2022 (10) TMI 1198 - SC - Indian Laws

Supreme Court reinstates summoning order in Section 138 case, emphasizes debt calculation rules

The Supreme Court allowed the appeals by the original complainant against the High Court's decision to quash the summoning order under Section 138 of the ... Dishonour of Cheque - legally enforceable debt - time limitation - rebuttal of presumption - Section 138 and 118 of the Negotiable Instruments Act, 1881 - HELD THAT:- The High Court thought fit to quash the proceedings on the premise that on the date of summoning the Accused the legally enforceable debt was time barred - High Court seems to have proceeded on the footing that there is no averment in the entire complaint as regards any kind of acknowledgment of the said debt by the Accused within the period of three years i.e. within the limitation period of recovering the debt. Once a cheque is issued and upon getting dishonoured a statutory notice is issued, it is for the Accused to dislodge the legal presumption available Under Sections 118 and 139 reply of the N.I. Act. Whether the cheque in question had been issued for a time barred debt or not, itself prima facie, is a matter of evidence and could not have been adjudicated in an application filed by the Accused Under Section 482 of the Code of Criminal Procedure. Appeal allowed by way of remand. Issues Involved:Appeal against quashing of summoning order under Section 138 of the Negotiable Instruments Act, 1881 by the High Court of Punjab and Haryana; Consideration of time-barred debt and acknowledgment of debt within the limitation period; Legal presumption under Sections 118 and 139 of the N.I. Act; Non-hearing of complainant by the High Court leading to recall application rejection.Analysis:The Supreme Court granted leave to hear appeals by the original complainant against the High Court's orders quashing the summoning order under Section 138 of the N.I. Act. The High Court's decision was based on the belief that the debt was time-barred on the date of summoning the Accused. The Court noted the absence of any acknowledgment of the debt within the limitation period in the complaint, leading to the quashing of the proceedings. However, the Supreme Court found this reasoning flawed as the loan was for seven years, not three, and the debt acknowledgment could be considered from the date of the cheque issued for debt discharge in 2018, despite the loan originating in 2011.The Supreme Court highlighted that the High Court's interpretation of the limitation period was incorrect, as the debt repayment period was seven years, not three. The Court emphasized that the limitation period should commence from the end of the seven-year period, not three years from the loan date. The Court also stressed that the issuance of a cheque and subsequent statutory notice triggers legal presumptions under Sections 118 and 139 of the N.I. Act, making it the Accused's responsibility to rebut these presumptions. The determination of whether the cheque was issued for a time-barred debt should be based on evidence and not decided summarily under Section 482 of the Code of Criminal Procedure.Additionally, the Supreme Court noted that the complainant was not heard during the High Court proceedings, leading to a recall application being rejected without due consideration. Consequently, the Supreme Court set aside the High Court's orders and remitted the matter for fresh consideration, emphasizing the importance of affording all concerned parties a fair hearing. Ultimately, the appeals were allowed, and the case was to be reconsidered on its merits with proper opportunity for hearing to all parties involved.