Cheque issued to repay time-barred debt: dishonour held outside S.138 as no legally enforceable liability; acquittal upheld.

S.138 NI Act applies only where the dishonoured cheque was issued towards discharge of a legally enforceable debt or liability. Where the cheque was admittedly issued to repay a time-barred debt, and there was no acknowledgment of liability or payment of interest within the limitation period to extend limitation, the underlying liability is not legally enforceable; hence dishonour does not attract criminal liability under S.138. Relying on this principle, the HC affirmed that the accused could not be convicted merely because a cheque was issued for a debt that was not legally recoverable, and upheld the acquittal; the appeal was dismissed.

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Issues involved:
The appeal against the judgment of acquittal in a case under Section 138 of the Negotiable Instruments Act.

Summary:
The appellant filed a complaint against the respondent for dishonoring a cheque issued in discharge of a loan. The Magistrate convicted the respondent, but the Additional Sessions Judge acquitted him. The appellant appealed against this acquittal.

The complainant alleged that the accused issued a cheque for a loan amount, which was dishonored due to insufficient funds. The accused claimed the loan was repaid earlier and the cheque was issued under duress.

Witnesses and documents were presented by both parties during the trial.

The main contention was whether the cheque issued for a time-barred debt falls under Section 138 of the Negotiable Instruments Act. The appellant argued that the promise to repay a time-barred debt is valid under the Indian Contract Act, but the cheque must be for a legally enforceable debt to attract Section 138.

The court noted that a time-barred debt is not legally enforceable and cited a similar case from the Andhra Pradesh High Court. The appellant relied on a Madras High Court case, but the court found no valid acknowledgment of the debt in this instance.

Ultimately, the court upheld the acquittal, stating that the cheque for a time-barred debt does not constitute a legally enforceable debt under Section 138. The appeal was dismissed.

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