Case Note & Summary
The petitioner, accused in C.C. No.35622/2010 for an offence under Section 138 of the Negotiable Instruments Act, 1881, filed a petition under Section 482 Cr.P.C. to quash the proceedings. The respondent/complainant alleged that the petitioner had taken a hand loan of Rs. 3,00,000 on 28.08.1996, agreeing to pay interest at 5% per month, and issued two cheques dated 10.10.2009 towards discharge of the debt. The cheques were dishonoured on 15.10.2009 due to insufficient funds. After a demand notice dated 03.11.2009 and reply dated 11.11.2009, the complainant filed the complaint. The petitioner argued that the alleged loan was advanced in 1996, and the debt was time-barred under the Limitation Act, 1963, as more than three years had elapsed. The court examined whether a time-barred debt can be considered a 'legally enforceable debt' under Section 138. Relying on the principle that a time-barred debt is not recoverable by law, the court held that the cheque was issued for a debt that was not legally enforceable. Consequently, the essential ingredient of Section 138 was not satisfied. The court allowed the petition and quashed the complaint and all proceedings in C.C. No.35622/2010.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The court considered whether a cheque issued for a debt that is time-barred under the Limitation Act, 1963, constitutes a 'legally enforceable debt' under Section 138 of the Negotiable Instruments Act, 1881. Held that a time-barred debt is not legally enforceable, and thus the dishonour of a cheque issued for such a debt does not attract Section 138. The proceedings were quashed. (Paras 1-6)
Issue of Consideration
Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881, based on a debt that is time-barred under the Limitation Act, 1963, can be sustained.
Final Decision
The petition is allowed. The complaint and all proceedings in C.C. No.35622/2010 pending on the file of the XIV ACMM, Mayohall, Bengaluru, are quashed.
Law Points
- Section 138 of Negotiable Instruments Act
- 1881
- time-barred debt
- legally enforceable debt
- quashing of criminal proceedings under Section 482 Cr.P.C.
Case Details
2015 LawText (KAR) (04) 102
Criminal Petition No.4719/2011
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Criminal petition under Section 482 Cr.P.C. to quash complaint under Section 138 of Negotiable Instruments Act, 1881.
Remedy Sought
Petitioner sought quashing of complaint and proceedings in C.C. No.35622/2010.
Filing Reason
Petitioner alleged that the debt was time-barred and not legally enforceable.
Issues
Whether a time-barred debt can be considered a 'legally enforceable debt' under Section 138 of the Negotiable Instruments Act, 1881.
Submissions/Arguments
Petitioner argued that the loan was advanced in 1996 and the debt was time-barred under the Limitation Act, 1963, hence not legally enforceable.
Respondent was served but unrepresented.
Ratio Decidendi
A cheque issued for a time-barred debt does not constitute a 'legally enforceable debt' under Section 138 of the Negotiable Instruments Act, 1881, as the debt is not recoverable by law. Therefore, the dishonour of such a cheque does not attract the offence under Section 138.
Judgment Excerpts
The petitioner, an accused, in C.C. No.35622/2010, on the file of the XIV ACMM, Mayohall, Bengaluru, for an offence under S.138 of the Negotiable Instruments Act, 1881, filed this petition under S.482 Cr.P.C. to quash the entire proceedings of the said case.
The respondent herein/complainant, has stated that the accused had taken from him, hand loan of ` 3,00,000/-, on 28.08.1996, agreeing to pay interest at 5% per month and towards discharge of the said debt, issued cheques bearing Nos.281049 and 564983, both dated 10.10.2009, drawn on Canara Bank, Frazer Town branch, Bengaluru.
Complainant having presented the cheques for payment with his banker, were returned on 15.10.2009, with remarks, 'funds insufficient'.
Thereafter, complainant got a demand notice dated 03.11.2009 issued, to which he received reply dated 11.11.2009.
Dissatisfied, complainant lodged a complaint in C.C. No.35622/2010, for an offence under S.138 of the Act.
The learned counsel for the petitioner submitted that the alleged loan was advanced in the year 1996 and the debt is time barred and hence, not legally enforceable debt.
The respondent is served but unrepresented.
The only point for consideration is whether the complaint can be sustained?
The alleged loan was advanced on 28.08.1996. The cheques were issued on 10.10.2009. The debt was time barred under the Limitation Act, 1963, as more than three years had elapsed.
A time barred debt is not a legally enforceable debt. Therefore, the dishonour of the cheques issued for a time barred debt does not attract the offence under S.138 of the Act.
In the result, the petition is allowed. The complaint and all proceedings in C.C. No.35622/2010 pending on the file of the XIV ACMM, Mayohall, Bengaluru, are quashed.
Procedural History
The respondent/complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, in C.C. No.35622/2010 before the XIV ACMM, Mayohall, Bengaluru. The petitioner/accused filed Criminal Petition No.4719/2011 under Section 482 Cr.P.C. before the High Court of Karnataka seeking quashing of the complaint. The petition was reserved and pronounced on 13.04.2015.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973 (Cr.P.C.): 482
- Limitation Act, 1963:
