2010 (6) TMI 887 - HC - Indian Laws

Court convicts respondent under section 138 for dishonored cheque, clarifies time-barred debt as valid consideration.

The High Court set aside the acquittal order and convicted the first respondent under section 138 of the Negotiable Instruments Act. The first respondent ... - Issues involved: Appeal challenging order of acquittal u/s 138 of Negotiable Instruments Act.Summary:1. The appellant filed a complaint u/s 138 of Negotiable Instruments Act against the first respondent for dishonour of a cheque issued for construction expenses. The learned Magistrate acquitted the first respondent based on the debt being time-barred and lack of consideration. 2. The appellant contended that even a time-barred debt can be a valid consideration for a cheque issuance. The Division Bench decision clarified that a promise can be made in writing even for a time-barred debt, and dishonouring such a cheque constitutes an offence u/s 138 of Negotiable Instruments Act.3. The learned Magistrate doubted the existence of consideration for the cheque, but the evidence supported that the cheque was issued towards an existing liability. The first respondent failed to rebut the presumption u/s 139 of Negotiable Instruments Act regarding the cheque's execution under coercion.4. The High Court set aside the order of acquittal, convicted the first respondent u/s 138 of Negotiable Instruments Act, and sentenced him to imprisonment till rising of court and a compensation of Rs. 25,000 to be paid to the appellant. In default, simple imprisonment for two months was ordered.