Limitation defense not applicable in section 138 cases; Cheque liability prevails; Presumption rebuttable

The court held that the plea of limitation is not available to the accused in a case under section 138 of the Negotiable Instruments Act. It was determined that the issuance of a cheque creates a legally enforceable liability, and even if the limitation for recovery had expired, the promise made in writing (cheque) remains enforceable under the Indian Contract Act. The court clarified that the presumption under section 139 of the Act is rebuttable, and overruled the view that the penal provision is not applicable if the cheque was issued for a debt barred by limitation. The revision petition was dismissed, and the petitioner was directed to pay Rs. 75,000 to the respondent-complainant.

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Issues Involved:
1. Plea of limitation in a case u/s 138 of the Negotiable Instruments Act, 1881.
2. Legally enforceable debt or liability.
3. Interpretation of Section 25(3) of the Indian Contract Act, 1872 in relation to Section 138 of the Negotiable Instruments Act.
4. Rebuttable presumption u/s 139 of the Negotiable Instruments Act.
5. Validity of the view taken in Joseph v. Devassia.

Summary:

Issue 1: Plea of Limitation in a Case u/s 138 of the Negotiable Instruments Act, 1881
The primary question was whether the plea of limitation is available to the accused in a case u/s 138 of the Negotiable Instruments Act. The court held that when a person issues a cheque, he acknowledges his liability to pay. If the cheque is dishonoured due to insufficiency of funds, he cannot claim that the debt had become barred by limitation and thus not legally enforceable. He would be liable for penalty if the charge is proved.

Issue 2: Legally Enforceable Debt or Liability
The court examined whether the delivery of a cheque creates a legally enforceable liability. It was held that the issuance of a cheque is an acknowledgment of a legally enforceable liability. The delivery of the cheque to the drawee creates a right to recover the money, and if dishonoured, the issuer becomes liable for prosecution u/s 138.

Issue 3: Interpretation of Section 25(3) of the Indian Contract Act, 1872 in Relation to Section 138 of the Negotiable Instruments Act
The court discussed that u/s 25(3) of the Indian Contract Act, an agreement made without consideration is void unless it is a promise in writing to pay a debt that could have been enforced but for the law of limitation. The court held that even if the limitation for recovery of the amount had expired, the promise made in writing (in the form of a cheque) is enforceable. Thus, the provisions of the Contract Act are relevant to determine the enforceability of the liability u/s 138.

Issue 4: Rebuttable Presumption u/s 139 of the Negotiable Instruments Act
The court noted that Section 139 raises a presumption in favor of the holder of a cheque, but it is a rebuttable presumption. The issuer of the cheque can prove that it was issued without consideration or not in pursuance of any legally enforceable debt or liability.

Issue 5: Validity of the View Taken in Joseph v. Devassia
The court overruled the view taken in Joseph v. Devassia, which held that the penal provision u/s 138 is not attracted if the cheque was issued for a debt barred by limitation. The court found that relevant provisions like Section 25(3) of the Contract Act and Section 46 of the Negotiable Instruments Act were not considered in Joseph's case.

Conclusion:
The revision petition was dismissed. The court directed that out of the amount of Rs. 1,50,000/- deposited by the petitioner, Rs. 75,000/- should be paid to the respondent-complainant within one week from the presentation of a copy of the order.

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