Issuance of a cheque acknowledges a debt, reviving time-barred claims under Section 25(3) of the Indian Contract Act, allowing for prosecution under Section 138 of the Negotiable Instruments Act.

JUDGMENT

ANISH DAYAL, J. CRL.L.P. 212/2021

1. This criminal leave petition is filed under Section 378(4) read with Section 482 of The Code of Criminal Procedure, 1973 (‘CrPC’) by appellant seeking setting aside of order dated 31st July 2021 (‘impugned order’) passed by Ms. Isha Singh, MM/NI Act-03/Central/ Delhi in CC No. 510085/2016 titled as ‘Rajeev Kumar v Satish Kumar’, where the Trial Court dismissed the complaint of appellant and acquitted respondent no.2 for the offence under section 138 of The Negotiable Instruments Act, 1881 (‘NI Act’).

2. Leave to appeal is granted.

3. Petition is disposed of.

CRL.A._____/2024 (Registry to number the appeal)

1. Heard counsels for the parties.

Factual background

2. The said complaint was filed by complainant/appellant under section 138 of NI Act against accused/respondent no.2. The gravamen of the complaint was that the father of the complainant, Late Sh. Narain Dass and accused were colleagues, working in the same bank and branch, when the accused had approached the father of the complainant for a loan of Rs. 3,50,000/-. The said interest-free loan was advanced by the complainant’s father in about October 2011, and in discharge of its liability the accused issued a cheque for a sum of Rs. 3,50,000/- in the name of the father of the complainant in January 2014, as refund of the loan amount. However, subsequently, the father of the complainant passed away in July 2014 before presenting the cheque for encashment, after which accused issued a new cheque bearing No. 201465 dated 31st December 2015 for a sum of Rs. 3,50,000/- (‘the cheque in question’) in the name of the complainant for repayment of the loan amount. The cheque in question, on presentation, was dishonoured twice with the remarks “funds insufficient” vide separate return memos dated 3rd March 2016 and 9th March 2016. Thereafter, pursuant to legal notice dated 15th March 2016, the said complaint was lodged under section 138 of NI Act.

3. Pre-summoning evidence was led by the complainant and upon finding a prima facie case against the accused, he was summoned vide order dated 27th April 2016. The Metropolitan Magistrate (‘MM’) dismissed the complaint vide the impugned order and acquitted the accused of the offence under section 138 of NI Act by holding that in the present case the debt was not legally recoverable due to limitation. The relevant observation made by the MM is reproduced hereunder:

“41. Accordingly, the Court is in agreement with the accused for by way of the present cheque, the complainant is seeking to recover a debt which was no longer legally recoverable on the date of issuance of cheque as it was barred by the law of limitation and the cheque in question did not extend the period of limitation under section 18 of The Limitation Act, 1963 .”

(emphasis supplied)

4. After considering the evidence on record, the MM held that the loan partly stood paid by accused on the date of issuance of the cheque to the complainant, as payments of Rs. 2,55,000/- and Rs. 20,000/- from the account of the accused, into the account of the father of the complainant (during his lifetime) and the complainant respectively, stood proved by the accused.

Submissions of Appellant

5. The appellant being aggrieved by the impugned order, filed the present petition. The case of the appellant is that the cheque in question was issued by respondent no.2 to appellant after arriving at an oral mutual settlement, after a lapse of approximately seventeen months from his father’s demise. Respondent no.2, therefore, duly accepted the legal liability on his part.

6. Counsel for appellant submits that the testimony of respondent no.2 is marred by contradictions. At the time of framing of notice under section 251 of CrPC and in application under section 145(2) of NI Act dated 26th April 2017, respondent no.2 accepted that he had taken a loan from the father of the appellant and had given a cheque of the same amount to the appellant’s father. Further, after the demi