2023 (9) TMI 443 - HC - Indian Laws

Dishonour of Cheque - security cheque or not - acquittal of accused - holder of cheque on the date of presentation viz. 31.12.2004. Security cheque or not? - Whether the learned Magistrate committed error in recording finding that the complainant was having custody of the cheque on the date when the transaction was entered upon between the parties? - HELD THAT - On evaluation of the cross-examination of the complainant, it has come on record that the date, amount and name in disputed cheque was entered by the accused. Such admission of part of complainant indicate the date 31.12.2004 being entered by accused - Even otherwise, if one looks at provisions of Section 138(a) of the Act, it prescribes the date inscribed on cheque as the date on which cheque was drawn. The same is provided for the purpose of determining validity of the cheque. However, the fact remains that the issuance of cheque in light of the aforesaid provisions shows as 31.12.2004 . Period of limitation - Whether the complainant be treated as holder of cheque on the date of presentation viz. 31.12.2004, to attract the offence under Section 138 of the N.I. Act? - HELD THAT - In the present case, at no stage, evidence has been adduced by the complainant to show that within the prescribed period of limitation, the debt was acknowledged by the accused in writing, which is required under Sub-Section (3) of Section 25 of the Indian Contract Act. The period of limitation of three years is to be computed as provided under Article 19 of the Limitation Act, which provides for the money payable within three years from the date of loan. The date on which loan was advanced, makes the present transaction time barred as on 31.12.2004. Admittedly, the date of loan as emerged on record is 15.12.1998 and by applying the prescribed period of three years, as per Article 19 of the Limitation Act, would come to an end on 15.12.2001, whereas the disputed cheque bears the date 31.12.2004. In absence of any document being brought on record by the complainant that the debt was acknowledged during the prescribed period of limitation, the cheque was time barred. In light of the decision of the Hon ble Supreme Court in the case of Sasseriyil Joseph 2001 (9) TMI 1177 - SC ORDER , the same cannot be treated as legally enforceable debt or other liability as appeared in the Explanation attached to Section 138 of the N.I. Act. The appeal is found to be devoid of any merit and hence, the same stands dismissed.

Summary

Issues Involved:
1. Scope of the Appeal
2. Facts
3. Arguments of Learned Advocates for the Parties
4. Question which falls for consideration of this Court
5. Analysis
6. Conclusion

Summary:

A. Scope of the Appeal:
This appeal challenges the judgment and order dated 31.07.2007 by the Judicial Magistrate First Class at Manavdar, District-Junagadh in Criminal Case No.176 of 2005, which acquitted the respondent No.1-original accused for the offence under Section 138 of the N.I. Act.

B. Facts:
The original complainant gave a friendly loan of Rs.2,00,000/- to respondent No.1 by cheque dated 15.12.1998. Rs.60,000/- was repaid in cash, and for the remaining Rs.1,40,000/-, a cheque dated 31.12.2004 was issued, which was dishonored with the endorsement "account is closed." A notice under Section 138 of the N.I. Act was issued, and upon no reply, the criminal case was filed. The Magistrate acquitted the respondent, leading to the present appeal.

C. Arguments of Learned Advocates for the Parties:

(i) Advocate for the Appellants:
Mr. J. R. Shah argued that the learned Magistrate erred in concluding that the cheque issued against a time-barred debt cannot be treated as acknowledgment. He emphasized that the accused did not enter the witness box, nor provided any reply to the demand notice, and thus failed to rebut the statutory presumption under Sections 118 and 139 of the N.I. Act. He relied on judgments from the Hon'ble Supreme Court, including A.V. Murthy vs. B.S. Nagabasavanna and K.N. Beena vs. Muniyappan and Ors., to argue that the cheque amounts to acknowledgment and the burden was on the accused to disprove the debt.

(ii) Advocate for the Respondent-Original Accused:
Mr. Ashish M. Dagli contended that the Magistrate rightly concluded that the cheque was a security cheque given in 1998 and misused in 2004. He argued that the complainant failed to prove the existence of a legally enforceable debt and raised issues regarding the service of notice. He cited several judgments to support that the cheque was not valid for a time-barred debt and emphasized that the accused successfully raised a probable defense without needing to enter the witness box.

D. Question which falls for consideration of this Court:
1. Whether the learned Magistrate erred in treating the disputed cheque as a "security cheque"?
2. Whether the complainant can be treated as the "holder of cheque" on the date of presentation to attract the offence under Section 138 of the N.I. Act?

E. Analysis:

First Issue:
The learned Magistrate inferred that the cheque was given in 1998, based on the printed year "19" and the handwritten date "31.12.2004." The complainant admitted receiving Rs.60,000/- in cash, and the cheque was drawn on 31.12.2004. The Court found that the complainant failed to disclose the transaction details in the legal notice and complaint, supporting the defense of misuse of a blank cheque. The cheque was rightly treated as a "security cheque."

Second Issue:
The hand loan of Rs.2 Lakhs was given on 15.12.1998, and the cheque dated 31.12.2004 was issued beyond the limitation period. The Hon'ble Supreme Court in Sasseriyil Joseph vs. Devassia held that a time-barred debt is not legally enforceable under Section 138 of the N.I. Act. The complainant failed to show any acknowledgment of debt within the limitation period, making the debt time-barred and not legally enforceable.

F. Conclusion:
The appeal is devoid of merit and stands dismissed. The bailable warrant issued upon respondent-original accused is hereby canceled.