2010 (12) TMI 1331 - HC - Indian Laws

Summary

Issues involved:
The petition seeks to quash the proceedings in STC No. 1126/2010 u/s 138 of Negotiable Instruments Act on the grounds of absence of subsisting liability, lack of consideration for the cheque, time-barred debt, and maintainability of the criminal complaint.

Details of the Judgment:

Issue 1: Lack of subsisting liability and absence of consideration for the cheque
The Respondent filed a complaint u/s 138 of Negotiable Instruments Act alleging that the Petitioner failed to provide accounts for a business transaction with the complainant's wife, resulting in a cheque being dishonored due to insufficient funds. The Petitioner contended that there was no legally enforceable debt as the cheque was issued in the name of the complainant, not the actual creditor. The learned senior counsel argued that the alleged debt was time-barred, making the proceedings unsustainable.

Issue 2: Time-barred debt and legal enforceability
Citing legal precedents, the Petitioner's counsel emphasized that a cheque for a time-barred debt is not legally enforceable, as per Section 138 of the Negotiable Instruments Act. The courts have held that a cheque drawn for a debt that is not legally recoverable cannot lead to liability u/s 138. The Respondent argued that the debt was legally enforceable, as the Petitioner had admitted the liability before issuing the cheque.

Issue 3: Abuse of process of law and interference by the Court
The Court considered the facts presented and concluded that the complainant's claim was based on a business transaction from 2003, with the cheque issued only after a demand for profits in 2008. The Court found that the debt, if any, was payable to the complainant's wife, not the Petitioner. Under Section 482 Cr.P.C, the Court can intervene if there is an abuse of process of law, leading to harassment. Consequently, the Court quashed the proceedings in STC No. 1126/2010, as it deemed fit to interfere due to the lack of a legally enforceable debt and potential abuse of process.

This judgment highlights the importance of legal enforceability and consideration in cheque transactions under the Negotiable Instruments Act, emphasizing the need for a genuine debt or liability for liability u/s 138.