Dismissed

M/S. v. a. Enterprises v M/S. Tooltek Special Machinces and Ors.

Bombay HC14 Oct 2013APPLN/159/2012

Case brief

AI extract

What is this about?

Criminal appellate jurisdiction application by a cheque holder challenging a judgment and order acquitting the drawer under Section 138 of the Negotiable Instruments Act. The High Court dismissed the application, holding that issuance of a cheque is not conclusive proof of a promise to pay a time-barred debt and the complainant must prove such a promise.

What did the court decide?

Application for leave to appeal dismissed; original acquittal of respondents under Section 138 of the Negotiable Instruments Act upheld.

M/S. v. a. Enterprises Vs M/S. Tooltek Special Machinces and… — Cheque Dishonour | Bombay HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION

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CRIMINAL APPLICATION NO.159 OF 2012

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M/s. V. A. Enterprises ) Having its office at Plot ) No.3^rd floor, Flat No.15/A ) Ronak Residency, Survey No.224 ) Near Choinchwad Station ) Pune. ) Through its proprietor ) Mr. Ashok Pundalik Suryavanshi ) Age 41 years, Occ:Business ) Address as above. ) ...Applicant vs. 1. M/s. Tooltek Special Machines) Having its office at Plot ) No.7/2, Siddhivinayak ) Industrial Estate, Kudalwadi ) Pune. ) 2. Mr. Bashir Hamidknhan Inamdar) Proprietor of M/s. Tooltek ) Special Machines, Plot No.7/2) Siddhivinayak Industrial ) Estate, Kudalwadi, Pune. ) 3. The State of Maharashtra ) ...Respondents

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Mr. Vaibhav A. Sugdare for the Applicant. Ms. A. A. Mane, APP, for the Respondent – State.

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CORAM : A. H. JOSHI, J.

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DATE : 14^th October, 2013

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J U D G M E N T

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1] By the present application, the applicant seeks leave to file appeal, taking exception to the impugned judgment and order dated 30.11.2011 passed by the Ld. 4^th Judicial Magistrate, First Class, Pimpri, Pune, whereby the learned

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Magistrate has dismissed the complaint filed by the applicant under Section 138 of the Negotiable Instruments Act.

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2] Applicant's case is summarized as follows:-

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(a) Applicant had supplied certain goods on oral orders to the respondent, on credit limit of 60 days. The respondent used to acknowledge the delivery of material by signing delivery challans.

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(b) The dues towards supplies and invoices had accumulated to the tune of Rs.3,10,540/-. Out of the said amount, the respondent made a part payment of Rs.59,000/- and assured the applicant to pay the balance in due course of time.

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(c) Two cheques bearing cheques No.295879 and 295880 for an amount of Rs.1,00,000/- drawn on Karad Urban Co-operative Bank Ltd., Bhosari Branch, Pune were issued by the Respondent towards the payment of dues. Both aforesaid cheques were dishonoured and returned with remark “funds insufficient”.

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(d) Applicant issued notice as regards dishonour, which was served, however the accused did not pay. Therefore the applicant filed Criminal Complaint No.6169 of 2007 in the Court of Judicial Magistrate First Class, Pimpri, Pune.

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3] Applicant filed affidavit of examination in chief and thereby tendered the proof of facts as regards transactions, the dishonour of cheques and notice etc. The applicant's defence as suggested in the cross examination was that the

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cheques were issued by way of security. Said suggestion was denied by the applicant.

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4] Respondent No.2 examined himself. He was cross examined by the advocate for the applicant. In the cross examination, respondent No.2 accepted the business transaction and supply of material till the year 2004. He also accepted the transaction and the signature on the cheques.

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5] The learned Magistrate considered the complaint and the evidence of the parties, and acquitted respondent No.1 and 2, holding that the complainant had failed to prove that cheques were issued towards legally enforceable debt, it being a debt barred by law of limitation.

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6] According to the applicant, the learned Magistrate had failed to:-

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(a) Correctly apply the principle and interpretation of provision under Section 118(a) and Section 139 of the Negotiable Instruments Act, as regards the presumption of consideration consideration in favour of the holder of a cheque;

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(b) Appreciate the provision of Section 18 of the Limitation Act and erred in arriving at a conclusion that though the debt was barred by the Limitation Act, the same was payable when the debtor issues a cheque;

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(c) Appreciate that the respondent No.2 had failed to destroy the presumption of consideration as established under Section 118(a) and as to the aspect of the consideration and the fact that the cheques which were issued were not towards any debt due to the applicant;

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(d) Appreciate that the fact of issuance of cheques dated 1.6.2007 which have been dishonoured, is a promise made in writing, and signed by person contemplated under sub-section 3 of Section 25 of the Indian Contract Act, 1872 and therefore the same amounts to acknowledgment, there by, it revives debt, and activates fresh spell of limitation.

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7] Learned advocate for the applicant has placed reliance on the reported judgment of this Court in Dinesh B. Chokshi V/s. Rahul Vasudeo Bhatt 2013 (2) Mh. L.J. Page 130. Relying on this judgment, it is urged that:

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A cheque issued for payment of a time barred debt would constitute a promise to pay a time barred debt and hence therefore issuance of such cheque would comprehend existing and legally enforceable civil liability.

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8] Now this Court has to see on facts as to whether the act of issuance of a cheque which complainant claims that it was issued towards a debt barred by law of limitation, did the act of issue of cheque, ipso facto, constitute a promise to pay “a debt which was barred by limitation.

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sbw 5/12 appln.159.12

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9] On facts of the case on hand, it is seen that the complainant did not begin and proceeded with a positive factual plea, that based on facts within common knowledge and understanding of both parties, the cheques subject matter were issued towards payment of money which was a debt barred by limitation.

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10] Text of notice issued by applicant as regards the mode and reasons of issue of cheque read thus:-

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“4. My client submits that you avoided to pay the outstanding bill amount to my client and hence my client requested you personally and on telephone discussions to pay outstanding at the earliest. Thereafter you issued under described cheques after tremendous follow up by my client to repay the outstanding bill:

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Cheque No.	Date	Amount	Name of Ba	nk
295880	01/06/07	1,00,000/-	The Karad Co-op. Bank Bhosari Branch	Urban Ltd. Pune.
295879	01/06/07	1,00,000/-	The Karad Co-op. Bank Bhosari Branch	Urban Ltd. Pune.

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(Herein after referred as “The said Cheque” for the sake of brevity).

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My client submits that you assured and promised my client that the said 2 cheques will be honoured on presentation and assured to pay balance amount shortly.”

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(quoted from page 21 paragraph No.4 of paper book).

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11] The version contained in paragraph No.5 of complaint is verbatim the same as stated in the notice as is quoted in the foregoing paragraph. It is also evident from the paragraph number 5 of the examination in chief on affidavit at page No.24 of the paper book, that the same plea is replicated.

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12] It is seen from records that it was argued/urged before trial Court that:-

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(a) Cheques were issued towards dues found at the foot of open and current account towards goods supplied.

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(b) Reliance was placed during oral arguments before trial Court on Section 18 of Limitation Act, thereby meaning that plea that a promise to pay debt barred by limitation was never either fact of matter or plea of the complainant.

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13] On facts of the case on hand, it is seen from the evidence on record and impugned judgment that:-

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(a) Liability was not based on actual and admitted fact of delivery goods.

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(b) Delivery of goods too was not proved.

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14] It is also seen that it was not the complainant's case that :-

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(a) Admittedly parties were acting on a foundation that there existed a debt

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barred by law of limitation.

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(b) The cheques were issued by the accused knowing fully well based solely on moral consideration to pay debt which is otherwise barred by law of limitation.

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15] It emerges that the story that the cheques were issued for payment of a debt which was barred by limitation is crafted post facto, the judgment of acquittal. This is an art work created only after reading the judgment in case of Dinesh (supra) or based on independent genius, but denovo. It is thus vivid that the story that the cheques were issued towards time barred debt is a find of legal talent.

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16] This Court has also to keep in mind that statute allows law the drawee to set up a plea that the cheque subject matter is issued for payment of a debt which is barred by law of limitation, but does not excuse him from obligation/burden of proving a promise as pleaded or relied.

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17] Similarly a plea to deny and defeat the drawee's plea that there did not exist any such promise by and on the part of accused, too is not barred enacted law or law of precedent.

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18] There does not exist any room to debate that it is a settled legal position, that a promise to pay debt which is antecedent and a time barred debt, constitutes a good and

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lawful consideration for a promise to pay it. This legal position is based on moral consideration and such promise is not illegal nor is not opposed to policy of state. Recognition of a promise to pay a time barred debt by law is based on strong morals and good order of life, which is based on high ethical values as foundation of life.

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19] It is very well recognized that bar of limitation perishes the remedy but not the right. This principle is based on ethical principles that a debt does not extinguish and facts of a case may stop operation of the clock of limitation fixed by law, and even for this stoppage of clock, the law provides that reckoning certain durations while counting limitation certain spells can be excluded.

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20] It is seen that the judgment in case of Dinesh B. Chokshi (supra) does not lay down that a defence or defences such as the debt being barred by law and that no such promise exist cannot be taken.

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21] The case of Dinesh B. Chokshi (supra) is a precedent on the law that a debt for which a suit is barred by limitation is a good consideration and a cheque issued for payment of such debt is a cheque towards liability which is legally enforceable.

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22] Therefore after considering the judgment in case of

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Dinesh Chokshi (supra) this Court has to proceed on assumption that law as it stands has to be read only as:-

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(a) It is open to a complainant to prove that the accused had promised to pay a time barred debt.

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(b) The cheque so issued when proved can be used as a piece of evidence to show that it was act of performance of said promise to pay the debt for which suit is barred due to limitation.

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(c) Fact of issue of a cheque which drawee claims to be issued for payment of a debt barred by law of limitation does not have a backing due to any statute law by a presumption of “shall presume” or “conclusive proof” as to existence of a fact that, ipso facto, due to issuance of a cheque where the debt is ostensibly barred by law of limitation, is created.

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(d) Thus the fact of issuance of cheque is the last act in the series of events such as after which becomes a promise when accepted, as its performance, towards payment of a debt barred by limitation.

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(e) Whenever a cheque is proved to be issued by a drawer knowing fully well that the cheque is issued for discharge of civil liability which is barred by law of limitation, such cheque would not only constitute a promise to pay a sum assured therein but would also constitute proof of fact as an act performance of a promise to pay a time barred debt.

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23] Every complainant owes an obligation and a burden in law to prove before the Court that the accused know that the debt subject matter was barred by law and the accused has made a promise to pay said time barred debt.

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24] Proof of facts by leading evidence is the bounden duty of a litigant. He can claim exception from duty to begin or duty to prove. Duty to prove can be escaped if any rigid presumption of the category of “shall resume” governs the matter of existence of fact and creates a bounden obligation on a Court to proceed on supposition of existence of a fact.

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25] Learned advocate for the applicant is not able to show that whenever payee of a cheque claims that issuance of a cheque was done by drawer for payment of or towards payment of time barred debt, it would mean that according to the drawee there exists a promise to pay a time barred debt and issuance of cheque is performance of said promise.

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26] The law as enacted and as laid down by precedents does not lay down that act of a debtor in issuance of a cheque which the holder/payee claims that it was issued/drawn for payment of a time barred debt, carries a presumption to that effect, and a defence to th contrary is barred.

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27] A promise to pay a time barred debt whether oral or written, is a question of fact, unless admitted by accused such “promise” needs to be proved being a fact in issue involved in the case like any other jurisdictional fact or an ingredient.

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28] It is seen that in any form law as enacted or due to precedent, has not created any bar as regards the plea wherein an accused can deny or take any defence in any form against such a cheque purportedly or ostensibly for a debt for which suit it barred.

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29] All that can be regarded as settled law is that whenever a cheque is issued “for payment of time barred debt”, said debt answers the description of the term existence of “legally enforceable liability” hence presumption as to consideration being legal exists, but no presumption exists or is created that the fact of issuance of cheque would ipso fact prove existence of promise, as a presumption of class “shall presume”.

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30] This Court has to be mindful to the basic fact as to what a cheque is. Issuance of a cheque is an “order” by drawer to his banker to “pay”. It may be backed by a promise to pay a debt barred by law of limitation, but itself it is not a promise to pay a debt barred by limitation, at least a fact bound to be presumed in the class

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of presumption of “shall presume” as provided in the Evidence Act.

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31] In present case cheque subject matter may at the most be the evidence of part performance of promise, and not a promise in itself. Issuance of cheque can be shown by the drawee to be an act constituting evidence of performance the oral or written promise to pay a debt barred by law of limitation.

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32] The result is that the story of cheques being issued to pay a debt barred by limitation is all based on figment than fact of the matter.

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33] The application has no merit and deserves dismissal and is dismissed.

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wadhwa

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( A. H. JOSHI, J.)

M/S. v. a. Enterprises v M/S. Tooltek Special Machinces and Ors.

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M/S. v. a. Enterprises v M/S. Tooltek Special Machinces and Ors.

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