Retrospective condonation under Section 142(b) rejected as substantive; cheque treated as collateral security, defeating Section 138 liability.

A subsequently inserted proviso to Section 142(b) of the Negotiable Instruments Act, allowing condonation of delay in filing a Section 138 complaint, was treated as substantive and therefore could not apply retrospectively absent express legislative intent; the complaint was accordingly time-barred. On the evidence, the cheque was found to have been issued as collateral security rather than in discharge of a legally enforceable debt or liability, so Section 138 liability was not established. The impugned appellate order disclosed no infirmity warranting interference, and the challenge failed.

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Issues: (i) Whether the proviso to Section 142(b) of the Negotiable Instruments Act, 1881 permitting condonation of delay in filing a complaint under Section 138 applied retrospectively to the complaint in question; (ii) Whether the cheque was issued towards discharge of a legally enforceable debt or merely as collateral security.

Issue (i): Whether the proviso to Section 142(b) of the Negotiable Instruments Act, 1881 permitting condonation of delay in filing a complaint under Section 138 applied retrospectively to the complaint in question.

Analysis: The complaint had been filed beyond the prescribed period. The proviso empowering the Court to take cognizance after the prescribed period on sufficient cause was inserted later and was treated as a substantive provision. A substantive provision, in the absence of express language, cannot be applied retrospectively. The delay condonation order passed by the trial court was therefore unsustainable.

Conclusion: The benefit of the proviso to Section 142(b) was not available retrospectively, and the complaint was barred by limitation.

Issue (ii): Whether the cheque was issued towards discharge of a legally enforceable debt or merely as collateral security.

Analysis: On appreciation of the material on record, the cheque was found to have been given as collateral security and not in discharge of any debt or other liability. That finding of fact did not suffer from illegality.

Conclusion: The cheque was treated as having been issued as collateral security, not for discharge of a legally enforceable debt.

Final Conclusion: The revision did not disclose any infirmity in the impugned order warranting interference, and the challenge to the appellate order failed.

Ratio Decidendi: A subsequently inserted proviso conferring power to condone delay in a complaint under Section 138 of the Negotiable Instruments Act, 1881 is substantive in nature and cannot be applied retrospectively absent express legislative intent; a cheque found to have been issued as collateral security does not establish liability under Section 138.

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