Cheque dishonour and time-barred debt issues require evidence; quashing is improper when statutory presumptions and acknowledgment are in dispute.

Proceedings under Section 138 of the Negotiable Instruments Act cannot ordinarily be quashed on the ground that the cheque was issued towards a time-barred debt, because whether limitation has expired and whether the cheque amounts to acknowledgment of liability are matters requiring evidence. The statutory presumptions under Sections 118 and 139 operate once issuance and dishonour are shown, leaving rebuttal to the accused. The Court also held that limitation and acknowledgment issues were not suitable for summary rejection under Section 482 of the Code of Criminal Procedure. The quashing order was set aside and the matter remitted for fresh consideration after hearing the parties.

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Issues: (i) whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed on the ground that the cheque was issued towards a time-barred debt; (ii) whether the complaint could be rejected in exercise of Section 482 of the Code of Criminal Procedure, 1973 on the question of limitation and acknowledgment; (iii) whether the matter required remand for fresh consideration after hearing the complainant.

Issue (i): whether proceedings under Section 138 of the Negotiable Instruments Act, 1881 could be quashed on the ground that the cheque was issued towards a time-barred debt.

Analysis: The complaint disclosed that the loan was advanced in 2011, the cheque was issued in 2018, and the cheque was alleged to have been issued towards discharge of the liability. The question whether the debt had become barred by limitation, or whether issuance of the cheque amounted to acknowledgment of liability, was not capable of final determination at the quashing stage. Once a cheque is issued and dishonoured, the statutory presumptions under Sections 118 and 139 operate, leaving the accused to rebut them.

Conclusion: The High Court ought not to have quashed the proceedings on the premise that the debt was time-barred; the issue required adjudication on evidence.

Issue (ii): whether the complaint could be rejected in exercise of Section 482 of the Code of Criminal Procedure, 1973 on the question of limitation and acknowledgment.

Analysis: The Court held that the High Court proceeded on an incorrect understanding of the period for reckoning limitation and on an assumption that no acknowledgment existed within three years from the loan transaction. The asserted liability was stated to subsist for seven years, and the controversy about limitation and acknowledgment was treated as a factual matter unsuitable for summary adjudication under Section 482.

Conclusion: The order quashing the complaint was unsustainable in exercise of Section 482 of the Code of Criminal Procedure, 1973.

Issue (iii): whether the matter required remand for fresh consideration after hearing the complainant.

Analysis: It was recorded that the complainant had not been heard before the High Court disposed of the main matter and that the recall application was rejected. This procedural infirmity furnished an additional ground for interference and warranted rehearing on merits after affording opportunity to all parties.

Conclusion: The matter was remitted to the High Court for fresh consideration after hearing the parties.

Final Conclusion: The impugned quashing order was set aside and the appeals were allowed, with the controversy restored to the High Court for decision afresh on merits.

Ratio Decidendi: Whether a cheque was issued towards a time-barred debt, and whether such issuance amounted to acknowledgment of liability, are matters requiring evidence and cannot ordinarily be conclusively decided at the stage of quashing proceedings under Section 482 of the Code of Criminal Procedure, 1973 where statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate.

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