Application under Section 482 CrPC sought quashing of a Section 138 NI Act complaint on grounds that the cheque covered a time-barred debt and had been stolen. Holding both pleas to be defences raising mixed questions of fact and law triable at trial, the High Court dismissed the application.
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Neutral Citation No. - 2024:AHC:186322
Court No. - 79
Case :- APPLICATION U/S 482 No. - 17788 of 2024
Applicant :- Kuldeep Kumar Opposite Party :- State of U.P. and Another Counsel for Applicant :- Devid Kumar Singh,Prateek Rai,Satya Prakash Rai Counsel for Opposite Party :- G.A.
Hon'ble Arun Kumar Singh Deshwal,J.
Rs. 10 Lakh was given on 21.9.2016 and Rs. 5 Lakh was given on 24.10.2017, subsequently despite the acknowledgement and promise to pay the loan, the applicant did not pay the loan and finally the cheque in question was handed over to the opposite party No.2 on 8.9.2023.
"5. As the complaint has been rejected at the threshold, we do not propose to express any opinion on this question as the matter is yet to be agitated by the parties. But, we are of the view that the learned Sessions Judge and the learned Single Judge of the High Court were clearly in error in quashing the complaint proceedings. Under Section 118 of the Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. Even under Section 139 of the Act, it is specifically stated that it shall be presumed, unless the contrary is proved, 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 other liability. It is also pertinent to note that under sub-section (3) of Section 25 of the Indian Contract Act, 1872, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract. Moreover, in the instant case, the appellant has submitted before us that the respondent, in his balance sheet prepared for every year subsequent to the loan advanced by the appellant, had shown the amount as deposits from friends. A copy of the balance sheet as on 31-3-1997 is also produced before us. If the amount borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgment and the creditor might have a fresh period of limitation from the date on which the acknowledgment was made. However, we do not express any final opinion on all these aspects, as these are matters to be agitated before the Magistrate by way of defence of the respondent.
6. This is not a case where the cheque was drawn in respect of a debt or liability, which was completely barred from being enforced under law. If for example, the cheque was drawn in respect of a debt or liability payable under a wagering contract, it could have been said that that debt or liability is not legally enforceable as it is a claim, which is prohibited under law. This case is not a case of that type. But we are certain that at this stage of the proceedings, to say that the cheque drawn by the respondent was in respect of a debt or liability, which was not legally
enforceable, was clearly illegal and erroneous."
"8. In this connection, we may usefully refer to a judgment of this Court in A.V. Murthy v. B.S. Nagabasavanna [A.V. Murthy v. B.S. Nagabasavanna, (2002) 2 SCC 642] where the accused had alleged that the cheque issued by him in favour of the complainant in respect of sum advanced to the accused by the complainant four years ago was dishonoured by the bank for the reasons "account closed". The Magistrate had issued summons to the accused. The Sessions Court quashed the proceedings on the ground that the alleged debt was barred by limitation at the time of issuance of cheque and, therefore, there was no legally enforceable debt or liability against the accused under the Explanation to Section 138 of the NI Act and, therefore, the complaint was not maintainable. While dealing with the challenge to this order, this Court observed that under Section 118 of the NI Act, there is a presumption that until the contrary is proved, every negotiable instrument was drawn for consideration. This Court further observed that Section 139 of the NI Act specifically notes that it shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for discharge, in whole or in part, of any debt or other liability. This Court further observed that under sub-section (3) of Section 25 of the Contract Act, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits, is a valid contract. Referring to the facts before it, this Court observed that the complainant therein had submitted his balance sheet, prepared for every year subsequent to the loan advanced by the complainant and had shown the amount as deposits from friends. This Court noticed that the relevant balance sheet is also produced in the Court. This Court observed that if the amount borrowed by the accused therein is shown in the balance sheet, it may amount to acknowledgment and the creditor might have a fresh period of limitation from the date on which the acknowledgment was made. After highlighting further facts of the case, this Court held that at this stage of proceedings, to say that the cheque drawn by the accused was in respect of a debt or liability, which was not legally enforceable, was clearly illegal and erroneous. In the circumstances, this Court set aside the order passed by the High Court upholding the Sessions Court's order quashing the entire proceedings on the ground that the debt or liability is barred by limitation and, hence, the complaint was not maintainable. It is, therefore, clear that the contention urged by the appellant herein can be examined only during trial since it involves examination of facts.
9. In Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] , the legal question before this Court pertained to the proper interpretation of Section 139 of the NI Act which shifts the burden of proof on to the accused in cheque bouncing cases. This Court observed that the presumption mandated by Section 139 of the NI Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature
of rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. This Court further observed that Section 139 of the NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. This Court clarified that the reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. This Court, then, explained the manner in which this statutory presumption can be rebutted. Thus, in cheque bouncing cases, the initial presumption incorporated in Section 139 of the NI Act favours the complainant and the accused can rebut the said presumption and discharge the reverse onus by adducing evidence.
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 timebarred and therefore, the complaint was not maintainable. The High Court, therefore, fell into a grave error in quashing the proceedings."
Order Date :- 27.11.2024 Vandana
Digitally signed by :- VANDANA GAUTAM High Court of Judicature at Allahabad
2 issues framed by the court
Whether proceedings under Section 138 NI Act can be quashed on the plea that the cheque was issued in discharge of a time-barred debt.
Whether the allegation that the cheque was stolen warrants quashing of the complaint.
Colour shows how this judgement treated each authority
Sasserilyil Joseph vs. DevassiaReferred
Sasserilyil Joseph vs. Devassia; 2001 CRILJ 24 · Who else cites this
A.V. Murthy vs. B.S. NagabasavannaRelied on¶8
A.V. Murthy vs. B.S. Nagabasavanna; (2002) 2 SCC 642 · Who else cites this
S. Natarajan vs. Sama Dharman and anotherApplied¶9
S. Natarajan vs. Sama Dharman and another; (2021) 6 SCC 413 · Who else cites this
2 provisions across 2 enactments
Kuldeep Kumar
State of U.P.
Vipin Kumar
Arun Kumar Singh Deshwal
As recorded by the court registry
4 orders share this CNR
Judgements on the same questions, provisions and authorities, from every court
