Gujarat High Court
Sureshbhai Narsinhbhai Parsana vs State Of Gujarat & on 18 April, 2017
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/CR.MA/32287/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 32287 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
==========================================================
SURESHBHAI NARSINHBHAI PARSANA....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
==========================================================
Appearance:
MR K S CHANDRANI, ADVOCATE for the Applicant(s) No. 1
MS. PATHAK, ADDL. PUBLIC PROSECUTOR for the Respondent(s) No. 1
SUREN B PATEL, ADVOCATE for the Respondent(s) No. 2
==========================================================
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 18/04/2017
ORAL JUDGMENT
Page 1 of 11
HC-NIC Page 1 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT
1. Rule returnable forthwith. Ms. Pathak, the learned APP, waives service of notice of rule for and on behalf of the respondent No.1-State and Mr. Suren B. Patel, the learned counsel, waives service of notice of rule for and on behalf of the respondent No.2.
2. By this application under section 482 of the Code of Criminal Procedure, 1973, the applicant-original accused seeks to invoke the inherent powers of this Court praying for quashing of the proceedings of the Criminal Case No.6412 of 2015 filed in the court of the learned Chief Judicial Magistrate, Rajkot arising from a complaint filed under section 138 of the N.I. Act for the dishonour of the cheque.
3. Mr. Chandrani, the learned counsel appearing for the applicant invited my attention to the averments made in para-2 of the complaint. It appears that according to the averments made in the complaint, the applicant herein borrowed an amount of Rs.16,50,000/- from the complainant as he wanted to purchase a parcel of land. This amount was borrowed by the applicant from the complainant way back on 3rd November, 2008. To discharge this liability, the cheque in question dated 14th May, 2015 was drawn by the applicant in favour of the complainant, which came to be dishonoured on account of the funds insufficient.
4. Mr. Chandrani would submit that on the face of the Page 2 of 11 HC-NIC Page 2 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT record, the debt, being time barred, the same is not enforceable and, therefore, the complaint under section 138 of the N.I. Act should fail.
5. In support of his submission, strong reliance is placed on a decision of this Court in the case of J.Chitranjan And Company Proprietor- C D Shah Versus State Of Gujarat, 2017 (1) GCD 390. Mr. Chandrani relied on the observations made in paras-16.3 and 17.1 and 17.2, which reads as under;
"16.3 The complainant had produced computerized one page statement of account for the year 1993-94. The accounting commenced either from 1.4.1983 or 1.4.1986 as deposed by PW-1 - the complainant, and ended on 1.2.1994 i.e. the date of issuance of the cheque. No evidence as to how the amount due was carried forward from year to year between the disputed period, was adduced. The question, however, raised by the learned counsel for the petitioner is whether one page so-called statement of accounts that too, for the year 1993-94 only would constitute books of account. Reliance is placed upon Hiralal v. Badkulal (AIR 1953 SC 225) and Chandradhar Goswami v. Gauhati Bank [AIR 1967 SC 1058]. In Chandradhar Goswami (supra) after referring to section 34 of the Evidence Act, it was held that no person can be charged with liability merely on the basis of the entries in books of account, even where such books of accounts are kept in regular course of business. It was further held that there has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder. PW-1 in Criminal Revision Application No. 231 of 2009, namely, Anil G. Shah, inter alia, deposed that his father gave him cash of Rs. 6 lakh for being handed over to Shri C.D. Shah who was present in his house, as loan at the agreed rate of interest of 15% per annum which interest if not paid, was agreed to be accumulated in the accounts on 1.4.1983. In his further examination in chief, however, he said that the said Page 3 of 11 HC-NIC Page 3 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT amount was handed over to accused Shri C.D. Shah on 1.4.1986 and entry thereof was made in the books of account which was being maintained by his father G.L. Shah. He produced true copies of the computerized entries for the years 1992-93, 1993-94 and 1994-95. Admittedly, as is evident from his cross-examination the accounts for the period between 1986 and 1990 were not computerized and computerization was done since 1990. The witness also pleaded ignorance as to whether he was instructed by his father with regard to accounts at the time of lodging of the complaint. He deposed that the entries were recorded by his accountant Anil Parikh in computer. Indisputably Anil Parikh could not be examined as witness despite this court confirming the order of the court below ordering adducing additional evidence. From complainant's evidence, it is evident that the source of cash of Rs. 6 lakh was his father G.L. Shah. How the said cash amount of Rs. 6 lakh had come into possession of G.L. Shah is not explained by the complainant. No books of account, though claimed to have been maintained by G.L. Shah, were produced to establish the source of Rs. 6 lakh. No documentary evidence was adduced, though available, to establish the transaction of the interest and loan to accused C.D. Shah by Shri G.L. Shah. It appears from the cross-examination of the witness that complaint was lodged by him at the instance of his father Shri G.L. Shah. Instruction for lodgement of the complaint was also given by his father's advocate, although in his presence. Statutory notice to the accused was also issued under the instruction of his father, although in his presence.
17.1 The next question which falls for consideration of this court is with regard to the meaning to be assigned to the expression `legally enforceable debt or other liability' as contained in explanation to section 138 of the N.I. Act and whether the time barred debt is a legally enforceable debt. This issue may not detain this court for long in view of the decision in Sasseriyil Joseph v. Devassia (supra). The said legal position was reiterated by this court in Criminal Appeal No. 35 of 2008 decided on 14.12.2013 whereby the case under section 138 of the N.I. Act was dismissed on noticing the time barred debt. It must be held that for a time barred debt proceedings under section 138 of the N.I. Act are not maintainable. In the instant case, admittedly, loan was made in the year 1983/1986 as deposed by the complainant and in view of Page 4 of 11 HC-NIC Page 4 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT the limitation period prescribed in Article 19 of the Limitation Act for money payable for money lent being 3 years from the date the loan was made, the debt or other liability as indicated in explanation to section 138 of the N.I. Act was not legally enforceable beyond 1986/1989 and the proceedings under section 138 of the N.I. Act initiated in the year 1994 were not competent. No evidence was adduced to show that within the prescribed period of limitation debt was acknowledged by the accused in writing. The decision in A.V. Murthy (supra) is of no assistance to the complainant inasmuch as therein it was held that in view of presumption under section 118 and 138 of the N.I. Act; as also section 25 of the Indian Contract Act, the complaint could not have been thrown overboard at the threshold on the ground of limitation. Such a fact situation is not available in the instant case. The proposition of law indicated in Hindustan Apparel Industries v. Fair Deal Corporation (supra) which dealt with acknowledgement within the period of limitation also cannot be applied to the facts of the case inasmuch as according to the complainant, the cheque was issued in the year 1994 i.e. after expiry of the period of limitation and therefore, there was no question of acknowledgement of the debt within the meaning of section 18 of the Limitation Act. As noticed at paragraph No. 5.3 above, the Supreme Court in Sasseriyil Joseph v. Devassia (supra) had, in no uncertain terms, after perusing the decision of the Kerala High Court in Criminal Appeal No. 161 of 1994 and after finding that the language in section 138 of the N.I. Act was clear and unambiguous, confirmed the judgement of the Kerala High Court. In the said judgement of the Kerala High Court in paragraph No. 6 and 7, it is held as under:
"6. The only question that arises for consideration in this appeal is whether the respondent who issued the cheque in question in discharge of a time barred debt is liable under Section 138 of the Negotiable Instruments Act. In this case, the complainant had 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. According to the learned counsel for the appellant, the promise made by the accused to repay the time barred debt would come within Page 5 of 11 HC-NIC Page 5 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT the purview of Section 25(3) of the Indian Contract Act. No doubt, the promise to pay a time barred cheque (debt) is valid and enforceable, if it is made in writing and signed by the person to be charged therewith. But, it is clear from Section 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, wholly or in part, or any debt or other liability of the drawer to the payee. The explanation to Section 138 defines the expression debt or other liability as a legally enforceable debt or other liability. The explanation to Section 138 reads as under :-
Explanation :- For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
7. Thus, Section 138 is attracted only if the cheque is issued for the discharge of a legally enforceable debt or other liability. In this case, admittedly, the cheque in question was issued in discharge of a time barred debt. It cannot be said that a time barred debt is a legally enforceable debt. In this connection, it is also relevant to note the decision of the Andhra Pradesh High Court reported in Girdhari Lal Rathi v. P.T.V. Ramanujachari 1997 (2) Crimes 658. It has been held in that case that if a cheque is issued for a time barred debt and it is dishonoured, the accused cannot be convicted under Section 138 of the Negotiable Instruments Act simply on the ground that the debt was not legally recoverable. I am fully in agreement with the view expressed by the learned Judge in the decision referred to above. "
17.2 Thus, the above discussion would answer even the argument in relation to section 25(3) of the Indian Contract Act apart from the argument in relation to enforceability of the debt and maintainability of the complaint under section 138 of the N.I. Act. "
6. In the above referred case, the loan was obtained in the year 1983-86. The learned Single Judge of this Court took into consideration Article 19 of the Limitation Act. Article 19 of the Limitation Act provides for the money Page 6 of 11 HC-NIC Page 6 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT payable within three years from the date the loan was made. The proceedings under section 138 of the N.I. Act were initiated in the year 1994. In such circumstances, the Court, on the basis of the evidence on record, recorded a finding that the cheque was time barred. I take notice of the fact that the judgment referred to relied upon of this Court was in exercise of the revisional jurisdiction. After a full fledged trial, the accused was convicted for the offence under section 138 and his criminal appeal was also dismissed. He came before this Court invoking the revisional jurisdiction and succeeded on the basis of the evidence on record.
7. On the other hand, this application has been vehemently opposed by Mr. Patel, the learned counsel appearing for the complainant. According to Mr. Patel whether the cheque could be said to be time barred and enforceable or not being a mixed question of law and fact, the same cannot be gone into by this Court in the present proceedings. To fortify this submission, he seeks to rely on the decision of the Supreme Court in the case of S. Natrajan vs. Sama Dharman, reported in 2014 CJ (SC)
844. He relied on the observations made in paras- 5 to 8 of the decision, which are as under;
'5. The High Court referred to Section 25(3) of the Indian Contract Act, 1872 on which reliance was placed by the complainant and observed that with regard to payment of time barred debt, there must be a distinct promise to pay either whole or in part the debt; that the promise must be in writing either signed by the person concerned Page 7 of 11 HC-NIC Page 7 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT or by his duly appointed agent. The High Court then observed that unless a specific direction in the form of novation is created with regard to payment of the time barred debt, Section 25(2) of the Contract Act cannot be invoked. The High Court then went into the question whether issuance of cheque itself is a promise to pay time barred debt and referred to Sections 4 and 6 of the NI Act. After referring to certain judgments on the question of legally enforceable debt, the High Court stated that for the purpose of invoking Section 138 read with Section 142 of the NI Act, the cheque in question must be issued in respect of legally enforceable debt or other liability. The High Court then observed that since at the time of issuance of cheque i.e. on 1/2/2011, the alleged debt of the accused had become time barred, the proceedings deserve to be quashed.
6. 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.
7. In this connection, we may usefully refer to a judgment of this Court in A.V.Murthy v. B.S. Nagabasavanna, 2002 2 SCC 642 where the accused had alleged that the cheque issued by him in favour of the complainant in respect of sum advanced to the accused by the complainant four years ago was dishonoured by the Bank for the reasons account closed. The Magistrate had issued summons to the accused. The Sessions Court quashed the proceedings on the ground that the alleged debt was barred by limitation at the time of issuance of cheque and, therefore, there was no legally enforceable debt or liability against the accused under the Explanation to Section 138 of the NI Act and, therefore, the complaint was not maintainable. While dealing with the challenge to this order, this Court observed that under Section Page 8 of 11 HC-NIC Page 8 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT 118 of the NI Act, there is a presumption that until the contrary is proved, every negotiable was drawn for consideration. This Court further observed that Section 139 of the NI Act specifically notes that it shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the NI Act for discharge, in whole or in part, of any debt or other liability. This Court further observed that under Sub-section (3) of the Section 25 of the Contract Act, a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized 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, is a valid contract. Referring to the facts before it, this Court observed that the complainant therein had submitted his balance sheet, prepared for every year subsequent to the loan advanced by the complainant and had shown the amount as deposits from friends. This Court noticed that the relevant balance sheet is also produced in the Court. This Court observed that if the amount borrowed by the accused therein is shown in the balance sheet, it may amount to acknowledgment and the creditor might have a fresh period of limitation from the date on which the acknowledgment was made. After highlighting further facts of the case, this Court held that at this stage of proceedings, to say that the cheque drawn by the accused was in respect of a debt or liability, which was not legally enforceable, was clearly illegal and erroneous. In the circumstances, this court set aside the order passed by the High Court upholding the Sessions Courts order quashing the entire proceedings on the ground that the debt or liability is barred by limitation and, hence, the complaint was not maintainable. It is, therefore, clear that the contention urged by the Appellant herein can be examined only during trial since it involves examination of facts.
(8) In Rangappa v. Sri Mohan, 2010 11 SCC 441, the legal question before this Court pertained to the proper interpretation of Section 139 of the NI Page 9 of 11 HC-NIC Page 9 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT Act which shifts the burden of proof on to the accused in cheque bouncing cases. This Court observed that the presumption mandated by Section 139 of the NI Act includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. This Court further observed that Section 139 of the NI Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. This Court clarified that the reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. This Court, then, explained the manner in which this statutory presumption can be rebutted. Thus, in cheque bouncing cases, the initial presumption incorporated in Section 139 of the NI Act favours the complainant and the accused can rebut the said presumption and discharge the reverse onus by adducing evidence. "
8. Having heard the learned counsel appearing for the parties and having considered the materials on record, I am of the view that the issue as regards the cheque being time barred should be gone into by the Trial Court and the same should be decided on the basis of the evidence that may be led by the parties. The law is very clear that if the cheque is found to be time barred, the complaint under section 138 of the N.I. Act shall fail. This aspect shall be borne in mind by the Trial Court while appreciating the evidence on record.
9. This application, therefore, fails and is hereby rejected. Notice is discharged. The ad-interim order, earlier granted, stands vacated.
Page 10 of 11 HC-NIC Page 10 of 11 Created On Wed Aug 16 01:36:16 IST 2017 R/CR.MA/32287/2016 JUDGMENT (J.B.PARDIWALA, J.) Vahid Page 11 of 11 HC-NIC Page 11 of 11 Created On Wed Aug 16 01:36:16 IST 2017