The Bidar Urban Co-operative Bank Ltd. vs Giris. Criminal Appeal 200057/2016 decided on 17 December 2020.
Judgment Link: http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/355418/1/CRLA200057-16-17-12-2020.pdf
Relevant paragraphs: 29. The contention of learned counsel for complainant that, there is no bar under law to repay the time barred debt and it is not open to the drawer of the cheque to contend that he is not liable as the debt was time barred is also not tenable as such contention is either pleader or any legally admissible evidence was led by complainant-Bank. Such time barred debt cannot be called as legally recoverable debt so as to attract penal provision under section 138 of N.I Act.
30. The Kerala High Court in a decision reported in 2001 Crl.L.J 24 in case of Sasseriyal Joseph Vs Devassia, held that section 138 of the Act is attracted only if there is legally recoverable debt and it cannot be said that time barred debt is legally recoverable debt. The said Judgment rendered by Kerala High Court in Sasseriyil Joseph’s case was challenged before the Hon’ble Supreme Court in Special Leave to Appeal (Crl.) No.1785/2001 by Hon’ble Supreme Court by Judgment dated:10-09-2001 affirmed the said view of Kerala High Court.
31. Further the High Court of Andhra Pradesh in case of Girdhari Lal Rathi Vs P.T.V Ramanujachari and another reported in 1997 (2) Crimes 658 held that, in case of cheque issued for time barred debt which is dishonoured the accused cannot be convicted under section 138 of Negotiable Instrument Act on the ground that the debt was not legally recoverable.
Therefore in view of the principles stated in those decisions the arguments of the learned counsel for the appellant that the said cheque can be construed as a promise to pay time barred debt is also not tenable.
In view of the principles stated in the above referred decision, it is evident that the provisions of Section 25(3) of the Indian Contract Act, 1872 is not applicable to the facts and evidence in this case.
Further as per section 13 of N.I Act “negotiable instrument” means a “promissory note” bill of exchange”, or “cheque” payable either to order or to bearer. The definition of promissory note as stated in section 4 of the N.I Act indicates that, it contains an unconditional undertaking signed by the maker, to pay a sum of money only to, or to the order of, a certain person, or to the bearer of instrument. The definition of “bill of exchange” as stated in Section 5 and the definition of cheque contain only an unconditional order which clearly distinguish them from the definition of promissory note. In promissory note there must be an express undertaking upon the face of instrument to pay the money. Therefore in promissory there is unconditional undertaking i.e., promise to pay, but the definition of bill of exchange and cheque contain only an unconditional order. This distinction needs to be kept in mind while considering whether the cheque itself constitutes a promise in writing by the accused so as to bring that cheque within the ambit of section 25 (3) of the Indian Contract Act 1872 and penal provision under section 138 of N.I Act.
39. In view of the principles stated in the above referred decision and discussion it is evident that the penal provision of Section 138 of the N.I.Act is applicable only to the cheques which are issued for the discharge in whole or in part, of any debt or other liability, which according to Explanation must be a legally enforceable debt or other liability. A cheque given in discharge of a time barred debt will not constitute an unconditional undertaking or promise in writing either expressly or impliedly so as to attract the criminal offence under section 138 of N.I Act.
Compiled by S. Basavaraj, Advocate, Daksha Legal.
Daksha Legal 