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TMI Blog2021 (9) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Court and examined himself as CW-1 and tendered in evidence his affidavit Ex. CW1/A and documents Ex. C1 to C6. After considering the same, vide order dated 06.09.2019, Judicial Magistrate Ist Class, Kurukshetra passed the impugned summoning order. Aggrieved against the same, the present petition has been filed. 3. Learned counsel for the petitioner has primarily raised two arguments to challenge the summoning order and the complaint. 4. The first argument of learned counsel for the petitioner is that in the present case, there was no "legally enforceable debt" on the date of the issuance of the cheque, inasmuch as the cheque in question was issued on 02.08.2019, whereas the said amount was borrowed on 04.08.2015. It is argued that the recovery of the amount was barred by the law of limitation and thus, issuance of the cheque after the expiry of the period of limitation, would not extend/renew the period of limitation. Thus, on the date of issuance of the cheque, there was no "legally enforceable debt". In support of the said contention, learned counsel for the petitioner has relied upon the judgment of Andhra Pradesh High Court, dated 20.01.1997, passed in "Girdhari La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Indian Contract Act, 1872 (for short, "the Contract Act"), the Negotiable Instruments Act, 1881 (for short, "The Negotiable Instruments Act") and the Limitation Act, 1963 (for short, "The Limitation Act") would be relevant for a comprehensive consideration of the first two issues. 9. Section 2 and section 25 of the Contract Act are reproduced hereinbelow:- "2. Interpretation clause. - In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:- (a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal; (b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise; (c) The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee"; (d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstains from doing, or promises to do or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rypto system or with electronic signature, as the case may be; (b) "a truncated cheque" means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. Explanation II. - For the purposes of this section, the expression "clearing house" means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India. [Explanation III. - For the purposes of this section, the expressions "asymmetric crypto system", "computer resource", "digital signature", "electronic form" and "electronic signature" shall have the same meanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000).]" xx xx xx xx xx "13. "Negotiable instrument". - [(1) A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. Explanation (i) - A promissory note, bill of exchange or cheque is payable to order which is expressed to be so payable or whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thus, there is some divergence of opinion among different Courts with respect to the first two issues. The Division Bench of the Bombay High Court in the case titled as Dinesh B. Chokshi Vs. Rahul Vasudeo Bhat, reported as 2013 (5) RCR (Civil) 598, decided on 19.10.12 has considered the relevant provisions in detail and after considering the said provisions, has opined in favour of the person in whose favour the cheque is issued. After considering the provisions of Section 2 of the Contract Act, it was observed that a joint reading of Section 2(a) and 2(b) of the Contract Act, would show that if a proposal is accepted, it becomes a promise and in view of Clause (e) of Section 2 of the Contract Act, a promise or a set of promises, forming consideration for each other, would be an agreement. Further, by virtue of Clauses (g) and (h) of Section 2 of the Contract Act, an agreement which is not enforceable by law would be void and the agreement which is enforceable by law is termed as a contract. Clause (j) of Section 2 of the Contract Act provides that where a contract is no more enforceable by law then the same becomes void when it ceases to be enforceable. It has been further obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Section 6 of the Negotiable Instruments Act, as per which, a cheque is a bill of exchange which is drawn on a specified banker and not expressed to be payable otherwise than on demand. Reference was made to a judgment of the Hon'ble Apex Court in the case titled as National Insurance Company Limited Vs. Seema Malhotra and others, reported as 2001 (3) SCC 151 to hold that drawer of a cheque promises to the person in whose favour the cheque is drawn, that the cheque, on presentation, would yield the amount in cash, as mentioned in the cheque and thus, when the said cheque is returned dishonoured, the person issuing the cheque has failed to perform his promise. Section 13 of the Negotiable Instruments Act, which defines a Negotiable Instrument, was also considered and it was observed that the Negotiable Instruments also include a cheque within their ambit. After considering all of these in conjunction, it was held that a cheque is a promise within the meaning of Section 25(3) of the Contract Act. Such a promise is an agreement and is an exception to the general rule that an agreement without consideration is void. Thus, although, on the date of making such a promise by issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract Act, 1872? (ii) If it amounts to such a promise, does such a promise, by itself, create any legally enforceable debt or other liability as contemplated by Section 138 of the Negotiable Instruments Act, 1881?" xx xx xx xx xx "9. Thus, Sub-section (3) of Section 25 of the Contract Act is an exception to the general rule that an agreement made without consideration is void. Sub-section (3) of Section 25 of the Contract Act applies to a case where there is a promise made in writing and signed by a person to be charged therewith to pay wholly or in part a debt which is barred by law of limitation. A promise covered by Sub-section (3) becomes enforceable agreement notwithstanding the fact that it is a promise to pay a debt which is already barred by limitation. Thus, Sub-section (3) of Section 25 of the Contract Act applies to a promise made in writing which is signed by a person to pay a debt which cannot be recovered by reason of expiry of period of limitation for filing a suit for recovery. Therefore, if a debtor after expiry of the period of limitation provided for recovery of debt makes a promise in writing signed by him to pay the debt wholly or in part, the said pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .V. Moorthy (supra). Therefore, the first question will have to be answered in the affirmative." xx xx xx xx xx "18. Under Section 118, there is a rebuttable presumption that every negotiable instrument was made or drawn for consideration. Section 139 creates a rebuttable presumption in favour of a holder of a cheque. The presumption is that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part of any debt or liability. Thus, under the aforesaid two Sections, there are rebuttable presumptions which extend to the existence of consideration and to the fact that the cheque was for the discharge of any debt or liability." xx xx xx xx xx "20. While recording our answer to the first Question, we have already held that a cheque issued for discharge of a debt which is barred by law of limitation is itself a promise within the meaning of Sub-section (3) of Section 25 of the Contract Act. A promise is an agreement and such promise which is covered by Section 25(3) of the Contract Act becomes enforceable contract provided that the same is not otherwise void under the Contract Act. 21. Therefore, while answering second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, undoubtedly, true that 'to draw' means to write and sign. However, even if the claim is barred by limitation on the date of the drawing of the cheque, on delivery to the other person, it becomes a valid consideration for another agreement. The drawal of the cheque evidences such an agreement. This acknowledgement is enforceable. The drawing and delivery of a cheque create a legally enforceable liability. Thus, we are of the opinion that when a person writes, signs and delivers a cheque to another it is an acknowledgment of a legally enforceable liability. Thereafter, if the cheque is dishonoured on account of insufficiency of funds such a person shall not be entitled to plead that at the time of his writing the cheque the claim had become barred by limitation and, thus, he is not liable to be punished under Section 138. 14. Mr. Benny Gervacis contended that under Section 18 of the Limitation Act the acknowledgement has to be made before the expiry of the period of limitation. In the present case, the cheque was executed after the limitation had already expired. Thus, it cannot amount to an extension of limitation. 15. For the purpose of the present case, it does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered by their Lordships of the Supreme Court in A.V. Murthy v. B.S. Nagabasavanna (2002 (2) SCC 642). On a perusal of the judgment, we find that the matter was considered by the Supreme Court in the context of the provisions contained in the Negotiable Instruments Act as well as those of the Contract Act. However, the issue of limitation was left open. But what deserves mention is that even though the learned Sessions Judge had quashed the proceedings as the limitation in recovering the money had expired and the order had been upheld by the Karnataka High Court, yet, their Lordships had reversed the decision. This is indicative of the fact that the accused was not entitled to escape liability to suffer penalty merely on account of the fact that the limitation for recovery of the amount had expired before the date of the issue of the cheque. xx xx xx xx xx 25. In view of the above, the question as posed at the outset is answered in the negative. It is held that: (1) When a person issues a cheque, he acknowledges his liability to pay. In the event of the cheque being dishonoured on account of insufficiency of funds he will not be entitled to claim that the debt had become b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 15 of the judgment of Bombay High Court in Dinesh B. Chokshi Vs. Rahul Vasudeo Bhatt & another 2013 (2) Civil Court Cases 017 (Bombay), as has been reproduced, cannot be faulted with. Counsel for the appellant has placed reliance upon the judgment of A.V. Murthy Vs. B.S. Nagabasavanna, 2002 (1) RCR (Criminal) 745 to assert that the suit would be barred by limitation and Section 25(3) of the Indian Contract Act, would not be attracted, is misplaced. This judgment rather goes against him as is apparent from the observations made on this aspect in para 5 thereof, where, in fact, the Hon'ble Supreme Court has referred to sub-Section 3 of Section 25 of the Indian Contract Act, 1872 and has accepted that the time barred debts also can be enforceable in the light of the subsequent acceptance/acknowledgment of liability. It is not disputed that from the date of issue of the cheque on 17.10.2007, the suit has been filed within limitation. The findings, thus, recorded by the Courts below with regard to the suit being within the limitation cannot be faulted with." 16. The Hon'ble Supreme Court in the case of A.V. Murthy v. B.S. Nagabasavanna, reported as 2002 (1) RCR (Criminal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no acknowledgment before the expiry of period of limitation and the cheque is issued after a period of expiry of limitation, still whether there is an enforceable liability or not will have to be considered. I have already observed above that the cheque is issued under the signature of the debtor after putting the sum payable. The cheque directs the bank to pay the bearer sum mentioned in the cheque. As such it becomes the promise in favour of the payee within the meaning of Section 25(3) of the Indian Contract Act. Once it becomes a fresh promise, fresh period of limitation of 3 years would begin to run from the date of cheque. Hence the liability would certainly be a legally enforceable liability." 19. Even a Division Bench of Madras High Court in the case titled as N. Ethirajulu Naidu Vs. K.R. Chinnikrishnan Chettiar reported as 1975 AIR (Madras) 333, decided on 02.08.1974, while considering both, Section 18 of the Limitation Act, 1963 and Section 25(3) of the Contract Act, has observed as under:- "The distinction between an acknowledgment under Section 18 of the Limitation Act 1963 and a promise within the meaning of Section 25(3) of the Contract Act is of great imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being barred by limitation were not in affirmative terms in as much as it had been stated that "the debt appears to have been barred by limitation". Moreover, it is reiterated that the said issue was not in a case of quashing under Section 482 Cr.P.C. but one in an appeal filed against an acquittal ordered by the trial Court. 23. With respect to the judgment of learned Single Judge of the High Court of Bombay at Goa in Smt. Ashwini Satish Bhat's case (supra), relied upon by the learned counsel for the petitioner, it would be relevant to mention that the said judgment was also considered by the Division Bench of Kerala High Court in R amakrishnan's case (supra) and the Division Bench had not concurred with the view taken therein. Further the Division Bench of the same court, that is, the Bombay High Court, in Dinesh B Chokshi's case (supra), had taken a view contrary to the view taken in Smt. Ashwini Satish Bhat's case (supra). Moreover, the judgment of the Division Bench was of the year 2012, which was subsequent to the judgment in Smt. Ashwini Satish Bhat's case (supra), which was of the year 1999. Further, the provisions of Sections 25(3) of the Contract Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cheques in question were issued beyond the date of limitation was not in dispute. The relevant part of judgment in Narendra V. Kanekar's case (supra) is reproduced hereinbelow:- "6. Reference to illustrations (e) would not be out of context. It reads as follows:- (e) A owes B Rs. 1000/-, but the debt is barred by the Limitation Act. A signs a written promise to play B Rs. 500/- on account of the debt. This is a contract. 7. Shri Padiyar, the learned counsel on behalf of the petitioner/accused has submitted that the cheques in question were issued beyond the period of limitation and there was otherwise no acknowledgment of debt in writing given prior to the expiry of the period of limitation" 25. This Court has considered the abovesaid provisions as well as the judgments on the point. A conjoint reading of Sections 2, 10, 23 and 25 to 30 of the Contract Act would clearly bring out that when a proposal is accepted, it becomes a promise, and the promise to do something would be an agreement, and an agreement enforceable in law is a contract and the one which ceases to be enforceable would become void. Under the Contract Act, there are several categories of void agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the meaning of Section 25(3) of the Contract Act, this Court concurs with the observations made by the Division Bench of the Madras High Court in N. Ethirajulu Naidu's case (supra) and that of the Bombay High Court (Nagpur Bench) in the case of Vijay Ganesh Gondhlekar (supra) reproduced hereinabove and holds that both the provisions have the effect of creating a fresh starting point of limitation, if they are in writing and signed by the party or his authorized agent. An acknowledgement under Section 18 of the Limitation Act to be valid, must be made before the expiry of the period of limitation, whereas, a promise under Section 25(3) of the Contract Act, to pay a debt, may be made after the debt has become time barred. On the said aspect even the judgment in Narendra V. Kanekar's case (supra), relied upon by the learned counsel for the petitioner, reinforces the view taken by this Court. The relevant portion of the said judgment is reproduced hereinbelow: "......There is no doubt that in terms of the Indian Limitation Act, 1963, a signed acknowledgement of liability made in writing before the expiration of period of limitation, is enough to start a fresh period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.. (4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant. (5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section." xx xx xx xx xx "148. Power of Appellate Court to order payment pending appeal against conviction. - (1) Notwithstanding anything contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome time barred, any person issuing a cheque subsequent to that, makes a promise to the person in whose favour the cheque is issued, that the said cheque would be honoured. On dishonor, the person to whom the cheque has been issued, would then have the right to pursue the remedy under Section 138 of the Negotiable Instruments Act. By the time, the summoning order etc. would be issued and the matter would be agitated by the accused person, considerable time would have elapsed. In such a situation, in case the proposition is held in favour of the accused person and the proceedings under Section 138 of the Negotiable Instruments Act are quashed, only on account of the plea of limitation, then the person who has a cheque issued in his favour, would be left high and dry. Moreover, in case the proceedings under Sections 138 of the Negotiable Instruments Act are quashed, then the same would result in undue enrichment of the accused person who has managed to linger on the matter on a false promise by issuing the said cheque. 31. Thus, after considering the relevant provisions as well as the judgments of various Courts on issue No. (i) and (ii), this Court conclusively holds that the issua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccused did not have sufficient funds in their account. A copy of the Memorandum dated 12/2/2011 issued by the Karur Vysya Bank Limited is on record at Annexure P-1." xx xx xx xx xx 6........ The High Court then observed that since at the time of issuance of cheque i.e., on 1/2/2011, the alleged debt of the accused had become time barred, the proceedings deserve to be quashed. 7. In our opinion, the High Court erred in quashing the complaint on the ground that the debt or liability was barred by limitation and, therefore, there was no legally enforceable debt or liability against the accused. The case before the High Court was not of such a nature which could have persuaded the High Court to draw such a definite conclusion at this stage. Whether the debt was time barred or not can be decided only after the evidence is adduced, it being a mixed question of law and fact." xx xx xx xx xx 10. In our opinion, therefore, the High Curt could not have quashed the proceedings on the ground that at the time of issuance of cheque, the debt had become time-barred and therefore, the complaint was not maintainable. The High Court, therefore, fell into a grave error in quashing the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the debt was time barred or not can be decided only after the evidence is adduced, it being a mixed question of law and fact. xx xx xx xx xx 10. In our opinion, therefore, the High Court could not have quashed the proceedings on the ground that at the time of issuance of cheque, the debt had become time barred and therefore, the complaint was not maintainable. The High Court, therefore, fell into a grave error in quashing the proceedings. 11. In the result, the impugned order dated 25/7/2012 is set aside. The trial court shall proceed with the case." 8. In view of the decision of the Apex Court in S. Natarajan's case (supra), the judgments relied upon by the learned counsel for the petitioner fail to advance the case of the petitioner. 9. No ground for interference by this Court is made out." 36. A perusal of the above mentioned judgment would show that the plea of time barred debt can only be gone into by the trial Court after the parties have led their evidence with regard to their respective pleas. No judgment has been cited by learned counsel for the petitioner in the present case, in which on the basis of said plea of time barred debt, a petition under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent petition is reproduced hereinbelow:- "Sultan Singh aged about 46 years son of Shri Dayal Singh resident of VPO Umri, Tehsil Thanesar, District Kurukshetra, Haryana." 41. A perusal of the complaint would show that in paragraph 5 and 6 of the same, it has been specifically alleged by the complainant that after the dishonour of the cheque, the complainant contacted the accused and told him about dishonouring of the cheque and requested him to make the payment but the petitioner had flatly refused to make the payment of the cheque without any reasonable cause and excuse. It has been specifically alleged that the legal notice dated 18.08.2019 through Sh. M.K. Sharma, Advocate, was served upon the accused/petitioner and despite the same, the payment was not made. 42. Learned counsel for the petitioner has not sought to dispute the issuance of the cheque or the signature on the same. Moreover, the fact as to whether the legal notice under Section 138 of the Act was served upon the petitioner or not, is a disputed question of fact, which can only be gone into during the trial, after the witnesses have been examined and cross-examined and the documents have been put to the said w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examination the complainant has categorically admitted that he had never met the petitioner or corresponded with the petitioner at the Barakhamba Road address. Further it is contended that in the complaint filed by the complainant the correspondence address mentioned in the alleged acknowledgement has been mentioned as the second address of the petitioner and the petitioner was served with the summons only at the second address. 9. He further submits that the Trial Court erred in placing reliance on the judgment of the Supreme Court in C.C. Alavi Haji vs. Palapetty Muhammed & Anr., AIR 2007 SC (Suppl) 705. He submits that the said judgment would apply only in the case notice was correctly addressed. Admittedly in the present case notice was sent to an incorrect address at which the petitioner was not present. 10. He relies on the judgment in M/s. Ajeet Seeds Ltd. v. K. Gopala Krishnaiah, (2014) 12 SCC 685 wherein it has been held that presumption of service of notice would arise only in case the notice is correctly addressed. xx xx xx xx xx 12. The statutory legal notice is addressed to the petitioner as follows:- "R.L. Verma & Sons (HUF) Through its authorized sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory notice under Section 138 of the Act was not correct inasmuch as in the acknowledgment relied upon by the complainant therein, the correspondence address had been specifically mentioned and the statutory notice was not issued on the said address. Even in the cross-examination, the petitioner therein had stated that he had not met the accused at the address where the notice had been issued. In this judgment, reference had been made to the judgment of the Hon'ble Supreme Court in "M/s. Ajeet Seeds Ltd. vs. K. Gopala Krishnaiah", reported as (2014) 12 SCC 685 wherein it had been held that the presumption of service of notice would arise only in a case where the notice is correctly addressed. It is in the said background that this judgment was passed by the Delhi High Court. In the present case, the legal notice and the other relevant documents have not even been produced on record. The Hon'ble Supreme Court as well as Delhi High Court have observed that the presumption of service of notice would arise when address mentioned in the statutory notice is correct. It is not even argued by learned counsel for the petitioner that address on the legal notice was not correct. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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