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2023 Supreme(P&H) 2647

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
DEEPAK GUPTA, J.
M/s. Maharia Automobiles – Appellant
Versus
Anil Kumar – Respondent
CRM-A-1952-MA of 2014 IN/AND CRA-AS-249 of 2023
Decided On : 08-05-2023

Advocates Appeared:
Mr. Jitender Dhanda, Advocate; For the Appellant
None; For the Respondent

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Limitation Act, 1963 - Section 25(3) - Appeal against dismissal of complaint for dishonored cheque - Court found that a cheque issued for a time-barred debt may create an enforceable promise under Section 25(3) - Cheque issued by the accused after release from jail for payment of a debt that had legally expired - Dismissal overturned, remanded to decide on ingredients of the offence. (Paras 3, 20, 21)

Facts of the case:
The complainant, a firm, alleged that the accused obtained a tractor on credit but failed to repay, subsequently issuing a cheque which was dishonored due to insufficient funds.

Findings of Court:
The trial court's decision that the debt was time-barred was incorrect; issuing a cheque for a time-barred debt revives the enforceability of that debt.

Issues: Whether a cheque issued for a time-barred debt creates a legally enforceable liability under Section 138 of the N.I. Act.

Ratio Decidendi: A cheque issued for a time-barred debt constitutes a promise to pay under Section 25(3) of the Contract Act, rendering it enforceable as a debt under Section 138 of the N.I. Act.

Result: Judgment set aside; matter remanded to trial Court for further proceedings.

Table of Content
1. complaint for cheque dishonor due to time-barred debt. (Para 1 , 3 , 4)
2. arguments regarding enforceability of time-barred debts. (Para 5 , 6)
3. legal enforceability of a cheque for a time-barred debt. (Para 8 , 9 , 10 , 11 , 12 , 13)
4. judicial precedents affirming enforceability under ni act. (Para 14 , 15 , 16 , 17 , 18)
5. the issuance of a cheque constitutes a written promise. (Para 19)
6. court orders remand of the case for further consideration. (Para 20 , 21 , 22)

JUDGMENT

Deepak Gupta, J.

This application for grant of leave to appeal under Section 378(4) Cr.P.C is directed against the judgment dated 27.11.2014 passed by learned Judicial Magistrate Ist Class, Hisar, whereby complaint No.220- 2/2010 filed by the complainant - M/s Maharia Automobiles (Applicant) seeking prosecution of accused Anil Kumar (now respondent) under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as 'the N.I. Act'), has been dismissed.

2. Leave granted. On direction to the Registry, number CRA-AS- 249-2023 has been assigned.

3. Copy of the trial Court record has been received and perused. It was alleged by the complainant-firm that accused had purchased a Swaraj Tractor from it for consideration of Rs.2,70,000/- on 17.11.2004, to be repaid on instalments basis along with interest @ 1.5% per month in half yearly instalments on or before 17.02.2007. In the meantime, accused was arrested in a criminal case registered against him under Section 302 IPC and was sent to Central Jail, Bhiwani. He assured the complainant firm to repay the loan along with interest on his release from the jail. In February, 2010, accused came out of Central Jail, Bhiwani. Complainant approached him for repayment of the loan and the accused issued cheque No.305103 dated 29.09.2010 for a sum of Rs.3,50,000/- drawn on Allahabad Bank, Hansi Branch, District Hisar in favour of the complainant. On presentation, the cheque was dishonored vide bank memo dated 01.10.2010 with remarks "insufficient funds". Legal notice dated 16.10.2010 was sent to the accused to make payment of the cheque amount within 15 days as stipulated in the notice but accused failed to do so and hence the complaint was filed on 4.11.2010.

4. After recording preliminary evidence, accused was summoned to face trial under section 138 of the Negotiable Instruments Act. On his appearance, he was served with notice of accusation, to which he pleaded not guilty and claimed trial. Evidence produced by the complainant was taken on record. Statement of the accused under Section 313 Cr.P.C was recorded and after hearing both the sides, learned Magistrate dismissed the complaint by observing that loan in question had been taken on 17.11.2004 and the debt was to be paid before 17.02.2007, whereas the cheque in question had been issued on 29.09.2010 i.e., after expiry of 6 years from the date of loan and thus, loan taken by the accused had become barred by time after 17.02.2007. It was also noticed that complainant had not placed on record any acknowledgement of debt given by the accused within a period of limitation and since at the time of issuance of the cheque in question, the debt was not legally enforceable, so the cheque was for a time barred debt and so conviction under section 138 of the Negotiable Instruments Act could not be recorded. To take this view, learned trial Court relied upon Jagadamba Parisar Sahakari Pat Sanstha Maryadit v. Shravan Ajinath Ukirde (Bombay) (Aurangabad Bench) 2007(1) BCR 185 and Wilson Carvolho v. Krishna Budhaji Patil (Karnataka) 2014(7) RCR (Criminal) 1586.

5. Assailing the above-said judgment acquitting the accused on the ground of cheque being for a time barred debt, it is submitted by the appellant that trial Court failed to consider the fact that respondent-accused was in judicial custody since 2005 till 2010 and it is only after coming out of the jail that he had issued the cheque.

6. Apart from above, learned counsel for the appellant

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