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2022 (9) TMI 669 - HC - Indian LawsDishonor of Cheque - legally enforceable liability or not - acknowledgment of debt in terms of Section 18 of Limitation Act 1963 or not - time limitation - rebuttal of presumption u/s 118 and 139 of the Act - HELD THAT - Since the petitioner has raised an issue as regards his liability in respect of the dishonoured cheque, it needs to be mentioned at the outset that Section 118 and 139 of the Act, embody some presumptions in favour of holder of cheque particularly as regards existance of debt or liability. However, needless to mention such presumptions are rebuttable and which may be rebutted by way of leading some evidence to demolish such presumptions. It would obviously before trial Court that one may be able to lead evidence and not before High Court. A complaint, though expected to state all such facts which attract criminal liability of accused, need not be encyclopaedic so as to include all the finer details and evidence which would be required to substantiate the allegations. It would be at appropriate stage that evidence would be led to substantiate allegations. There can be no dispute that question as regards limitation is a mixed question of law and facts particularly when there could be an issue of extension of limitation. As such, inherent powers of High Court can not be invoked for quashing of complaint at the threshold on grounds which would require evidence to be led. Section 18 of Limitation Act 1963 leaves no manner of doubt that it is only if an acknowledgment of liability or debt is made during subsistence of limitation for filing suit that fresh period of limitation will be computed from date of such acknowledgment - Section 25(3) of the Indian Contract resuscitates a time-barred remedy to enforce payment by way of suit, consequent upon a promise made by debtor to pay off the debt or liablity. In such a case, where the payment could be enforced by a suit, it means that it still has the character of legally enforceable debt as contemplated by 'Explanation' to Section 138 of the Act. While considering acknowledgement or promise, another important aspect would be as regards the quality and kind of evidence required to establish such acknowledgement or promise. Hon'ble the Supreme Court, in Shapoor Freedom Mazda v. Durga Prosad Chamaria, 1961 (3) TMI 113 - SUPREME COURT , while discussing acknowledgement of debt in terms of section 19 of Limitation Act, held that an admission as regards liability may be in any form and may be express or implied, and that acknowledgment requires to be construed liberally. The contentions put forth on behalf of petitioner regarding debt being time-barred and that dishonour of a cheque issued after more than 6 years of advancement of loan would not attract provisions of Section 138 of the Act, having been issued qua a debt not enforceable by law, cannot be accepted. Rather, it can safely be held that as on 6.7.2018 when the cheque was issued by the petitioner for paying off the loan advanced on 14.12.2011, the same was issued in acknowledgment of a debt, and upon its dishonour would make the drawer liable to be proceeded against under Section 138 of the Act. This Court does not find the present case to be such where inherent powers under Section 482 Cr.P.C. should be invoked for quashing the complaint or for setting aside the summoning order. Petition dismissed.
Issues Involved:
1. Quashing of the complaint and summoning order. 2. Legality of the debt in context of Section 138 of the Negotiable Instruments Act. 3. Interpretation of "legally enforceable liability"¯ under Section 138. 4. Applicability of Section 18 of the Limitation Act and Section 25(3) of the Indian Contract Act. 5. Relevance of precedents and case law. Issue-wise Detailed Analysis: 1. Quashing of the Complaint and Summoning Order: The petitioner sought to quash the complaint dated 26.9.2018 and the summoning order dated 13.11.2019, which required him to face trial under Section 138 of the Negotiable Instruments Act. The complaint was instituted by the respondent, alleging that a cheque issued by the petitioner was dishonoured due to the account being closed. The Judicial Magistrate First Class, Hisar, summoned the accused based on the preliminary evidence presented by the complainant. 2. Legality of the Debt in Context of Section 138 of the Negotiable Instruments Act: The petitioner argued that the loan advanced in 2011 had become time-barred after three years, and thus, the cheque issued in 2018 could not be considered for the discharge of a "legally enforceable liability" under Section 138. The court noted that Section 118 and 139 of the Act embody presumptions in favor of the cheque holder regarding the existence of debt or liability, which are rebuttable through evidence. The Supreme Court in S. Natarajan v. Sama Dharman emphasized that whether a debt was time-barred is a mixed question of law and fact, to be decided after evidence is adduced. 3. Interpretation of "Legally Enforceable Liability"¯ under Section 138: The court examined whether the liability to pay the debt existed when the cheque was issued on 6.7.2018. It considered the terms under which the loan was advanced, noting that no specific time frame was prescribed for the loan's return, and the petitioner had been paying agreed interest. This raised the issue of "acknowledgment of liability" under Section 18 of the Limitation Act, which extends the limitation period if acknowledgment is made before the expiration of the prescribed period. 4. Applicability of Section 18 of the Limitation Act and Section 25(3) of the Indian Contract Act: Section 18 of the Limitation Act requires acknowledgment of liability before the expiration of the limitation period to extend it. Section 25(3) of the Indian Contract Act allows for a written promise to pay a time-barred debt, which can renew the limitation period. The court highlighted that a promise to pay a time-barred debt under Section 25(3) resuscitates the remedy to enforce payment, making the debt legally enforceable under Section 138 of the Negotiable Instruments Act. 5. Relevance of Precedents and Case Law: The court referred to several precedents, including judgments from the Kerala High Court and the Supreme Court, which supported the view that a cheque issued for a time-barred debt constitutes a legally enforceable liability. The court dismissed the reliance on Delhi High Court judgments by the petitioner, as they were not applicable in light of the more relevant precedents. Conclusion: The court concluded that the cheque issued by the petitioner on 6.7.2018 acknowledged a debt, making it legally enforceable under Section 138 of the Negotiable Instruments Act. The petition to quash the complaint and summoning order was dismissed, affirming that the issue of whether the debt was time-barred required evidence and could not be decided at the threshold. Final Judgment: The petition was dismissed, and the complaint and summoning order were upheld. The court emphasized that the inherent powers under Section 482 Cr.P.C. should not be invoked to quash the complaint or summoning order in this case.
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