dishnoured cheque

This objection is not maintainable & tenable.

Totally not legal and not valid. So it must be rejected.

Advocate Pandya

098985-98184

Since the chque was issued against a time barred debt, which was not a legally enforceable debt, complaint is not maintainable. 

There are numerous case laws on this poitnt ; just for one read   

Jagdamba Parsar sahakari Pat. v. Shravan 2007 AIIMR (Cr.) 1043  

THANKS A LOT FOR PROMPT REPLY. PLEASE  GIVE CITATION/JUDGEMENT ON THE SUBJECT.

ALSO EXPLAIN WHAT IS THE INTENTION BEHIND THE  INSERTATION OF  EXPLANATION TO SEC.138 OF NIA.

WHAT IMPACT IT HAS ON THE MAIN SEC.138? IN MY VIEW THE SAID SECTION IF SELF EXPLAITORY. AM I INCORRECT?

I  am giving  below couple of judgments on the subject

2007 INDLAW MAD 494

[MADRAS HIGH COURT] 

Iadayam Investments

v

M. Ramasamy

A. C. ARUMUGAPERUMAL ADITYAN

01 Mar 2007

BENCH

A. C. ARUMUGAPERUMAL ADITYAN

CASES REFERRED TO

A.V. Murthy v B.S. Nagabasavanna 2002 Indlaw SC 78

ACTS REFERRED

Code of Criminal Procedure, 1973 (as amended by Act No. 25 of 2005 & Act No. 2 of 2006.)[s. 200, s. 207, s. 255(1)]

Negotiable Instruments Act, 1881[s. 138, s. 139]

Indian Contract Act, 1872[s. 25(3)]

Limitation Act, 1963

CASE NO

Crl. A. No.666 of 2000

LAWYERS

S.Subbiah, D.Bharatha Chakravarthi

.JUDGMENT TEXT

The Order of the Court was as follows :

1. This appeal has been preferred against Judgment in STC.No.1240 of 1997 on the file of the Court of Judicial Magistrate No.V, Coimbatore. The complainant has preferred a private complaint under Section 200 of Cr.P.C for offence under Section 138 of Negotiable Instrument Act.

2. In the private complaint the complainant would alleged that the accused had borrowed Rs.3, 00, 000/- from the complainant, a partnership firm which was represented by the complainant, the Managing Partner S.N. Sankaranarayanan. It is the definite case of the complainant that the accused had issued a cheque for Rs.4, 35, 000/- dated 17.3.1997 drawn on Bank of Baroda, Coimbatore. The said cheque was issued by the accused to discharge the said loan. When the cheque was presented before the Tamil Nadu Mercantile Bank, Big Bazar Branch, on 18.3.1997, the same was returned on 19.3.1997 with an endorsement "no sufficient funds". The accused had issued the cheque with a view to defraud the complainant. The accused failed to arrange funds to honour the cheque. The complainant issued a lawyer's notice dated 24.3.1997 informing the accused about the dishonouring of the cheque and called upon him to pay the amount within 15 days from the date of receipt of notice. The accused received the notice on 29.3.1997. But the accused has not chosen to send any reply nor repay the amount. Hence, the complaint.

3. The learned trial Judge has taken the complaint on file after recording the sworn statement as STC.No.1240/1997 and issued summon to the accused for appearance. On appearance of the accused, the learned trial Judge has furnished copies to the accused under Section 207 of Cr.P.C and when the offence was explained to him the accused pleaded not guilty. On the side of the complainant P.W.1 and P.W.2 were examined and Ex.P.1 to P.7 were marked.

4. P.W.1 is the complainant. He would depose that he is the partner of the complainant-company viz. Idayam Investments and that the accused-Ramasamy had borrowed Rs.3, 00, 000/- as a loan and issued a cheque dated 17.03.1997 for a sum of Rs.4, 35, 000/- and when the said cheque was presented in the Bank on 18.3.1997, the same was dishonoured on 19.3.1997 on the ground that there was no sufficient funds in the account of the accused. The complainant had issued notice on 24.3.1997 informing about return of the cheque. The said notice was received by the accused on 29.3.1997 but the accused neither sent any reply nor paid the debt amount. Ex.P.1 is the dishonoured cheque. Ex.P.2 is the bank's memo. Ex.P.3 is the copy of the notice issued by the complainant to the accused. Ex.P.4 is the acknowledgment for the notice being received by the accused. When P.W.1 was recalled and examined in chief further on 16.3.1999, he would depose that the said loan of Rs.3, 00, 000/- was advanced to the accused by way of a cheque of Tamil Nadu Mercantile Bank and Ex.P.6 is the counter-foil for the said cheque dated 15.12.1993. He would further depose that Ex.P.7 is the income tax returns submitted by the complainant for the assessment year 1998-1999.

5. P.W.2 is an employee of Bank of Baroda, Coimbatore Branch. According to P.W.2, Ex.P.1-cheque leaf belongs to the Bank of Baroda and that the said cheque along with the cheque book was given to the accused since he has opened an account with the said Bank and that Ex.P.1-cheque was drawn for a sum of Rs.4, 35, 000/- and the said cheque was presented in his Bank through Tamil Nadu Mercantile Bank on 19.3.1997 and that the said cheque was returned with an endorsement that there is no sufficient funds available in the accounts of the accused. Ex.P.5 is the statement of accounts relating to the account of the accused.

6. After going through the evidence both oral and documentary produced before him, the learned trial Judge has come to the conclusion that the guilt against the accused under Section 138 of Negotiable Instruments Act was not proved beyond any reasonable doubt and consequently acquitted the accused under Section 255(1) of Cr.P.C. Aggrieved by the findings of the learned trial Judge, the complainant has preferred this appeal.

7. Now the point for determination in this appeal is whether there was any subsisting liability or debt as contemplated under Section 138 of Negotiable Instruments Act on the date of drawal of Ex.P.1-cheque to warrant conviction under the said provision of law?

8. The Point:

8(a) The complainant was examined as P.W.1. According to P.W.1, the accused had borrowed Rs.3, 00, 000/- on 17.3.1997. To prove the fact of lending the loan, the complainant has produced two documents. One is Ex.P.6, a counter-foil of the cheque through which the said loan of Rs.3, 00, 000/- is said to have been disbursed to the accused and the other document is Ex.P.7-income tax return of the complainant-company for the assessment year 1998-1999. There is no seal found in Ex.P.7 of the income tax department.

8(b) The learned trial judge has acquitted the accused only on the ground that there was no subsisting debt on the date of drawal of Ex.P.1-cheque. Even in the cross-examination P.W.1 would admit that only including the interest for the principle amount Rs.3, 00, 000/- the amount due to the complainant on the date of issuance of cheque comes to Rs.4, 35, 000/-. The learned trial Judge has also observed that admittedly the loan is for Rs.3, 00, 000/- which was advanced by the complainant to the accused on 15.12.1993. But the cheque is dated 17.3.1997 ie., three years after the date of lending of loan to the accused and that under Section 25(3) of the Indian Contract Act that is not an acknowledgment for the said debt before the time of limitation prescribed under the Limitation Act and the trial Judge has come to the definite conclusion that it is a time barred debt.

8(c) P.W.1 in his deposition in the cross-examination on 29.5.2000 would admit that he has not produced any documentary evidence to show that the accused owes Rs.4, 35, 000/-. During his cross-examination on 6.1.1999 P.W.1 would depose that the accused has obtained mortgage loan and that the original deed is with him. But the complainant has not produced either the mortgage deed or any other deed to show that the mortgage was on deposit of title deeds. To attract the offence under Section 138 of Negotiable Instruments Act, it is the bounden duty of the complainant to prove beyond any reasonable doubt that the dishonoured cheque was drawn only to discharge a subsisting debt. But in this case the complainant has miserably failed to prove that there was a subsisting debt of Rs.4, 35, 000/- and only to discharge the said debt Ex.P.1-cheque was drawn by the accused.

8(d) Section 138 of the Negotiable Instruments Act runs as follows:

Dishonour of cheque for insufficiency, etc., of funds in the accounts -

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

PROVIDED that nothing contained in this section shall apply unless -

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the rawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation: For the purpose of this Section, "debt or other liability" means a leagally enforceable debt or other liability"

8(e) The learned counsel for the appellant would contend that under Section 139 of Negotiable Instruments Act when the accused had drawn Ex.P.1-cheque for Rs.4, 35, 000/- the presumption should be that the consideration passed. But before taking such a presumption it is the bounden duty of the complainant under Section 138 of the Negotiable Instruments Act to show that there was a subsisting debt on the date of drawl of the cheque. Even as per the explanation to Section 138 of Negotiable Instruments Act, the debt or other liability means a legally enforceable debt or other liability. The loan of Rs.3, 00, 000/- was advanced to the accused on 15.12.1993 as admitted by P.W.1, Ex.P.1-cheque dated 17.3.1997 will not save limitation.

8(f) The learned counsel for the appellant relied on  2002 Indlaw SC 78 (A.V.Murthy Vs. B.S.Nagabasavanna) and contended that a private complaint under Section 138 of Negotiable Instruments Act cannot be dismissed on the ground that there was no consideration passed under the dishonoured cheque. A reading of the above cited judgment of the Honourable Apex Court will go to show that the District and Sessions Judge has quashed the proceedings which was pending on the file of the Magistrate concerned on the ground that there was no legally enforceable debt or liability. While setting aside the order of the learned Sessions Judge, which was upheld by the High Court, the Honourable Apex Court has observed that without giving an opportunity to the complainant to let in evidence the Court cannot give a finding to the effect that there was no subsisting or enforceable debt. But that is not the case herein. In the case on hand the parties have been given full opportunity before the trial Court to let in evidence and further after going through the evidence both oral and documentary the learned trial Judge has come to the conclusion that there was no subsisting or enforceable debt for which Ex.P.1 is said to have been drawn by the accused. Under such circumstances, I do not find any reason to interfere with the findings of the learned trial Judge # in STC.No.1240/1997, on the file of the Judicial Magistrate No.V, Coimbatore, which is neither illegal nor infirm. Point is answered accordingly.

9. In fine, the appeal is dismissed confirming the judgment in STC.No.1240/1997, on the file of the Judicial Magistrate No.V, Coimbatore.

2006 INDLAW MUM 555

[BOMBAY HIGH COURT] 

AURANGABAD BENCH

Jagadamba Parisar Sahakari Pat Sanstha Maryadit

v

Shravan and Another

M. G. Gaikwad

27 Sep 2006

BENCH

M. G. Gaikwad

COMPARATIVE CITATIONS

2007 AllMR(Cr) 1043, 2006 INDLAW MUM 555

CASES REFERRED TO

Hiten P. Dalal v Bratindranath Banerjee 2001 Indlaw SC 19949

A. S. Krishnappa Chettiar and Others v Nachiappa Chettiar and Others 1963 Indlaw SC 352

V. Munikrishnaiah Vs. C. Janakirama Naidu & another [2005 ALLMR(CrJ) 117]

K. N. Beena Vs. Muniyappan & another [2002 (1)) BCR 342 : 2002 (1)) AllMR 277]

Punjab National Bank and others Vs. Surendra Prasad Sinha [1992 AIR(SC) 1815]

ACTS REFERRED

Negotiable Instruments Act, 1881[s. 138, s. 139]

Limitation Act, 1963

Indian Penal Code, 1860[s. 109, s. 114, s. 409]

CASE NO

Criminal Application No.2259 of 2006

LAWYERS

N. V. Gaware

.JUDGMENT TEXT

The Order of the Court was as follows :

1. Heard learned advocate Shri. N. V. Gaware, appearing for the applicant.

2. By prefering this application, complainant Society seeks leave to prefer an appeal against the order of acquittal of respondent No.1 for the offence punishable under section 138 of the Negotiable Instruments Act, 1881 (for short, "the Act"), passed by learned Judicial Magistrate First Class, Karjat in S.T.C. No.915/2005.

3. The applicant/complainant lodged a complaint with allegations that the complainant Society advanced loan of Rs.32, 664/- to the accused on 11-02-2002. The accused did not repay that loan amount and the dues outstanding were Rs.55, 990/-. On consistent demand from the complainant Society, the accused drew a cheque dated 31-07-2005 in favour of the complainant Society. Said cheque was presented in the bank on 09-08-2005. However, it was dishonoured on account of insufficient funds. The complainant received the intimation of dishonour of the cheque on 11-08-2005 and then, issued a notice on the same day demanding the amount from the accused. Accused received this notice on 24-08-2005, but did not make payment. Within stipulated time, the complaint came to be filed.

4. At the trial, the accused put forth a defence of denial.

5. The complainant to prove his case, examined himself and according to him, the cheque was issued to discharge the legal liability. The defence suggested on behalf of the accused was that the cheque in question was obtained for time-barred debt. He has denied that he had borrowed the loan on 11-02-2000 and it was to be repaid within two years which period expired on 11-02-2002. Thereafter, the cheque in question was obtained on 31-07-2005. In view of the admission of the complainant that this loan was advanced in 2000 and the cheque being issued on 31-07-2005, the trial court observed that the cheque in question was obtained for a time-barred debt. The case made out by the complainant in its complaint and at the trial is contradicting each other. The debt being found to be a time-barred debt and the cheque being issued for time-barred debt, the finding is recorded that the cheque cannot be said to have been issued for discharge of legally enforceable debt or liability and on that count, the accused came to be acquitted. Against the said order of acquittal, the complainant intends to prefer an appeal, hence, prayed for grant of leave to prefer appeal.

6. On behalf of the complainant, learned advocate Shri. Gaware advanced submission that even if the cheque is found to have been issued for a time-barred debt, the provisions of Limitation Act, 1963 are not attracted to Section 138 of the Negotiable Instruments Act, 1881. In this case, issuance of cheque being admitted and same being dishonoured, the complaint came to be filed. There is, therefore, presumption of issuance of cheque for debt or liability to the complainant as per provisions of section 139 of the Act. It is submitted that in rebuttal of presumption arising out of section 139 of the Act, the accused did not enter into witness box. Hence, the presumption cannot be said to have been rebutted.

Learned advocate Shri Gaware also advanced submission that the provisions of Limitation Act, 1963 are not attracted to the criminal case. In support of this submission, he has placed reliance on the decision of the Apex Court in the case of A.S.K. Krishnappa Chettiar and others Vs. S.V.V. Somiah @ Navniappa Chettiar and another, reported in  1963 Indlaw SC 352. In the said case, the plaintiff had obtained a decree against the defendants and had filed Execution Petition, but the Execution Petition proved to be infructuous because first defendant was adjudicated to be insolvent. Thereafter, there was some compromise between son of the plaintiff and defendant No.2. Defendant No.2 was not found adjudicated as insolvent. Under the terms of composition arrangement, the entire property of defendants was to vest in four trustees. Said composition scheme was accepted by the Insolvency Court. The last execution application was dismissed in 1946 and fresh application was moved on 13-06-1952. In paragraph 13 of the reported judgment, The Apex Court observed as under :

"(13)...The Limitation Act, 1963 is a consolidating and amending statute relating to the limitation of suits, appeals and certain types of applications to courts and must, therefore, be regarded as an exhaustive Code.

...They cannot be extended by analogy or reference to proceedings to which they do not expressly apply or could be said to apply by necessary implication..."

In the present case, placing reliance on these observations of the Apex Court, learned advocate Shri. Gaware advanced submission that present proceeding being a criminal proceeding, the provisions of Limitation Act, 1963 are not attracted and the debt cannot be said to be time-barred debt. He has also placed reliance on the decision of the Apex Court in the case of Punjab National Bank and others Vs. Surendra Prasad Sinha, reported in  1992 AIR(SC) 1815, wherein the Apex Court held that even if the debt is barred by limitation, adjustment of securities deposited by guarantor towards debt after the debt becomes time-barred, is permissible. The adjustment made by adjusting securities of the guarantors towards the debt, as held by the Apex Court, does not constitute an offence punishable under sections 109, 114 and 409 of Indian Penal Code, 1860.

The ratio in the reported case of Punjab National Bank (supra) is not attracted to the facts of present case. The Apex Court held that the adjustment of securities does not amount to an offence punishable under section 409 of Indian Penal Code, 1860. The ratio in the earlier case reported in  1963 Indlaw SC 352 (supra) that the provisions of the Limitation Act, 1963 are attracted to the proceedings referred in the schedule only, cannot be disputed. For filing criminal cases, particularly complaint under section 138 of the Negotiable Instruments Act, 1881 limitation is prescribed in the special statute and for computing the period of limtiation, the provisions of the Limitation Act, 1963 are not attracted. The question relevant in the present case is as to whether the provisions of Section 138 of the Act are attracted to the case when the cheque was issued for a time-barred debt. The Explanation of Section 138 of the Act clearly mentions that for the purpose of Section 138, the "debt or other liability must" means a legally enforceable debt or other liability. The time-barred debt cannot be said to be a legally enforceable debt or liability. Hence, considering these provisions incorporated in the Explanation, it can be sai J that the time-barred debt cannot be said to be a legally enforceable debt or liability. Thus, the provisions of Section 138 of the Act will not be attracted in the present case.

7. Another submission advanced by learned advocate Shri. Gaware is that unless the accused examines himself to rebut the presumption arising under section 139 of the Act, the presumption cannot be said to be rebutted even though there is other material on record. In support of this submission, he tried to place reliance on the decision of the Apex Court in case of K. N. Beena Vs. Muniyappan & another, reported in  2002 (1) BCR 342 (Supreme Court) :  2002 (1) ALLMR 277 (S.C.)]. In the said case, considering the provisions of Sections 118 and 139 of the Act, Their Lordships of the Apex Court observed thus:-

".......Under Section 118, unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under section 139, the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus, in complaints under section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused."

In the case before Their Lordships of the Apex Court, the respondent in that case had led no evidence except some formal evidence. Their Lordships observed that such denial in his reply to the notice is not sufficient to shift the burden of proof on the appellant to prove that the cheque was issued or debt or liability.

8. Another decision relied upon by learned advocate Shri Gaware is the decision of Apex Court in the case of Hiten P. Dalai Vs. Bratindranath Banerjee, reported in  2001 Indlaw SC 19949 :  2001 ALLMR(Cr) 1497 (S.C.)], wherein the Apex Court held that the presumption under section 139 of the Act is a 'presumption of law' as distinguished from 'presumption of fact', which describes the provisions by which the court "may presume" a certain state-of-affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt.

9. Reliance has also been placed by the learned advocate for the applicant on the decision of the Andhra Pradesh in the case of V. Munikrishnaiah Vs. C. Janakirama Naidu & another, reported in 2005 ALL MR (Cri) JOURNAL 117, wherein it has been held that in case of failure of the accused to adduce any evidence to rebut the presumption under section 139 of the Act in favour of the complainant, the court has to presume that the cheque was issued for legally enforceable debt or liability.

Thus, the ratio in these cases make it clear that the burden is on the accused/drawer to prove that the cheque has not been issued for debt or liability. This legal position is settled one and cannot be disputed. The accused in the present case put forth a defence that the debt for which this cheque was obtained by the complainant was a time-barred debt. Admittedly, the accused did not enter into witness box to give evidence on this point, nor any other witness is examined. However, the complainant himself found to have concealed material facts. In his complaint, he alleged that the loan was advanced on 12-02-2002, which was to be repaid within two years and the accused issued a cheque on 31 -07-2005. However, at the trial, when cross-examined, he has admitted that he had advanced loan to the accused on 11-02-2000. It was to be repaid before 11-02-2002. The cheque was issued on 31-07-2005. Thus, the fact of disbursement of loan in the year 2000 was suppressed by this complainant. However, his admission proved advance of loan in 2000 and his allegations in the complaint and statement in Examination-in-Chief that the loan was advanced on 11 -02-2002 are found to be false. Admittedly, on the date of issuance of that cheque dated 31-07-2005, the debt was found to be a time-barred debt. In view of Explanation to Section 138 of the Act, the penal liability under section 138 arises in case the cheque was found to have been issued for discharge of legally enforceable debt or liability. Time-barred debt cannot be said to be a legally enforceable debt or liability. In view of these facts, this liability being found not a debt legally enforceable, the accused came to be acquitted.

10. In view of above discussion, the order of acquittal passed by the trial court was not found suffering from any infirmities and there being no arguable point, this is not a fit case to grant leave to prefer an appeal against the order of acquittal.

Accordingly, this application for grant of leave to prefer appeal against the acquittal of the respondent No. 1, preferred by the original complainant is hereby rejected and the appeal filed by it, therefore, stands disposed of.

Order accordingly.

chque was issued against a time barred debt, which was not a legally enforceable debt, complaint is not maintainable. 

 

Sec 25 (c) of Contract Act has made you safe.

hai,

     you will win,presumtion of law in your favour.proceed.

Cheque issued under a legally enforceable debt and time-barred debt has different  meanings.

Cheque was issued for a legally enforceable debt, meaning though it is time-barred it was a debt which had the sanctitiy of legally enforceable,  hence cheque given on that debt attracts punishment on its dishonour.

You may say now that time barred debt is not legally enforceable debt.  May be now it is, but the debt itself was legally enforceable one before for which the cheque has been issued now!!!   Though the money is not recoverable under these circumstances because it is time-barred, the punishment still lingers. 

If the section 138 of the N. I. Act is been properly complied with

the compliant will be tanable.

ulthough the transaction is much older but the same must be taken in the averments of the complaint.this please note.

(1) Had the accused issued the subject cheque in repayment of the debt, he alleges to have time barred. (2) Have you mentioned made this averment in to your complaint. (3) Are all the requirements of Section 138 are complied with.

 If answers to above are in affirmative, your complaint will succeed.

The case is mintanable. Even the debt is time barred, but the accused admitted the debt and gave a cheque. According to ur information it is clear that you followed all  technical steps. The case will be decided in your favour.