A cheque issued acknowledges a legally enforceable liability, regardless of limitation periods.

1 Whether the plea of limitation is available to an accused to contend that the dishonoured cheque was issued for a time barred debt and thereby no offence under S.138 of N.I. Act was committed, is the question that is to be settled in this case.

2 Appellant is the complainant. First respondent is the accused. Ext. P2 cheque was admittedly drawn in the account maintained by respondent in Peringode Branch of State Bank of India. Appellant presented the cheque for encashment. The cheque was for Rs.50,000/- It was dishonoured for want of sufficient fund under Ext. P3. Appellant sent Ext. P4 notice within the period demanding the amount covered by the dishonoured cheque. First respondent received the notice. He failed to pay the amount. He sent Ext. P5 reply disputing the liability. Complaint was lodged thereafter within the statutory period. Respondent pleaded not guilty. Appellant was examined as PW 2. The Manager of the Bank was examined as PW 1. Ext. P1 to P5 were also marked. Learned Magistrate on the evidence found that Ext. P2 cheque was issued by the respondent and it was dishonoured for want of sufficient funds as proved by the evidence of PW 1 and Ext. P1 ledger extract. But finding that Ext. P2 cheque was in respect of a time barred debt, learned Magistrate held that no offence under S.138 of N.I Act was committed. First respondent was acquitted under S.255(1) of CrPC. Complainant is challenging the order of acquittal in the appeal.

3 Appellant contended that court below did not properly consider the provisions of S.139 of N.I. Act and Ext. P2 cheque was issued towards discharge of an existing liability and by agreeing to repay the amount and issuing Ext. P2 cheque, a fresh contract has been entered into and therefore Ext. P2 cheque was issued towards the existing liability and the finding of the court below is unsustainable.

4 Learned counsel appearing for the appellant relying on the Division Bench ruling of this Court in Ramakrishnan v. Parthasaradhy (2003 (2) KLT 613) argued that even if the cheque is issued for a time barred debt, S.138 is applicable and the drawer of the cheque is not entitled to set up a plea of bar of limitation when he is prosecuted for the offence under S.138 of N.I. Act.

5 When an appeal filed by the accused challenging conviction for the offence under S.138 of N.I. Act came up before a learned single Judge, finding that the defence of the accused was that the cheque was issued not for a legally enforceable debt or liability as the liability was barred by time, a reference was made to the Division Bench on the question whether plea of limitation is available to the accused in a case under S.138 of N.I. Act. The Division Bench held that even if the claim is barred by limitation on the date of drawing of the cheque, on delivery to the other person, it becomes a valid consideration for another agreement. The drawing of the cheque evidences such an agreement and it is enforceable. The drawing and delivery of a cheque create a legally enforceable liability. The Division Bench therefore held when a person writes, signs and delivers a cheque to another, it is an acknowledgment of a legally enforceable liability. Thereafter, if the cheque is dishonoured on account of insufficiency of funds, such a person shall not be entitled to plead that at the time of his writing the cheque the claim had become barred by limitation and thus he is not liable to be punished under S.138. The Division Bench also held that under S.25(3) of the Contract Act a promise can be made even in a case where the limitation for recovery of the amount has already expired. Such a promise has to be in writing. It can be in the form of a cheque. When a cheque is delivered to the payee, the person is entitled to present the cheque to the Bank and seek payment. In such an event, if the cheque is dishonoured, the liability under S.138 would arise. It would not be permissible for the accused to contend that liability was not legally enforcea