TaxTMI 
TaxTMI 
2021 (9) TMI 1424
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....laint was filed, the complainant appeared before the Court and examined himself as CW-1 and tendered in evidence his affidavit Ex. CW1/A and documents Ex. C1 to C6. After considering the same, vide order dated 06.09.2019, Judicial Magistrate Ist Class, Kurukshetra passed the impugned summoning order. Aggrieved against the same, the present petition has been filed. 3. Learned counsel for the petitioner has primarily raised two arguments to challenge the summoning order and the complaint. 4. The first argument of learned counsel for the petitioner is that in the present case, there was no "legally enforceable debt" on the date of the issuance of the cheque, inasmuch as the cheque in question was issued on 02.08.2019, whereas the said amount was borrowed on 04.08.2015. It is argued that the recovery of the amount was barred by the law of limitation and thus, issuance of the cheque after the expiry of the period of limitation, would not extend/renew the period of limitation. Thus, on the date of issuance of the cheque, there was no "legally enforceable debt". In support of the said contention, learned counsel for the petitioner has relied upon the judgment of Andhra Pradesh High ....
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....d in a large number of cases and are thus being dealt with in detail. Several provisions of the Indian Contract Act, 1872 (for short, "the Contract Act"), the Negotiable Instruments Act, 1881 (for short, "The Negotiable Instruments Act") and the Limitation Act, 1963 (for short, "The Limitation Act") would be relevant for a comprehensive consideration of the first two issues. 9. Section 2 and section 25 of the Contract Act are reproduced hereinbelow:- "2. Interpretation clause. - In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:- (a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal; (b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise; (c) The person making the proposal is called the "promisor", and the person accepting the proposal is called the "promisee"; (d) When, at the desire of the promiso....
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....ns - (a) "a cheque in the electronic form" means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be; (b) "a truncated cheque" means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. Explanation II. - For the purposes of this section, the expression "clearing house" means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India. [Explanation III. - For the purposes of this section, the expressions "asymmetric crypto system", "computer resource", "digital signature", "electronic form" and "electronic signature" shall have the same meanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000).]" xx xx xx xx xx "13. "Negotiable instrume....
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....ce or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. xx xx xx xx xx "138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (a) the cheque has been prese....
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....led to the property or right, (b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right." 12. The above-mentioned provisions of law have been considered in several judgments. In some judgments, a comprehensive view of all the said provisions has not been taken and thus, there is some divergence of opinion among different Courts with respect to the first two issues. The Division Bench of the Bombay High Court in the case titled as Dinesh B. Chokshi Vs. Rahul Vasudeo Bhat, reported as 2013 (5) RCR (Civil) 598, decided on 19.10.12 has considered the relevant provisions in detail and after considering the said provisions, has opined in favour of the person in whose favour the cheque is issued. After considering the provisions of Section 2 of the Contract Act, it was observed that a joint reading of Section 2(a) and 2(b) of the Contract Act, would show that if a proposal is accepted, it becomes a promise and in view of Clause (e) of Section 2 of the Contract Act, a promise or a set of pro....
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....ame is barred by the law of limitation. To exemplify, if under a promise, an amount is advanced for immoral purposes, then the same would be hit by Section 23 of the Contract Act and would not be covered by the provisions of Section 25(3). In the said judgment, the provisions of the Negotiable Instruments Act were also considered in detail. It was observed that a cheque, which is a legal instrument as per Section 13 of the Negotiable Instruments Act, is defined in Section 6 of the Negotiable Instruments Act, as per which, a cheque is a bill of exchange which is drawn on a specified banker and not expressed to be payable otherwise than on demand. Reference was made to a judgment of the Hon'ble Apex Court in the case titled as National Insurance Company Limited Vs. Seema Malhotra and others, reported as 2001 (3) SCC 151 to hold that drawer of a cheque promises to the person in whose favour the cheque is drawn, that the cheque, on presentation, would yield the amount in cash, as mentioned in the cheque and thus, when the said cheque is returned dishonoured, the person issuing the cheque has failed to perform his promise. Section 13 of the Negotiable Instruments Act, which defines ....
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....ld be placed before a Division Bench. Accordingly, these Applications have been placed before this Court. 2. The reference to Division Bench is for deciding the two questions formulated by the learned Single Judge under his Judgment and Order dated 23rd December, 2008. The said two questions are:- "(i) Does the issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of section 25(3) of the Indian Contract Act, 1872? (ii) If it amounts to such a promise, does such a promise, by itself, create any legally enforceable debt or other liability as contemplated by Section 138 of the Negotiable Instruments Act, 1881?" xx xx xx xx xx "9. Thus, Sub-section (3) of Section 25 of the Contract Act is an exception to the general rule that an agreement made without consideration is void. Sub-section (3) of Section 25 of the Contract Act applies to a case where there is a promise made in writing and signed by a person to be charged therewith to pay wholly or in part a debt which is barred by law of limitation. A promise covered by Sub-section (3) becomes enforceable agreement notwithsta....
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....f Section 25 of the Contract Act. Such promise which is an agreement becomes exception to the general rule that an agreement without consideration is void. Though on the date of making such promise by issuing a cheque, the debt which is promised to be paid may be already time barred, in view of Sub-section (3) of Section 25 of the Contract Act, the promise/agreement is valid and, therefore, the same is enforceable. The promise to pay time barred debt becomes a valid contract as held by the Apex Court in the case of A.V. Moorthy (supra). Therefore, the first question will have to be answered in the affirmative." xx xx xx xx xx "18. Under Section 118, there is a rebuttable presumption that every negotiable instrument was made or drawn for consideration. Section 139 creates a rebuttable presumption in favour of a holder of a cheque. The presumption is that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part of any debt or liability. Thus, under the aforesaid two Sections, there are rebuttable presumptions which extend to the existence of consideration and to the fact that the cheque was for the discha....
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....tation. Thus, he could not have been found guilty of an offence punishable under Section 138 of the Act. In support of this contention, reliance was placed on a single Bench decision of this Court in Joseph v. Devassia 2000 (4) RCR (Criminal) 686 (Kerala) : (2000 (3) KLT 533). xx xx xx xx xx 13. Mr. Benny Gervacis was at pains to point out that a cheque is drawn only when it is written and signed. If the claim is barred by limitation even before the cheque is actually drawn, it cannot amount to an acknowledgement of a debt or liability. This contention cannot be accepted. It is, undoubtedly, true that 'to draw' means to write and sign. However, even if the claim is barred by limitation on the date of the drawing of the cheque, on delivery to the other person, it becomes a valid consideration for another agreement. The drawal of the cheque evidences such an agreement. This acknowledgement is enforceable. The drawing and delivery of a cheque create a legally enforceable liability. Thus, we are of the opinion that when a person writes, signs and delivers a cheque to another it is an acknowledgment of a legally enforceable liability. Thereafter, if the cheque ....
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....of liabilities." It was with this object in view that the drawer of a cheque was said to be made liable "for penalties in case of bouncing of cheque due to insufficiency of funds in the accounts ......" If this object of the statute is kept in view the explanation cannot be liberally construed. It would only mean that the liability or debt should not arise out of a transaction which is illegal. It should be not a cheque to meet a liability under a wagering contract which shall not be legally enforceable. Otherwise, the object with which Section 138 was enacted shall be defeated. xx xx xx xx xx 22. The matter appears to have been considered by their Lordships of the Supreme Court in A.V. Murthy v. B.S. Nagabasavanna (2002 (2) SCC 642). On a perusal of the judgment, we find that the matter was considered by the Supreme Court in the context of the provisions contained in the Negotiable Instruments Act as well as those of the Contract Act. However, the issue of limitation was left open. But what deserves mention is that even though the learned Sessions Judge had quashed the proceedings as the limitation in recovering the money had expired and the order had been upheld....
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....sed as barred by limitation." xx xx xx xx xx "It is correct that as per the assertion of the respondent-plaintiff, the amount was handed over to the appellant-defendant in January, 2001 but the fact remains that as per the case of the respondent-plaintiff, as the appellant-defendant failed to send his son abroad, he, in acknowledgment of his debt, has issued a cheque on 17.10.2007. As per the provision of Section 25(3) of the Indian Contract Act, the suit which has been filed, cannot be said to be barred by limitation. The law in this regard has rightly been appreciated by the Courts below and applied. Reliance in this regard placed on the conclusions and observations recorded in para 15 of the judgment of Bombay High Court in Dinesh B. Chokshi Vs. Rahul Vasudeo Bhatt & another 2013 (2) Civil Court Cases 017 (Bombay), as has been reproduced, cannot be faulted with. Counsel for the appellant has placed reliance upon the judgment of A.V. Murthy Vs. B.S. Nagabasavanna, 2002 (1) RCR (Criminal) 745 to assert that the suit would be barred by limitation and Section 25(3) of the Indian Contract Act, would not be attracted, is misplaced. This judgment rather goes ....
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....romises the insurer that the cheque, on presentation, would yield the amount in cash. It cannot be forgotten that a cheque is a bill of exchange drawn on a specified banker. A bill of exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid." 18. Bombay High Court (Nagpur Bench), in the case of Vijay Ganesh Gondhlekar Vs. Indranil Jairaj Damale reported as 2008 (1) RCR (Criminal) 530, decided on 4.10.2007, while considering the provisions of Section 25(3) of the Contract Act and also Section 18 of the Limitation Act had held as under:- "7. Assuming for the sake of argument that there was no acknowledgment before the expiry of period of limitation and the cheque is issued after a period of expiry of limitation, still whether there is an enforceable liability or not will have to be considered. I have already observed above that the cheque is issued under the signature of the debtor after putting the sum payable. The cheque directs the bank to pay the bearer sum mentioned in the cheque. As such it becomes the promise in favour of t....
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....nt irrelevant for the purpose of determination of the present petition filed under Section 482 CrPC, also need to be taken note of. A perusal of the aforementioned case would show that the said judgment was passed by the High Court in an appeal against acquittal and thus the entire trial had already been completed. As is apparent from para 4 of the said judgment, the trial Court in the said case had found that the appellant had failed to establish that the accused had issued the cheque in question in the discharge of his liability to pay any amount to the appellant and the cheque which was alleged to have been issued, was issued at the time when the accused had already closed his bank account. Even the observations in para 7 in respect of the debt being barred by limitation were not in affirmative terms in as much as it had been stated that "the debt appears to have been barred by limitation". Moreover, it is reiterated that the said issue was not in a case of quashing under Section 482 Cr.P.C. but one in an appeal filed against an acquittal ordered by the trial Court. 23. With respect to the judgment of learned Single Judge of the High Court of Bombay at Goa in Smt. Ashwini Sat....
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..... In the said judgment, although the provisions of Section 25(3) of the Contract Act have been considered but the other relevant provisions of the Contract Act and the Negotiable Instruments Act have not been considered and the consideration with respect to Section 25(3) is neither in detail nor in the right perspective. The other factors to show that the present judgment would not further the case of the present petitioner also need to be taken note of. Even the said case was not a petition arising under Section 482 CrPC, but was a case where against the order of conviction and sentence, the petitioner therein had approached the High Court. A perusal of the said judgment would show that in the said case, trial had already taken place and the fact that the cheques in question were issued beyond the date of limitation was not in dispute. The relevant part of judgment in Narendra V. Kanekar's case (supra) is reproduced hereinbelow:- "6. Reference to illustrations (e) would not be out of context. It reads as follows:- (e) A owes B Rs. 1000/-, but the debt is barred by the Limitation Act. A signs a written promise to play B Rs. 500/- on account of the debt. This i....
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....date on which the cheque has been drawn, is subsequent to the date when the debt has become time barred, in view of the provisions of Section 25(3) of the Contract Act, the said cheque would, by itself, create a promise which would become a legally enforceable contract and it cannot be then said that the cheque is drawn in discharge of a debt or liability, which is not legally enforceable. Reference in this regard may be made to the view taken by the Division Bench of the Bombay High Court in Dinesh B Chokshi's case (supra) as well as of the Division Bench of the Kerala High Court in Ramakrishnan's case (supra), with which this Court fully concurs. 26. With respect to the distinction between an acknowledgement under Section 18 of the Limitation Act and a promise within the meaning of Section 25(3) of the Contract Act, this Court concurs with the observations made by the Division Bench of the Madras High Court in N. Ethirajulu Naidu's case (supra) and that of the Bombay High Court (Nagpur Bench) in the case of Vijay Ganesh Gondhlekar (supra) reproduced hereinabove and holds that both the provisions have the effect of creating a fresh starting point of limitation, if t....
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.... the provisions of the Negotiable Instruments Act have been amended and Sections 143A and 148 have been added. The said provisions have been reproduced hereinbelow: "143A. Power to direct interim compensation.--(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant-- (a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and (b) in any other case, upon framing of charge. (2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque. (3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.. (4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as ....
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....ed has been convicted and in case of Section 148, even before the appeal is decided. Thus, the intent of the Legislature is very clear, which is to instil confidence in a person who has a cheque issued in his favour, that the person who has issued the said cheque, would not be able to avoid/evade his liability. Thus, while considering issue No. (i) and (ii), the whole object of the Negotiable Instruments Act, including the amendments made therein, have to be kept in mind and the interpretation which subserves the object of the Act, needs to be given. 30. To hold in favour of a person who has consciously issued a cheque after the debt has become time barred, would amount to doing injustice to the person in whose favour the cheque has been issued and would also defeat/frustrate the intent and object of the provisions of the Negotiable Instruments Act and the Contract Act. After a debt has become time barred, any person issuing a cheque subsequent to that, makes a promise to the person in whose favour the cheque is issued, that the said cheque would be honoured. On dishonor, the person to whom the cheque has been issued, would then have the right to pursue the remedy under Section ....
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....ant portion of the judgment of the Hon'ble Supreme Court in S. Natarajan's case (supra) is reproduced hereinbelow: "1. Leave granted. The appellant is the complainant in C.C. No. 250 of 2011. It is his case that on 6/5/2006, the respondents/accused had received a sum of Rs. 49,000/- from him. On 4/7/2006, they have received a further sum of Rs. 1,00,000/-. On the same day, they received another sum of Rs. 1,00,000/-. It is further the case of the appellant that on 11/1/2007, the accused have received Rs. 50,000/- and subsequently they have received Rs. 1,000/-. Thus, according to the complainant, a total sum of Rs. 3,00,000/- has been received by the accused. According to the appellant, to discharge the said debt, accused No. 1 gave a cheque dated 1/2/2011. The appellant presented the said cheque for payment through his bank on 2/2/2011. The said cheque was dishonoured on the ground that the accused did not have sufficient funds in their account. A copy of the Memorandum dated 12/2/2011 issued by the Karur Vysya Bank Limited is on record at Annexure P-1." xx xx xx xx xx 6........ The High Court then observed that since at the time of issuance of c....
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.... respective pleas. However, at this stage, it would not be just and expedient to quash the criminal proceedings at the very threshold by presuming that the cheque in question had been issued qua a time barred debt. Complainant is yet to lead his evidence in support of his case. In case the complainant fails to establish his case, petitioner will be acquitted by the Trial Court but it would not be in the interest of justice to scuttle the criminal proceedings at the very threshold. 7. Hon'ble Apex Court in 'S. Natarajan vs. Sama Dharman 2015 (2) R.C.R. (Criminal) 854', has held as under:- 7. In our opinion, the High Court erred in quashing the complaint on the ground that the debt or liability was barred by limitation and, therefore, there was no legally enforceable debt or liability against the accused. The case before the High Court was not of such a nature which could have persuaded the High Court to draw such a definite conclusion at this stage. Whether the debt was time barred or not can be decided only after the evidence is adduced, it being a mixed question of law and fact. xx xx xx xx xx 10. In our opinion, therefore, the High ....
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....hich is stated to be Ex. C3 has not been produced on record. In fact, on a specific query raised by this Court, learned counsel for the petitioner was not able to state as to what Ex. C6 is. Even the affidavit of the complainant has not been produced on record. In the absence of the entire material which had been produced by the complainant, having not been produced by the petitioner before this Court, it is not possible for this Court to hold that the petitioner was never served with the notice under Section 138 of the Negotiable Instruments Act. The legal notice Ex. C3 would have been very relevant in order to ascertain as to what address had been mentioned in the same. However, a perusal of the complaint would show that the address mentioned in the complaint is the same as that mentioned in the present petition. For the sake of reference, the address mentioned in the complaint is reproduced hereinbelow:- "Sultan Singh s/o. Sh. Dayal Singh, R/o. VPO Umri, Tehsil Thanesar, District Kurukshetra." 40. The address mentioned in the present petition is reproduced hereinbelow:- "Sultan Singh aged about 46 years son of Shri Dayal Singh resident of VPO Umri, Tehsil Th....
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....o the petitioner. 3. It is submitted that the complainant had relied on an alleged acknowledgement of debt as on 31.03.2009 by an undated letter which was exhibited as Exh. CW1/2. It is submitted that in the said acknowledgement it was clearly mentioned that the correspondence address was A-123, Friends Colony (East), New Delhi. 4. He submits that the statutory notice exhibit CW-1/5 was not addressed to the correspondence address mentioned in the said alleged acknowledgement (Exh. CW1/2) but was sent to Dr. Gopal Das Building, 28, Barakhamba Road, New Delhi. He submits that the said building was a building promoted by the family of the petitioner, however, as on the date of the statutory notice there was no space occupied by the petitioners in the said building. 5. He further submits that the notices which were sent through registered post were delivered back unserved and this was acknowledged by the complainant and the returned envelope was exhibited as exhibit CW-1/8 which had an endorsement "Left". xx xx xx xx xx 8. Petitioner further submits that in his cross examination the complainant has categorically admitted that he had never me....
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....f notice can only arise in case the notice is correctly addressed. If the notice is incorrectly addressed no legal presumption can arise. In the present case, the complainant had annexed the letterhead of the petitioner containing the address mentioned in the statutory notice but specifically mentioning there in the correspondence address as that of New Friends Colony. 23. It is not the case of the complainant that the petitioner was having an office or was ever found at Barakhamba Road, the address mentioned in the statutory notice. xx xx xx xx xx 25. As noted above, in the present case there was admittedly no service of statutory notice and the presumption of service of the statutory notice also does not arise in the facts of the present case as the notice was not correctly addressed." 44. A perusal of said judgment would show that in fact the said judgment is more against the petitioner than in his favour. The said judgment was delivered in a case where the Appellate Court had dismissed the appeal of the petitioner therein, impugning the order of conviction and sentence and thus, the said judgment had been delivered after the trial had been complete....