondent was barred by limitation and hence, it is not for any debt or legally enforceable liability as defined under Section 138 of the Negotiable Instrument Act; as per Section 25(3) of the Indian Contract Act, the agreement without consideration is void unless it is written and registered; on the date of issuance of the cheque, there was no legally enforceable debt or liability or drawing the cheque cannot amount to an acknowledgement of time barred debt; it has been held in number of cases that the complainant cannot take any action under Section 138 of the Negotiable Instrument Act unless there is any legally enforceable debt; even according to the case of the complainant for the loan advanced on 19.12.2013 the cheque is alleged to have been issued on 24.06.2020 after a period of 6 1/2 years; so it is clearly a time barred debt and it is not legally enforceable.
3.1. In respect of the above contention the learned counsel for the petitioner submitted the following judgements :
| Sl. No. | Citations submitted by the petitioner’s counsel | Reported in |
| 1. | M.P. Farook Vs. K. Sasikumar | judgement made in A.No.4088 of 2017 & A.No.750 of 2017 in CS.No.75 of 2017 and Crl.OP.No.13939 & 13940 of 2016 & 15581 of 2017 dated16.12.2019 |
| 2. | M. Danabal Vs. R. Senthil Rajan | Order made in Crl.RC.No.492 of 2014 dated 12.09.2019 |
| 3. | K. Kumaravel Vs. R.P. Rathinam | 2010 (3) MWN (Cr.) DCC 121 |
| 4. | Sama Dharman Proprietor and another Vs. S. Natarajan | 2012 SCC Online Mad 2776 |
| 5. | S. Natarajan Vs. Sama Dharman | |
| 6. | Rajendra Finance Vs. S. Alosius Thairiyanatham | 2005 (2) R.C.R.(Criminal) 382 |
| 7. | S. Kamatchi & others Vs. M/s. Arkaa Medicament | 2009 (3) MWN (Cr.) DCC 31 |
| 8. | Sujies Benefits Fund Ltd Vs. H. Sultan | 2016 ACD 195 : 2016 ALL MR(Cri) 222 |
| 9. | Joseph and Devassia | 2001 Cri LJ 24 |
| 10. | Sasseriyil Joseph Vs. Devassia | S.L.P.(Cri) No.1785/2001 |
| 11. | Neptune Inflatables Ltd Vs. Industrial Venture Captial Ltd | 2019 SCC OnLine Mad 16642 |
| 12. | Jage Ram Karan Singh & another Vs. State & another | 2019 SCC OnLine Del 9486 |
| 13. | The Bidar Urban Cooperative, Bank Ltd, Hyderabad Vs. Girsh | Judgement of the Hon’ble High Court Karnataka in Crl.A.No.200057/2016 dated 17.12.2020 |
| 14. | M/s.National Agricultural Cooperative Marketing Federation of India (NAFED) Vs. M/s.Disha Impex (PVT) Ltd. and another. | Judgement of the Hon’ble High Court Karnataka in Crl.A.No.1072 of 2013 dated 06.01.2021 |
| 15. | Shree Daneshwari Traders Vs. Sanjay Jain and another | |
| 16. | J.C. Budhraja Vs. Chairman, Orissa Mining Corp. Ltd and another | |
| 17. | A.V. Murthy Vs. B.S. Nagabasavanna | |
| 18. | A.R.M. Nizmathuallah Vs. Vaduganathan | 2007 (5) CTC 488 |
| 19. | P. Mohanraj & others Vs. Shah Brothers Ispat Pvt Ltd | 2021 (1) MWN (Cr.) DCC 97 (SC) |
4. Per Contra, the learned counsel for the respondent submitted that the signature of the executant is not disputed; there is a presumption in favour of the holder of the cheque that the cheque was issued for legally enforceable d
The nature of the debt must be proven during trial, and there is a presumption in favor of the holder of the cheque.
Point of Law : Hon’ble Supreme Court observed that, Section 139 of N.I. Act, includes a presumption that there exists a legally enforceable debt or liability, which is a rebuttal one.
A cheque issued for a time-barred debt does not constitute a legally enforceable debt under Section 138 of the Negotiable Instruments Act, leading to no offence being committed.
The legal point established is that the existence of a time-barred debt should be determined based on evidence during the trial, and the burden of proof lies with the accused to establish the non-exi....
Dishonour of cheque – Cheque itself is a promise to pay even if debt is barred by time.
The issue of whether a cheque was issued for a time-barred debt is a matter for evidence and cannot be adjudicated before the court.
A debtor's issuance of a cheque acknowledges a debt; questions of enforceability or time-bar must be determined through evidence, not prior to trial.
Dishonour of cheque – When a cheque is issued towards a time-barred debt and is dishonoured, liability under Section 138 of N.I. Act squarely arises.
The court ruled that a cheque issued to discharge a time-barred debt is not legally enforceable under the Indian Contract Act. A written promise is required to validate such debts.
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