2020 (1) TMI 1651 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - time limitation for recovery of alleged debt - HELD THAT - There is no averment in the entire complaint as regards any kind of acknowledgment of the said debt by the petitioner within the period of three years i.e. the limitation period to recover the debt. Thus, there being no acknowledgement by or on behalf of the accused, it cannot be said that the complaint filed in respect of the said debt was maintainable. Similar issue was considered by this Court in Manjit Kaur s case 2009 (11) TMI 1026 - PUNJAB AND HARYANA HIGH COURT . In the said case, a cheque issued in the year 2003 in respect of the loan advanced in 1999, was held not be legally enforceable. It was held The acknowledgment of the alleged amount in 2003 was not valid acknowledgment under Section 18 of the Limitation Act and consequently, it was not a legally enforceable debt. On the same analogy, it is held that the cheque issued in 2018 in respect of the loan advanced in the year 2011, cannot be said to be a valid acknowledgment and thus, the complaint filed in respect of the dishonour of the said cheque is not maintainable. As a consequence, the summoning order passed in the said complaint cannot be sustained. The present petition is allowed.

Summary

Issues:
Quashing of complaint and summoning order under Section 138 of the Negotiable Instruments Act, 1881 based on limitation period for recovery of debt.

Analysis:
The petitioner sought to quash a complaint and summoning order related to a loan taken in 2011, filed under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused issued a cheque in 2018 which got dishonored due to insufficient funds. The petitioner argued that the complaint was time-barred as the limitation for recovery of the debt was three years from the date of issue. The petitioner contended that there was no acknowledgment of the debt within the limitation period, making the complaint not maintainable. The court examined the complaint and found no acknowledgment by the petitioner within the three-year limitation period, rendering the complaint unsustainable.

The court referred to a previous case where a similar issue was considered, highlighting the importance of acknowledgment within the limitation period for debt recovery. The court emphasized that an acknowledgment renews the liability and provides a fresh limitation period. In this case, the court concluded that the cheque issued in 2018 for a loan from 2011 did not constitute a valid acknowledgment, making the complaint regarding the dishonored cheque not maintainable. Consequently, the summoning order based on the complaint was quashed.

In summary, the court allowed the petition, quashing both the complaint and the summoning order. The judgment was based on the lack of acknowledgment of the debt within the limitation period, making the complaint unsustainable under the Negotiable Instruments Act, 1881. The court's decision was in line with the legal principle that acknowledgment of debt within the prescribed period is essential for maintaining a complaint related to dishonored cheques and debt recovery.