Cheque issued for discharge of a debt which is barred by law

Very good job compared to many persons who just dish out advice without any practical knowledge.

S.25 (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent 

 generally or specially authorized in that behalf, to pay  wholly or in part a debt of which the creditor might 

 have enforced payment but for the law for the limitation  of suits. 

Explanation

(e) A owes B Rs. 1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs. 500 on account of the debt. This is a contract. 

The order of honorable High Court is based on above law, prima facie  looks great, but does it absolutely sound flawless ?  To me it is not flawless.

My argument is that above order will have to be reconsidered one day or the other, this is my opinion only, I may be 100% wrong. I support my argument as follows:

1. Criminal Liability in general cannot be enforced for breach of promise. There is a civil remedy. So when a cheque issued for time barred debt, true it becomes a promise under S.25(3) of contract act, but in all likelyhood it cannot create the criminal liability, civil recovery 100% lies.

2. This is no longer Res Integra that under S.138, the liability or the debt must be subsisting, that means legally enforceable debt must be present at the time of issue of the cheque. Once it is proved (in this case, it is) that the liability was time barred at the time of issue, that means there was no legally enforceable subsisting debt or liability at the time of issue of cheque and hence section 138 is not applicable. Yes, the liability becomes legally enforceable under civil remedy only after issuance of cheque.

Other general aspect to ponder over in support of my argument, (court is obliged to consider all the defense brought forward before sending someone to jail)...

1. Why one would willingly issue a cheque for time barred debt knowing fully well that it would bounce ?

This is possible under following circumstances:

a. Cheque must have been lying blank with complainant.

b. Cheque must have been fraudulently collected by complainant.

c. The drawer of the cheque took some more consideration and issued this cheque. (it happens in commercial world like, ok, I will clear the old dues but give me more material now).

d. good senses prevails and issues the cheque... but then in this case drawer would ensure honor of the cheque.

e. ??? I cannot think any other way.

Only (c)  shows clear dishonest act on the part of drawer, but then complainant should come forward and allege this. Otherwise case is highly probablised in favor of accused.

I do not know if the honorabel Mumbai HC considered all these points 1 & 2 and a,b,c,d. Accused deserves the acquittal from criminal aspect. Yes, it must go against him in civil recovery case.

Mr Beni Prasad has posted one more useful order in below link

https://www.lawyersclubindia.com/forum/Case-law-about-presentation-of-cheque-77270.asp#.UUmo7Rfinko

In the above order the observation of Andhra HC is differing from that of Mumbai HC..

......Therefore, she states that on the date of presentation of the said cheque, there was no existing legally enforceable debt. As to this, both the Courts below held that since the suit based on Ex.A-9 promissory note was pending before a civil Court, it cannot be said that the cheque was presented beyond the period of limitation. The findings recorded by both the Courts below on this aspect do not seem to be correct. Merely because the civil suit is pending, it cannot be said that the cheque can be presented by the complainant at any time during the pendency of the said civil suit. The cause of action to file the complaint under Section 138 of the Negotiable Instruments Act is an independent cause of action and the cheque therefore shall be presented by the complainant within the period of validity of the debt borrowed. In the instant case, the cheque was presented beyond the period of limitation and therefore, it will not give rise to any cause of action.....

So clearly the order of Mumbai HC above is not flawless..... Mumbai HC did not refer this order also in their judgement.  So one day the matter has to go to SC. Sooner the better. The point is two different HCs have taken contradictory stands on a very serious question of law (Applicability of S.138 on cheques issued against time barred debt ?), in our judicial system the favorable view must go to accused. Although it happens, but this is not correct that accused in Mumbai under similar circumstances gets convicted while accused in AP under the same circumstances go scot free.