2024 Supreme(Online)(GUJ) 3934
HIGH COURT OF GUJARAT
M. K. THAKKER, J
SHRIRAM FINANCE LTD.(SHRIRAM TRANSPORT FINANCE CO. LTD.) THRO KULDEEPSINH NIRMLSINH ZALA – Appellant
Versus
STATE OF GUJARAT – Respondent
R/CRIMINAL MISC.APPLICATION NO. 9894 of 2024
Petitioner Advocates:MR MANISH J PATEL(2131) ,Respondent Advocate: PUBLIC PROSECUTOR(2)
The issuance of a cheque serves as an acknowledgment of debt, resetting the limitation period under Section 18 of the Limitation Act.
Headnote:(A) Limitation Act, 1963 - Section 18 - Negotiable Instruments Act, 1881 - Sections 118 and 139 - Acquittal of respondent-accused on grounds of time-barred debt - Court finds that acknowledgment of debt through cheque issuance resets limitation period - Trial Court's conclusion deemed erroneous as it ignored the acknowledgment principle. (Paras 1-5)
(B) Acknowledgment of Debt - A cheque serves as an acknowledgment of debt, and its issuance indicates intention to acknowledge liability, affecting limitation period. (Paras 3-4)
Facts of the case:
The trial Court acquitted the respondent-accused on the basis that the debt was time-barred, concluding that the limitation period expired in September 2016, while the complaint was filed in September 2015.
Findings of Court:
The Court found merit in the applicant's argument regarding the acknowledgment of debt through the cheque, which resets the limitation period.
Issues: The main issue was whether the trial Court erred in concluding that the debt was time-barred without considering the acknowledgment of debt through the cheque.
Ratio Decidendi: The court ruled that the issuance of a cheque constitutes an acknowledgment of debt, thereby resetting the limitation period, and the trial Court's acquittal was based on an erroneous interpretation of the law.
Result: Leave granted to prefer an appeal.
ORDER1. Learned advocate Mr.Manish Patel submits that the learned trial Court has acquitted the respondent-accused on the ground of time barred debt. Learned advocate Mr.Patel has drawn the attention of this Court with regard to the observations made by the learned trial Court, wherein it is observed that period of completion of loan was over in September 2013. Learned advocate Mr.Patel submits that the limitation period would start from September 2013 and would be over in September 2016. Learned advocate Mr.Patel submits that impugned complaint is filed on 28.09.2015 i.e. within the period of limitation. Learned advocate Mr.Patel submits that without considering the same, learned trial Court comes to the conclusion that the debt is time barred debt.
2. The learned advocate Mr.Patel submits that the learned trial Court held that it is time barred debt as it was beyond the period of limitation of three years. The learned advocate relies on the provisions of Section 18 of the Limitation Act, which reproduced hereinbelow:-
“18.Effect of acknowledgment in writing.—(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.
Explanation.—For the purposes of this section,— (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right, (b) the word “signed” means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.”
3. The learned advocate Mr.Patel further relies on the decision rendered by the Hon’ble Apex Court in the case of S. Natarajan v/s. Sama Dharman and another reported in (2021) 6 SCC 413. Para 8 of the said decision reproduced hereinbelow:-
“8.In this connection, we may usefully refer to a judgment of this Court in A.V. Murthy v. B.S. Nagabasavanna where the accused had alleged that the cheque issued by him in favour of the complainant in respect of sum advanced to the accused by the complainant four years ago was dishonoured by the bank for the reasons "account closed". The Magistrate had issued summons to the accused. The Sessions Court quashed the proceedings on the ground that the alleged debt was barred by limitation at the time of issuance of cheque and, therefore, there was no legally enforceable debt or liability against the accused under the Explanation to Section 138 of the NI Act and, therefore, the complaint was not maintainable. While dealing with the challenge to this order, this Court observed that under Section 118 of the NI Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. This Court further observed that Section 139 of the NI Act specifically notes that it shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for discharge, in whole or in part, of any debt or other liability. This Court further observed that under sub-Section (3) of Secti
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