TaxTMI 
TaxTMI 
2019 (8) TMI 310
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....he allegations of the petitioners, the respondent No.2, in discharge of the liability for the goods sold to him in the year 2005, had firstly issued a cheque bearing No.902041, for an amount of Rs. 3,24,000/- in favour of the petitioners on 03.01.2009 and the said cheque was dishonoured, on presentation, with the remarks - "insufficient funds." 3. Thereafter, in the process of settlement with respect to the aforesaid dishonoured cheque dated 03.01.2009, the respondent No.2 made a cash payment of Rs. 5,000/- and issued the alleged cheque bearing No.902042 dated 12.06.2009 for an amount of Rs. 3,19,000/-, to the petitioners, which also got dishonoured for want of sufficiency of funds when presented for encashment. Thus, this was the second time when a cheque was issued by the respondent No.2 to discharge his liability towards the goods received by him from the petitioners in the year 2005 and the same got dishonoured. 4. Thereafter, on 23.09.2009, the petitioners sent a legal notice to the respondent No.2. However, despite the receipt of the said legal notice, the respondent No.2 did not make the payment, and hence a complaint under Section 138 of the NI Act was filed by the pe....
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....d in discharge of time-barred debts, which does not come within the purview of legally enforceable debt as contemplated under Section 138 of the NI Act. 10. The Appellate Court, in the impugned order dated 05.12.2012, observed that the cause of action to enforce the liability against the respondent No.2 remained in existence up to July 2008, whereas the cheque in question had been issued on 12.06.2009. Although, the Appellate Court agreed with the observation made by the Trial Court that once signatures are admitted on the cheque, existence of legally enforceable debt or liability has to be presumed, but observed that the said presumption is rebuttable and in the instant case, the respondent No.2 has been able to rebut the said presumption by showing that the liability for payment against the goods supplied arose in July 2005 and the limitation to file the case on the said liability expired in July 2008. Further, the Appellate Court held that if an accused is able to raise a probable defence, which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail, as per the language of Section 139 of the NI Act. Accordingly, the Appellate C....
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....tted that a cheque issued, in lieu of time-barred debt, does not come within the purview of Section 138 of the NI Act. 19. The learned counsel for the respondent No.2 further submitted that on the date of the alleged issuance of the said cheque, there was no existing legally enforceable debt or liability and that the petitioner No.2 had categorically stated that the cheque dated 12.06.2009 was issued by the respondent No.2 for discharging the liability against the two bills bearing No. 5419 dated 14.06.2005 and No.5442 dated 26.07.2005 respectively, which prima facie reflects that the said cheque in question was issued for a time-barred debt. 20. To buttress her arguments further, the learned counsel has relied upon the order dated 10.09.2001 passed by the Supreme Court in the case titled as Sasseriyil Joseph v. Devassia in SLP (Crl.) 1785/2001, the judgment passed by this Court in the case titled as Vijay Polymers Pvt. Ltd. & Anr. v. Vinnay Aggarwal (supra) and the judgment of the Bombay High Court in the case titled as Kamalaksha Laxman Prabhu v. S.G. Mayekar (supra). 21. The learned counsel for the respondent No.2 vehemently contended that the petitioners had based and ....
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....heque, within fifteen days of the receipt of the said notice. Explanation. - For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability." 24. At this juncture, it would also be appropriate to take note of Section 18 of the Limitation Act, 1963 which deals with the effect of acknowledgement which reads as under: - "18. Effect of acknowledgment in writing. (1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this secti....
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....iable Instruments Act the judgment of the lower appellate Court as confirmed by the High Court is unassailed. Therefore, the special leave petition is dismissed." 27. In Vijay Polymers Pvt. Ltd. & Anr. v. Vinnay Aggarwal (supra), relying upon the judgment of the Supreme Court in Sasseriyil Joseph (supra), it has been observed that, cheques issued for a time-barred debt would not fall within the definition of 'legally enforceable debt', which is the essential requirement for a complaint under Section 138 of the NI Act; the extended meaning of debt or liability has been explained in the Explanation to the Section which means a legally enforceable debt or liability. 28. Useful reference may also be made to the case titled Prajan Kumar Jain v. Ravi Malhotra, 2009 SCC Online Del 3368, wherein, like the case in hand, it has been held by another Coordinate Bench of this Court that, an acknowledgment to be encompassed within the ambit of Section 18 of the Limitation Act has to be an acknowledgment in writing as also within the prescribed period of limitation. These are the twin requirements which have to be fulfilled in order to be a valid acknowledgment under Section 18 of ....
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....period of limitation also cannot be extended after July 2008. The cheque dated 3.1.2009 relied upon by the petitioners is also after the expiry of period of limitation, therefore, again cannot bring the issue of liability within the time frame. Though, it is correct that once the signatures are admitted on the cheque, existence of legally enforceable debt or liability has to be presumed, but it is to be noted that the said presumption is rebuttable and in the instant matter, the respondent No.2 has been able to rebut the said presumption by showing that the liability for payment against the goods supplied arose in July 2005 and the limitation to file the case on the said liability expired in July 2008. 31. Further, the law is no longer res integra in this regard. It is wellsettled that the presumption, which is contained in Section 139 of the NI Act, only raises the presumption that the cheque has been issued for the discharge of a debt or liability and existence of legally recoverable debt is not a matter of presumption, as per the aforesaid provisions of law. 32. The Supreme Court, in Krishna Janardhan Bhat vs. Dattatraya G. Hedge, (2008) 4 SCC 54, has elucidated the law in....
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....been stated: "In determining whether a reverse burden is compatible with the presumption of innocence regard should also be had to the pragmatics of proof. How difficult would it be for the prosecution to prove guilt without the reverse burden? How easily could an innocent defendant discharge the reverse burden? But courts will not allow these pragmatic considerations to override the legitimate rights of the defendant. Pragmatism will have greater sway where the reverse burden would not pose the risk of great injustice - where the offence is not too serious or the reverse burden only concerns a matter incidental to guilt. And greater weight will be given to prosecutorial efficiency in the regulatory environment." 45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye....