2013 ALL MR (Cri) JOURNAL 225
(MADRAS HIGH COURT)

A. SELVAM, J.

Sama Dharman Vs. S. Natarajan

Crl.O.P (MD) No. 3824 of 2012,MP (MD) Nos. 1 & 2 of 2012

25th July, 2012

Petitioner Counsel: Mr. A. JOEL PAUL ANTONY
Respondent Counsel: M/s. J. MARIA ROSELINE

Negotiable Instruments Act (1881) Ss.138, 6 - Contract Act (1872), S.25(3) - Dishonour of cheque - Cheque issued towards a time barred debt - Cannot be said to have been issued in discharge of legally enforceable debt - S.138 cannot be invoked for its dishonour - Further, such cheque cannot be enforced even under S.25(3) of Contract Act which requires a separate promise - Mere issuance of cheque by accused is no 'promise' to pay a time barred debt.

From a mere reading of the said explanation, it is made clear that the cheque in question must be issued in respect of enforceable debt or other liability. If a cheque in question has been given not in respect of enforceable debt or other liability, Section 138 of the said Act cannot be invoked.

Contention of complaint is that even though the debts alleged to have been received by the petitioners/accused have become time barred at the time of issuance of cheque as per Section 25(3) of the Indian Contract Act, 1872, the debts in question have not become time barred, since the cheque in question has been given in respect of past consideration, the same is valid in law. However, for invoking Section 25(3) of the Indian Contract Act, 1872 there must be a separate and distinct promise. Unless a separate and distinct promise, novation of contract does not arise.

At this juncture, a legal question arises as to whether issuance of cheque itself is a promise to pay a time barred debt. Reading of section 6 of N.I. Act makes it clear that a "cheque" means "a draft signed by the maker or drawer drawn on a bank, payable on demand and unlimited in negotiability." Therefore, it goes without saying that a cheque is not a promise. It is nothing but an instrument which enables a person in whose favour the same has been drawn to draw money mentioned therein from the concerned bank. Therefore, a cheque cannot be equated with a promise. [Para 7,10,13,16,19,25]

Cases Cited:
Joseph Vs. Devassia, 2001 ALL MR (Cri) JOURNAL 26 =(2001) MLJ (Crl) 115 Kerala [Para 21]
S. Kamatchi & Ors. Vs. M/s. Arkaa Medicament, through its Managing Director, Mr. A. Dhanasekaran & Anr., 2009 (3) MWN (Cr.) DCC 31 [Para 21]
A. R. M. Nizmathullah Vs. Vaduganathan, 2007 (2) T.N.L.R.286 [Para 24]


JUDGMENT

JUDGMENT :- This petition has been filed so as to quash the proceeding in C.C.No.250 of 2011 pending on the file of the Judicial Magistrate Court, Musiri.

2. It is stated in the petition that the respondent herein as complainant has lodged the complaint in question under section 138 r/w section 142 of the Negotiable Instruments Act, 1881, wherein the present petitioners have been shown as respondents/accused. The complaint in question has been taken on file in C.C.No.250 of 2011 on the file of the Judicial Magistrate Court, Musiri. During pendency of the same, the present petition has been filed under section 482 of the Code of Criminal Procedure, 1973 praying to quash the proceeding in C.C.No.250 of 2011.

3. Before considering the rival submissions made on either side, the Court has to narrate the main averments made in the complaint filed under section 138 r/w section 142 of the Negotiable Instruments Act, 1881. It is stated in the complaint that on 06.05.2006 the respondents/accused have received a sum of Rs.49,000/- from the petitioner/complainant. On 04.07.2006 they have received a sum of Rs.1,00,000/-. On the same day, they received another sum of Rs.1,00,000/-. On 11.01.2007 they have received Rs.50,000/- and subsequently they received Rs.1,000/- and in aggregation they received Rs.3,00,000/- and in order to discharge the same, the cheque in question has been given on 01.02.2011.

4. From the averments made in the complaint it is made clear that the amounts alleged to have been received by the respondents /accused/petitioners have become time barred on 06.05.2009, 04.07.2009 and 11.01.2010. Further in the complaint no date has been mentioned with regard to receipt of Rs.1,000/-. The cheque in question has been given on 01.02.2011. Therefore, on the date of issuance of the cheque in question, the debts alleged to have been received by the respondents/accused/petitioners have become time barred.

5. Section 138 of the Negotiable Instruments Act, 1881 deals with "Dishonour of cheque for insufficiency, etc., of funds in the account."

6. Explanation of Section 138 of the said Act reads as follows:

"For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.

7. Even from a mere reading of the said explanation, it is made clear that the cheque in question must be issued in respect of enforceable debt or other liability. If a cheque in question has been given not in respect of enforceable debt or other liability, Section 138 of the said Act cannot be invoked.

8. It has already been pointed out that as per the averments made in the complaint, the amounts alleged to have been received by the respondents/accused/petitioners have become time barred on the date of issuance of cheque i.e., on 01.02.2011.

9. The learned counsel appearing for the petitioners has succinctly contended that the cheque in question has been given on 01.02.2011 and on the date of issuance of cheque, all the debts alleged to have been received by the petitioners/accused have become time barred and since the cheque in question has not been given in respect of enforceable debt or liability so as to attract the provision of section 138 of the Negotiable Instruments Act, 1881, the complaint in question is not legally maintainable and the Court below has failed to look into the same and therefore, the entire proceeding in C.C.No.250 of 2011 is liable to be quashed.

10. In order to repudiate the contention put forth on the side of the petitioners/accused, the learned counsel appearing for the respondent /complainant has also equally contended that even though the debts alleged to have been received by the petitioners/accused have become time barred at the time of issuance of cheque i.e., on 01.02.2011, as per Section 25(3) of the Indian Contract Act, 1872, the debts in question have not become time barred, since the cheque in question has been given on 01.02.2011 in respect of past consideration, the same is valid in law and to put it in short, past consideration is a good consideration and the Court below after considering the above legal aspect, has rightly taken the complaint in question on file in C.C.No.250 of 2011 and therefore, the contentions put forth on the side of the petitioners/accused are not legally tenable and the same are liable to be eschewed.

11. For considering the rival submissions made on either side, the Court has to look into section 25 of the Indian Contract Act, 1872 and the same reads as follows:

"Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law - An agreement made without consideration is void, unless-

(1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless

(2) it is promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless

(3) it is promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorised in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

12. The entire argument advanced on the side of the respondent/complainant is based upon the provision of section 25(3) of the said Act and the same can be vivisected as follows:

(i) it must refer to a debt which the creditor but for the period of limitation, might have enforced.

(ii) there must be a distinct promise to pay wholly or in part such debt;

(iii) the promise must be in writing signed by the person or by his duly appointed agent.

13. It is an admitted fact that Section 25(3) of the said Act deals with time-barred debt. From a close reading of the said Section, it is made clear that with regard to payment of time barred debt, there must be a distinct promise to pay either wholly or in part of the same. Further the promise must be in writing either signed by the person concerned or by his duly appointed agent. To put it in short, unless a specific contract in the form of novation is created with regard to payment of time barred debt, Section 25(3) of the said Act cannot be invoked. At this juncture, the Court has to look into the vital distinction between "promise to pay and acknowledgement of debt" under the Limitation Act.

14. The distinction between an acknowledgement under section 18, Limitation Act of 1963 and a 'promise' within the meaning of Section 25(3) of the Contract Act is of great importance. Both an acknowledgement and a promise are required to be in writing, signed by the party or his agent authorised in that behalf; and both have the effect of creating a fresh starting point of limitation. But while an acknowledgement under the Limitation Act is required to be made before the expiration of the period of limitation, a promise under section 25(3) to pay a debt may be made after the limitation period. Further promise to pay must be in writing in order to be enforceable.

15. As pointed out earlier, the learned counsel appearing for the respondent/complainant has taken umbrage under section 25 (3) of the Indian Contract Act, 1872. It has already been pointed out that for the purpose of invoking the said Section, there must be a distinct promise in writing. In the instant case, such a promise has not been made by the petitioners/accused and therefore, it is needless to say that the respondent/complainant is not entitled to invoke section 25 (3) of the said Act.

16. It is an admitted fact that all the debts alleged to have been received by the petitioners/accused have become time barred and the cheque in question has been given on 01.02.2011. At this juncture, a nice legal question arises as to whether issuance of cheque itself is a promise to pay a time barred debt. Section 4 of the Negotiable Instruments Act, 1881 deals with "Promissory Note" and the same reads as follows:

"A "Promissory Note" is an instrument in writing (not being a bank-note) or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

17. It means a promise to pay a certain sum of money to a person by the maker of the same.

18. Section 6 of the said Act, deals with "Cheque" and the same reads as follows:

A "Cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

19. A "Cheque" means "a draft signed by the maker or drawer drawn on a bank, payable on demand and unlimited in negotiability." Therefore, it goes without saying that a cheque is not a promise. It is nothing but an instrument which enables a person in whose favour the same has been drawn to draw money mentioned therein from the concerned bank. Therefore, a cheque cannot be equated with a promise.

20. It has already been pointed out that the respondent/complainant cannot take umbrage under section 25(3) of the Indian Contract Act, 1872 and further issuance of cheque in question on 01.02.2011 is not a promise. Therefore, viewing from any angle, on the date of issuance of the cheque in question that is, on 01.02.2011, all the debts mentioned in the complaint have become time barred and the cheque in question has not been issued in respect of enforceable debt or other liability. Under the said circumstances, the complaint in question under section 138 r/w section 142 of the Negotiable Instruments Act, 1881 is not legally maintainable and this Court by invoking inherent powers can very well quash the entire proceeding in C.C.No.250 of 2011.

21. The learned counsel appearing for the petitioners has drawn the attention of the Court to the following decisions:

(a)In (2001) MLJ (Crl)115 Kerala : [2001 ALL MR (Cri) JOURNAL 26] (Joseph Vs. Devassia), it is held that "in the case the complainant admitted that the loan was advanced to the accused in January 1988 and the cheque was issued in February 1991. Thus, by the time the cheque was issued, the debt was barred by limitation. Since there was no valid acknowledgement of the liability within the period of limitation. It is clear from Sec.138 of the Negotiable Instruments Act that in order to attract the penal provisions in the bouncing of a cheque in Chapter XVII, it is essential that the dishonoured cheque should have been issued in discharge of wholly on the part of any debt or other liability of the drawer to the payee. The explanation to Sec.138 defines the express 'debt as liability' as a legally enforceable debt in other liability. It cannot be said that a time barred debt is a legally enforceable debt. It cannot be said that a time barred debt and it is dishonoured the accused cannot be convicted under Sec.138 of the Act."

(b)In 2009 (3) MWN (Cr.) DCC 31 (S. Kamatchi & Others Vs. M/s. Arkaa Medicament, through its Managing Director, Mr. A. Dhanasekaran and another) this Court has held that "time barred debt cannot be construed as a legally enforceable debt."

22. From the conjoint reading of the decisions referred to supra, it is easily discernible that for the purpose of invoking Section 138 r/w section 142 of the Negotiable Instruments Act, 1881, the cheque in question must be issued in respect of legally enforceable debt or other liability.

23. In the instant case, it has already been pointed out that at the time of issuance of cheque that is, on 01.02.2011, the debts alleged to have been received by the petitioners have become time barred. Therefore, viewing from any angle, the contention put forth on the side of the petitioners is really having subsisting force.

24. The learned counsel appearing for the respondent has drawn the attention of the Court to the decision reported in 2007 (2) T.N.L.R. 286 (Mad) (MB) (A.R.M. Nizmathullah V. Vaduganathan), wherein this Court has held that "the cheque in question has been issued in view of the fact that the debtor has acknowledged his liability. Under the said circumstances, he should not be entitled to claim that the debt has become barred by limitation."

25. It has already been pointed out that for invoking Section 25(3) of the Indian Contract Act, 1872 there must be a separate and distinct promise. Unless a separate and distinct promise, novation of contract does not arise. In the instant case, no such distinct or separate promise has been in existence in writing between the parties and therefore, viewing from any angle, the contention put forth on the side of the respondent/complainant does not hold good.

26. In fine, this petition is allowed and the proceeding in C.C.No.250 of 2011 pending on the file of the Judicial Magistrate Court, Musiri is quashed. Connected Miscellaneous Petitions are closed.

Petition allowed.