2024 (6) TMI 382 - SC - Indian Laws

Dishonour of Cheque - time limitation - seeking to to quash the underlying proceedings on the principal premise that as on the date of the issuance of the summoning order, the underlying debt and/or liability qua Respondent No. 2 was time barred - HELD THAT - The classification of the underlying debt or liability as being barred by limitation is a question that must be decided based on the evidence adduced by the parties. Undoubtedly, the question regarding the time barred nature of an underlying debt or liability in proceedings under Section 138 of the NI Act is a mixed question of law and fact which ought not to be decided by the High Court exercising jurisdiction under Section 482 of the CrPC. The Impugned Order is set aside. The proceedings emanating from the Underlying Complaint i.e., CC No. 6437 of 2017 is restored to the file of the Trial Court - Appeal allowed.

Summary

Issues involved: Appeal against quashing of summoning order u/s 138 of NI Act due to time-barred debt.

Summary:

Issue 1: Quashing of summoning order by High Court
The appeal was filed challenging the High Court's decision to quash the summoning order issued by the Trial Court under Section 138 of the Negotiable Instruments Act, 1881. The High Court based its decision on the premise that the debt in question was time-barred at the time of the summoning order.

Details: The High Court quashed the proceedings citing that the debt owed by Respondent No. 2 to the Appellant was time-barred as per the date of issuance of the summoning order. The transactions between the parties dated back to 2011, culminating in a cheque issued in 2017. The High Court relied on various agreements and receipts from 2011 to determine the debt's enforceability, leading to the quashing of the summoning order and the complaint.

Issue 2: Legal position on time-barred debt in Section 138 proceedings
The Supreme Court referred to a previous case to highlight the legal position regarding time-barred debts in proceedings under Section 138 of the NI Act. The Court emphasized that the determination of a debt being time-barred is a matter of evidence and should not be decided at the stage of summoning under Section 482 of the CrPC.

Details: The Court reiterated that the question of a debt being time-barred is a mixed question of law and fact that should be decided based on evidence presented by the parties. The Court disagreed with the High Court's decision to quash the summoning order based on the time-barred nature of the debt and set aside the Impugned Order, restoring the proceedings to the Trial Court.

In conclusion, the Supreme Court allowed the appeal, set aside the High Court's decision, and restored the proceedings related to the complaint back to the Trial Court.