Time Barred Debt - Section 138 - Not Maintainbale

MANU/DE/2779/2009
Equivalent Citation: I(2010)BC8

IN THE HIGH COURT OF DELHI
Crl. M.C. 1869/2007, Crl. M.A. Nos. 6479 and 12998/2007
Decided On: 26.10.2009
Appellants: Prajan Kumar Jain
Vs.
Respondent: Ravi Malhotra
Hon'ble
Indermeet Kaur, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: R.P. Sharma and Amit Punj, Advs
For Respondents/Defendant: M.L. Mahajan and Gaurav Mahajan, Advs.
Subject: Banking
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act - Sections 138, 139 and 142; Indian Penal Code Section 420; Limitation Act - Section 18; Criminal Procedure Code (CrPC) - Section
482
Cases
Referred:
Sh. Ravi Malhotra v. Sh. Prajan Kumar Jain Complaint No. 1535/1; Vijay Polymers
Pvt. Ltd. and Anr. v. Vinnay Aggarwal 162 (2009) DLT 23; Sasseriyil Joseph v.
Devassia 2001 Crl.LJ 24;Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4
SCC 54; A.V. Murthy v. B.S. Nagabasavanna (2002) 2 SCC 642; MMTC Ltd. and
Anr. v. Medical Chemicals and Pharma (P) Ltd. and Anr. IV (2001) CCR 316
(SC); Woods and Ors. v. State and Anr. 121 (2005) DLT 314; Bishan Dayal v.
Dinesh Kumar Singal 2007 (2) DCR 161
Citing
Sh. Ravi Malhotra v. Sh. Prajan Kumar Jain
Reference:
Mentioned
Vijay Polymers Pvt. Ltd. and Anr. v. Vinnay Aggarwal Distinguished

Sasseriyil Joseph v. Devassia
Distinguished
Krishna Janardhan Bhat v. Dattatraya G. Hegde
Distinguished
A.V. Murthy v. B.S. Nagabasavanna
Discussed
MMTC Ltd. and Anr. v. Medical Chemicals and

Pharma (P) Ltd. and Anr.
Distinguished
Woods and Ors. v. State and Anr.
Distinguished
Bishan Dayal v. Dinesh Kumar Singal
Distinguished
Case
Note:
Criminal Procedure Code, 1973 - Section 482 - Negotiable Instruments Act,
1881 - Section 138 & 142 - Quashing of the complaint - Cheques issued in
lieu of a time barred debt - Agreement to purchase agricultural land Acknowledgment after the statutory period of three years not valid Complaint and all proceedings, quashed.
JUDGMENT
Indermeet Kaur, J.
1. This petition seeks quashing of the Complaint No. 1535/1 titled as Sh. Ravi
Malhotra v. Sh.Prajan Kumar Jain filed under Sections 138/142 of the Negotiable
Instruments Act (hereinafter referred to as NI Act) read with Section 420 of the
Indian Penal Code. Complainant is Ravi Malhotra. Prajan Kumar Jain has been
arrayed as the accused.
2. The short point raised in this petition is that the two cheques i.e. cheque No.
7375535 dated 25.3.2005 for Rs. 5 lakhs and cheque No. 7375536 dated
30.4.2005 for Rs. 5 lakhs do not come within the ambit of a 'legally enforceable
debt'. The said cheques had been issued for the discharge of a liability arising out
of an agreement dated 14.6.2000; and having been issued on 25.3.2005 and
30.4.2005 were for the discharge of debt which had become time barred. The
complaint is thus liable to be quashed.
3. To appreciate this submission salient paragraphs of the complaint filed by Ravi
Malhotra are reproduced.:
2. That by an agreement dated 14.06.2000, entered into by the complainant with
the accused and his brother, Shri Vijay Kumar Jain, to purchase the agricultural
land measuring 12 Bighas and 03 Biswas, bearing Mustatil No. 54, Killa No. 14/2
(3-12), 17 (2-19), 7 (4-17), 14/1 (0-15), situated at village Bharthal, Tehsil Vasant
Vihar, New Delhi, for the consideration of rupees 2 Crores 30 Lakhs. The
complainant paid a sum of rupees 30 Lakhs to the accused and his brother Shri
Vijay Kumar Jain, who were jointly maintained as Party No. 1 in the said
agreement.
3. That after sometimes the parties agreed to terminate the agreement and the
accused alongwith his brother, Shri Vijay Kumar Jain, promised to return the
advance money of rupees 30 Lakhs paid by the complainant to the accused and his
brother. This settlement took place on 26.01.2005, whereby the accused and his
brother acknowledged to pay the balance amount in short time and the agreement
was terminated.
4. That in the discharge of his liability of debt arising out of the agreement dated
14.6.2000 between the accused and his brother, Shri Vijay Kumar Jain on the one
hand and the complainant on the other, the accued agreed to pay a sum of Rs.
10,00,000/- (Rupees ten lakhs) and in lieu thereof the accued issued two post
dated cheques drawn on the Jammu & Kashmir Bank Ltd., Sector-3, Krishna
Complex, Trikuta Nagar, Jammu in favour of the complainant. The details whereof
are as under:
1. 7375535 dated 25.3.2005 for Rs. 5,00,000/-.
1. 7375536 dated 30.4.2005 for Rs. 5,00,000/-.
4. Learned Counsel for the petitioner has placed reliance upon a judgment reported
in Vijay Polymers Pvt. Ltd. and Anr. v. Vinnay Aggarwal 162 (2009) DLT 23 to
support his submission that the cheques issued in lieu of a time barred debt does
not come within the definition of a 'legally enforceable debt' as is contained in the
Explanation of Section 138 of the NI Act. Cheques issued for the discharge of such
a time barred debt cannot become the subject matter of a complaint under
Section 138 of the NI Act; the agreement in this case having terminated on
14.6.2000 and cheques having been issued almost five years later i.e. on
25.3.2005 and 30.4.2005, there being no enlargement of period of limitation, it is
clear that at this point of time the liability, if any, qua the accused had become time
barred.
Reliance
has
also
been
placed
upon
Sasseriyil
Joseph
v.
Devassia MANU/KE/0674/2000 : 2001 Crl.LJ 24 to support this submission. It is
further submitted that the presumption which is contained in Section 139 of the NI
Act only raises a presumption that the said cheque has been issued for the
discharge of a debt or liability and the existence of a legally recoverable debt is not
a matter of presumption under the aforestated provision of law. For this proposition
reliance has been placed upon Krishna Janardhan Bhat v. Dattatraya G.
Hegde MANU/SC/0503/2008 : (2008) 4 SCC 54.
5. These submissions have countered by the learned Counsel for the complainant.
It is submitted that it is not in dispute that the parties had entered into an
agreement dated 14.6.2000 which had fizzled out and they had agreed to
terminate the agreement. This settlement had taken place on 26.1.2005 whereby
the accused and his brother had acknowledged to pay the balance amount within a
short time; thereafter the aforesaid two cheques dated 25.3.2005 and 30.4.2005
for Rs. 5 lakhs each had been issued. It is submitted that this acknowledgment to
pay the balance amount would constitute a fresh period of limitation and even
otherwise these are disputed questions of facts and being a matter of trial, cannot
become the subject matter of a quashing petition; if there is documentary evidence
which might amount to an acknowledgment reviving the period of limitation such a
question can only be agitated before the Magistrate by way of a defence of the
respondent.
Reliance
has
been
placed
upon
A.V.
Murthy
v.
B.S.
Nagabasavanna MANU/SC/0089/2002 : (2002) 2 SCC 642 as also MMTC Ltd. and
Anr. v. Medical Chemicals and Pharma (P) Ltd. and Anr. IV (2001) CCR 316 (SC) to
support this argument. There is also no specific requirement that the complainant
must specifically allege in the complaint that there was a subsisting liability; burden
of proving that there was no such existing debt or liability is on the respondents
which they have to discharge at the stage of trial. It is submitted that in Woods and
Ors. v. State and Anr. MANU/DE/0847/2005 : 121 (2005) DLT 314 it has been held
that where there is no inherent defect in a complaint under Section 138 of the NI
Act, a petition under Section 482 of the Cr.PC would not be maintainable. Reliance
has also been placed upon Bishan Dayal v. Dinesh Kumar Singal 2007 (2) DCR
161 to support the argument that the question whether a legally enforceable debt
exists or not should not be pre-judged by the High Court and the invocation of
powers by the High Court in such circumstances under Section 482 Cr.PC would not
be justified.
6. The record has been perused and the submissions have been noted.
7. To better appreciate the contentions of the parties, the provisions of
Section 138 of the Negotiable Instruments Act are reproduced hereunder:
138. Dishonour of cheque for insufficiency, etc., of funds in the account.- 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 provision 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) ....
(b) ....
(c) ....
Explanation. - For the purposes of this section, "debt or other liability" means a
legally enforceable debt or other liability.
8. At this juncture, it would also be appropriate to take note of Section 18 of the
Limitation Act which inter alia reads as follows:
18. Effect of acknowledgement in writing-(1) Where, before the expiration of the
prescribed period for a suit or application in respect of any property or right, an
acknowledgement 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 acknowledgement was so signed.
....
9. Perusal of the complaint shows that an agreement dated 14.6.2000 had been
entered into between the complainant and the accused and his brother Vijay Kumar
Jain to purchase agricultural land for a consideration of Rs. 2.30 crores. A sum of
Rs. 30 lakhs was accordingly paid by the complainant to the accused and his
brother. Complaint further recites that after sometime the parties had agreed to
terminate this agreement and the accused and his brother Vijay Kumar Jain
promised to return the sum of Rs. 30 lakhs paid by the complainant to him. This
settlement took place on 26.1.2005 on which date the accused and his brother had
acknowledged to pay the balance amount in a short time. Further part of the
complaint states that in discharge of this liability of the debt arising out of the
agreement dated 14.6.2000 the accused agreed to pay a sum of Rs. 10 lakhs vide
two post-dated cheques dated 25.3.2005 and 30.4.2005 of Rs. 5 lakhs each.
10. The facts as detailed in the complaint show that the agreement between the
parties was dated 14.6.2000. Pursuant to this agreement, the complainant had paid
Rs. 30 lakhs to the accused which the accused had agreed to repay as the
agreement had terminated. On 26.1.2005 i.e. four and half years after the
termination of this agreement, the accused and his brother acknowledged to pay
the balance amount in a short time. This acknowledgment even as per the
complaint was much after the statutory period of three years which is the
prescribed period of limitation for the recovery of an outstanding amount. An
acknowledgment to be encompassed within the ambit of Section 18 of the
Limitation Act has to be an acknowledgment in writing as also within the prescribed
period of limitation. These are the twin requirements which have to be fulfilled in
order to be a valid acknowledgment under Section 18 of the Limitation Act which is
admittedly not so in the instant case. In this case this acknowledgment to pay the
balance amount was in terms of the settlement dated 26.1.2005 i.e. much after the
statutory period of three years; it also does not speak of the acknowledgement
being in writing. It was thus not a valid acknowledgment. Cheques issued on
25.3.2005 and 30.4.2005 were clearly outside the period of limitation.
11. In Vijay Polymers Pvt. Ltd. and Anr.(supra), relying upon the judgment of
Hon'ble Supreme Court in Sasseriyil Joseph (supra) a coordinate bench of this
Court had held that cheques issued on a time barred debt would not fall within the
definition of 'legally enforceable debt' which is the essential requirement for a
complaint under Section 138 of NI Act; the extended meaning of debt or liability
has been explained in the Explanation to the Section which means a legally
enforceable debt or liability. The existence of a legally recoverable debt is also not a
matter of presumption as has been held by the Supreme Court in Krishna
Janardhan Bhat (supra).
12. The judgments relied upon by the learned defence counsel are distinct on their
facts. In the case of A.V. Murthy (supra), the hon'ble Supreme Court had held that
the question of an acknowledgment reviving the period of limitation could be
agitated before the Magistrate, in a case where there was documentary evidence;
in the said case the balance sheet of the respondent had acknowledged his liability;
there is no such documentary evidence in this case.
13. The judgments of MMTC Ltd. and Anr. (supra) as also the subsequent
judgments of Woods and Ors. (supra) and Bishan Dayal (supra) do not relate to the
issue as to whether the transaction had become time barred or not; the facts of the
said cases would be inapplicable.
14. In the instant case, the two cheques which are the subject matter of this
complaint were for the discharge of a liability of a debt arising out of the agreement
dated 14.6.2000 which debt had become time barred. This debt was not a legally
enforceable debt within the meaning of Section 138 Explanation of the NI Act.
Complaint and all proceedings emanating there from are accordingly quashed.
Manupatra Information Solutions Pvt. Ltd.
MANU/MH/0924/2009
Equivalent Citation: I(2010)BC398
IN THE HIGH COURT OF BOMBAY AT GOA
Criminal Appeal No. 26 of 2007
Appellants: Priya Bhobe
Vs.
Respondent: Speer Finance Pvt. Ltd. registered Company under Companies
Act, 1956, Mr. Shrikant Gawda S/o. Shanker Gawda, Mrs. Manisha Gawda
w/o. Shrikant Gawda and State
Hon'ble
N.A. Britto, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: S.G. Bhobe, Adv.
For Respondents/Defendant: Ryan Menezes, S. Samant, Advs. for Respondents
Nos. 1 to 3 and Winnie Coutinho, Public Prosecutor for Respondent No. 4
Subject: Banking
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act, 1881 - Sections 138 and 139
Cases
Ashwini Bhat 2005 (5) BomC.R. 9
Referred:
Disposition:
Appeal dismissed
JUDGMENT
N.A. Britto, J.
1. This is complainant's appeal and is directed against Judgment dated 16.10.2006
of the Learned Additional Sessions Judge, Panaji, acquitting the accused under
Section 138 of the Negotiable Instruments Act, 1881.
2. Heard Shri S.G. Bhobe, Learned Counsel on behalf of the complainant. The
complaint was filed with the allegation that accused No. 1 is a company of which
accused Nos. 2 and 3 were Directors who were in overall control of accused No. 1company and were jointly and severally liable for the liabilities of the company. The
complainant had stated that the accused owed to the complainant a sum of Rs.
3,40,000/and towards the payment of the same the accused had given to the
complainant the subject cheque dated 3.8.01 in the sum of Rs. 3,40,000/drawn on
the Mapusa Urban Co-operative Bank Ltd. which cheque when presented by the
complainant for payment was returned dishonoured on the ground of insufficient
funds. The complainant sent a notice to the accused dated 13.8.01 calling upon the
accused to make the payment of the said amount of Rs. 3,40,000/- within fifteen
days which was received by the accused but was not complied with and as such the
complaint came to be filed against the accused on 21.9.01 and the complainant
examined herself in support of the same.
3. None of the accused stepped in the witness box and it was their case taken in
cross examination, that the subject cheque was stolen by the complainant as the
complainant was occupying the office premises of the accused and moreover it was
further stated that the signature of accused No. 3 was forged by the complainant.
4. Initially, the accused appear to have been sentenced by the Learned trial Court
to simple imprisonment of a period of six months under Section 138 of the said Act
and also were directed to pay to the complainant a sum of Rs. 6,80,000/- by way of
compensation being twice the amount of the cheque and in default were directed to
undergo simple imprisonment for a period of six months. In fact it appears that the
Learned J.M.F.C who convicted and sentenced the accused aforesaid did not even
notice that the accused No. 1 was a company which could not be sentenced to
imprisonment.
5. Be that as it may, the accused filed an appeal before the Court of Sessions and
the Learned Additional Sessions Judge, was pleased to allow the appeal by the
impugned Judgment and in allowing the said appeal, the Learned Additional
Sessions Judge came to the conclusion that the complainant had miserably failed to
establish the transaction itself between the complainant and the other accused. The
Learned Additional Sessions Judge further held that the accused having taken a
stand/plea that the cheque was not issued for the discharge of a legally enforceable
debt or liability, it was upon the complainant to prove the circumstances under
which the cheque was given in her favour and the same was issued in discharge of
a legally enforceable debt, and, therefore unless this initial burden was discharged
by the complainant, presumptions available under Section 139 of the Act could not
be made use against the respondents. The Learned Additional Sessions Judge also
noted that the Learned trial Court while appreciating the evidence of the
complainant did not take into consideration the admissions of the complainant and
failure of the complainant in crossing the first hurdle in establishing that there was
any transaction between the complainant and the accused as averred in the
complaint and the complainant having failed to establish the said transaction there
could not be any presumption under Section 139 of the Act.
6. Be that as it may, Shri Bhobe, Learned Counsel, appearing on behalf of the
complainant, submits that both the defences taken by the accused that the subject
cheque was stolen by the complainant from their office and that the signature
thereon was forged having not been proved, there was no other option but to raise
the presumptions available to the complainant in terms of the relevant provisions of
the Act and on the basis of the same, held the accused guilty under Section 138 of
the Act as was done by the Learned Magistrate. Learned Counsel has further
submitted that the accused had also not given reply to the demand notice sent by
the complainant and therefore that fact also ought to have been considered by the
Learned Additional Sessions Judge.
7. Admittedly, the cheque in question, was signed by A-3 on behalf of A-1.
Admittedly also, the accused did not reply to the notice and that is one of the
circumstance against the accused, but there are far too many against the
complainant. By cross examination of the complainant, the accused had by ample
measure discharged the initial burden that consideration was not only improbable
but there was none.
8. The complainant filed the complaint with the allegations that it is the accusedcompany which owed a sum of Rs. 3,40,000/- to the complainant and towards
payment of the same that the subject cheque was given by the accused i.e. the
company. The complainant filed the complaint against the accused Nos. 2 and 3
because according to the complainant they were in overall control of the accused
No. 1-company, and, it was certainly not the case of the complainant that it is
accused No. 3 who was liable to pay the said sum of Rs. 3,40,000/- to the
complainant and on that count, accused No. 3 had issued the subject cheque on
behalf of the accused No. 1-company.
9. However, in cross examination, the complainant stated that she had not joined
accused Nos. 2 and 3 as Directors of accused No. 1company and further stated that
the subject cheque was issued by the accused No. 2 (it ought to have been accused
No. 3) and that the complaint was filed by the complainant because she had given
the some money to the accused Nos. 2 and 3. When the complainant was further
questioned as to whether she had any proof to show that the sum of Rs.
3,40,000/was advanced to accused No. 1, she replied stating that she had paid the
amount of Rs. 2,50,000/- to accused No. 1 by a cross cheque dated 27.10.95 and
Rs. 90,000/- to accused No. 1 in cash on 23.5.97 and she had documentary
evidence to support the said statement. In support of the said statements she
produced a xerox copy, without producing the original bank pass book, which
showed that the sum of Rs. 2,50,000/was paid to accused No. 3 on or about
4.11.95 and a Fixed Deposit Receipt in the name of her father-in-law Damodar A.
Bhobe in the sum of Rs. 90,000/-. First of all, it must be observed, that the said
xerox copy in the absence of production of the pass book, was clearly inadmissible
in evidence.
10. Learned Counsel on behalf of the complainant, fairly concedes, that there is
some prevarication in evidence of the complainant as compared to the complaint
originally filed. In my view, there is no way in which the complainant could have
succeeded. A reading of paras 2 and 3 of the com plaint clearly shows that it is A-1,
the company, which owed to her a sum of Rs. 3.40 lacs and towards payment of
the same that the cheque was issued. That was her case in affidavit in evidence as
well. However, in cross examination, the complainant stated that the legal liability
towards the cheque was that of A-2 (should be A-3) and tried to prove the same by
production of the xerox copy of the passbook and the fixed deposit receipt. It is a
well settled preposition of criminal law that a complainant cannot be allowed to
reconstruct a story different from the one propounded or pleaded in the complaint
and that is exactly what the complainant was found doing in the evidence produced
by her and on that count alone, her case ought to have been rejected. In other
words, the case in the complaint was that the money was advanced to A-1, the
company which has its own distinct identity and on whose behalfs the cheque was
issued. In the evidence, the complainant has tried to depose that the liability was
that of A-3 Smt.Gawda.
11. That apart, the accused in cross examination, were able to create a doubt as to
the existence of consideration that it was improbable and therefore it was for the
complainant to prove that the subject cheque was issued towards debt or liability
which either of the accused had towards her, which the complainant had failed to
prove. As already sated, the xerox copy of bank passbook, was clearly inadmissible.
Rs. 90,000/- were paid by her father-in-law for which he was issued a F.D.R.
Further, the complainant had admitted that the liability was of the year 1995 and
there was no written acknowledgment from that year. If that was so, the cheque
given in the year 2001, was given towards a time barred debt and therefore the
accused had not committed any offence (See Ashwini Bhat 2005 (5) Bom C.R. 9).
12. In the light of the above discussion, acquittal of the accused by the Learned
Additional Sessions Judge, could not be faulted. There is no merit in this appeal and
consequently the same is hereby dismissed.
MANU/DE/0486/2009
Equivalent Citation: 162(2009)DLT23, (2009)156PLR1
IN THE HIGH COURT OF DELHI
Crl. M.C. 1682/2008 and Crl. M.A. Nos. 6167 and 12878/2008
Appellants: Vijay Polymers Pvt. Ltd. and Anr.
Vs.
Respondent: Vinnay Aggarwal
Hon'ble
Mool Chand Garg, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff:P.D. Gupta Kamal Gupta an Abhishek Gupta, Advs
For Respondents/Defendant: Balwinder Ralhan, Adv.
Subject: Banking
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act - Sections 138 and 141; Contract Act - Section
25; Limitation Act - Section 18; Indian Evidence Act, 1872
Cases
Referred:
Sasseriyil Joseph v. Devassia SLP (Crl.) 1785/2001; Smt. Ashwini Satish Bhat v.
Shri Jeevan Divakar Lolienkar and Anr. 2000 (5) Bom CR 9; Girdhari Lal Rathi v.
P.T.V. Ramanujachari and Anr. 1998 Bank J. 127 : 2000 Do Ch. (A.P.) 420
Citing
Sasseriyil Joseph v. Devassia SLP (Crl.)
Reference:
Discussed
Smt. Ashwini Satish Bhat

v. Shri Jeevan Divakar Lolienkar and Anr.
Discussed
Girdhari Lal Rathi v. P.T.V. Ramanujachari and Anr.
Mentioned
Disposition:
Appeal dismissed
Case
Note:
Negotiable Instruments Act, 1881 - Section 138 - Limitation Act, 1963 Section 18 - Dishonor of cheque - Complaint - Cheques issued in lieu of a
debt which was not legally recoverable - Acknowledgement, if any, must
be there before period of limitation is over - Magistrate was right in
coming to the conclusion that it had not been proved that the dishonoured
cheque was in relation to a legally enforceable debt or liability in law Dishonoured cheque admittedly was issued after 5 years - Debt was not
legally enforceable at the time of issuance of cheque - Proceedings not
maintainable.
JUDGMENT
Mool Chand Garg, J.
1. The basis issues which involved in this case are:
(i) Whether the complaint dated 13.12.2007 (Annexure P-4) filed under Section
138 of the Negotiable Instruments Act (for short the N.I. Act) by respondent
against the petitioner is not maintainable in law inasmuch as, it is pleaded, that the
same is based upon the dishonor of a cheque which was issued by petitioner No. 2
in lieu of a debt which was not legally recoverable as alleged at the time of issuance
of the said cheque?
(ii) Whether the summoning order is sustainable in the facts of this case in view of
the judgment of Apex Court delivered in Special Leave to Appeal being SLP (Crl.)
1785/2001 decided on 10.9.2001?
2. This petition has been filed by the accused persons who were summoned to face
the trial in this case of a charge under Section 138/141 of the N.I. Act vide order
dated 21.01.2008, which order was passed by the trial court taking note of the
averments made in the complaint which was filed in support of the complaint. The
same reads as under:
Complainant examined by way of affidavit. Documents filed along with complaint
perused. Material on record prima facie discloses commissionof an offence under
Section 138 N.I. Act by accused. Let accused be summoned on filing of PF/RC,
approved courier, dasti for 25.03.08. Steps be taken within a week.
3. To appreciate the factual matrix of this case, it would be necessary to take note
of some of the paragraphs of the complaint which are reproduced hereunder:
2. That the accused No. 2 in the month of Jan 2002 approached and asked from the
complainant for a sum of Rs. 6,00,000/- (Rs. Six Lakhs Only) for the personal
needs/friendly loan as the accused was facing some financial crises. On the
accuseds request the complainant gave you a sum of Rs. 6,00,000/- (Rs. Six Lakhs
Only) through cheque No. 340787 drawn on Punjab National Bank, Lawrence Road
Branch, to the accused No. 2 as friendly loan. The said cheque was issued in favour
of noticee No. 1 and was debited in the account of the complainant on 01-02-2002.
3. That thereafter the complainant waited for some time as the accused had
promised to repay the friendly loan after six months but he failed to do so. After
considerable persuasion from the complainant the accused No. 2 in lieu of the
above mentioned friendly loan, issued two cheques bearing No. 817758 dated 2704-2006 and another bearing No. 817760 dated 31-05-2006 each for a sum of Rs.
50,000/- (Fifty Thousand Only) each, each drawn on Bank of India Rajendra Place
Delhi, Branch in favour of the complainant towards the part payment against the
outstanding dues towards the accused. The said cheques were however enchased
on presentation.
4. That thereafter the complainant again waited for some time and after
considerable persuasion from the complainant the accused No. 1, again in lieu of
above mentioned friendly loan, issued two cheques bearing nos.817772 dated 1408-2006 and another cheque bearing No. 817773 dated 30-08-2006 each for a sum
of Rs. 50,000/- (Fifty Thousand Only) each, each drawn on Bank of India Rajendra
Place Delhi, Branch in favour of the complainant towards the part payment against
the outstanding dues towards the accused. The said cheques were dishonored on
presentation but however the complainant did not take any action on the request of
the accused that the entire payment will be cleared very shortly.
5. That again after great persuasion from the complainant the accused No. 2 issued
one cheque bearing No. 350562 dated 05-05-2007 drawn on ICICI Bank Limited,
Punjabi Bagh branch, New Delhi for a sum of Rs. 50,000/- towards the part
payment against the outstanding dues towards the accused. That the complainant
presented the said cheque with the banker but the same was returned unpaid by
the accused banker with the remarks Funds Insufficient vide memo dated 07-052007. The complainant contacted the accused and the accused requested the
complainant to present the same after some time. The complainant again presented
the above cheque with his banker but the same was again returned unpaid by the
accuseds banker with the remarks Funds Insufficient as per memo dated 09-102007 of the accused bank and as per memo dated 12-10-2007 the complainants
bank which was received by the complainant on 15-10-2007.
6. That the above said cheque bearing No. 350562 dated 05-05-2007 drawn on
ICICI Bank Limited, Punjabi Bagh branch, New Delhi for a sum of Rs. 50,000/- was
issued by the accused No. 2 to the complainant with the clear understanding that
the same will be encashed on presentation.
7. That upon return of the said cheques, the Complainant issued a notice dated 1211-2007 i.e. within a stipulated period from the date of dishonoured cheques
having been handed over by the Complainants banker to her. The said notice was
duly serve duly served upon the Accused/Respondent. However, the
Accused/Respondent neither complied with the terms of the said notice nor replied
the same.
4. A perusal of the affidavit annexed with the complaint which has been relied upon
by the Metropolitan Magistrate while passing the impugned order also shows that
only the averments made in the complaint have been reiterated by the deponent.
5. One thing which is important and can be taken note of is that neither in the
complaint nor in the notice nor in the affidavit it has been stated that the debt
which became time barred i.e. the amount of Rs. 6 lakhs which was paid by the
complainant to petitioner No. 1 at the asking of petitioner No. 2 on 1.2.2002 was
ever acknowledged within the period of limitation so as to keep the liability alive.
6. A perusal of the complaint and other documents as referred to above goes to
show that the complainant had paid a sum of Rs. 6 lakhs by way of cheque to
petitioner No. 1 at the asking of petitioner No. 2 somewhere in January, 2002 and
the said cheque was credited in the account of petitioner No. 1 on 1.2.2002 and
was payable after six months and was not paid within three years from 31.8.2002
that is the period within which it was under limitation and as such the loan became
time barred as on 31.8.2002. A perusal of the complaint also clarified that first two
cheques which stated to have been paid to the complainant by the petitioners were
paid on 27.4.2006 and 31.5.2006. Thus those cheques were paid after three years
of the friendly loan having became time barred. Similarly, the cheques issued in
lieu of the original cheque i.e. a cheque of Rs. 50,000/- bearing No. 817773 dated
30-08-2006 and another cheque bearing No. 350562 dated 05-05-2007.
7. It is submitted on behalf of learned Counsel for the petitioners that in view of
provisions of Section 138 of the N.I. Act and if the same read along with
explanation, it is apparent that the offence under Section 138 of the N.I. Act as per
the scheme of the Act can be fastened on an accused only if he commits a default
in repayment of the dishonoured cheque which was issued in discharge of a legally
recoverable debt.
8. Counsel for the petitioners relies upon a judgment delivered by the Apex Court in
SLP (Crl.) 1785/2001 reported in Sasseriyil Joseph v. Devassia decided on
10.09.2001. The same is reproduced hereunder:
We have heard learned Counsel for the petitioner. We have perused the judgment
of the High Court of Kerala in Criminal Appeal No. 161 of 1994 confirming the
judgment/order of acquittal passed by the Addl. Sessions Judge, Thalassery in
Criminal Appeal No. 212 of 1992 holding inter alia that the cheque in question
having been issued by the accused for due which was barred by limitation the penal
provision under Section 138 of the Negotiable Instrument Act is not attracted in the
case. On the facts of the case as available on the records and the clear and
unambiguous provision in the explanation to Section 138 of the Negotiable
Instrument Act the judgment of the lower appellate court as confirmed by the High
Court is unassailed. Therefore, the special leave petition is dismissed.
9. Counsel for the complainant/respondent on the other hand tried to suggest that
in view of Section 25 of the Contract Act, once the cheque was issued by the
petitioners in lieu of their admitted liability, the dishonor of a cheque issued by
them and non-payment thereof despite receipt of the notice makes out a case
against them under Section 138 of the N.I. Act and therefore, the complaint filed by
the complainant was maintainable in accordance with law.
10. To appreciate the contentions of parties, the provisions contained under Section
138 of the N.I. Act are reproduced hereunder:
Section 138 - Dishonour of cheque for insufficiency, etc., of funds in the account
Where any cheque drawn by a person on an account maintained by hi m 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 sh all be deemed to have committed an offence and sh all,
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 dr awn 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 drawer of the cheque, 2 [within thirty days] of the receipt of
information by hi m 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
purposes of this section, "debt or other liability" means a legally enforceable debt or
other liability.]
11. At this juncture, it would also be appropriate to take note of Section 18 of the
Limitation Act which deals with acknowledgement and explanation of limitation
which reads as under:
Section 18 - Effect of acknowledgment in writing( limitation act)(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.
12. A perusal of the aforesaid provision clearly goes to show that for analyzing the
limitation of a civil liability beyond a period of three years, the acknowledgement, if
any, must be there before period of limitation is over, which is not the case.
13. It may also be relevant to take note of the judgment delivered by the Bombay
High Court in Smt. Ashwini Satish Bhat v. Shri Jeevan Divakar Lolienkar and Anr.
MANU/MH/0487/2000 : 2000(5)BomCR9 , wherein also in a similar case when a
cheque was dishonoured which issued beyond the period of limitation the appeal
filed by the complainant was dismissed. The relevant observations made in this
regard in the aforesaid judgment are reproduced hereunder:
3. On the other hand, learned Advocate Shri C.A. Ferreira, appearing for the
respondent, submitted before me that the dishonoured cheque in question was not
in respect of a legally enforceable debt and in view of Explanation to Section 138 of
the said Act, the Magistrate has rightly acquitted the respondent on the said count
as well as on the ground that there was doubt as to whether the amount mentioned
in the said cheque was in the handwriting of the respondent as the defence of the
respondent is that he had handed over to the appellant a blank cheque. In support
of his submission that the dishonoured cheque in question is not in connection with
any legally enforceable debt, reliance was placed by him on Girdhari Lal Rathi v.
P.T.V. Ramanujachari and Anr. 1998 B J. 127 : 2000 DC. (A.P.) 420. He, therefore,
submits that there is no case for interference with the acquittal.
4. The complainant, respondent and one Shankar Prabhudessai had entered into
partnership vide Partnership Deed Exhibit P.W. 1/D on 24th August 1990. This
partnership was dissolved on 13th June 1991 after an agreement was executed
between the parties under which the respondent agreed to pay a sum of Rs.
1,53,724 to the appellant/complainant within 12 months and in case he fails to
make the said payment during the said period, the said amount was to carry bank
interest from the date of the agreement. The case of the complainant further is that
the respondent did not pay the amount as agreed under the said Agreement dated
13th June, 1991, but on 19th July, 1996 the respondent issued cheque for Rs.
3,87,500/- and this cheque has bounced.
5. The defence had taken the stand that the dishonoured cheque was not in relation
to any legally enforceable debt and, as such, the respondent could not be held
guilty under Section 138 of the said Act. The contention of learned Advocate for the
appellant is that this cheque dated 19th July 1996 itself is an acknowledgement of
debt and, as such, there is no merit in the submission of the defence that the
liability under dishonoured cheque is not on account of legally enforceable debt.
Insofar as the dishonoured cheque is concerned, the stand taken by the respondent
is that the cheque was not written by him and it is not in his handwriting and that
he had, in fact, issued a blank cheque in favour of the appellant for certain purpose.
This stand was specifically taken by the respondent in the course of the trial and, as
such, it was necessary for the complainant to have sought the opinion of
handwriting expert in case her case was that the cheque in question was in the
handwriting of the respondent, so as to rebut the theory of blank cheque taken by
the respondent. It is in these circumstances that the Magistrate had come to the
conclusion that the dishonoured cheque in question cannot be treated as
acknowledgement under Section 18 of the Limitation Act, since the
acknowledgement should be before the period of limitation is over and that it
should be in writing. In view of this position, the Magistrate was right in coming to
the conclusion that it had not been proved that the dishonoured cheque was in
relation to a legally enforceable debt or liability in law. The dishonoured cheque
admittedly was issued after 5 years of the said Agreement dated 13th June 1991.
6. The ruling upon which reliance has been placed by the learned advocate for the
respondent is applicable on all fours. In that case loan was advanced in the year
1985 and the cheque was issued in the year 1990. By the time the cheque was
issued, the debt was barred by limitation because no acknowledgement was
obtained before the expiry of 3 years from the date of loan. In these circumstances,
it was held there that the debt was not legally enforceable at the time of issuance
of cheque and the accused could not be punished under Section 138 of the said Act.
In the light of Explanation to the said section, it was further held therein that in
case a cheque is issued for time barred debt and it is dishonoured, the accused
cannot be convicted under Section 138 on the ground that the said debt was not
legally recoverable.
7. For the aforesaid reasons, I do not find any merit in this appeal and the appeal is
liable to be dismissed. The appeal is accordingly dismissed.
14. No contrary judgment has been cited on behalf of the complainant/respondent.
Accordingly the petition is allowed. The complaint dated 13.12.2007 and all the
proceedings emanating therefrom are hereby quashed. Crl. M.A. Nos. 6167/2008
and 12878/2008 In view of the orders passed, applications are disposed of.
MANU/TN/0250/2008
Equivalent Citation:
IN THE HIGH COURT OF MADRAS
Criminal Appeal No. 1296 of 2002
Appellants: Emirates Finance (P) Ltd. rep. by its Accountant Krishnan
Vs.
Respondent: V. Harikrishnan
Hon'ble
P.R. Shivakumar, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: Walter Solomon, Adv.
For Respondents/Defendant: A.C. Jayalakshmi, Legal Aid Counsel
Subject: Criminal
Subject: Banking
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act, 1983 - Section 138; Criminal Procedure Code (CrPC) Sections 200 and 313
Disposition:
Appeal dismissed
JUDGMENT
P.R. Shivakumar, J.
1. This Criminal Appeal has been filed against the judgment of the learned XVIII
Metropolitan Magistrate, Saidapet, Chennai, made in CC No. 411 of 1999 dated
8.5.2002 thereby acquitting the accused.
2. The above said Calendar Case was taken on file by the learned XVIII
Metropolitan Magistrate based on the complaint of the appellant herein preferred
under Section 200 Cr.P.C. alleging that the respondent herein had committed an
offence punishable under Section 138 of the Negotiable Instruments Act, 1983.
3. According to the appellant/complainant, the respondent obtained a loan of Rs. 3
lakhs promising to repay the same with interest @ 36% per annum and in
discharge of the said debt and a cheque dated 11.9.1998 was issued by the
respondent for the above said amount. When the said cheque was presented for
encashment on 14.9.1998 through the appellant's banker, the same was returned
on 15.9.1998 with an endorsement "insufficient funds". The statutory notice issued
thereafter on 22.9.1998 was received by the respondent on 23.9.1998. Even after
the receipt of the said notice, the respondent did not make payment of the amount
covered by the cheque within the statutory period, but chose to issue a reply
notice. Hence, the complaint was preferred for prosecuting him for the offence
under Section 138 of the Negotiable Instruments Act.
4. The respondent, who appeared before the trial court on receipt of process,
pleaded not guilty and denied the allegations found in the complaint. During trial,
three witnesses were examined and 10 documents were marked on the side of the
appellant/complainant. When the incriminating part of the evidence adduced on the
side of the complainant was pointed out and the respondent/accused was examined
under Section 313 Cr.P.C., besides denying such incriminating evidence, the
respondent has taken a specific stand that the cheque was not issued for the
discharge of a legally recoverable debt. The learned Magistrate, after meticulously
examining the evidence adduced in this case, came to the conclusion that the
appellant/complainant failed to prove that the cheque was issued for the discharge
of a legally recoverable debt or other liability and in line with the said finding, the
learned Magistrate acquitted the respondent/accused by her judgment dated
8.4.2002. Challenging the correctness and the legality of the said judgment of
acquittal, the present appeal has been preferred on the file of this Court.
5. The arguments advance on behalf of the appellant and the respondent have
been heard. The materials available on record were also perused by this Court.
6. The unsuccessful complainant before the trial court is the appellant in this
appeal, which has been filed against the acquittal of the accused in C.C. No. 411 of
1999 on the file of the learned XVIII Metropolitan Magistrate, Saidapet, Chennai.
The respondent herein stood charged for committing an offence punishable under
Section 138 of the Negotiable Instruments Act. Upon perusing the records and reappraising the evidence in the light of the arguments advanced by the learned
Counsel appearing on either side, this Court is not able to find out any discrepancy
or infirmity in the approach of the learned Magistrate and the decision made by the
said Magistrate holding the respondent/accused not guilty of the offence with which
he stood charged. Though the appellant/complainant had stated in its complaint
that the cheque was issued in discharge of the debt due to the
appellant/complainant to the tune of Rs. 3 lakhs, there are no details regarding the
date on which the amount was borrowed and the documents executed for the
same. Though the details of the cheque has been furnished in the complaint, the
language of the complaint has been couched in such a way that one going through
the complaint would be guessing as to what could be the date on which the cheque
was actually issued. Such an ingenious method of drafting the complaint has been
adopted. Learned Counsel for the respondent, pointing out the said fact, has
contended that in fact, the blank cheque without date was handed over as an
additional security for the loan advanced by the appellant/complainant and that the
same was subsequently filled up by putting a date in 1998 and used by the
appellant in this case.
7. In support of the said contention, the learned Counsel has taken this Court
through the evidence of PW1, who during cross-examination, has candidly admitted
that the loan was advanced in 1993, a pronote as well as the blank cheque was
obtained in 1993 and the cheque was presented for collection in 1998, on the
instructions of the respondent/accused. The implication of the said admission is
twofold. They are : (i) the admission that the cheque was issued as a security for
the loan and not for the discharge of the loan is to be used in support of the case of
the respondent/accused that the cheque was not issued for the discharge of a debt
or other liability as provided under Section 138 of the Negotiable Instruments Act.
The said admission itself will be enough to rebut the presumption provided under
Section 139 of the Negotiable Instruments Act. (ii) The second implication of the
said admission is that the debt which was incurred by the respondent/accused in
the year 1993 was time barred even before the date of the cheque. Hence, the
cheque could not be construed as one issued in discharge of a legally recoverable
debt or other liability. It is not the case of the appellant/complainant that the debt
incurred in the year 1993 was subsequently acknowledged giving a new start of
limitation. It is also not the case of the appellant/complainant that a fresh promise
was made for the payment of the time barred debt and the time barred debt itself
proved to be the consideration for such a fresh promise.
8. The learned Magistrate has marshalled the evidence in this regard properly and
has come to the correct conclusion that the appellant/complainant failed to prove
the charge against the respondent/accused beyond reasonable doubt and that the
respondent accused was entitled to be acquitted, holding him not guilty of the
offence for which he stood charged. There is no merit in this appeal as no scope
whatsoever is found to interfere with the well considered judgment of the trial
court. The judgment of the trial court deserves to be confirmed.
9. Accordingly, the criminal appeal is dismissed. The remuneration of the learned
Counsel for the respondent shall be paid in accordance with the schedule of fee
applicable to the Legal Aid Counsel.
MANU/KA/1143/2006
Equivalent Citation: [2007]138CompCas816(Kar), 2007(1)KarLJ238
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
Criminal Appeal No. 377/2002
Appellants: H. Narasimha Rao S/o Sri S.R. Hanumantha Rao
Vs.
Respondent: Venkataram R. S/o Sri T.C. Ramakrishnaiah
Hon'ble
K. Bhakthavatsala, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: H.T. Nataraja, Adv.
For Respondents/Defendant: B.C. Rajanna, Adv.
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act - Section 118, 138, 139; Code of Criminal Procedure
(Crpc) - Section 378(4); Indian Contract, 1972 - Section 25(3)
Cases
Referred:
A.V. Murthy v. B.S. Nagabasavanna 2002 AIR SCW 694; Ramakrishnan v.
Parthasaradhy 2003 (3) Indian Civil Cases 662; Hawkers v. Saunders (1782) 98 ER
1091
Disposition:
Appeal allowed
Citing
A.V. Murthy v. B.S. Nagabasavanna
Reference:
Discussed
Ramakrishnan v. Parthasaradhy
Mentioned
Hawkers v. Saunders
Discussed
Case
Note:
Banking Dishonour of Cheque Time-barred debt Section 138 of
Negotiable Instruments Act, 1881 (the Act) Complainant granted loan
to Accused on condition of repayment within short period Accused
issued two cheques in favour of Complainant towards discharge of loan
On presentation, cheques were bounced Complainant issued demand
notice, the receipt of which was acknowledged by Accused but untenable
reply was sent along with Therefore, Complainant had filed complaint
under Section 138 of the Act against Accused Magistrate, however,
acquitted Accused on ground that Accused could not be held liable to pay
any time barred debt Hence, present appeal Held, there was no legal
bar for debtor agreeing to pay time barred debt No fresh consideration
was required for debtors promise to pay time barred debt Moreover,
undisputed signatures on cheques by Accused constitute agreement to pay
time barred debt Offence under Section 138 made out Appeal allowed
JUDGMENT
1. The short question that arises for consideration in this appeal is:
Whether the dishonoured cheques issued towards repayment of time barred debt
does not constitute an offence under Section 138 of the N.I. Act?
2. Heard Sri H.T. Nataraja, learned Counsel for the appellant/complainant and Sri
B.C. Rajanna, learned Counsel for the respondent/accused.
3. For the purpose of convenience, the appellant and the respondent herein are
referred to as 'the complainant' and 'the accused', respectively.
4. The complainant and the accused were friends and colleagues in the then
Karnataka Electricity Board. When the accused was about to retire, he approached
the complainant for a loan of Rs. 60,000/- and agreed to repay the same within a
short period. The complainant advanced a sum of Rs. 60,000/- to the accused in
this way that a sum of Rs. 200/- was paid in cash and the balance amount of Rs.
59,800/- was paid by three cheques. The accused has encashed the cheques.
Though the loan amount was repayable within a short period, the accused took
undue advantage of friendship with the complainant and agreed to repay the loan
within six months with interest at the rate of 8% p.a., but the accused failed to
keep up his promise. On complainant's persistent demand, the accused issued two
cheques, one bearing No. 152400 dated 15.5.1999 for a sum of Rs. 50, 000/- and
another cheque bearing No. 152921 dated 25.5.1999 for a sum of Rs. 10, 000/both drawn on the Bangalore City Co-operative Bank Limited, Bangalore, in favour
of the complainant towards discharge of the loan amount stating that the cheques
would be honoured on presentation to the Banker. But when the cheques were
presented, they were bounced and returned on 1.6.1999 with an endorsement
"funds insufficient". The complainant issued a demand notice dated 10.6.1999
calling upon the accused to pay the amount of dishonoured cheques within 15 days.
The accused acknowledged the receipt of the same but sent an untenable reply
dated 24.6.1999. Therefore, the complainant filed a private complainant against the
accused for the offence under Section 138 of the Negotiable Instruments Act (in
short, 'the Act'). The accused denied the accusation. The complainant has got him
examined as P.W-1 and got marked Exs.P-1 to P-10. In rebuttal, the accused has
got him examined as D.W-1 besides examining one Khalandar Baigh as D.W-2.
5. The learned Magistrate has accepted the evidence of the complainant and held
that in the year 1994, the complainant gave loan of Rs. 60,000/- to the accused,
but rejected the complainant on the ground that the accused had issued the
cheques in the month of May 1999 as against time barred debt, and there was no
evidence to show that the accused had acknowledged the debt within 3 years of
loan. Therefore, the trial court recorded an order of acquittal in favour of the
accused. This is impugned in this appeal.
6. The learned Counsel for the complainant submitted that the learned Magistrate
committed an error in dismissing the complaint. He cited the following decisions
reported in:
(i) AIR 2002 SCW 694 ( A.V. Murthy v. B.S. Nagabasavanna) and
(ii) 2003 (3) Ind Cas 662 (Ramakrishnan v. Parthasaradhy).
7. The learned Counsel for the respondent/accused submitted that there is no

illegality or infirmity in the impugned judgment.
8. The complainant has produced pass books at Exs.P-8 and P-9. As per Exs.P-8
and P-9, the pass books of the complainant, issued by Union Bank of India and
Syndicate Bank, it is crystal clear that the accused has drawn in all amounting to
Rs. 59,800/- between 31.5.1994 and 12.6.1994, A sum of Rs. 200/- was paid in
cash by the complainant to the accused. The learned Trial Judge rejected the
contention of the accused that he drew the amounts and paid the complainant and
held that the complainant had advanced hand loan of Rs. 60,000/- to the accused
in the year 1994.
9. Section 138 of the Act, which was inserted by Amendment Act, 1988, and came
into force from 1.4.1989 reads as under:
138. Dishonour of cheque for insufficiency, etc, of funds in the account.- Where any
cheque drawn by a person on an account maintained by him with a banker for
other provision of this Act, be punished with imprisonment for a term which may
extend to one year, or with fine which may extend to twice the amount of the
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 drawer of the cheque, within fifteen 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
cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally
enforceable debt or other liability.
10. Admittedly, the loan transaction took place in the month of May, 1994. The
accused issued two cheques one cheque dated 15.5.1999 for a sum of Rs. 50,000/and another cheque dated 25.5.1999 for a sum of Rs. 10,000/- (both drawn on
Bangalore City Cooperative Bank Limited, Bangalore,) in favour of the complainant
towards discharge of the loan amount. As on 12.6.1997, the entire debt of Rs.
60,000/- had become time barred, but there is no legal bar for the debtor agreeing
to pay the time barred debt. No fresh consideration is required for debtor's promise
to pay the time barred debt. There is moral obligation on the accused, who is none
other than the friend of the complainant, to refund the loan amount. It would be
useful to refer to the observation made by Lord Mansfield, in Hawkers v.
Saunders (1782) 98 ER 1091, which reads as under:
Where a man is under a legal or equitable obligation to pay, the law implies a
promise, though none was ever actually made. A fortiori, a legal or equitable duty
is a sufficient consideration for an actual promise. Where a man is under a moral
obligation, which no Court of Law or Equity can enforce, and promises, the honesty
and rectitude of the thing is a consideration. As if a man promises, to pay a just
debt, the recovery of which is barred by the Statute of Limitations: or, if a man,
after he comes of age, promises to pay a meritorious debt contracted during his
minority, but not for necessaries; or if a bankrupt, in affluent circumstances after

his certificate, promises to pay the whole of his debts; or if a man promises to
perform a secret trust, or a trust void for want of writing, by the Statute of Frauds.
In such and many other instances, though the promise gives a compulsory remedy,
where there was none before either in law or equity; yet as the promise is only to
do what an honest man ought to do, the ties of conscience upon an upright mind
are a sufficient consideration.
11. The Hon'ble Apex Court in A.V. Murthy v. B.S. Nagabasavanna, supra, has
made an observation in para-5 of the judgment as under:
...Under Section 118 of the Act, there is a presumption that until the contrary is
proved, every negotiable instruments was drawn for consideration. Even under
Section 139 of the Act, it is specifically stated 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 Section138 of discharge, in whole or in part, of any debt or other
liability. It is also pertinent to note that under Sub-section (3) of Section 25 of the
Indian Contract, 1972, 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, is a valid contract....
12. The Division Bench of the Kerala High Court in Ramakrishnan case, supra,
following the ratio laid down in the A.V. Murthy's case, supra, held that when a
person writes, signs and delivers a cheque to another it is an acknowledgment of a
legally enforceable liability and therefore, if the cheque is dishonoured 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 Section 138 of the Act.
13. The complainant has not disputed his signature on the dishonoured cheques in
question. Therefore, they constitute an agreement or promise by the debtor to pay
the time barred debt. Since the accused has not paid the cheque amounts inspite of
demand made by the complainant the accused has committed an offence under
Section 138 of the Act. The learned Magistrate has committed an error in
dismissing the complaint and recording an order of acquittal in favour of the
accused.
14. For the foregoing reasons, I answer the point formulated for my consideration
in the negative.
In the result, the Appeal is allowed and the impugned judgment dated 20.11.2001
made in CC No. 35100/1999 on the file of XVI Addl. Chief Metropolitan Magistrate
at Bangalore, is set aside and the respondent/accused is convicted for the offence
under Section 138 of the Act and sentenced to pay a sum of Rs. 1,00,000/-, failing
which the accused shall undergo SI for six months. If the fine amount is recovered,
the appellant/complainant shall be paid a sum of Rs. 90,000/-, as compensation.
MANU/KA/0046/2009
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
Appellants: Prabhakar K. Prabhu, S/o. Late K.S. Prabhu
Vs.
Respondent: Ganapathi A. Prabhu S/o. Late. A.A. Prabhu
Hon'ble
K. Ramanna, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: I. Taranath Poojary, Adv.
For Respondents/Defendant: S. Vishwajith Shetty, Adv.
Subject: Criminal
Subject: Banking
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instument Act - Sections 118, 138 and 139; Criminal Procedure Code
(CrPC) - Section 378(4)
Cases
Referred:
A.V. Murthy v. B.S. Nagabasavanna ILR 2002 SC 985; Modi Cements Ltd. v. Kuchil
Kumar Nandi 1998 Crl.L.J 1397; K.N. Beena v. Muniyappan and Anr. 2001 CRL.L.J
4745; Hiteh P. Dalal v. Bratindranath Banerjee AIR 2001 SC 3897
JUDGMENT
K. Ramanna, J.
1. This appeal is filed by appellant-complainant under Section 378[4] of Cr.P.C to
set aside the judgment and order of dismissal of C.C. No. 51/2000 passed by the
JMFC [IV Court) Mangalore, dated 22-8-2000 praying to convict the respondent for
an offence punishable under Section 138 of N.I. Act.
2. The case of the appellant in nutshell is that the respondent has issued the post
dated cheque-Ex. P.2 dated 31-3-1998 for Rs. 21,800 drawn on Canara Bank,
Mazagaon, Mumbai, when it was presented for encashment it came to be
dishonoured on the ground that payment stopped by the drawer, to that effect the
banker of the appellant had issued endorsement dated 16-4-1998, therefore he got
issued demand notice, inspite of service of notice he neither paid the amount nor
sent any reply therefore, a private complaint came to be filed. In pursuance to the
summons issued, respondent appeared through counsel. To prove his case
appellant was examined himself as P.W.1 and also examined one M. Panduranga
Kamath as P.W.2, where as the respondent examined himself as D.W.1 and got
marked two documents, Certified copy of the order in S.C. 3093/1971 and the
decree passed therein, as Ex.D.1 and D.2 respectively. After recording 313
statement and considering the evidence of both parties, trial court dismissed the
complaint filed against the respondent, on the ground that amount covered under
the cheque is time barred and that issuance of cheque will not save the limitation
unless there is an acknowledgment of the debt. Hence this appeal.
3. Heard the arguments of the learned Counsel appearing on both sides and
perused the documents placed on record.
4. It is contended by counsel for appellant that though the notice was duty served
on the respondent be has failed to comply with the demand made in the same, the
endorsement issued by the banker marked at Ex.P.3 that the respondent himself
issued the letter stop payment letter therefore the banker did not encashed the
cheque. It is argued that there is no specific reply sent by the respondent and he
has taken the defence only during trial. It is argued that the defence taken during
the trial court that he lost the cheque therefore he has sent a letter to stop
payment. The respondent did not dispute his liability to make payment as covered
under the cheque the conclusion arrived by the trial court without taking into
consideration the admissions made by the respondent and the finding recorded by
the trial court that it is a time barred debt is totally incorrect, perverse and illegal.
Hence it is prayed to allow the appeal.
5. While arguing the case the learned Counsel for the appellant has relied on the
number of decision namely
In case of A.V. Murthy v. B.S. Nagabasavanna ILR 2002 SC 985 it has been held
thus:
Dishonour of cheque - Complaint alleging that cheque was drawn to pay back
amount advanced by complainant 4 years back -Dismissal at threshold on ground
that as amount was advanced 4 years prior there was no legally enforceable debt Not proper -Consideration for cheque is presumed under Sections 118, 139 Moreover drawer in his balance sheet prepared for every year, had shown the
amount as deposits from friend - This may amount to acknowledgement - Dismissal
complaint on ground that cheque drawn was in respect of a debt or liability, which
was not legally enforceable - Is illegal and erroneous.
In case of Modi Cements Ltd. v. Kuchil Kumar Nandi MANU/SC/0171/1998 :
1998CriLJ1397 it has been held thus:
Dishnour of cheque - Presumption under Section 139 in favour of holder is followed
once -Cheque is issued by drawer - Notice by drawer to drawee or to bank for
stoppage of payment -Would not preclude action under Section 138 by drawee.
In case of K.N. Beena v. Muniyappan and
2001CriLJ4745 wherein, it has been held thus:
Anr.
MANU/SC/0661/2001 :
Cheque dishonour complaint - Burden of proving that cheque had not been issued
for any debt or liability - Is on the accused -Denial/averments in reply by accused
are not sufficient in shift burden of proof onto the complainant - Accused has to
prove in trial by leading cogent evidence that there was no debt or liability - Setting
aside of conviction on basis of some formal evidence led by accused - Not proper.
In case of Hiteh P. Dalal v. Bratindranath Banerjee MANU/SC/0359/2001 :
2001CriLJ4647 it has been held thus: Presumption that cheque was drawn for discharge of liability of drawer - Is
presumption of law - Ought to be raised by Court in every case - Rebuttal evidence
- Nature - Mere plausible explanation is not sufficient - Proof of explanation is
necessary.
6. It is submitted that liability to pay royalty is a continuous liability therefore the
question of limitation does not arise. Therefore, the judgment and order of
dismissal of complaint and acquitting the respondent for the offence under
Section 138 of N.I. Act is liable to be set aside and he be convicted for the same.
7. As against this the learned Counsel for respondent submitted that the royalty to
be payable to the appellant-complainant by the respondent as a managing partner
of JAGANNIVASA RESTAURANT, since the appellant was a shareholder therefore the
royalty to be payable to him cannot become a debt to attract the provision of
Section 138 of N.I. Act. Therefore the trial court rightly come to the conclusion that
it is a time barred debt. The payment if any made by way of cheque cannot be
considered as a cheque. It is argued that as per the evidence of P.W.1 he is entitled
to get monthly royalty at Rs. 200/- per month, but the same does not corroborate
with the cheque-Ex. P.2. Even otherwise the appellant is entitled to recover at the
rate of Rs. 200/- p.m for the period of 3 years. There is no acknowledgment as
such made by the respondent to recover such a debt. Therefore he prays for
dismissal of appeal.
8. Having heard the arguments for counsel for both parties the point that arises for
consideration is whether the trial court is justified in holding that amount covered
under the cheque Ex. P.2 is not legally enforceable and the same is time barred?
9. Admittedly respondent is the cousin of the appellant. The cheque Ex.P-2 belong
to the respondent. The same came to be dishonoured when presented for
encashment with shara 'payment stopped by the drawer'. The signature and the
amount found in the cheque is not in dispute. According to appellant, the
respondent issued the said cheque towards payment of share of appellant and his
brother out of the amount collected by respondent as royalty of Jagan Nivas
restaurant, Bombay. However, the respondent disputes the same and he claimed
that the cheque in question was lost when the same was kept signed in his house
and that the appellant who is the relative of respondent and frequently coming to
his house has stolen the said cheque and filed false complaint against him. The
respondent had not sent any reply to the demand notice sent by the appellant in
spite of service of the same. Even in examination-in-chief before the Court,
respondent has not stated anything about theft, of the cheque in question. Only
during cross examination, he has come up with the theory that the cheque has
been stolen. The respondent does not dispute his liability to pay appellant his share
in the royalty collected by him in respect of Jagan Nivas Restaurant situated in
Bombay, which was originally owned by the fathers of appellant and respondent
According to appellant, from the year 1960, the father of appellant was paying
royalty of Rs. 200/- to the appellant; that the father of appellant died during 1952,
father of respondent died during 1990. Thereafter, the respondent being the
Managing partner, was receiving royally from 1990. The trial Court though come to
the conclusion that the cheque in question came to be issued by respondent to the
appellant towards payment of his share in the royalty, dismissed the complaint
holding that since respondent is entitled to a sum of Rs. 200/- per month towards
his share in the royalty, the amount covered in the cheque would come over to 9
years and 1 month and that appellant cannot recover from the respondent any
amount more than 3 years prior to date of cheque and thus held that amount
covered in the cheque is partly barred by limitation and the appellant cannot
recover the same. Thus, come to the conclusion that there is no legally enforceable
debt or liability under the cheque Ex.P-2.
10. According to appellant, the respondent was collecting the royalty as a Managing
partner and he issued the cheque Ex.P-2 towards payment of share of himself and
his brothers. Though respondent has put his defence, that he has lost the chequeEx. P. 2, he has not filed any police complaint to that effect. As such, his theory
cannot be believed. When once the signature and contents of the cheque is not
disputed, burden is on the respondent to prove under what circumstances he issued
the said cheque. There is always a presumption available in favour of the holder of
the cheque that the drawer of the said cheque issued the same towards payment of
legally recoverable debt or liability. In the instant case, the respondent though put
his defence has not substantiated the same by producing documentary evidence to
that effect. Mere denial of the case of the appellant and putting forward a new case
will not constitute rebuttal of appellant's evidence. The trial Court without carefully
scrutinising the material evidence placed on record, come to the conclusion that
respondent had rebutted the presumption available in favour of appellantcomplainant Of course, the Jagan Nivas Restaurant was sold during December 2000
and the safe proceeds have been divided among appellant, respondent and others.
But the cheque in question is prior to the said date. The respondent has failed to
rebut the evidence of appellant that there is legally recoverable debt under the said
cheque. The amount covered under the cheque is the share of the appellant and his
brothers, out of the royalty collected by the respondent in respect of Jagan Nivas
Restaurant, it is not a loan lent or debt which was covered under the said cheque.
The share of the royalty which was accumulated and was with the respondent who
was the managing partner of Jagan Nivas Restaurant, to which appellant was also a
partner was given to appellant which cannot be termed as time barred debt, though
it relates to periods more than 3 years from the date of issuance of the cheque. The
amount accrued to the share of appellant is a recurring amount and it does not
require any subsequent acknowledgment as that of a debt Therefore, the trial Court
erred in holding that the amount covered under the cheque-Ex.P-2 is partly time
barred. Thus, the order of acquittal passed by the trial Court is liable to be set
aside.
11. Therefore, this appeal is allowed in part. The judgment and order of acquittal
passed by trial Court is hereby set aside. The respondent is convicted for the
offence punishable under Section 138 of N.I. Act and is sentenced to pay a fine of
Rs. 30,000/-, in default, to undergo simple imprisonment for three months. After
deposit of the fine amount Rs. 28,000/- shall be payable to the appellant as
compensation and the balance of Rs. 2,000/- shall be credited to the state
exchequer.
MANU/KA/8433/2006
Equivalent Citation: 2007CriLJ583
IN THE HIGH COURT OF KARNATAKA
Appellants: H. Narasimha Rao
Vs.
Respondent: R. Venkataram
Hon'ble
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: H.T. Nataraja, Adv.
For Respondents/Defendant: B.C. Rajanna, Adv.
Subject: Criminal
Subject: Banking
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instrument Act, 1881 - Sections 118, 138 and 139; Negotiable
Instrument (Amendment) Act, 1988; Indian Contract Act, 1972 - Section 25(3)
Cases
Referred:
A.V. Murthy v. B.S. Nagabasavanna 2002 AIR SCW 694; Ramakrishnan v.
Parthasaradhy 2003 (3) Indian Civil Cases 662; Hawkers v. Saunders 1782 98 ER
1091
Disposition:
Appeal allowed
Case
Note:
NEGOTIABLE INSTRUMENTS ACT, 1881 (AMENDMENT ACT, 1988) SECTION 138--offence under-repayment of time barred debt-issue of
cheque-whether constitute an offence--HELD, Since no fresh consideration
is required to pay the time barred debt, and there is no legal bar for the
debtor agreeing to pay the time barred debt, the dishonoured cheques
issued towards repayment of time barred debt does constitute an offence
under Section 138 of the Act--Order of acquittal is set aside.
Appeal is allowed.
JUDGMENT
1. The short question that arises for consideration in this appeal is:
Whether the dishonoured cheques issued towards repayment of time barred debt
does not constitute an offence under Section 138 of the N.I. Act?
2. Heard Sri H.T. Nataraja, learned Counsel for the appellant/complainant and Sri
B.C. Rajanna, learned Counsel for the respondent/accused.
3. For the purpose of convenience, the appellant and the respondent herein are
referred to as 'the complainant' and 'the accused', respectively.
4. The complainant and the accused were friends and colleagues in the then
Karnataka Electricity Board. When the accused was about to retire, he approached
the complainant for a loan of Rs. 60,0007 and agreed to repay the same within a
short period. The complainant advanced a sum of Rs. 60,0007 to the accused in
this way that a sum of Rs. 2007 was paid in cash and the balance amount of Rs.
59,8007- was paid by three cheques. The accused has encashed the cheques.
Though the loan amount was repayable within a short period, the accused took
undue advantage of friendship with the complainant and agreed to repay the loan
within six months with interest at the rate of 8% p.a., but the accused failed to
keep up his promise. On complainant's persistent demand, the accused issued two
cheques, one bearing No. 152400 dated 15.5.1999 for a sum of Rs. 50,000/- and
another cheque bearing No. 152921 dated 25.5.1999 for a sum of Rs. 10,0007both drawn on the Bangalore City Co-operative Bank Limited, Bangalore, in favour
of the complainant towards discharge of the loan amount stating that the cheques
would be honoured on presentation to the Banker. But when the cheques were
presented, they were bounced and returned on 1.6.1999 with an endorsement
"funds insufficient". The complainant issued a demand notice dated 10.6.1999
calling upon the accused to pay the amount of dishonoured cheques within 15 days.
The accused acknowledged the receipt of the same but sent an untenable reply
dated 24.6.1999. Therefore, the complainant filed a private complaint against the
accused for the offence under Section 138 of the Negotiable Instruments Act (in
short, 'the Act'). The accused denied the accusation. The complainant has got him
examined as P.W-1 and got marked Exs. P-1 to P-10. In rebuttal, the accused has
got him examined as D.W-1 besides examining one Khalandar Baigh as D.W-2.
5. The Learned Magistrate has accepted the evidence of the complainant and held
that in the year 1994, the complainant gave loan of Rs. 60,0007- to the accused,
but rejected the complainant on the ground that the accused had issued the
cheques in the month of May 1999 as against time barred debt, and there was no
evidence to show that the accused had acknowledged the debt within 3 years of
loan. Therefore, the Trial Court recorded an order of acquittal in favour of the
accused. This is impugned in this appeal.
6. The learned Counsel for the complainant submitted that the Learned Magistrate
committed an error in dismissing the complaint. He cited the following decisions
reported in:
(i) A.V. MURTHY v. B.S. NAGABASAVANNA AIR 2002 SCW 694
(ii) RAMAKRISHNAN v. PARTHASARADHT 2003 (3) Ind Cas 662
7. The learned Counsel for the respondent/accused submitted that there is no
illegality or infirmity in the impugned judgment.
8. The complainant has produced pass books at Exs. P-8 and P-9. As per Exs. P-8
and P-9, the pass books of the complainant, issued by Union Bank of India and
Syndicate Bank, it is crystal clear that the accused has drawn in all amounting to
Rs. 59,800/- between 31.5.1994 and 12.6.1994. A sum of Rs. 200/ - was paid in
cash by complainant to the accused. The learned Trial Judge rejected the
contention of the accused that he drew the amounts and paid the complainant and
held that the complainant had advanced hand loan of Rs. 60,000/- to the accused
in the year 1994.
9. Section 138 of the Act, which was inserted by Amendment Act, 1988, and came
into force form 1.4.1989 reads as under:
138. Dishonour of cheque for insufficiency, etc, of funds in the account.-Where any
cheque drawn by a person on an account maintained by him with a banker for
other provision of this Act, be punished with imprisonment for a term which may
extend to one year, or with fine which may extend to twice the amount of the
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 drawer of the cheque, within fifteen 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
cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability" means a legally
enforceable debt or other liability.
12. Admittedly, the loan transaction took place in the month of May, 1994. The
accused issued two cheques one cheque dated 15.5.1999 for a sum of Rs. 50,000/and another cheque dated 25.5.1999 for a sum of Rs. 10,000/-(both drawn on
Bangalore City Co-operative Bank Limited, Bangalore,) in favour of the complainant
towards discharge of the loan amount. As on 12.6.1997, the entire debt of Rs.
60,000/- had become time barred, but there is no legal bar for the debtor agreeing
to pay the time barred debt. No fresh consideration is required for debtor's promise
to pay the time barred debt. There is moral obligation on the accused, who is none
other than the friend of the complainant, to refund the loan amount. It would be
useful to refer to the observation made by Lord Mansfield, in Hawkers v.
Saunders (1782) 98 ER 1091 which reads as under:
Where a man is under a legal or equitable obligation to pay, the law implies a
promise, though none was ever actually made. A fortiori, a legal or equitable duty
is a sufficient consideration for an actual promise. Where a man is under a moral
obligation, which no Court of Law or Equity can enforce, and promises, the honesty
and rectitude of the thing is a consideration. As if a man promises, to pay a just
debt, the recovery of which is barred by the Statute of Limitations; or, if a man,
after he comes of age, promises to pay a meritorious debt contracted during his
minority, but not for necessaries; or if a bankrupt, in affluent circumstances after
his certificate, promises to pay the whole of his debts; or if a man promises to
perform a secret trust, or a trust void for want of writing, by the Statute of Frauds.
In such and many other instances, though the promise gives a compulsory remedy,
where there was none before either in law or equity; yet as the promise is only to
do what an honest man ought to do, the ties of conscience upon an upright mind
are a sufficient consideration.
11. The Hon'ble Apex Court in A.V. Murthy v. B.S. Nagabasavanna, supra, has
made an observation in para-5 of the judgment as under:
...Under Section 118 of the Act, there is a presumption (hat until the contrary is
proved, every negotiable instruments was drawn for consideration. Even under
Section 139 of the Act, it is specifically stated 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 Section138 of discharge, in whole or in part, of any debt or other
liability. It is also pertinent to note that under Sub-section (3) of Section 25 of the
Indian Contract, 1872, 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, is a valid contract....
12. The Division Bench of the Kerala High Court in Ramakrishnan case, supra,
following the ratio laid down in the A. V. Murthy's case, supra, held that when a
person writes, signs and delivers a cheque to another it is an acknowledgement of a
legally enforceable liability and therefore, if the cheque is dishonoured 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 Section 138 of the Act.
13. The complainant has not disputed his signature on the dishonoured cheques in
question. Therefore, they constitute an agreement or promise by the debtor to pay
the time barred debt, Since the accused has not paid the cheque amounts inspite of
demand made by the complainant the accused has committed an offence under
Section 138 of the Act. The learned Magistrate has committed an error in
dismissing the complaint and recording and order of acquittal in favour of the
accused.
14. For the foregoing reaons, I answer the point formulated for my consideration in
the negative.
In the result, the Appeal is allowed and the impugned judgment dated 20.11.2001
made in C.C.No. 35100/1999 on the file of XVI Addl. Chief Metropolitan Magistrate
at Bangalore, is set aside and the respondent/accused is convicted for the offence
under Section 138 of the Act and sentenced to pay a sum of Rs 1,00,000/-, failing
which the accused shall undergo S1 for six months. If the fine amount is recovered,
the appellant/complainant shall be paid a sum of Rs. 90,000/-, as compensation.
MANU/AP/1242/2006
Equivalent Citation: III(2007)BC5
IN THE HIGH COURT OF ANDHRA PRADESH
Crl. P. Nos. 4294 and 4295 of 2002
Appellants: Satish Kumar Mor
Vs.
Respondent: M.V. Rajeswara Rao and Anr.
Hon'ble
P. Swaroop Reddy, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: Sharad Sanghi, Adv.
For Respondents/Defendant: Public Prosecutor for Respondent No. 2
Subject: Banking
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act, 1881 - Sections 138 and 142
Cases
Referred:
SIL Import, USA v. Exim Aides Silk Exporters III (1999) CCR 15 (SC) : I (2000) BC
668 (SC) : AIR 1999 SC 1609; Pennar Steel Ltd. v. S. Ansari I (2004) BC 11 : IV
(2003) CCR 94 : 2003(2) LS 120
Disposition:
Petition allowed
JUDGMENT
P. Swaroop Reddy, J.
1. In both these petitions, the question raised for consideration and the petitioner is
one and the same. First respondent in Crl. P. No. 4294 of 2002 is the father and in
Crl.P. No. 4295 of 2002, it is his son. As the question raised for consideration is one
and the same both the petitions are heard together and disposed of by this
common order.
2. Both these petitions are filed by the petitioner-accused for quashing the
proceedings in C.C. Nos. 105 and 106 of 2000 on the file of the learned XVII
Metropolitan Magistrate, Hyderabad.
3. The facts of the case are as follows: The petitioner-accused has borrowed a sum
of Rs. 50,000.00 from the first respondent in each case. The cheques issued by him
towards repayment of the same, were dishonoured. As such after giving statutory
notice the de facto complainants filed private complaints under Section 138 of the
Negotiable Instruments Act.
4. The petitioner herein filed the present petitions for quashing the proceedings on
two grounds-(1) The complaints are filed for recovery of time-barred debt and as
such there is no legally enforceable debt; and (2) The complaints are filed after the
period of limitation contemplated under Section 142 of the Negotiable Instruments
Act.
5. Now, the point for consideration is whether there are any grounds for allowing
these petitions.
6. In Crl.P. No. 4294 of 2002, arising out of C.C. No. 105 of 2000, in the Xerox
copy of the Promissory Note filed, the date is mentioned as 3.11.1992 and at the
place of signature the date is again put as 3.11.1997. This 3.11.1997 is obviously
put subsequently, as there is no column provided for date there and the
handwriting there is also different. Further in Crl.P. No. 4295 of 2002. arising out of
C.C. No. 106 of 2000, the Promissory Note is dated 3.11.1992 and at no other
place the date is put. In this case receipt is also filed, which shows the date as
3.11.1992.
7. The contention of the learned Counsel for the first respondent in both the
petitions is that for 3.11.1997, the strokes for writing "7" after "9" is put differently
and on account of that instead of "7" it is appearing like "2" and actually the date is
"7" only. It is impossible to accept this contention. It is possible that at one place
there can be a mistake, but not at all the places. Apart from that, in the statutory
notice issued also, the second respondent de facto complainant has not stated the
date of the Promissory Note and has simply stated that vow have under the
Promissory Note borrowed a sum of Rs. 50,000.00 from me. Obviously,
deliberately, avoiding the date.
8. The learned Counsel for the first respondent further contends that the petitioner
has not issued any reply notice stating that the date of Promissory Note was
3.11.1992 and not 3.11.1997 and on account of this, the contention of the
petitioner cannot be accepted. I am not inclined to accept this contention of the
first respondent, as the petitioner never received the notice and the notice was only
returned and in the notice, the date of promissory note is not mentioned. As such
he was not aware as to whether in the notice the date was put as 3.11.1992 or
3.11.1997. Further the document clearly shows the date as 3.11.1992 without any
ambiguity as such there is no question of treating the dates of Promissory Notes as
3.11.1997. Thus, the first question has to be answered in favour of the petitioner.
On account of this, it has to be held that both the complaints are filed for
recovering time-barred debts and there are no legally enforceable debts.
9. Coming to the second question in both the petitions, the notices were returned
on 30.12.1999 and the complaints were filed on 14.2.2000. As such the complaints
are filed with a delay of one day, as fifteen days from 30.12.1999 would be over by
13.1.2000 and one month thereafter would be 13.2.2000. Therefore, the
complaints filed on 14.2.2000 are barred by limitation.
10. The learned Counsel for the petitioner, in the support of his contention relied on
a decision of the Hon' ble Supreme Court in SIL Import, USA v. Exim Aides Silk
Exporters MANU/SC/0312/1999 : 1999CriLJ2276 , and also a decision of our High
Court in Pennar Steel Ltd. v. S. Ansari 1 (2004) BC 11 : 4 (2003) CCR 94 : 2003(2)
LS 120. In both the above decisions the position is clarified. Thus the second
question also has to be answered in favour of the petitioner.
11. In view of the above findings both the petitions are liable to be allowed.
12. In the result both the Petitions are allowed. The proceedings against the
petitioner-accused in C.C. Nos. 105 and 106 of 2000 pending on the file of the
learned XVII Metropolitan Magistrate, Hyderabad are hereby quashed.
MANU/MP/0712/2006
IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
Criminal Revision No. 1013 of 2005
Appellants: Kaptan Singh Thakur S/o Late B.S. Thakur, Chairman and
Managing Director Abhimat Prakashan Private Ltd.
Vs.
Respondent: Betwa Developers Ltd. through Shri Sudhir Namdeo
Hon'ble
A.K. Shrivastava, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: Kishore Shrivastava, Sr. Adv. and Kunal Thakre,
Adv.
For Respondents/Defendant: G.S. Ahluwalia, Adv.
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instrument Act, 1881 - Sections 138, 139, 140, 141 and 141(2); Indian
Penal Code - Section 420; Companies Act, 1956 - Sections 291, 292, 293 and
294; Contract Act, 1872 - Section 25(3); Limitation Act, 1963 - Section
18; Criminal Procedure Code (CrPC) - Sections 138, 204 and 482
Cases
Referred:
Nibro Limited v. National Insurance Co. Ltd. AIR 1991 Delhi 25; Satish and
Company v. S.R. Traders and Ors. 1998 CRI.L.J. 419; Andhra Pradesh High Court
Girdhari Lal Rathi v. P.T.V. Ramanujachari and Anr. 1997 (2) Crimes 658; Kerala
High Court in Joseph v. Devassia 2001 (3) Crimes 229; Anil Hada v. Indian Acrylic
Ltd. AIR 2000 S.C. 145; S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalia and Anr.
(2005) 8 SCC 89; K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC
218; Katta Sujatha (Smt) v. Fertilizers & Chemicals Travancore Ltd and Anr. (2002)
7 SCC 655; Monaben Ketanbhai Shah and Anr. v. State of Gujarat and Anr. (2004)
7 SCC 15; M.M.T.C. Ltd. and Anr. v. Medchl Chemicals and Pharma (P) Ltd. and
Anr. AIR 2002 SC 182;Rajneesh Aggarwal v. Amit J. Bhalla AIR 2001 SC
518; Bilakchand Gyanchand Co. v. A. Chinnaswami AIR 1999 SC 2182; A.V. Murthy
v. B.S. Nagabasavanna (2002) 2 SCC 642; K.N. Beena v. Mumiyappan and Anr.
AIR 2001 SC 2895; Hiten P. Dalal v. Bratindranath Banerjee AIR 2001 SC
3897; Director of Settlements A.P. and Ors. v. M.R. Apparao and Ors. (2002) 4 SCC
638;Orient Paper and Industries Ltd. and Anr. etc. etc. v. State of Orissa and Ors.
AIR 1991 SC 672; Common Cause v. Union of India and Ors. (2004) 5 SCC 222
Disposition:
Revision dismissed
Case
Note:
Banking
Complaint
Section
482
of
Code
Criminal
Procedure,1973(Cr.PC),Section 420 of Indian Penal Code,1860(IPC) and
Sections 138,139 and 141 of the Negotiable Instrument Act, 1881
Respondent company filed complaint against petitioner under Section 138
read with 141 of Act and Section 420 of IPC - Petitioner earlier filed
petition under Section 482 Cr.P.C. for quashment of complaint - High Court
dismissed petition and directed that all grounds which raised by petitioner,
can be raised before trial court itself and petitioner cannot be allowed to
come directly Against this order petitioner filed SLP before Apex Court
Dismissed Thereafter petitioner raised objections at time of framing of
charge before Trial Court - Trial court rejected all objections and framed
charge under Section 138 of Act against petitioner Hence, present
petition Held, sufficient material on record to frame charges under
Section 138 of Act - Defence for petitioner always to be tested during trial
and not at time of framing of charge - Therefore, defence of petitioner kept
open for trial which may be decided after recording evidence in trial court
at time of recording judgment - Apart from this, Section 139 of Act clearly
contemplate legal presumption in favour of holder of cheque According
to Section 139 of Act, it shall be presumed unless contrary is proved that
holder of cheque received cheque, of nature referred to it in Section 138 of
Act for discharge, in whole or in part, of any debt or other liability - Thus,
in order to prove contrary there should be trial in which contrary is
required to be proved by accused in his defence - There is sufficient
material to frame charge under Section 138 of Act against petitioner and
trial court rightly framed the said charge - Resultantly, petition dismissed
ORDER
A.K. Shrivastava, J.
1. This revision petition has been filed by the petitioner/accused against the order
dated 24.5.2005 passed by Additional Chief Judicial Magistrate, Bhopal in Case No.
RT267/2004 rejecting the objections of petitioner in regard to framing of the charge
against the applicant under Section 138 of the Negotiable Instrument Act, 1881 (in
short 'the Act') and framing charge against him under Section 138 of the Act.
2. The respondent company filed a complaint against the petitioner under
Section 138 read with Section 141 of the Act and Section 420 of IPC. The trial court
registered the complaint and thereafter by the impugned order has framed the
charge under Section 138 of the Act against the petitioner.
3. In brief the case of complainant as setforth in the complaint is that the
complainant is a limited company registered under the Companies Act, 1956 having
its registered office at the address mentioned in the complaint. In the meeting of
the Board of Directors of complainant company held on 27th February, 2004, Mr.
Sudhir Namdeo was appointed on behalf of the company to attend, appear and
argue and sign the relevant papers on behalf of the company. The
petitioner/accused is known to Mr. S.K. Jain who is the Director in the complainant
company and on the request of the accused, Mr. S.K. Jain and other Director had
given financial help to the accused and accused had always promised to pay back
the outstanding amount. During such one meeting on 1.10.1999 the accused had
given account statement figured Rs. 6,45,851/- as outstanding on the date and
promised to pay the amount.
4. From the impugned order, it is also gathered that in the trading, profit and loss
account of the year 200-2001 of M/s Abhimat Prakashan Pvt. Ltd. whose Managing
Director is Kaptan Singh Thakur (accused) it has been shown that the loan has
been obtained from the complainant.
5. The accused on 6.1.2004 assured the Director of the complainant that he will
settle the outstanding amount which was calculated with interest as Rs.
13,09,852=00 and thus accused issued one cheque of Rs. 13,09,852=00 of
Allahabad Bank in favour of the complainant company and assured Mr. S.K. Jain,
the Director, to honour the said cheque. Copy of the cheque which is filed in the
trial court has also been filed along with the revision petition. The complainant
informed accused and presented the said cheque in his bank i.e. Union Bank of
India, Arera Colony Branch, Bhopal on 15.1.2004 The Bank intimated that the said
cheque is dishonoured due to "funds insufficient" on 16.1.2004. The said memo of
the Bank has been placed in the trial court and the copies are also filed in this
petition. Thus the accused committed the offence under Section 138(b) read with
Section 141 of the Act and also under Section 420IPC.
6. According to complainant after the receipt of the memorandum/information from
his Bank, namely, Union Bank of India dated 16.1.2004, regarding return of the
cheque as unpaid, the complainant sent one notice by registered A.D. post on
20.1.2004 to the accused which was duly received by the accused at his residence
address on 22.1.2004 and thereafter the accused sent its reply on 3.2.2004 but did
not make the payment of the outstanding amount mentioned in the notice. The
accused was given 15 days' time from the date of receipt of the notice for making
the payment of the said amount of the dishonoured cheque. However, the accused
did not make the requisite payment and thus the complaint was filed praying
therein to punish the accused as well as an order of payment double of the amount
of the cheque of Rs. 13,09,852/-.
7. The petitioner/accused earlier filed a petition under Section 482 Cr.P.C. before
this Court which was registered as M.Cr.C. No. 8448/2004, for the quashment of
the complaint on the ground that debt or liability for which the cheque was issued is
not legally enforceable because the complainant had not shown in the complaint
that on what date the money was advanced and no valid acknowledgement of debt
has been filed along with the complaint. The claim is barred by limitation. Though
the cheque has been issued by the company but notice under Clause (b) of proviso
to Section 138 of the Act was not served on the company and the same has been
served on individual. This Court while dismissing the petition under
Section482 Cr.P.C. on 9.11.2004 directed that all the grounds which were raised by
the petitioner, can be raised before the trial court itself and the petitioner cannot be
allowed to come directly.
8. The above said order was assailed by the petitioner before the Apex Court
[379/2005 Special Leave to Appeal Criminal]. The Apex Court declined to interfere
in the order passed by this Court dismissing the petition under Section 482 Cr.P.C.
and the Special Leave Petition was dismissed. However, it was directed and the
petitioner/accused was allowed to raise these objections before the Magistrate at
appropriate time including the stage at which the charges, if any, are framed.
9. Thereafter, the accused raised following objections at the time of framing of the
charge before the trial court:
(i) the complaint is silent that on which date the financial aid was provided ;
therefore it cannot be said that any amount as required to be paid by the accused;
(ii) the debt or other liability should be legally enforceable and therefore it was
necessary to mention in the complaint that when the amount was given to the
accused and whether the said debt was in existence and could be legally
recoverable on the date of the issuance of the impugned cheque. No
acknowledgement of the accused has been filed along with the complaint;
(iii) third objection which was taken is that since the impugned cheque has been
issued on behalf of the company as such the notice required under Sub-clause (b)
of Section138 should have been sent to the company and not to the individual.
Admittedly in the present case, no notice has been sent to the company and
therefore the petitioner/accused who has been arrayed in the private capacity
cannot be arrayed as an accused;
(iv) Under Section 291 and 292 of the Indian Companies Act, 1956, the power of a
Company vests in the Board of Directors and the Company can act only upon the
resolution of the Board of Directors. Unless and until the Board of Directors resolve
on behalf of the Company to take some legal action, no action on behalf of the
Company can be taken.
The trial court rejected all above said objections raised by the accused/petitioner by
the impugned order and has framed thereafter a charge under Section 138 of the
Act against the petitioner. Hence this petition has been filed by the
petitioner/accused.
10. Shri Kishore Shrivastava, learned senior counsel, indeed, has raised all those
objections in this revision again. According to learned senior counsel the complaint
has been filed by one Shri Sudhir Namdeo who has no authority to file complaint. In
that regard he has invited my attention to the resolution passed in the meeting of
the Board of Directors of the complainant company wherein Shri Sudhir Namdeo
has not been authorized to file the complaint on behalf of the company. He has also
submitted that the resolution dated 27.2.2004 is in past tense and therefore since
the resolution is in past tense, therefore the complaint which was filed lateron for it,
there is no resolution. Learned senior counsel has submitted that the said
authorization is to sue the company M/s Abhimat Prakashan Pvt. Ltd. However, the
company has not been arrayed as an accused, but, the complaint has been filed
against the present petitioner Kaptan Singh. By inviting my attention to
Section 293 and 294 of the Companies Act, it has been contended that the
resolution should have been passed in the general meeting and there is no material
on record in order to show that there was any such resolution. In support of his
contention, learned Counsel has placed reliance on the decision of Nibro Limited
v. National Insurance Co. Ltd. MANU/DE/0138/1991 : AIR1991Delhi25 . By
taking the aid of the Division Bench decision of Andhra Pradesh High Court in the
case of Satish and Company v. S.R. Traders and Ors. MANU/AP/0123/1996, it
has been contended that beyond the resolution Mr. Namdeo is not authorized to do
anything and even if the resolution is stretched to the extent that Mr. Namdeo was
authorized to file the complaint, then it was to the extent to file it against the
company but there was no such authorization to file the complaint against Kaptan
Singh.
11. It has been then submitted by learned Counsel that there are inherent
contradictions in the complaint. The complaint has been filed on behalf of the
company but there is nothing in the complaint in order to show that the loan was
given by the company. By inviting my attention to Section 138(b) it has been
contended that under this section, the payee or holder in due course of the cheque,
should make a demand for the payment of the said amount of money by giving a
notice in writing to the drawer of the cheque. But, the debt or the other liability
should be for the payee or the holder of the cheque and the notice in writing should
be given to the drawer of the cheque within 15 days of the receipt of the
information received by the payee or the holder of the cheque from the Bank
regarding the return of the cheque as unpaid. By inviting my attention to the
averments made in the complaint, it has been contended that according to the
complaint, Mr. Kaptan Singh Thakur is known to Mr. S.K. Jain, Director in the
complainant company and on the request made by the accused to Mr. S.K. Jain and
other Directors, the financial help was given to the accused and he promised to pay
back the outstanding amount. Thus, according to the complaint, Mr. S.K. Jain who
is one of the Director of the Company had given financial help to the accused and
not the petitioner company and therefore since the complainant is not filed by Mr.
S.K. Jain, the same is not maintainable.
12. Learned senior counsel by inviting my attention to para 2 of the complaint has
stated that according to complainant's own case during one meeting held on
1.10.1999 accused had given account statement figure of Rs. 6,45,851/outstanding on that date and promised to pay the said amount, therefore, the date
6.1.2004 when the cheque was issued the alleged debt became time barred and
could have been revived only by a fresh contract in terms of Section 25(3) of the
Indian Contract Act, 1872 and for that there should be a written agreement signed
by the person. Since there is no such written contract for the time barred debt, no
complaint can be filed. In that regard my attention has also been drawn to the
explanation to Section 138 of the Act wherein for the purpose of this section, "debt
or other liability" means a legally enforceable debt or other liability. By adverting
my attention to Section 18 of the Indian Limitation Act, 1963, it has been
contended by learned senior counsel that the acknowledgement should be before
the expiration of the prescribed period and further it should be in writing and signed
by the party. Since there is no acknowledgement in writing and signed by the
accused, therefore, the complaint is not maintainable and charge under
Section 138 of the Act cannot be framed. In support of his contention, learned
Counsel has placed reliance on the decision of Andhra Pradesh High Court
Girdhari Lal Rathi v. P.T.V. Ramanujachari and Anr. 1997 (2) Crimes 658 and
the decision of Kerala High Court in Joseph v. Devassia 2001 (3) Crimes 229.
Thus, according to learned senior counsel cheque must be issued for the debt and
liability which is alive and but not for the debt or the liability which has become
dead. It has been argued that the explanation to Section 138should be strictly
construed.
13. It has been further canvassed by learned senior counsel that under the Act if
the offender is a company then the company should also be prosecuted along with
the Director. In that regard much emphasis has been placed reliance by learned
senior counsel on the term "as well as the company" embodied in Section 141 of
the Act. Thus, according to learned Counsel where the company is to be
prosecuted, the Director alone cannot be prosecuted. In that regard he has invited
my attention to the decision of the Supreme Court Anil Hada v. Indian Acrylic
Ltd. MANU/SC/0736/1999 : 2000CriLJ373 and also S.M.S. Pharmaceuticals Ltd.
v. Neeta Bhalia and Anr. MANU/SC/0622/2005 : 2005CriLJ4140 . According to
learned senior counsel since the cheque has been issued on behalf of the company,
the actual offender is the company. By inviting my attention to Section 204 Cr.P.C.
it has been contended by learned senior counsel that the Magistrate taking
cognizance of an offence should satisfy that there is sufficient ground for
proceeding in the case and since there are serious infirmities in the complaint, the
Magistrate should not have proceeded with the matter. It has been further
propounded by learned senior counsel that if one has to be prosecuted with the aid
of Section 141 of the Act, there should be strict compliance in regard to prosecuting
the company along with the Directors. The learned Counsel in that regard has
placed reliance on following decisions:
(i) K.P.G.
Nair
(2001)10SCC218
v. Jindal
Menthol
India
Ltd. MANU/SC/2327/2000 :
(ii) Katta Sujatha (Smt) v. Fertilizers & Chemicals Travancore Ltd and
Anr. MANU/SC/0897/2002 : (2002)7SCC655
(III) Monaben Ketanbhai Shah and
Anr. MANU/SC/0596/2004 : 2004CriLJ4249
Anr.
v. State
of
Gujarat
and
Thus according to learned senior counsel since the company has not been
prosecuted and the cheque has been said to be issued by the company, the present
petitioner cannot be prosecuted.
14. Learned senior counsel has also invited my attention to the notice sent under
Section 138 of the Act and has contended that the notice should go to the drawer
of the cheque and since the drawer is the company, notice ought to have been sent
to the company. Admittedly, the notice was not sent to the company but was sent
to the accused. It has been further submitted by learned senior counsel that the
complaint is silent in regard to the status of Kaptan Singh in the company. Whether
he is Director, Managing Director or any officer in the company. On these premised
submissions, it has been argued by learned senior counsel that the
accused/petitioner cannot be charged under Section 138 of the Cr.P.C. and the
impugned order framing charge be quashed.
15. Per contra, Shri G.S. Ahluwalia, learned Counsel appearing for the
complainant/respondent has argued that if the resolution has not been happily
worded, the question is whether at the threshold, the complaint should be thrown
out? According to learned Counsel at the outset the complaint cannot be dismissed
and in support of his contention he has placed reliance on the decision of Supreme
Court M.M.T.C. Ltd. and Anr. v. Medchl Chemicals and Pharma (P) Ltd. and
Anr. MANU/SC/0728/2001 : 2002CriLJ266 . It has been then contended by learned
Counsel for respondent that even if no notice was sent to the company, the
complaint cannot be dismissed and the same is still maintainable against the
Director. In that regard he has invited my attention to two decisions of the
Supreme
Court,
they
are Rajneesh
Aggarwal
v. Amit
J.
Bhalla MANU/SC/1462/2001 : 2001CriLJ708 and Bilakchand Gyanchand Co.
v. A. Chinnaswami MANU/SC/0201/1999 : 1999CriLJ3498 . By inviting my

attention to the decision of Anil Hada (supra) which has been placed reliance by
learned senior counsel for the petitioner, it has been contended by Shri Ahluwalia,
learned Counsel for the respondent that not arraying the company as an accused
would in itself is not fatal.
16. By replying the argument of learned senior counsel that the petitioner/accused
is one of the Director of the Company, it has been contended by Shri Ahluwalia that
in the cause title of the complaint the name of accused Mr. Kaptan Singh Thakur
has been mentioned and it has been mentioned that he is the Chairman and the
Managing Director of "M/s Abhimat Prakashan Pvt. Ltd." and in the body of the
complaint the word "accused" is mentioned which would mean Kaptan Singh who is
the Chairman and Managing Director of M/s Abhimat Prakashan Pvt. Ltd. Shri
Ahluwalia, learned Counsel for respondent by placing reliance on the decision of the
Supreme Court S.M.S. Pharmaceuticals Ltd. (supra) has submitted that the
three Judge Bench of the Supreme Court while answering the questions of
references referred to it, if considered in proper perspective, and specially answer
to question "c", it would reveal that the signatory of a cheque which is dishonoured
is responsible for the incriminating Act and will be covered under Sub-section (2) of
Section 141 of the Act. Since the petitioner/accused is a signatory of the cheque he
cannot be escaped and the charge has been rightly framed.
17. By replying the argument of the objection in regard to legally recoverable debt
raised by learned senior counsel for the petitioner, it has been contended by Shri
Ahluwalia, learned Counsel for the respondent that in the impugned order there is a
reference of the balance sheet of the company of the year 2001-2002 in which the
accused is the Chairman and the Managing Director, and in the balance sheet it has
been mentioned that there is an outstanding amount to be paid to the complainant
company and if that is the position, the complaint which was filed on 5.3.2004
cannot be said to be a complaint for a demand of a time barred debt. In support of
his contention learned Counsel has placed reliance on the decision of Supreme
Court in the case of A.V. Murthy v. B.S. Nagabasavanna MANU/SC/0089/2002 :
2002CriLJ1479 . Shri Ahluwalia, learned Counsel by inviting my attention to legal
presumption under Section 139 of the Act, has submitted that the statute has
conferred a presumption in favour of the holder and it shall be presumed, unless
the contrary is proved that a holder of the cheque received cheque, of the nature
referred to in Section 138 for the discharge, in whole or in part of any debt or other
liability. According to learned Counsel there is sufficient material in order to frame
the charge and the trial court rightly framed the charge. In that regard learned
Counsel placed reliance on the decision of the Supreme Court M.M.T.C. Ltd.
(supra), K.N. Beena v. Mumiyappan and Anr. MANU/SC/0661/2001 :
2001CriLJ4745
and Hiten
P.
Dalal
v. Bratindranath
Banerjee MANU/SC/0359/2001 : 2001CriLJ4647 and has submitted that the
burden of proof is on the accused to prove that it is a time barred debt and which
can only be decided after recording the evidence.
18. In reply to the argument of Shri Ahluwalia learned Counsel for the respondent,
it has been contended by learned senior counsel Shri Kishore Shrivastava that any
observation of the Supreme Court cannot be stretched to the extent of precedent
and in that regard he has placed reliance on three decisions they are Director of
Settlements A.P. and Ors. v. M.R. Apparao and Ors. MANU/SC/0219/2002 :
[2002]2SCR661 , Orient Paper and Industries Ltd. and Anr. etc. etc. v. State
of Orissa and Ors. MANU/SC/0169/1991 : AIR1991SC672 andCommon Cause v.
Union of India and Ors. : (2004)5SCC222 and thus according to learned senior
counsel, the decision of A.V. Murthy (supra) cannot be said to be a precedent. It
has also been vehemently submitted by learned senior counsel that in para 2 and 4
of the complaint it has been contended that accused had issued the cheque and
there is no averment that he signed the cheque and thus, since there is no
averment in the complaint that the accused/petitioner signed the cheque, on the
contrary, there is averment that he has only issued the cheque, no criminal liability
can be fastened on him.
19. After having heard learned Counsel for the parties, I am of the view that this
petition deserves to be dismissed.
20. In the decision of S.M.S. Pharmaceuticals Ltd. (supra) , a larger Bench of

the Supreme Court was constituted and the following questions were referred to it
which reads thus:
(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it
is sufficient if the substance of the allegation read as a whole fulfil the requirements
of the said section and it is not necessary to specifically state in the complaint that
the person accused was in charge of, or responsible for, the conduct of the business
of the company.
(b) Whether a director of a company would be deemed to be in charge of, and
responsible to, the company for conduct of the business of the company and,
therefore, deemed to be guilty of the offence unless he proves to the contrary.
(c) Even if it is held that specific averments are necessary, whether in the absence
of such averments the signatory of the cheque and or the managing directors or
joint managing director who admittedly would be in charge of the company and
responsible to the company for conduct of its business could be proceeded against.
21. After considering several decisions, the questions of reference were answered
in para 19 as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the
time the offence was committed, the person accused was in charge of, and
responsible for the conduct of business of the company. This averment is an
essential requirement of Section 141 and has to be made in a complaint. Without
this averment being made in a complaint, the requirements of Section 141 cannot
be said to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the negative.
Merely being a director of a company is not sufficient to make the person liable
under Section141 of the Act. A director in a company cannot be deemed to be in
charge of and responsible to the company for the conduct of its business. The
requirement of Section 141is that the person sought to be made liable should be in
charge of and responsible for the conduct of the business of the company at the
relevant time. This has to be averred as a fact as there is no deemed liability of a
director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that
the managing director or joint managing director would be admittedly in charge of
the company and responsible to the company for the conduct of its business. When
that is so, holders of such positions in a company become liable under
Section 141 of the Act. By virtue of the office they hold as managing director or
joint managing director, these persons are in charge of and responsible for the
conduct of business of the company. Therefore, they get covered under
Section 141. So far as the signatory of a cheque which is dishonoured is
concerned, he is clearly responsible for the incriminating act and will be covered
under Sub-section (2) of Section 141.
(emphasis supplied)
22. Thus, the larger Bench of the Supreme Court in S.M.S. Pharmaceuticals Ltd.
(supra), by answering all the questions referred to it specifically held that so far as
the signatory of a cheque which is dishonoured is concerned, he is clearly
responsible for incriminating act and will be covered under Sub-section (2) of
Section 141 of the Act. In the present case there is specific averment in the
complaint that the accused/petitioner issued a cheque of Rs. 13,09,852.00 of
Allahabad Bank MCA, Habibganj Branch in favour of the complainant company. On
bare perusal of the photocopy of the impugned cheque, it is gathered that it bears
the signature of Kaptan Singh Thakur in between the specified space of the seal of
Abhimat Prakashan Pvt. Ltd. On bare perusal one can read "K.S. Thakur Director".
In the cause title of the complaint, where the description of accused has been
mentioned, it is gathered that Kaptan Singh Thakur, Chairman and Managing
Director M/s Abhimat Prakashan Pvt. Ltd. has been arrayed as accused and if for
the convenience, in the body of complaint he has been denoted by the term
"accused" it would mean that Kaptan Singh Thakur Chairman and Managing
Director of M/s Abhimat Prakashan Pvt. Ltd. Thus, there is no force in the
contention of learned senior counsel for the petitioner that in the complaint that
nowhere it is mentioned that what is the status of Kaptan Singh. On being asked to
him specifically that what is the status of Kaptan Singh in the company Abhimat
Prakashan Pvt. Ltd, learned senior counsel did not specifically answer to the query
but conveniently argued that it should have come in the complaint that what is the
status of accused in the company. The word "accused" which has been used in the
complaint would mean the person whose description has been given in the cause
title of the complaint. Since there is averment in the complaint that the accused
issued the cheque, rightly he has been prosecuted.
23. There is no merit in the contention of learned Counsel that because no where in
the complaint it has been mentioned that the accused has signed the impugned
cheque of Rs. 13,05,852/-, on the contrary there is an averment that the accused
had only issued the cheque therefore it cannot be said that the accused has in fact
signed the cheque. On bare perusal of the photocopy of the cheque clearly the
signature of K.S. Thakur, Director, Abhimat Prakashan is appearing, therefore it
cannot be said that the accused has not signed the cheque. Apart from this the
word "issue" cannot be construed in a narrower and it should be interpreted in
comprehensive manner. In Section 140 of the Act also, where the legislature has
disallowed certain type of the defence to be taken in the prosecution under
Section 138, has clearly used the words "that he issued the cheque". Thus the word
"issued" is comprehensive enough and would also include signature on the cheque.
For better understanding, it would be condign to quote Section 140 of the Act which
reads thus:
140. Defence which may not be allowed in any prosecution under Section 138. - It
shall not be a defence in a prosecution for an offence under Section 138 that the
drawer had no reason to believe when he issued the cheque that the cheque may
be dishonoured on presentment for the reasons stated in that section.
(emphasis supplied)
24. In the Act the word "issue" has not been defined. In the Advance Law Lexicon
by P. Ramanatha Aiyer (3rd edition 2005) the expression "issued" is not to be used
in the narrow sense of "sent". The dictionary meaning of the expression "issued"
takes the entire process of sending the notice as well as the service thereof in the
same manner the word "issued" used for the cheque should also be construed. In
the same book the term "issued" as used in the issuance of a life insurance policy,
means that when the policy is "made" and delivered in pursuance with the laws of
the state legalizing such policies. According to Advance Lax Lexicon, the term
"issue" would mean the original making of a negotiable instrument and first
delivery to another person. Thus, if the word issued has been used by the
complainant in the complaint, after reading the entire complaint, it would mean and
also include signing of the cheque by the accused. Even otherwise, if the word
"sign" is not used in para 2 and 4 of the complaint and instead the said word, word
"issued" is used, it should be read in the context that it was signed by the accused.
25. So far as the objection in regard to the defective resolution of the complainant
company is concerned, merely because the resolution is not happily worded, at the
threshold, and that too at the time of framing of the charge, the complaint cannot
be dismissed. The Supreme Court in the case of M.M.T.C. Ltd. (supra), has taken
much care of it and has held that merely because complainant has signed and
presented by a person who is neither as authorized agent nor a person empowered
under the Articles of Association or by any resolution of the Board to do so, is no
ground to quash the complaint. The Supreme Court has further held that it is open
to the complainant company to seek permission of the court for sending any other
person to represent the company in the court and therefore even presuming that
initially there was no authority, still the company can at any stage, rectify that
defect. Since sufficient light on the controversy has been thrown by the Supreme
Court in this decision, therefore it is not necessary to discuss the decision of M/s
Nibro Limited (supra) and M/s. Satish and Company (supra) which were
placed reliance by learned senior counsel for the petitioner.
26. So far as the objection that the offence has been committed by the Company
and the Company has not been arrayed as an accused and without arraying the
company as well, the other person cannot be prosecuted under Section 141 of the
Act is concerned, there is complete answer of this argument in the case of S.M.S.
Pharmaceuticals Ltd. (supra) , which I have quoted hereinabove wherein it has
been specifically mentioned that the so far as signatory of a cheque which is
dishonoured is concerned he is clearly responsible for the incriminating act and he
will be covered under Sub-section (2) of Section 141 of the Act. I have already held
hereinabove that there is sufficient averment in the complaint that the
accused/petitioner has issued the cheque and since he is the signatory of the
cheque, rightly he has been arrayed as accused and rightly the charge has been
framed. Even if the company is not prosecuted, it would not be fatal and a director
of that company can be prosecuted. In that regard the decision of are Rajneesh
Aggarwal (supra) and and M/s Bilakchand Gvanchand Co (supra) can be
placed reliance.
27. The next question for consideration is in regard to the "debt or other liability"
whether it is legally enforceable debt or other liability. In this regard it would be
profitable to read the explanation to Section 138 of the Act which postulates that
for the purpose of Section 138 "debt or other liability" would mean a legally
enforceable debt or other liability. The contention of Shri Kishore Shrivastava,
learned Counsel is that as per the own showing in para 2 of its complaint it has
been mentioned that during one such meeting on 1.10.1999 the accused had given
account statement figure of Rs. 6,45,851/- as outstanding on the date and
promised to pay the amount and thus even if this date i.e. 1.10.1999 is taken to be
the starting point of limitation, the debt became barred by time on 30.9.2002 and
therefore if some cheque on 6.1.2004 has been issued by the accused for the
settlement of the said debt, the said debt cannot be legally enforced by launching
this type of prosecution since it had become time barred. It is no doubt true that if
a time barred debt is to be legalized, there should be a written agreement in terms
of Section 25(3) of the Contract Act and it should be signed by the person to be
charged or by his agent jointly or substantially 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 he could not file the proceeding and that type of
agreement would be a contract. In the present case, there is no agreement in
writing signing by the accused. But, merely on this ground the point would not
come to rest, in order to benefit the accused. The trial court has taken care of this
aspect in its order and has mentioned in impugned order that trading, profit and
loss account of the year 2001-02 of the Abhimat Prakashan Limited, there is an
entry in regard to the taking of loan from the petitioner company and if that is the
position, the view of this Court is that there is sufficient material on record to frame
charge under Section 138 of the Act. I am straying my hands in giving my final
opinion in that regard. At the most, this could be a defence for the
petitioner/accused and the defence is always to be tested during the trial and not at
the time of the framing of the charge. Therefore, this defence point of the
accused/petitioner is kept open for the trial which may be decided after recording
the evidence in the trial court at the time of recording the judgment. It has not
been argued that there is no entry of the loan in the trading, profit and loss account
of the year 2001-2002.
28. Apart from this, Section 139 of the Act clearly postulates a legal presumption in
favour of the holder of the cheque. According to this Section it shall be presumed
unless the contrary is proved that the holder of a cheque received a cheque, of the
nature referred to it in Section 138 for the discharge, in whole or in part, of any
debt or other liability. Thus, in order to prove contrary there should be a trial in
which contrary is required to be proved by the accused in his defence. Thus, the
impugned order passed by the trial court framing the charge under Section 138 of
the Act cannot be said to be arbitrary or in contravention to any provision of the
Act. The burden of proof to the contrary is on accused that there was no existing
debt or liability. In that context the decision of M/s M.M.T.C. Ltd. (supra). K.N.
Beena (supra) and Hiten P. Dalai (supra) may be taken into consideration.
29. On the basis of the larger Bench decision of the Supreme Court in S.M.S.
Pharmaceuticals Ltd. (supra) and the law laid down in the said case the decision
of Anil Hada (supra), K.P.G. Nair (supra), Katta Sujatha (Smt)
(supra) and Monaben Ketanbhai Shah (supra) are distinguishable.
30. I have given my anxious and bestowed consideration to the reasonings

assigned by the trial court framing the charge under Section 138 of the Act and
rejecting the objections of the accused/petitioner, I find them to be quite cogent,
by judging from all the angles. There is sufficient material to frame charge under
Section 138 of the Act against the petitioner/accused and the trial court rightly
framed the said charge.
31. Resultantly, this revision petition is found to be devoid of any substance and
the same is hereby dismissed.
MANU/PH/0580/2005
Equivalent Citation: IV(2006)BC504, 2006CriLJ766, (2006)142PLR264
IN THE HIGH COURT OF PUNJAB AND HARYANA
Criminal Appeal No. 181-SBA of 2003
Appellants: Kiran Finance Company
Vs.
Respondent: Sukhdev Kishan
Hon'ble
Pritam Pal, J.
Judges:
Counsels:
For Appellant/Petitioner/Plaintiff: K.S. Cheema, Adv.
For Respondents/Defendant: Arvind Kashyap, Adv.
Subject: Criminal
Subject: Limitation
Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act, 1881 - Section 138; Limitation Act, 1963 - Section
19; Limitation Act, 1908 - Section 20; Criminal Procedure Code (CrPC) - Section
313
Cases
Referred:
S. Krishnamurthy v. A.R. Rajan 1996 Crl. Law Journal 3552;Sant Lal Mahton v.
Kamla Prasad and Ors. A.I.R. 1951 Supreme Court 477;Amit Desai v. Shine
Enterprises 2000(3) R.C.R. (Criminal) 255
Citing
S. Krishnamurthy v. A.R. Rajan
Reference:
Discussed
Sant Lal Mahton v. Kamla Prasad and Ors.
Discussed
Amit Desai v. Shine Enterprises
Mentioned
Disposition:
Appeal dismissed
Case
Note:
Criminal Dishonor of Cheque Time Barred Debt Section 138 of Code of
Criminal Procedure, 1973 (Cr.P.C.) Respondent had purchased a Matador
through Hire Purchase Agreement Said amount was to be paid in 36
instalments To discharge partial liability, respondent had issued a
cheque to appellant/company On presentation, cheque got dishonoured

Appellant through its Managing Partner, X filed complaint before Trial
Court Trial Court held that cheque was issued by respondent in favour of
appellant but same was issued when debt taken by respondent had already
become time-barred and so, no liability could be fastened upon respondent
under Section 138 of Act and as such, he was acquitted in Complaint case
Hence, aggrieved appellant filed present appeal Held, it was bounden
duty of appellant to establish its case by giving specific date and time
regarding payment of installment of debt liability by respondent in order to
show that claim of appellant was not time-barred when cheque was issued
in name of appellant-company Appellant has failed to produce any
cogent and convincing evidence in that behalf Hence, there is no merit in
appeal and same is dismissed
JUDGMENT
Pritam Pal, J.
1. This appeal has been preferred by Kiran Finance Company, Hoshiarpur through
its Managing Partner, Capt. Lakhwinder Singh Gill against order dated 26.2.2002
passed by learned Judicial Magistrate, 1st Class, Hoshiarpur, whereby respondentSukhdev Kishan was acquitted in a complaint case No. 9 of 18.11.1999 filed under
Section 138 of the Negotiable Instruments Act, 1881 (for short, "the Act").
2. The case of the complainant shorn of details, is like this: Respondent-Sukhdev
Kishan had purchased a Matador bearing registration No. HP-20-1444 vide Hire
Purchase Agreement (Ex. DX) dated 20.5.1996 for an amount of Rs. 3,20,000/-.
The said amount was to be paid in 36 installments. In the event of failure, 4%
overdue charges were also agreed to be paid on the defaulted amount. To
discharge his partial liability, respondent Sukhdev Kishan had issued a cheque No.
570893 dated 24.9.1999 worth Rs. 85,000/- to the complainant-appellant, but, the
same was dis-honoured on account of insufficient funds. A legal notice dated
11.10.1999 (Ex.C6) was issued to the respondent to make payment but, of no
avail. Ultimately, on these aforesaid allegations, complainant-appellant had filed a
complaint under Section 138 of the Act. After recording the preliminary evidence,
the respondent was summoned to face trial for commission of offence under
Section 138 of the Act.
3. In order to prove its case, the appellant examined as many as three witnesses,
namely CW-1 Lakhwinder Singh Gill, complainant, CW-2 Gurinderpal Singh, Special
Assistant of the Oriental Bank of Commerce, Hoshiarpur and CW-3 Naresh Pal,
Clerk-cum-Cashier, State Bank of Patiala, Una.
4. After closure of the evidence by the appellant, the respondent was examined in
terms of Section 313 of the Code of Criminal Procedure wherein, he denied the
incriminating evidence appearing against him. In answer to the last but one
question, the respondent submitted that the cheque-in-dispute, bearing his
signatures only, was handed over to the appellant as a security and it was never
issued by him in order to discharge the liability.
5. Learned trial Magistrate after appraisal of the evidence and hearing learned
counsel for the parties, came to the conclusion that the cheque (Ex. C2) dated
24.9.1999 worth Rs. 85,000/- was issued by the respondent in favour of the
appellant but the same was issued when the debt taken by the respondent had
already become time-barred. On this observation no liability could be fastened upon
the respondent under Section 138 of the Act and as such, he was acquitted in the
Complaint case. This is how feeling aggrieved, the appellant has come up in this
appeal.
6. I have heard learned counsel for the parties and have also gone through the file
carefully.
7. The only contention raised on behalf of the appellant is that under Section 19 of
the Limitation Act, 1963, a fresh period of limitation shall be computed from the
time, when the last payment was made by the respondent to discharge his liability.
He then made a reference to the cross-examination of CW-1 Capt. Lakhwinder

Singh Gill wherein he stated that the aforesaid Matador purchased by the
respondent was returned to him (appellant) in September, 1999 and ultimately, the
same vehicle was disposed of in an open auction on 18.10.2000 for a sum of Rs.
30,000/-. After making reference to the above given by the appellant in his crossexamination, learned counsel for the appellant also relied upon the decision in S.
Krishnamurthy v. A.R. Rajan MANU/TN/0120/1996 and then contended that in the
given circumstances, the trial Court should have drawn an inference that the last
payment was made on 18.10.2000 towards the debt liability and as such the
cheque dated 24.9.1999 was issued well within the time and the complaint case
was thus, also not time-barred though it is held to be time-barred by the trial court.
8. On the other hand, learned counsel for the respondent repelled the aforesaid
point of argument raised on behalf of the appellant and contended that in a criminal
case, the complainant has to prove his case beyond reasonable doubt for holding
the accused guilty under any particular offence. Here, in the instant case, the
appellant had all the records pertaining to details of payment and
acknowledgement thereof in his custody, but the same was not produced for the
reasons best known to it. In fact, had that records been brought on the file, the
same would have gone against the appellant. In order to prove the payment of last
installment, some receipt or acknowledgement or some writing in proof thereof, on
behalf of the respondent should have been produced for the purpose of computing
the period prescribed for limitation for filing the complaint case, but there is no
such document on the file. At the last leg of his argument, learned counsel for the
respondent also relied upon the Supreme Court judgment in Sant Lal Mahton
v. Kamla Prasad and Ors. MANU/SC/0043/1951 : [1952]1SCR116 . In the
alternative, he also relied upon the decision in Amit Desai v. Shine
Enterprises 2000(3) R.C.R. 255 and then contended that here, in the instant case,
partnership of Capt. Lakhwinder Singh Gill, complainant, as a Managing Partner in
the appellant-Company is not proved and in such circumstances, criminal complaint
filed by a person, who is not proved to be a partner in the registered firm or
Companyjs not maintainable.
9. I have given my thoughtful consideration to the above rival contentions of the
learned counsel for the parties and find no merit in the point raised on behalf of the
appellant, inasmuch as, a perusal of the evidence brought on the file by the
appellant goes a long way to show that there is not a iota of any positive evidence,
which could give any date and time of the last payment, made by the respondent in
favour of the appellant. According to the case of the respondent, he had paid the
entire amount of debt, whereas, the case of the appellant is that only partial
payment was made by the respondent. Admittedly, the entire record pertaining to
the payment of installments and sale of the vehicle, which was returned to it in
September, 1999, was with the appellant, but the same has been withheld for the
reasons best known to the complainant-appellant-Company. Moreover, the auction
of the said vehicle is stated to have taken place on 18.10.2000, but that cannot be
taken to be the date of last payment on behalf of the respondent, inasmuch as, at
that time, the vehicle was in the possession of the appellant. Moreover, on the said
date i.e. 18.10.2000, the liability of discharging the debt had become time-barred.
In this regard, it is pertinent to mention here that as per the Hire Purchase A
greement ( Ex.DX), the e ntire debt amount to t he t une o f Rs. 3,20,000/- w as
made payable in 36 monthly installments, with effect from 20.5.1996 and as such,
the same had to be paid within three years i.e. on or before 20.5.1999. As stated
above, the cheque dated 24.9.1999 was issued by the respondent when the debt
liability had become time-barred. In S.Krishnamurthy's case (supra), relied upon by
learned counsel for the appellant, it was proved that accused had paid the interest
on various dates in respect of alleged time-barred pronotes and thereby the
disputed pronotes had not become time-barred. But, here in the instant case, as
discussed above, the appellant was miserably failed to give any specific date, either
in his complaint or in his examination-in-chief in respect of the last payment of
installment or interest so as to bring the claim of the appellant within time. On the
other hand, under Section 19 of the Limitation Act, 1963 which corresponds to the
earlier Section 20 of the Limitation Act, 1908, the payment has got to be proved in
a particular way i.e. on the basis of some writing or signed acknowledgement. In
this regard, it has been observed by their Lordships of the Apex Court in Sant Lal
Mahton's case (supra) as under:-
It is the payment which really extends the period of limitation under Section 20 but
the payment has got to be proved in a particular way and for reasons of policy the
legislature insists on a written or signed acknowledgement as the only proof of
payment and excludes oral testimony. Unless, therefore, there is acknowledgement
in the required form, the payment by itself is of no avail. However, while the
Section requires that the payment should be made within the period of limitation, it
does not require that the acknowledgement should also be made within that period.
But while it is not necessary that the written acknowledgement should be made
prior to the expiry of the period of limitation, it is essential that such
acknowledgement whether made before or after the period of limitation must be in
existence prior to the institution of the suit. Whether a suit is time barred or not
has got to be determined exclusively with reference to the date on which the plaint
is filed and the allegations made therein. To claim exemption under Section 20, the
plaintiff must be in a position to allege and prove not only that there was payment
of interest on a debt or part payment of the principal, but that such payment had
been acknowledged in writing in the manner contemplated by that section. The
ground of exemption is not complete without this second element and unless both
these elements are proved to exist at the date of the plaint the suit would be held
to be time barred. Where none of the payments were endorsed on the bond itself
and there was no acknowledgement either in the handwritten of are or signed by
the debtors prior to the institution of the suit, but in the written statement filed in
the suit the defendants admitted the payments specified in the plaint as made on
the respective dates and the written statement was signed by defendants it would
not fulfill the requirements of a signed acknowledgement as is contemplated by the
proviso to Section 20....
10. It is settled law that in a criminal case, prosecution has to stand upon its own
legs and it c annot t aken the advantage of weak defence before holding the
accused guilty. Thus, it was the bounden duty of the complainant to establish its
case by giving specific date and time regarding the payment of installment of debt
liability by the respondent in order to show that the claim of the complainant was
not time-barred when the cheque (Ex.C2) dated 24.9.1999 was issued in the name
of appellant-company of which Capt. Lakhwinder Singh Gill was the Managing
Partner. But, as discussed above, he has failed to produce any cogent and
convincing evidence in that behalf. Further, it is evident on the file that the
respondent also took an objection when Capt. Lakhwinder Singh Gill had stated in
his examination-in-chief that he was the Managing Partner of Kiran Finance
Company. Even then, the appellant failed to prove that he was also a partner of the
said company, which is stated to have been registered. A photocopy of Form 'C' has
been placed on the file as Ex.Cl, but that too has not been attested by any
competent authority and the same does not show Capt. Lakhwinder Singh Gill to be
its Managing Partner. In such circumstances, the criminal complaint or the appeal
filed on behalf of a company, by the appellant, who is not proved to be a partner of
the registered Company/Firm, is held to be not maintainable.
11. In view of my foregoing discussion, I have no hesitation to hold that the appeal
filed by Capt. Lakhwinder Singh Gill, complainant-appellant is devoid of any merit
and as such, the same is hereby dismissed.

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