The court ruled that a cheque issued for a time-barred debt does not constitute a legally enforceable liability under Section 138 of the N.I. Act.

This appeal is filed by the complainant under Section 378(4) of Cr.P.C., challenging the judgment of acquittal dated 07.02.2020 passed by the XXII Additional Chief Metropolitan Magistrate, Bengaluru, in CC No.8638/2018, whereby the learned Magistrate has acquitted the accused/respondent herein of the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (‘N.I. Act’ for short).

2. The brief factual matrix leading to the case are as under:-

The accused was doing jewelry business in the name and style of Sri. Lakshmi Venkateshwara Jewels and the complainant is the regular customer. It is alleged that the complainant has sold some gold jewels to the accused and the accused retained Rs.5,00,000/- in the sale amount with a request to the complainant to invest the same in gold chit, which is repayable with interest at 2% p.a., and the complainant has accepted the said proposal. It is alleged that the accused in spite of lapse of several months, neither paid the said amount nor interest there on as assured. Thereafter, on demand for repayment of the said amount by the complainant, the accused issued a cheque under Ex.P1 dated 06.12.2017 for a sum of Rs.5,00,000/-. When the said cheque was presented by the complainant through her banker, it came to be dishonoured for the reason of Insufficient Funds. Then a statutory notice was issued by the complainant and in spite of service of notice, the accused has not repaid the said cheque amount. Hence, the complainant has lodged a complaint.

3. The learned Magistrate after recording the sworn statement, has taken cognizance of the offence under Section 138 of the N.I. Act and issued process against the accused. The accused appeared through his counsel and was enlarged on bail. The plea of accused under Section 138 of N.I. Act was recorded and the accused pleaded not guilty.

4. The complainant got examined herself as PW.1 and placed reliance on Exs.P1 to P8. Then the statement of accused under Section 313 of Cr.P.C. was recorded and the case of accused is of total denial. The accused got examined himself as DW.1 and placed reliance on Exs.D1 and D2.

5. After hearing the arguments and after appreciating the oral and documentary evidence, the learned Magistrate has acquitted the accused for the offence punishable under Section 138 of N.I. Act. Being aggrieved by this judgment of acquittal, the complainant is before this Court by way of this appeal.

6. Heard the arguments advanced by the learned counsel for the appellant and the learned counsel for the respondent. Perused the records.

7. The contention of the learned counsel for the appellant is that, the transaction is of the year 2012 and the cheque-Ex.P1 was issued in 2017 and there is no defence regarding time barred debt. He would also assert that the cheque and signature have been admitted and accused is taking inconsistent defences in his evidence, which he has failed to prove and hence, the presumption available in favour of the complainant is not rebutted. As such, he would contend that the Court below has erred in acquitting the accused.

8. Per contra, learned counsel for the respondent/accused would submit that, as per the case of the complainant, the transaction is of the year 2012, but the cheque was issued in the year 2017 and hence the claim is clearly barred by law of limitation. Hence, he would contend that, it is not a legally enforceable debt so as to attract the provisions of Section 138 of the N.I.Act. Further, he would contend that, by cross- examining PW.1, he has exposed the case of the complainant and the complainant was not aware of the transaction and though the documents disclose that they are pertaining to 2012, in the evidence she claims that the golden ornaments were sold in 2014, which is inconsistent stand and she further admits that the cheque was issued to her husband in 2014 itself.

Hence, he would contend that the complainant has not approached the Court with clean hands a