2019 (12) TMI 1451 - HC - Indian Laws

Dishonor of Cheque - section 138 of Negotiable Instruments Act - time limitation - It is the contention of the learned Senior Counsels for the applicant that the payments alleged to have been made in the months of February 2016 and March 2016 would not revive the period of limitation since the amounts were said to have been paid only after expiry of the limitation - whether the claim of the respondent is barred by limitation? - HELD THAT - A bare perusal of Section 18 in the Limitation Act would show that a fresh period of limitation would commence from the time where before expiry of the prescribed period for a suit or application, an acknowledgment of liability has been made. But in the matter on hand, as per the provisions of the Limitation Act, the period of limitation for both the loans got expired on 09.04.2011 and 29.03.2014 respectively. Even assuming that cash payments were made on 20.02.2016 and 22.03.2016 and the cheques were issued on 10.06.2016, everything had taken place after the period of limitation. This Court while dealing with the time barred debt observed that there must be a distinct promise to pay the money and the promise must be in the form of writing signed by the concerned person or his authorised agent. But in this case, admittedly, no such written promise produced by the complainant. Thus, the suit has been filed on a time barred debt and there was no legally enforceable liability for filing the criminal complaint - application disposed off.

Summary

Issues Involved:
1. Whether the claim of the respondent is barred by limitation.
2. Whether the cheques issued for a time-barred debt constitute a legally enforceable debt under Section 138 of the Negotiable Instruments Act.

Detailed Analysis:

Issue 1: Whether the claim of the respondent is barred by limitation.
The respondent instituted a suit seeking payment of ?1,00,51,250/- along with interest and filed a private complaint under Section 138 of the Negotiable Instruments Act for the dishonour of cheques. The respondent claimed that two loans were availed by the applicant on 30.03.2007, with part payments made till 10.05.2008 and 30.04.2011. Additional payments were alleged to have been made on 20.02.2016 and 22.03.2016. The applicant argued that the proceedings are barred by limitation as the last payments for the loans were made in 2008 and 2011, respectively, and the alleged payments in 2016 would not revive the original cause of action.

The court referred to Section 18 of the Limitation Act, which states that a fresh period of limitation commences from the time an acknowledgment of liability is made in writing before the expiration of the prescribed period. However, in this case, the limitation periods for the loans expired on 09.04.2011 and 29.03.2014, respectively. Even assuming payments were made in 2016, they occurred after the limitation period had expired.

The court cited several judgments to support this interpretation:
- M.Danabal vs. R.Senthil Rajan: A cheque issued for a time-barred debt does not satisfy the requirement of a legally enforceable debt.
- Sasseriyil Joseph vs. Devassia: The Kerala High Court and the Supreme Court held that a cheque issued for a time-barred debt does not attract the penal provisions of Section 138 of the Negotiable Instruments Act.
- S.Kamatchi and others vs. M/s.Arkaa Medicament: A time-barred debt cannot be considered a legally enforceable debt.

The court concluded that the suit was filed on a time-barred debt and there was no legally enforceable liability for filing the criminal complaint.

Issue 2: Whether the cheques issued for a time-barred debt constitute a legally enforceable debt under Section 138 of the Negotiable Instruments Act.
The applicant contended that the cheques were issued as security and not for a legally enforceable debt. The court emphasized that for Section 138 of the Negotiable Instruments Act to apply, the cheque must be issued for a legally enforceable debt. The court reiterated that a time-barred debt does not constitute a legally enforceable debt.

The court also addressed the respondent's argument that limitation is a mixed question of fact and law that should be decided after trial. However, the court found that the decisions relied upon by the respondent did not address the issue of limitation directly and were factually distinguishable.

Conclusion:
The court held that the suit was filed on a time-barred debt and there was no legally enforceable liability for the criminal complaint. Consequently, the plaint in CS.No.75 of 2017 was rejected, and the complaint in C.C.No.5257 of 2016 was quashed. The applications were allowed, and no costs were imposed.