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2022 (9) TMI 613 - HC - Indian LawsDishonor of Cheque - discharge of legally enforceable debt or not - whether the petitioner issued the cheque in question towards the discharge of legally enforceable liability or debt which is an essential ingredient for invoking section 138 of the Negotiable Instrument Act, 1881? - time barred debt or not - HELD THAT - The legal issue pertaining to the liability of accused under section 138 of the Negotiable Instruments Act, 1881 in time barred debt was considered and discussed by different High Courts. The Kerala High Court in Sasseriyil Joseph V Devassia 2000 (9) TMI 1081 - KERALA HIGH COURT considered the question whether the respondent who issued the cheque in question in discharge of a time barred debt is liable under Section 138 of the Negotiable Instruments Act, 1881. It is appearing from perusal of complaint that the respondent no 2 entered into Assured Return Agreements (Mark A and Mark ) with the petitioner and Jasween Sandhu on 16th September, 2011 and all transactions took place between the petitioner and the Jasween Sandhu in years 2011 as reflected from documents Ex. CW1/B1-B4 and as such whatever was due towards the respondent no 2 from the petitioner and Jasween Sandhu was in year 2011 - The accused cannot be prosecuted for offence under section 138 of the Negotiable Instruments Act, 1881 for issuance of cheque for time barred liability or debt. In the present case, the respondent no 2 in complaint admitted that the petitioner incurred liability towards the respondent no 2 in year 2011 but cheque in question was issued in year 2017 which clearly reflects that the cheque in question was issued towards discharge of time barred liability. The impugned order cannot be legally sustained qua the petitioner and as such the petition is allowed and impugned order is set aside qua the petitioner - Petition allowed.
Issues Involved:
1. Whether the cheque was issued towards the discharge of a legally enforceable liability or debt. 2. Whether the trial court erred in taking cognizance under Section 138 of the Negotiable Instruments Act, 1881. 3. Whether the complaint was filed to coerce the petitioner to settle a criminal case initiated by her. 4. Applicability of Section 138 of the Negotiable Instruments Act, 1881 to time-barred debts. Issue-wise Detailed Analysis: 1. Legally Enforceable Liability or Debt: The petitioner argued that there was no legally enforceable liability against her towards the respondent. The cheque in question was issued in 2017, whereas the debt was incurred in 2011. The petitioner contended that the debt had become time-barred and thus, not legally enforceable. The court noted that for Section 138 to apply, the cheque must be issued for a legally enforceable debt. The court referred to precedents, including the Kerala High Court's decision in Sasseriyil Joseph v. Devassia, which held that a time-barred debt is not legally enforceable. The Supreme Court affirmed this view, stating that Section 138 does not apply to cheques issued for time-barred debts. 2. Trial Court's Cognizance: The trial court took cognizance of the offence under Section 138 and issued summons to the petitioner. However, the petitioner argued that the trial court failed to appreciate that the complaint did not disclose any legally enforceable debt. The court emphasized that cognizance should not be taken in a mechanical manner and must involve the application of judicial mind to the facts. The court found that the trial court erred in taking cognizance without considering the time-barred nature of the debt. 3. Coercion Allegation: The petitioner alleged that the complaint was filed with an ulterior motive to coerce her into settling a criminal case initiated by her against the respondent. The court noted that the petitioner had filed a police complaint and an FIR against the respondent for cheating. The petitioner claimed that the cheque was handed over in 2011 for the development of a food court, and a stop payment request was made in 2011. The court found that the complaint did not disclose a legally enforceable debt and appeared to be an abuse of the process of law. 4. Applicability of Section 138 to Time-Barred Debts: The court discussed various judgments, including those from the Kerala, Bombay, and Karnataka High Courts, which held that Section 138 does not apply to cheques issued for time-barred debts. The court agreed with these views, emphasizing that the language of Section 138 is clear and mandates that the debt must be legally enforceable. The court concluded that the petitioner could not be prosecuted under Section 138 for a cheque issued for a time-barred debt. Conclusion: The court set aside the impugned order and dismissed the criminal complaint against the petitioner. The court held that the cheque in question was issued for a time-barred debt, which is not legally enforceable under Section 138 of the Negotiable Instruments Act, 1881. The petition was allowed, and the complaint was dismissed.
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