Karnataka High Court
Sri Sudhakar Reddy C.B vs Smt Pushpa on 12 October, 2023
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R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF OCTOBER, 2023
BEFORE
THE HON'BLE MRS.JUSTICE M.G. UMA
CRIMINAL REVISION PETITION NO.256/2022
BETWEEN:
SRI. SUDHAKAR REDDY C.B.
S/O C.N BYRAREDDY
AGED ABOUT 35 YEARS
R/AT CHOKKANAHALLI VILLAGE
YAENIGADALE POST
CHILAKALANERPU HOBLI
CHINTHAMANI TALUK
CHIKKABALLAPURA - 563 125.
ALSO AT NO.5, BASAVARAJU
BUILDING, KUNTE NANJAPPA
ROAD, B.B ROAD
BYATARAYANAPURA
BENGALURU - 560 092.
... PETITIONER
(BY SRI: B.M. MOHAN KUMAR, ADVOCATE)
AND:
SMT. PUSHPA
W/O B.V JANARDHAN
AGED ABOUT 42 YEARS
R/AT 865, 13TH MAIN, 5TH CROSS
HANUMANTHANAGAR
BENGALURU - 560 050.
... RESPONDENT
(BY SRI: CHOWDAREDDY T.M., ADVOCATE)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING TO
SET ASIDE THE ORDER DATED 05.02.2021 PASSED BY THE COURT
OF THE HONBLE LX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE
AT BENGALURU IN CRL.A.NO.492/2019 ON ITS FILE IN
DISMISSING THE CRL.A AND ALLOW THIS RP; SET ASIDE THE
JUDGMENT DATED 04.02.2019 PASSED IN CC NO.9436 OF 2017 BY
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THE HON'BLE COURT OF SMALL CAUSES AND XXVI A.C.M.M JUDGE
AT BENGALURU CONVICTING THE PETITIONER FOR THE OFFENCE
PUNISHABLE UNDER SECTION 138 OF NI ACT AND SENTENCED
THE PETITIONER TO UNDERGO SI FOR A PERIOD OF SIX MONTHS
AND TO PAY FINE OF RS.6,50,000/- AND FURTHER ACQUIT THE
PETITIONER FOR THE OFFENCE ALLEGED AGAINST HIM AND
DISMISS THE COMPLAINT.
THIS CRIMINAL REVISION PETITION HAVING BEEN HEARD
AND RESERVED FOR JUDGMENT ON 12/09/2023 COMING ON FOR
PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT PASSED THE
FOLLOWING:
ORDER
The revision petitioner - accused in CC No.9436 of 2017 on the file of the learned Court of Small Causes Judge and XXVI A.C.M.M., at Bengaluru (hereinafter referred to as 'the Trial Court' for brevity), is impugning the judgment of conviction and order of sentence dated 04.02.2019, convicting him for the offence punishable under Section 138 of the Negotiable Instruments Act (for short 'NI Act'), and sentencing to pay fine of Rs.6,50,000/-, in default to undergo simple imprisonment for a period of six months, which was confirmed vide judgment dated 05.02.2021 passed in Criminal Appeal No.492 of 2019 on the file of the learned LX Additional City Civil and Sessions Judge, Bengaluru (CCH-61) (hereinafter referred to as 'the First Appellate Court' for brevity).
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2. Brief facts of the case are that, the complainant filed the private complaint in PCR No.3916 of 2017 against the accused alleging commission of offence punishable under Section 138 of NI Act. It is contended that on 26.04.2013, the accused had requested the complainant to lend a sum of Rs.2,00,000/-. Accordingly, the complainant had paid cash of Rs.2,00,000/- to the accused on 28.04.2013. On 05.10.2013, the accused again requested for another sum of Rs.1,60,000/- and accordingly, the same was paid by the complainant on 07.10.2013. On 10.10.2013, the accused again requested for a sum of Rs.2,00,000/-and the complainant paid the same on 12.10.2013. Thus, the complainant has paid in all Rs.5,60,000/- to the accused on different dates. The accused promised to repay the same on or before 10.01.2016, but failed to comply with the same. When the complainant demanded to repay the entire amount, he undertook to pay the same before October 2016. Later he issued the cheque bearing No.283364 dated 10.11.2016 drawn on State Bank of Mysore Bank, Sahakarnagar Branch, Bengaluru for the sum of Rs.1,60,000/-. He also issued two undated cheques bearing Nos.283356 and 283357 for Rs.2,00,000/- each drawn on 4 State Bank of Mysore, Sahakarnagar Branch in favour of complainant. As per the instructions of accused, the complainant presented the cheque bearing No.283364 on 21.01.2017 and the same was dishonored as there was insufficient funds in his account. The accused promised to arrange sufficient fund in his account and asked to present other two cheques for encashment. Accordingly, those two cheques were also presented for encashment on 30.01.2017. But those two cheques were also came to be dishonored as there were insufficient funds in the account of the accused. The complainant issued legal notice on 10.02.2017 informing the accused regarding dishonoring of the cheques, calling upon him to repay the cheque amounts. The accused has neither replied, nor complied with the demands made therein. Thereby, he has committed offence punishable under Section 138 of NI Act. Accordingly, the complainant lodged the complaint requesting the Trial Court to take cognizance of the matter and to try the accused.
3. The Trial Court on considering the materials available on record, took cognizance of the offence and summoned the accused to appear before it. The accused 5 appeared before the Trial Court in response to the summons and pleaded not guilty and claimed to be tried. The complainant examined herself as PW1 and got marked Exs.P1 to P11 in support of her contention. The accused has denied all the incriminating materials available on record, but has not chosen to lead evidence in support of his defence. The Trial Court after taking into consideration of all these materials available on record, came to the conclusion that the complainant is successful in proving the guilt of the accused beyond reasonable doubt for the offence punishable under Section 138 of NI Act and passed the impugned judgment of conviction and order of sentence as stated above.
4. Being aggrieved by the same, the accused preferred Criminal Appeal No.492 of 2019. The First Appellate Court on re-appreciation of the materials on record, dismissed the appeal confirming the impugned judgment of conviction and order of sentence passed by the Trial Court.
5. Being aggrieved by the same, the accused is before this Court.
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6. Heard Sri B M Mohan Kumar, learned counsel for the revision petitioner and Sri T M Chowdareddy, learned counsel for the respondent. Perused the materials including the Trial Court records.
7. Learned counsel for the revision petitioner submitted that the complainant has not proved lending of amount on various dates as contended by her. Even according to the case of the complainant, the amount which was lent in favour of the accused are barred by limitation. No offence punishable under Section 138 NI Act would be made out, when a cheque was issued towards the debt which is barred by limitation. He also contended that financial capacity of the complainant for lending such huge amount is also not proved. The legal notice said to have been issued by the complainant was never served on the accused. Under such circumstances, no offence punishable under Section 138 of NI Act is made out.
8. Learned counsel placed reliance on the decision of the co-ordinate Bench of this court in The Bidar Urban Co- 7 1 operative Bank Ltd., Bidar Vs. Mr.Girish in support of his contention that the time barred debt cannot be called as a legally recoverable debt and no offence under Section 138 NI Act would be made out, when the cheque issued towards time barred debt.
9. Learned counsel further submitted that when it is the contention of the complainant that she had lent the amount on 28.04.2013, 07.10.2013 and 12.10.2013 and the cheques - Exs.P1 to P3 were issued dated 10.11.2016, 30.01.2017 and again on 30.01.2017, the same were issued towards a time barred debt and therefore, the offence under Section 138 of NI Act is not made out. He refers to Article 19 of the Limitation Act to contend that period of limitation for recovery of the money lent is 3 years when the loan is made. Therefore, even according to the case made out by the complainant, the cheques - Exs.P1 to P3 were issued towards time barred debt, therefore, the accused is to be acquitted.
10. Learned counsel has placed reliance on the decision rendered by the co-ordinate Bench of this Court in S 1 ILR 2021 KAR 2437 8 2 S Ramesh Vs K Lokesh , to contend that in a similar set of facts the co-ordinate Bench of this Court held that since the loan was advanced in the year 2002 and the cheque in question in the year December, 2007, the debt is time barred. To enforce the liability on Section 138 of NI Act, there shall be legally enforceable debt and since the debt is time barred, it is to be held that the accused is not liable for conviction.
11. Learned counsel also placed reliance on Amrit 3 Sandhu Costar Vs State and another , Girdhari Lal Rathi 4 Vs P.T.V. Ramanujachari and Another , Vijay Polymers 5 Pvt. Ltd. & Anr Vs Vinnay Aggarwal , Prajan Kumar Jain 6 Vs Ravi Malhotra , to contend that even the co-ordinate Benches of Delhi High Court formed similar opinion to acquit the accused for the offence punishable under Section 138 of NI Act. Accordingly, he prays for allowing the revision petition and to acquit the accused, in the interest of justice. 2 Crl.RP No.287/2015 DD 16.08.2023 3 2022 SCC online Del 2990 4 1997 SCC Online AP 1020 5 2009 (110) DRJ 592 6 2009 (113) DRJ 275 9
12. In the alternate, learned counsel further submitted that due to the negligence of the learned counsel who was representing the accused before the Trial Court, the complainant could not be cross examined properly. For the fault of counsel representing the accused, the accused cannot be penalised. Therefore, he prays for remanding the matter to the Trial Court to provide an opportunity to the accused to cross examine PW1 in detail.
13. Per contra, learned counsel for the respondent opposing the revision petition submitted that, accused is taking the defence that the debt was time barred, for the first time before this Court. No such contentions were raised before the Trial Court. PW1 was never cross examined in that regard and nothing has been elicited from her during cross examination. Issuance of cheques as per Exs.P1 to 3 and the signatures found therein are categorically admitted by the accused as per Exs.4 to 6. Those cheques were dishonored as there was insufficient funds in the account of the accused. The legal notice was issued calling upon the accused to pay the cheque amounts. The intimation was delivered to the accused regarding the registered notice, but he had not claimed the 10 said notice. Therefore, as per Ex.P10 the notice was returned to the sender as unclaimed. Under such circumstances, it is to be presumed that the accused has not claimed the notice knowing fully well about its contents. Even thereafter, the accused has not repaid the cheque amounts and therefore, the offence punishable under Section 138 NI Act is made out.
14. Learned counsel further submitted that when the accused admits issuance of cheques as per Exs.P1 to 3 and the signatures found therein, the presumption under Sections 118 and 139 of NI Act comes into operation. Therefore, the burden is on the accused to rebut the said presumption. Since nothing has been elicited from PW1 during cross examination and no specific defence was raised by the accused, nor he has stepped into the witness box to speak about his defence, he has not rebutted the presumption and therefore, the Trial Court and the First Appellate Court are right in convicting the accused as stated above. There are no merits in the contention taken by the petitioner.
15. Learned counsel for the respondent submitted that the order sheet maintained by the Trial Court discloses 11 that the counsel for the accused has sought for time to cross examine PW1 on many occasions and he was cross examined in installments on various dates. It is not the case where the Trial Court has not given any opportunity to the accused to cross examine PW1 and to lead evidence on behalf of the accused. Even though sufficient opportunity was given, the same is not availed by the accused. The cheques in question were issued by the accused during December, 2016. The impugned judgment of conviction and order of sentence was passed by the Trial Court during February, 2019. After lapse of four years, the accused is raising new defences without any basis. Therefore, there is no bonafides in the submission made by the learned counsel the petitioner seeking remanding the matter to the Trial Court.
16. Learned counsel for the respondent placed reliance on the decision in Electronics Trade & Technology Development Corpn. Ltd. Secunrderabad Vs Indian Technologists & Engineers (Electronics) (P) Ltd. and 7 another , in support of his contention.
7 (1996) 2 SCC 739 12
17. He also placed reliance on the decision of the 8 Hon'ble Apex Court in Rangappa Vs Mohan in support of his contention that even if a defence was taken that the blank cheque was issued, that will not absolve the accused from its liability for the offence punishable under Section 138 of NI Act.
18. Learned counsel for the respondent placed reliance on the decision of the Gujarat High Court in Hindustan Apparel Industries Vs Fair Deal Corporation, 9 New Delhi , wherein, the Full bench of Gujarat High Court considered the question referred to by the learned Single Judge that whether the payment by cheque amounts to acknowledgement of a debt and a liability, to contend that by issuing the cheque as per Ex.P1, the accused had promised to pay the time barred debt and therefore, from the date of dishonor of cheque, the cause of action to recover the cheque amount would begin to run.
19. He also placed reliance on the decision of co- ordinate Bench of this Court in Surendra Vs Smt Padma 8 AIR 2010 SC 1898 9 AIR 2000 Gujarat 261 13 10 and Others , in support of his contention that it is not Article 19, but Article 113 of the Limitation Act which would apply to the facts of the case. When the accused has issued the cheque and promised to pay the amount, the claim of the complainant is not barred by limitation and therefore, the cheque in question was issued towards payment of legally recoverable debt. The accused is liable for conviction under Section 138 of NI Act. Hence, he prays for dismissal of revision petition, in the interest of justice.
20. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is:
"Whether the impugned judgment of conviction and order of sentence passed by the Trial Court, which was confirmed by the First Appellate Court suffers from any infirmities and calls for interference by this Court?"
My answer to the above point is in the 'Negative' for the following:10
ILR 2000 KAR 579 14 REASONS
21. It is the specific contention of the complainant that at the request of accused, she had lent an amount of Rs.2,00,000/- on 28.04.2013, Rs.1,60,000/- on 07.10.2013 and Rs.2,00,000/- on 12.10.2013. The accused had promised to repay the same on or before 10.01.2016. But he failed to repay the same. When the complainant insisted the accused to repay the loan amount, he issued three cheques as per Exs.P1 to 3. When Ex.P1 was presented for encashment, same was dishonored for insufficient funds. When Exs.P2 and 3 were presented for encashment, both the cheques were dishonored as the payment stopped by the drawer. The legal notice as per Ex.P7 was issued informing the accused about dishonor of the cheques and calling upon to pay the cheque amounts. Ex.P10 is the postal envelop returned unserved on the accused as not claimed. Ex.P11 is the passbook pertaining to the complainant produced to prove her capacity to lend the amount.
22. The complainant stepped into the witness box and re-iterated the contention as taken in the complaint by filing the affidavit in lieu of examination-in-chief. She was further 15 examined as PW1. During cross examination by the learned counsel for the accused, witness re-iterated the payment of the loan amount in installment. It is elicited from the witness that she was having sufficient amount with her and the same was paid to the accused. Witness stated that at the time when cheques were issued, accused was residing in Byatarayanapura. She denied the suggestion that blank cheques were obtained from the accused about four years back and the same were misused by the complainant. Witness denied the suggestion that legal notice issued to the accused was not served on him. It is specifically suggested to the witness that she had received the amount from the accused, but had not returned the cheques, but on the other hand, misused the same. This suggestion is specifically denied by the witness.
23. The tenor of cross examination of PW1 discloses that the accused is not disputing issuance of cheques - Exs.P1 to 3 with his signatures. But his specific defence appears to be that he had returned the amount to the complainant. Exs.P4 to 6 are the endorsement issued by State Bank of Mysore, returning the cheques either as dishonored for funds 16 insufficient or payment stopped by the drawer. Ex.P7 is the copy of legal notice issued on behalf of the complainant to the accused on 10.02.2017. This notice was addressed to two different addresses of the accused, one at Chakkanahalli village, Chintamani Taluk and the other at Byatarayanapura Bengaluru. Exs.P8 and 9 are the postal receipts for having send the notice through RPAD. Ex.P10 is the postal envelop returned unserved as the accused has not claimed the same. The endorsement of the postman on the envelope discloses that the intimation was delivered to the accused regarding the registered notice on 13.02.2017 and in spite of that, the registered notice was not claimed by the accused and accordingly, it was returned as unclaimed on 25.02.2017. None of the documents were disputed by the accused during cross examination of PW1. Moreover, there is presumption regarding the endorsement made by the postal officials for returning the envelope as not claimed.
24. Ex.P11 is the copy of passbook of the complainant, according to which, on 27.04.2013 the complainant had withdrawn a sum of Rs.50,000/- and she had withdrawn Rs.30,000/- on 10.04.2013. On 28.09.2013, the 17 complainant had withdrawn another sum of Rs.50,000/- and on 12.10.2013, she had withdrawn another amount of Rs.50,000/-. The passbook discloses that she was regularly withdrawing the amount and she was having sufficient amount in her credit. Therefore, the contention of the learned counsel for the accused that the complainant was not having financial capacity to lend the amount to the accused on various dates as stated by her, cannot be accepted. Moreover, when a specific defence was taken that the accused had returned the amount to the complainant, it presupposes borrowal of the amount and under such circumstances, the accused cannot deny the financial capacity of the complainant.
25. The next contention raised by the learned counsel for the petitioner is that, even if the defence taken that the accused had repaid the loan amount is to be rejected, the amount lent by the complainant is barred by limitation and therefore, Section 138 of NI Act could not be invoked for the cheques issued towards the time barred debt. He has relied on the decision of co-ordinate bench of this court in Girish (supra).
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26. The co-ordinate Bench of this Court based on the facts and circumstances of the case on hand, held that the debt in question was time barred and therefore, Section 138 of NI Act could not be invoked. But in the present case, it is the specific contention of the complainant that she had lent the amount in installments as stated in the complaint on three different dates i.e., Rs.2,00,000/- on 28.04.2013, Rs.1,60,000/- on 07.10.2013 and Rs.2,00,000/- on 12.10.2013. It is pertinent to note that the complainant has specifically stated in the complaint that the accused had promised to repay the loan amount on or before 10.01.2016. When he failed to make the payment on or before 10.01.2016, the complainant demanded on 11.01.2016 to pay the loan amount. Thereafter, the accused has issued Exs.P1 to 3. Even though the complainant has re-iterated this fact in the affidavit filed in lieu of examination-in-chief, nothing has been elicited from the complainant to disbelieve her version during cross examination. When the complainant has specifically stated that the accused has undertaken to repay the loan amount on or before 10.01.2016, the cheques - Exs.P1 to 3 which are dated 10.11.2016 and 30.01.2017, 19 cannot be said to be towards a time barred debt. Therefore, the decision in Girish (supra) relied on by learned counsel for the respondent is not applicable to the facts of the present case.
27. The co-ordinate Bench of this Court in Surendra (supra) considered the facts of the case, where the defendant being the son of the borrower raised the contention that the claim of the plaintiff is barred by limitation. It is contended that mere handing over of the cheques to the plaintiff would not amount to payment on account of debt or of interest and it cannot be considered either as acknowledgment in writing or as payment of the amount towards debt or liability. Therefore, Sections 18 or 19 of the Limitation Act would not help the plaintiff in any manner. Recording the reasoning, the Trial Court dismissed the suit as barred by limitation. When the matter came up before this Court, the co-ordinate Bench held that the suit is for recovery of the amount on the basis of cheques given by the defendant, which came to be dishonored on presentation. Therefore, the suit is not under Article 19, but it will be governed by Article 113 of the Limitation Act. It is held that period of three years for filing the suit accrues 20 from the date on which the cheque was dishonored and accordingly, held that the suit is not barred by limitation.
28. Admittedly, the claim of the complainant in the present case is not based on accounts. But the specific contention of the complainant is that the accused had borrowed an amount of Rs.2,00,000/- on 28.04.2013, Rs.1,60,000/- on 07.10.2013 and Rs.2,00,000/0 on 12.10.2013. The cheques - Exs.P1 to 3 are dated 10.11.2016, 30.01.2017 and 30.01.2017 respectively. Therefore, it is the contention of the accused that it is Article 19 of the Limitation Act which is applicable to recover the amount that was lent and the period of limitation begins to run when the money was lent in the year 2013. The cheques in question came to be issued much later i.e., after the period of limitation and hence, the claim of the complainant is barred by limitation. Under such circumstances, it cannot be said that the cheques were issued towards repayment of legally enforceable debt which is requirement under Section 138 of NI Act.
29. The Full Bench of the Gujarat High Court in Hindustan Apparel Industries (supra), categorically held 21 that issuance of the cheque would prima facie amount to an admission of debt, unless a contrary intention has been expressed by the person issuing the cheque. Merely because subsequently such a cheque is dishonored and the admission is retracted, it can hardly be stated that the admission or the acknowledgment ceases to be an admission or acknowledgment of the liability. It is held that to hold otherwise would be contrary to fair play between the parties, and justice and equity. The Court has referred to Section 18 of the Limitation Act to highlight the effect of writing with its explanation along with Section 19, i.e., the effect of payment on account of debt for interest on legacy, held that there must be a subsisting jural relationship between the parties in respect of the claim and there must be an intention to accept such jural relationship by the writing canvassed as the acknowledgment. It is also held that such an intention need not be in express terms but it can be inferred by implication from the nature of the admission and the surrounding circumstances. It upheld the opinion expressed by the learned Single Judge of Patna High Court in Rajpati Prasad 22 11 Vs Kaushlya Kuer , wherein, it is held that all the post dated cheques towards satisfaction of dues would amount to acknowledgment of liability irrespective of the fact whether the cheque was subsequently dishonored or not.
30. Sections 18 and 19 of the Limitation Act refer to the effect of acknowledgment in writing and effect of payment on account of debt, before expiration of the period prescribed under the Act. The facts of the present case disclose that the cheques - Exs.P1 to 3 were issued beyond the period of limitation i.e., 3 years. Taking the clue from the decision of Full Bench of Gujarat High Court in Hindustan Apparel Industries (supra), approving the decision of the Patna High Court in Rajpati Prasad (supra) that the cheques issued towards satisfaction of dues would amount to acknowledgement of liability irrespective of the fact whether the cheque was honored or dishonored, a reference may be made to Section 25 of the Indian Contract Act, which refers to the void agreement which was made without consideration. Sub-section (3) refers to an exception to the general rule, where a promise is made in writing and signed by the person 11 AIR 1981 Pat 187 23 to be charged to pay wholly or in part a debt of which the creditor might have enforced payment, but the law for the limitation of suits, such an agreement is considered to be a valid contract.
31. Illustration (e) to Section 25 refers to a situation where 'A' owes 'B' Rs.1,000/-, but the debt is bared by Limitation act. 'A' signs a written promise to pay 'B' Rs.500/- on account of the debt and it is considered as a contract and it saves limitation under the Limitation Act to recover the said amount, promised to be paid. If this provision of law could be made applicable to Exs.P1 to 3 - the cheques where under the accused has directed his banker in writing to pay the amount mentioned therein to the complainant on presentation of the cheques, is to be considered.
32. Section 6 of the NI Act defines the word 'cheque' as a Bill of Exchange. Section 5 of the NI Act defines the word 'Bill of Exchange' to mean an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the 24 instrument. This section further makes it clear that a promise or order to pay is not conditional within the meaning of this section and section 4, which defines the word promissory note by reason of the time for payment of the amount. Section 8 of NI Act defines the word 'holder' to mean the holder of a 'promissory note' or Bill of Exchange or cheque who is entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto.
33. Section 138 of NI Act refers to a cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money for discharge in whole or in part of any debt or liability. However, the explanation to Section 138 explain the 'debt or other liability' as legally recoverable debt or other liability.
34. In view of the above, the question that arises as to whether issuance of cheque amounts to a promise made in writing and signed by the person to be charged therewith 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 25 i.e., promise to pay the time barred debt as referred to in sub section (3) of section 25 of the Indian contract act.
35. In this regard, I may refer to the decision of the Division Bench of High Court of Bombay in Dinesh B Chokshi 12 Vs Rahul Vasudeo Bhatt and another , wherein, the Court referred to two questions formulated by the learned Single Judge, which read as follows:
"(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?"
36. The Division Bench after hearing the Amicus Curiae appointed to assist the Court, referred to various provisions of Indian Contract Act, 1872, including Section 25(3) and held in paragraph 9 as under:
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2013 (2) Mh.L.J.130 26 "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 notwithstanding the fact that it is a promise to pay a debt which is already barred by limitation. Thus, sub-section (3) of section 25 of the Contract Act applies to a promise made in writing which is signed by a person to pay a debt which cannot be recovered by reason of expiry of period of limitation for filing a suit for recovery. Therefore, if a debtor after expiry of the period of limitation provided for recovery of debt makes a promise in writing signed by him to pay the debt wholly or in part, the said promise being governed by sub-section (3) of section 25 of the Contract Act becomes an agreement which is enforceable in law. By virtue of the promise governed by sub-section (3) of section 25 of the Contract Act, the time barred debt becomes enforceable."
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37. It also referred to various provisions of Negotiable Instruments Act, 1881, including the presumptions and held in paragraph 15 to answer the first question as under:
"15. On plain reading of section 13 of the said Act of 1881, a negotiable instrument does contain a promise to pay the amount mentioned therein. The promise is given by the drawer. Under section 6 of the said Act of 1881, a cheque is a bill of exchange drawn on a specified banker. The drawer of a cheque promises to the person in whose name the cheque is drawn or to whom the cheque is endorsed, that the cheque on its presentation, would yield the amount specified therein. Hence, it will have to be held that a cheque is a promise within the meaning of sub- section (3) of section 25 of the Contract Act. What follows is that when a cheque is drawn to pay wholly or in part, a debt which is not enforceable only by reason of bar of limitation, the cheque amounts to a promise governed by the sub- section (3) of 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 28 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."
(emphasis supplied)
38. The Division Bench after considering Section 138 of NI Act along with presumption under Section 139 of NI Act answered question No.2 in paragraphs 20 and 21 as under:
"20. While recording our answer to the first question, we have already held that a cheque issued for discharge of a debt which is barred by law of limitation is itself a promise within the meaning of sub-section (3) of section 25 of the Contract Act. A promise is an agreement and such promise which is covered by section 25(3) of the Contract Act becomes enforceable contract provided that the same is not otherwise void under the Contract Act.
21. Therefore, while answering second question, we are specifically dealing with a case of promise created by a cheque issued for discharge of a time barred debt or liability. Once it is held that a cheque drawn for discharge of a time 29 barred debt creates a promise which becomes enforceable contract, it cannot be said that the cheque is drawn in discharge of debt or liability which is not legally enforceable. The promise in the form of a cheque drawn in discharge of a time barred debt or liability becomes enforceable by virtue of sub-section (3) of section 25 of the Contract Act. Thus, such cheque becomes a cheque drawn in discharge of a legally enforceable debt as contemplated by the explanation to section 138 of the said Act of 1881. Therefore, even the second question will have to be answered in the affirmative."
(emphasis supplied)
39. Thus, when the questions formulated by the learned Single Judge of High Court of Bombay was referred to the Division Bench, it took pains in considering the matter from various facets and answered both the questions in the Affirmative. Thereby, holding that issuance of cheque is a promise in writing within the meaning of sub section (3) of Section 25 of the Contract Act and it is an exception to the general rule that the agreement without consideration is void. Thus, issuance of a cheque satisfies the ingredients of sub section (3) of Section 25, i.e., promise 30 made in writing and signed by the person to be charged therewith to pay wholly or in part a dent of which the creditor might have enforced payment, but for the law for the limitation of suits and as such, the cheque becomes a cheque drawn towards discharge of a legally enforceable debt as contemplated by the explanation to Section 138 of the NI Act. Therefore, the position of law is laid down by the Division Bench of High Court of Bombay and there is no reason for not accepting the same.
40. In view of the settled position of law, even if the contention of the learned counsel for the petitioner that the cheques were issued towards a time barred debt is to be accepted, by applying the above principle of law to the present case, issuance of cheques in question amount to written promise to pay the said debt, as provided under Section 25(3) of the Contract Act and it creates legally enforceable debt. Hence, it squarely attracts Section 138 of NI Act.
41. The next contention raised by the learned counsel for the accused is that since PW1 was not cross examined 31 satisfactorily, the matter is to be remanded back to the Trial Court by setting aside the impugned judgment of conviction and order of sentence passed by the Trial Court.
42. It is pertinent to note that Ex.P1 is dated 10.11.2016, Exs.P2 and 3 are dated 30.01.2017. The private complaint was filed before the Trial Court on 14.03.2017. The complainant has filed her sworn statement on the date of the complaint and she was further examined as PW1 on the very same day and subsequently on 25.07.2018. She was cross examined by the learned counsel for the accused only on 07.09.2018. The statement of the accused was recorded under Section 313 of Cr.P.C. on 29.11.2018, but in the meantime, the Trial Court was compelled to issue NBW against the accused repeatedly to secure his presence and finally the impugned judgment of conviction and order sentence was passed on 04.02.2019. In spite of giving such a long rope to the accused to defend the case in support of his defence, he has not availed the same to get any admission from PW1 and to examine himself in support of his defence. During cross examination of PW1, nothing has been elicited from her. Under such circumstances, the claim of the learned 32 counsel for the accused to remand the matter to the Trial Court once again for further cross examination of PW1 would cause grave injustice to the complainant for no fault of his. Under such circumstances, I am of the opinion that it is not a fit case for remanding the matter to the Trial Court, at the request of the accused without there being any valid and reasonable cause. If it is the contention of the accused that PW1 could not be cross examined effectively due to the negligence of the counsel representing him, he was at liberty to initiate action against the counsel for deficiency of service, if he is advised to do so. But the complainant cannot be penalised for the same.
43. The discussions held above disclose that the complainant is successful in discharging her initial burden to prove lending of the amount, issuance of the cheques by the accused towards discharge of legally recoverable debt, which came to be dishonored for insufficiency of funds or for payment stopped. In spite of intimation regarding the legal notice, the accused has not claimed the same, nor issued any reply notice. He has also not repaid the cheque amounts and thereby he has committed the offence punishable under 33 Section 138 of NI Act. When the complainant is successful in discharging initial burden of proving issuance of cheques towards legally recoverable debt and failure on his part to repay the cheque amounts, the presumption under Sections 118 and 139 of NI Act would operate against the accused and the burden shifts on him to rebut the legal presumptions. The accused has failed to rebut the presumptions by cross examining PW1. He has not chosen to produce any documents nor he has stepped into the witness box.
44. As already noticed from the tenor of cross examination of PW1, the accused admits issuance of Exs.P1 to 3 with his signatures in favour of the complainant. Even though an attempt was made to contend that the blank cheques with signatures were issued in favour of the complainant about 4 years back, the same is not probabalised. Even otherwise, issuing blank cheques as security cannot be a legal defence to escape from the clutches of law under Section 138 of NI Act, in view of the Section 20 of NI Act.
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45. It is relevant to refer the decision of the Hon'ble Apex Court in M/s Kalamani Tex and another Vs P 13 Balasubramanian , wherein, the Hon'ble Apex Court refers its various decisions and held in paragraphs 15 and 17 as under:
"15. No doubt, and as correctly argued by Senior Counsel for the appellants, the presumptions raised under Sections 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon in Basalingappa, a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not mere possibility. These principles were also affirmed in Kumar Exports, wherein it was further held that a bare denial of passing of consideration would not aid the case of accused.
17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that:13
(2021) 5 SCC 283 35 "36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
(emphasis supplied)
46. It is also relevant to refer to the recent decision of the Hon'ble Apex Court in Rajesh Jain Vs Ajay Singh14, wherein, the Hon'ble Apex Court held in paragraphs 37, 38, 40, 41, 54 and 62 as under:
"37. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that 'a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar15]. Therefore, mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.14
MANU/SC/1096 OF 2023 15 (2019)4 SCC 197 36
38. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further.
40. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non-
existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of 'preponderance of probabilities', similar to a defendant in a civil proceeding. [Rangappa vs. Mohan (AIR 2010 SC 1898)]
41. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be 37 contested. The words 'until the contrary is proved' occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar Exports Vs. Sharma Carpets (2009) 2 SCC 513]
54. Nothing significant has been elicited in the cross-examination of complainant to raise any suspicion in the case set up by the complainant. Other than some minor inconsistencies, the case of the complainant has been consistent throughout as can be noticed from a perusal of the complainant, demand notice and affidavit evidence. In fact, the signature on the cheque having not been disputed, and the presumption under Section 118 and 139 having taken effect, the complainant's case stood satisfied every ingredient necessary for sustaining a conviction under Section 138. The case of the defense was limited only to the issue as to whether the cheque had been issued in discharge of a debt/liability. The accused having miserably failed to discharge 38 his evidential burden, that fact will have to be taken to be proved by force of the presumption, without requiring anything more from the complainant.
62. The fundamental error in the approach lies in the fact that the High Court has questioned the want of evidence on part of the complainant in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque."
47. In view of the settled position of law, the burden is on the accused to rebut the presumption under Section 139 of NI Act. Even though the standard of proof required is only a preponderance of probabilities, the accused is not successful in probablising his defence. Under such circumstances, it is to be held that the complainant is successful in proving the guilt of the accused beyond reasonable doubt and therefore the accused is liable for conviction.
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48. The Trial Court and the First Appellate Court have considered the materials on record in a proper perspective and arrived at a right conclusion in convicting and sentencing the accused for the above said offence. I do not find any reason to interfere with the same. Hence, I answer the above point in the 'Negative' and proceed to pass the following:
ORDER
(i) The revision petition is dismissed.
(ii) The amount in deposit, if any, be transmitted to the Trial Court to appropriate the same towards fine and compensation.
Registry is directed to send back the Trial Court records along with copy of the order.
Sd/-
JUDGE bgn/-