Himachal Pradesh High Court
Reserved On: 25.6.2025 vs Rajan Kumar Kanthwal on 15 July, 2025
2025:HHC:22697-DB IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Appeal No. 116 of 2011 .
Reserved on: 25.6.2025 Date of Decision: 15.07.2025.
Social Leasing (India) Ltd. ...Appellant
Versus
Rajan Kumar Kanthwal
Coram
r to ...Respondent
Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 Yes.
For the Appellant : Mr. Karan Singh Kanwar, Advocate.
For the Respondent : Ms. Devyani Sharma, Senior
Advocate, with M/s Shivam
Sharma and Srishti Negi,
Advocates.
Rakesh Kainthla, Judge
The present appeal is directed against the judgment dated 1.10.2010, passed by learned Judicial Magistrate First Class, Court No.2, Paonta Sahib, District Sirmour, H.P. (learned Trial Court), vide which the complaint filed by the appellant 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.
::: Downloaded on - 15/07/2025 21:21:08 :::CIS 22025:HHC:22697-DB (complainant before learned Trial Court) for the commission of an offence punishable under Section 138 of the Negotiable .
Instruments Act, 1881 (NI Act) was dismissed. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience.)
2. Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the NI Act. It was asserted that the complainant is running a Social Leasing (India) Ltd. and Social Finance Company at Paonta Sahib. The accused borrowed a sum of ₹2,09,000/- on 10.4.1996 from the complainant-company. He agreed to repay the amount in instalments. He defaulted in the payment of the instalments, and an amount of ₹3,73,000/- became due. He issued a cheque of ₹3,73,000/- on 18.10.1999 to discharge his liability. The complainant presented the cheque to the Bank, but it was dishonoured with an endorsement 'account closed'. The complainant issued a legal notice to the accused asking him to repay the money, but the accused failed to do so. Hence, the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 3 2025:HHC:22697-DB complaint was filed before the learned Trial Court to take action as per law.
.
3. The learned Trial Court recorded the preliminary evidence and found sufficient reasons to summon the accused.
When the accused appeared before the Court, notice of accusation was put to him, to which he pleaded not guilty and claimed to be tried.
4. The complainant examined B.D. Kanthwal (CW1), G.D. Sharma (CW2), and S.K. Lohia (CW3) to prove its case.
5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had borrowed ₹2,09,000/- but stated that the amount was borrowed from Social Financing Company. He denied the rest of the complainant's case. He stated that he had deposited ₹70,000/- and ₹27,000/- in two instalments with Social Financing Company. He had also paid margin money of ₹50,000/-. His vehicle was repossessed by the complainant, and he had repaid the whole of the amount. He stated that he wanted to lead defence evidence, but did not produce any evidence, and made a statement to this effect on 19.1.2010.
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6. Learned Trial Court held that the complainant-
company admitted that Social Leasing (India) Ltd. and Social .
Financing Company were two different Companies which were registered separately. This corroborated the version of the accused that he had taken the loan from Social Financing Company and not from the complainant-Company. The complainant-Company failed to produce any document to establish that the loan was advanced by Social Leasing India Limited. The loan was taken on 10.4.1996, and the cheque was issued on 18.10.1999 after the expiry of the period of limitation.
Therefore, the cheque was not issued in discharge of a legally enforceable debt/liability. The acknowledgement was not proved to contain the signatures of the accused. The date of issuance of the notice was not mentioned in the complaint. All the ingredients of Section 138 of the NI Act were not satisfied. Thus, the complaint was dismissed.
7. Being aggrieved from the judgment passed by the learned Trial Court, the complainant-Company filed the present appeal, asserting that the learned Trial Court erred in appreciating the evidence. The issuance of the cheque was not disputed. The accused also admitted that he had taken a loan of ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 5 2025:HHC:22697-DB ₹2,09,000/-. A presumption arises in these circumstances that the cheque was issued to discharge the legal liability. The cheque .
was dishonoured with an endorsement 'account closed', and this attracted the provisions of Section 138 of the NI Act. It was wrongly held that the issuance of the cheque for the repayment of time-barred debt does not attract the provisions of Section 138 of the NI Act. Hence, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside.
8. I have heard Mr. Karan Singh Kanwar, learned counsel for the appellant/complainant, Ms. Divyani Sharma, learned Senior Counsel, assisted by M/s Shivam Sharma and Shrishti Negi, learned counsel for the respondent/accused.
9. Mr. Karan Singh Kanwar, learned counsel for the appellant/complainant, submitted that the learned Trial Court erred in appreciating the material on record. It was duly proved by the statement of the complainant and his witnesses that the accused had issued a cheque in discharge of his legal liability.
Learned Trial Court erred in holding that the cheque issued for the repayment of a time-barred debt will not attract the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 6 2025:HHC:22697-DB provisions of Section 138 of the NI Act. There is a presumption that the cheque was issued for consideration in discharge of the .
legal liability, and the burden is upon the accused to rebut this presumption; however, the accused failed to produce any evidence to rebut the presumption. Learned Trial Court erred in holding that the complainant-Company was required to prove the documents showing the advancement of the loan. There is a presumption under Section 27 of the General Clauses Act that a letter sent to the correct address is deemed to be served, and there was no material to rebut this presumption. All the ingredients of the commission of an offence punishable under Section 138 of the NI Act were duly satisfied, and the learned Trial Court erred in dismissing the complaint. Therefore, he prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. He relied upon the judgment of the Delhi High Court in Rajeev Kumar v. State NCT Delhi 2024:DHC:7074 and the Uttarakhand High Court in M/s Sharma Associates Vs. State of Uttar Pradesh and another 2023:UHC:3107 in support of his submission.
10. Ms. Devyani Sharma, learned Senior Counsel for the respondent/accused, supported the judgment passed by the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 7 2025:HHC:22697-DB learned Trial Court. She submitted that a cheque was issued for repayment of time-barred debt, which does not attract the .
provisions of Section 138 of the NI Act, because the cheque has to be issued to discharge the legally enforceable debt or other liability. A time-barred debt is not legally enforceable. It was admitted by the Branch Manager of the complainant-Company in his cross-examination that Social Leasing (India) Ltd. and Social Finance Company are two different Companies. The accused specifically stated that he had taken a loan from the Social Financing Company. This witness admitted that Social Finance Company was banned by the RBI in 1999. Therefore, the payment made to the accused by the complainant was required to be supported by producing the documents. No such documents were produced, and the learned Trial Court had rightly refused to rely upon the complainant's version.
Therefore, the learned Trial Court had taken a reasonable view while deciding the matter, and this Court should not interfere with the reasonable view of the learned Trial Court while deciding the appeal against acquittal. Hence, she prayed that the present appeal be dismissed. She relied upon the following judgments in support of her submission: -
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(i) G. Veeresham Vs. S. Shiva Shankar & Ann. 2007 SCC OnLine AP 975;
.
(ii) Raman Finance Corporation Vs. Harmeet Singh 2007 SCC OnLine P&H 1646;
(iii) Girdhari Lal Rathi VS. PTV Ramanujachari and another, 1997(1)ALT (CRI) 509;
(iv) Zaheeda Kazi Vs. Sharina Ashraff Khan 2007 SCC OnLine Bom 1453;
(v) Shriram Transport Finance Co. Ltd. Vs. State of Gujarat and another, 2024:GUJHC:70578;
(vi) Muralilal Birdhichand Rawat, Partner of the Ratnamani Foods Vs. State of Gujarat & Anr. R/Criminal Misc.
Application (for Leave to Appeal) No. 2764 of 2021;
(vii) Rajaram through LRs Vs. Maruthachalam (since deceased) 2023 SCC OnLine SC 48;
(viii) A. Yesubabu Vs. D. Appala Swami & Anr. 2003 (3) APLJ 371 (HC);
(ix) Sasseriyil Joseph Vs. Devassia 2001CRILJ24;
(x) Vijay Polymers Pvt. Ltd. and Anr. Vs. Vinnay Aggarwal 2009(110) DRJ 592;
(xi) Kiran Finance Company Vs. H. Sukhdev Kishan, Cr. Appeal No. 181/SBA of 2003, decided on 3.10.2005;
(xii) Shri Sujies Benefits Fund Ltd. Vs. Sultan 2016 SCC OnLine Mad 8371;
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(xiii) S. Kamatchi & Others Vs. M/s Arkaa Medicament 2009 (3) MWN (Cr.) DCC 31;
.
(xiv) Om Prakash Vs. Manoj Kumar and another 2024 SCC OnLine HP 2595;
(xv) Prakash Chimanlal Sheth vs. T. Ramalingam Nadar and others 2022 SCC OnLine Bom 10161; and (xvi) Atma Ram and others Vs. State of Rajasthan (2019) 20 SCC 481;
11. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
12. The present appeal has been filed against a judgment of acquittal. It was laid down by the Hon'ble Supreme Court in Surendra Singh v. State of Uttarakhand, 2025 SCC OnLine SC 176:
(2025) 5 SCC 433 that the Court can interfere with a judgment of acquittal if it is patently perverse, is based on misreading of evidence, omission to consider the material evidence and no reasonable person would have recorded the acquittal based on the evidence led before the learned Trial Court. It was observed:
"11. Recently, in the case of Babu Sahebagouda Rudragoudar v. State of Karnataka 2024 SCC OnLine SC 4035, a Bench of this Court to which one of us was a Member (B.R. Gavai, J.) had an occasion to consider the legal position with regard to the scope of interference in an appeal against acquittal. It was observed thus:::: Downloaded on - 15/07/2025 21:21:08 :::CIS 10
2025:HHC:22697-DB "38. First of all, we would like to reiterate the principles laid down by this Court governing the scope of interference by the High Court in an appeal filed by the State for challenging the acquittal of the accused .
recorded by the trial court.
39. This Court in Rajesh Prasad v. State of Bihar [Rajesh Prasad v. State of Bihar, (2022) 3 SCC 471: (2022) 2 SCC (Cri) 31] encapsulated the legal position covering the field after considering various earlier judgments and held as below: (SCC pp. 482-83, para 29) "29. After referring to a catena of judgments, this Court culled out the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal in the following words: (Chandrappa case [Chandrappa v. State of Karnataka, (2007) 4 SCC 415: (2007) 2 SCC (Cri) 325], SCC p. 432, para 42) '42. From the above decisions, in our considered view, the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal emerge:
(1) An appellate court has full power to review, reappreciate, and reconsider the evidence upon which the order of acquittal is founded.
(2) The Criminal Procedure Code, 1973 puts no limitation, restriction or condition on the exercise of such power and an appellate court, on the evidence before it, may reach its own conclusion, both on questions of fact and law.
(3) Various expressions, such as "substantial and compelling reasons", "good and sufficient grounds", "very strong circumstances", "distorted conclusions", "glaring mistakes", etc., are not intended to ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 11 2025:HHC:22697-DB curtail the extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of "flourishes of language" to emphasise the .
reluctance of an appellate court to interfere with an acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion.
(4) An appellate court, however, must bear in mind that in case of acquittal, there is a double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused, having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed, and strengthened by the trial court.
(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court."
40. Further, in H.D. Sundara v. State of Karnataka [H.D. Sundara v. State of Karnataka, (2023) 9 SCC 581: (2023) 3 SCC (Cri) 748] this Court summarised the principles governing the exercise of appellate jurisdiction while dealing with an appeal against acquittal under Section 378CrPC as follows: (SCC p. 584, para 8) "8. ... 8.1. The acquittal of the accused further strengthens the presumption of innocence. 8.2. The appellate court, while hearing an appeal against acquittal, is entitled to reappreciate the oral and documentary evidence;
::: Downloaded on - 15/07/2025 21:21:08 :::CIS 122025:HHC:22697-DB 8.3. The appellate court, while deciding an appeal against acquittal, after reappreciating the evidence, is required to consider whether the view taken by the trial court is a possible view which could have .
been taken on the basis of the evidence on record; 8.4. If the view taken is a possible view, the appellate court cannot overturn the order of acquittal on the ground that another view was also possible; and 8.5. The appellate court can interfere with the order of acquittal only if it comes to a finding that the only conclusion which can be recorded on the basis of the evidence on record was that the guilt of the accused was proved beyond a reasonable doubt and no other conclusion was possible."
41. Thus, it is beyond the pale of doubt that the scope of interference by an appellate court for reversing the judgment of acquittal recorded by the trial court in favour of the accused has to be exercised within the four corners of the following principles:
41.1. That the judgment of acquittal suffers from patent perversity;
41.2. That the same is based on a misreading/omission to consider material evidence on record; and 41.3. That no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record."
12. It could thus be seen that it is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record."::: Downloaded on - 15/07/2025 21:21:08 :::CIS 13
2025:HHC:22697-DB
13. A similar view was taken in Bhupatbhai Bachubhai Chavda v. State of Gujarat, 2024 SCC OnLine SC 523, wherein it was .
observed: -
"6. It is true that while deciding an appeal against acquittal, the Appellate Court has to reappreciate the evidence. After re-appreciating the evidence, the first question that needs to be answered by the Appellate Court is whether the view taken by the Trial Court was a plausible view that could have been taken based on the evidence on record. Perusal of the impugned judgment of the High Court shows that this question has not been adverted to. The Appellate Court can interfere with the order of acquittal only if it is satisfied after reappreciating the evidence that the only possible conclusion was that the guilt of the accused had been established beyond a reasonable doubt. The Appellate Court cannot overturn the order of acquittal only on the ground that another view is possible. In other words, the judgment of acquittal must be found to be perverse. Unless the Appellate Court records such a finding, no interference can be made with the order of acquittal. The High Court has ignored the well-settled principle that an order of acquittal further strengthens the presumption of innocence of the accused. After having perused the judgment, we find that the High Court has not addressed itself to the main question."
14. The present appeal has to be decided as per the parameters laid down by the Hon'ble Supreme Court.
15. It was specifically mentioned in the complaint that the accused borrowed a sum of ₹2,09,000/- on 10.4.1996 from the complainant-Company, and the cheque was issued on 18.10.1999 towards the repayment of the loan. Thus, the cheque ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 14 2025:HHC:22697-DB was issued beyond the period of three years from the date of advancement of the loan. The period of limitation for the .
recovery of the money lent is three years. Thus, the debt had become time-barred on the date of the issuance of the cheque.
16. Section 138 of the NI Act reads as under: -
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b)the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 15 2025:HHC:22697-DB
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
.
Explanation. --For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.]
17. It is apparent from the explanation that the cheque has to be issued for repayment towards the legally enforceable debt or other liability. An amount barred by limitation is not a legally enforceable debt, and a cheque issued towards the repayment of such a loan will not fall within the definition of Section 138 of the NI Act.
18. It was laid down in Girdhari Lal Rath v. P.T.V.
Ramanujachari, (1998) 94 Comp Cas 139 that when the loan was taken in the year 1995 and the cheque was issued in 1999, the cheque was issued for a debt which had become barred by limitation and it does not fall within the purview of Section 138 of the NI Act. It was observed: -
"7. The alleged loan was advanced in the year 1985, and the cheque was issued in the year 1990. By the time the cheque was issued, the debt appears to have been barred by limitation because no acknowledgement is alleged to have been obtained by the appellant from the first respondent-accused before expiry of three years from the date of the loan. Thus, it is crystal clear that the debt was not legally enforceable at the time of issuance of the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 16 2025:HHC:22697-DB cheque, and therefore, vide explanation to Section 138 of the Negotiable Instruments Act, which reads as under:
"Explanation. - Until the debt is legally .
recoverable, the drawer of the cheque cannot be fastened with the liability under Section 138 of the Act."
There appears to be no force in the contention of the learned Counsel for the appellant that by issuance of the cheque, the limitation for realising the loan amount was extended, because at the time of issuance of the cheque, the debt should be a legally recoverable debt. In case 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."
19. Bombay High Court also took a similar view in Zaheeda Kazi v. Sharina Ashraff Khan, 2007 SCC OnLine Bom 1453:
(2007) 3 BC 767: (2007) 2 CCC 337 and held at page 769: -
8. The first two contentions raised by the learned Senior Counsel are covered by two Judgments of this Court. A submission similar to the first was rejected by this Court in the Order dated 15.6.2006, Shri Raymond Morenhas v. Shri Rajanna S. Kothur, Criminal Miscellaneous Application No. 223/2006, by observing that:
Considering the evidence of the complainant, the view held by the learned J.M.F.C. in acquitting the accused could not be faulted. The learned. J.M.F.C., in coming to the said conclusion, had referred to the judgment of this Court in the case of Smt. Ashwini Satish Bhat v. Shri Jeevan Divaka Lolienkar, 1999 (1) Goa L.T. 408, which view has again been subsequently followed by this Court in an unreported Judgment dated 20.4.2006, in Criminal Revision Application No. 3/2006, in the case of Narendra V. Kanekar v. The Bardez Taluka Co-op Housing ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 17 2025:HHC:22697-DB Mortgage Society Ltd. At present, there is preponderance of judicial opinion in support of the view that if only a cheque is issued in discharge of legally enforceable debt or other liability, that Section 138 of the Act is attracted .
but, if the cheque is issued for discharge of time barred debt and it is dishonoured, the accused cannot be convicted under Section 138 of the Act."
9. A submission similar to the second was rejected by this Court vide Judgment dated 20.4.2006 in Narendra V. Kanekar v. The Bardez Taluka Co-op. Housing Mortgage Society Ltd., Criminal Revision Application No. 3/2006, observing that:
"Mere giving a cheque, without anything more, will not revive a barred debt, because a cheque has to be given, as contemplated by the explanation to Section 138 of the Act, in discharge of a legally enforceable debt."
20. Punjab and Haryana High Court also held in Manjit Kaur v. Vanita, 2009 SCC OnLine P&H 10337: (2010) 3 RCR (Civil) 693: (2010) 3 RCR (Cri) 574 that a cheque issued to discharge a time barred debt does not attract the provisions of section 138 of the NI Act. It was observed at page 695:
"8 ...It emanates from this evidence that when the alleged cheque Ex. P.1 was issued at that point in time, a period of more than four years had already elapsed since the day of advancement of the disputed amount as a loan. In re:
Ashwini Satish Bhat (Mrs.) v. Jeevan Divakar Lolienkar, 2000 (1) R.C.R. (Rent) 214: 2000 (1) Recent Criminal Reports (Criminal) 829, it has been observed as under: -- "The ruling upon which reliance has been placed by the learned Advocate for the respondent is applicable on all fours. In that case loan was advanced in the year 1985, and the cheque was issued in the year 1990. By the time the cheque was issued, the debt was barred by ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 18 2025:HHC:22697-DB limitation because no acknowledgement was obtained before the expiry of 3 years from the date of the loan. In these circumstances, it was held that the debt was not legally enforceable at the time of issuance of the .
cheque and the accused could not be punished under section 138 of the said Act. In the light of the Explanation to the said section, it was further held therein that in case a cheque is issued for time-barred debt and it is dishonoured, the accused cannot be convicted under Section 138 on the ground that the said debt was not legally recoverable."
9. Adverting to the facts of the instant case, the cheque was issued on 28.6.2003. On reckoning, it works out that the loan was advanced somewhere in June 1999. A meticulous perusal of the evidence on record would reveal that the appellant has not produced any document or other evidence revealing that the accused-respondent had acknowledged the debt within three years from the date of the loan. Thus, by the time the cheque was issued, the debt became barred by limitation because no acknowledgement was obtained before the expiry of three years from the date of the loan. Section 18 of the Limitation Act, 1963 deals with the theory underlying the doctrine of acknowledgement. The true principle underlying an acknowledgement is that it merely renews the liability and gives the creditor or claimant a fresh period of limitation according to the nature of the liability which exists at the date of the acknowledgement. An acknowledgement cannot be regarded as evidence of the debt, but an acknowledgement that a person owes money to another, a specified person, is good evidence of his owing money to another. The dishonoured cheque Ex. P1 cannot be treated as an acknowledgement under Section 18 of the Limitation Act, since the acknowledgement should be made before the period of limitation is over, and it should be in writing. Thus, it cannot be said that the appellant has been able to prove that Ex. P1 was in relation to a legally enforceable debt or liability in law, as ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 19 2025:HHC:22697-DB the same was admittedly issued after more than three years of the advancement of the alleged amount as a loan. So, if the matter is viewed in the background of the observations rendered in re: Ashwini Satish Bhat .
(Mrs.) (supra), it turns out that the accused-respondent had issued the cheque in 2003 when the debt had already become time-barred. The acknowledgement of the alleged amount in 2003 was not a valid acknowledgement under Section 18 of the Limitation Act, and consequently, it was not a legally enforceable debt.
21. Gauhati High Court held in Amulya Patowary v.
Amarendra Choudhury, 2013 SCC OnLine Gau 519: (2014) 5 Gau LR 28: (2014) 1 BC 705 that the cheque for issuing time-barred debt does not attract the provisions of Section 138 of the NI Act. It was observed:
"37. A careful-reading of section-138 shows that though section 138 makes/it an offence if a chequers dishonoured for insufficiency of fund by the bank provided that the cheque has been issued for discharge, in whole or in part, of the debt or other liability, the Explanation to section 138 makes it abundantly clear that the expression "debt or other liability", appearing in the body of section 138, means "a legally enforceable debt or other liability".
38. To put it a little differently, in order to attract the penal provisions of section 138, the cheque, which is dishonoured for "insufficiency of fund" ought to have been issued for discharge, in whole, or in part, of a "legally enforceable debt or other liability". Resultantly, therefore, the penal provisions of section 138 would not be attracted if a cheque is issued for; discharge, in whole or in part, of a debt or liability, which has ceased to be legally enforceable.
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39. What emerges from the above discussion is that dishonour of a cheque by the banker for insufficiency of fund would not necessarily result into an offence punishable by section 138 if the cheque was issued for .
discharge, in whole or in part, of a debt or other liability; which was not enforceable in law. However, dishonour of a cheque would become an offence punishable under section 138 if the cheque, which is dishonoured for insufficiency of funds by the bank, had been issued for the discharge, in whole or in part, of a debt or other liability, which was legally enforceable."
22. It was further held that the issuance of the cheque does not attract the provisions of section 25 (3) of the Indian Contract Act or Section 18 of the Limitation Act. It was observed:
"20. There can be no doubt that, in the present case, since the loan was advanced on 21.3.2003, the right to recover the loan stood barred by limitation on 20.3.2006 and, hence, on 3.7.2006, when the accused-respondent issued the cheque, in question, there was no enforceable debt or liability on the part of the accused.
21. The question, however, is, as to when a debt or liability becomes time-barred? Whether it is possible for a person who is under debt or liability to enter into a contract with the person to whom he had the debt or liability to pay, so that he would make the payment of his debt or liability?
22. My quest for an answer to the above question brings me to section 25 of the Contract Act, 1872. Clause (3) of section 25, which, being relevant in the present appeal, is reproduced below:
"25. An 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 ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 21 2025:HHC:22697-DB 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 a 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 a promise, made in writing and signed by r 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."
23. From a cautious and careful reading of the provisions of section 25 of the Contract Act, 1872, as a whole, and, particularly, clause (3) thereof, it becomes clear that the law does not prohibit a person to make a promise, in writing and signed by him, to pay wholly, or in part, a debt, which his creditor might have enforced payment of, but for the law of limitation in instituting a suit for recovery of money, meaning thereby that even if a debt becomes time-barred and a suit cannot be instituted for recovery of such a debt by the creditor, it does not take away the right of the debtor to make a promise, in writing and signed by him, to make payment of is debt. When such a promise is made, it becomes an agreement, which, being valid in law, turns into an enforceable contract.
24. The contract, so formed, can, therefore, be enforced. Considered in this light, it becomes clear that when a debtor, whose debt or liability becomes time-barred, promises, in writing and signs the same, an enforceable ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 22 2025:HHC:22697-DB contract comes to be created, in respect of the time- barred debt or liability, and, in such a case, the promisor can be forced to make good his promise.
.
25. Logically extended, what the above discussion shows is that the accused-respondent, in the present case, was free to give it, in writing, and signed by him, that notwithstanding the fact that his debt had become time barred and, was not enforceable, because of, expiry of the period of limitation for recovery of the money, which he had received as loan, he would, nonetheless, make payment of his debt. With the promise, so made, had the accused-respondent issued a cheque for the discharge, in whole or in part, of his debt and had a such a cheque been dishonourned on the ground of insufficiency of fund in the account of the accused-respondent, the complainant would have derived the right to give requisite notice to the complainant-appellant demanding money covered by the cheque and, on the failure of the accused-respondent to make payment, the complainant-appellant would have been entitled to prosecute the accused-respondent under section 138 of the NI Act and such a prosecution would have been legally permissible and sustainable.
26. It has been contended by Mr. Purkayastha, learned counsel, that since the cheque, in question, has been issued by the respondent, it is an acknowledgement of the respondent's debt and even if the debt or liability had stood time-barred, the cheque, in question, being an acknowledgement of debt, creates an enforceable contract within the meaning of section 25(3) of the Contract Act, 1872. It is also the contention of Mr. Purkayastha, learned counsel, that the cheque in question has the effect of extending the period of enforcement of the debt or liability, which had been, originally, created by virtue of the loan, taken on 21.3.2003, by the accused- respondent.
27. In order to correctly appreciate the submissions made on behalf of the appellant, let me point out that a cheque, as defined by section 6 of the NI Act, means, in substance, ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 23 2025:HHC:22697-DB a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
28. From a bare reading of the definition of the cheque, .
what clearly transpires is that it is a bill of exchange, which is drawn on a specified bank, making the bearer of the cheque entitled to receive. On demand, payment of the sum of money mentioned in the cheque. A cheque can, at best, be construed to mean an acknowledgement, in writing, of a debtor's liability/which may or may not have remained legally enforceable.
29. Coupled with the above, section 18 of the Limitation Act, 1963, which embodies the provisions, as regards extension of liability, lays down as follows:
"18. Effect of acknowledgement in writing.-- (1) Where before the expiration of the prescribed period for a suit or application in respect or any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derived his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2), Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.- For the purposes of this section,--
(a) an acknowledgement may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 24 2025:HHC:22697-DB to a person other than a person entitled to the property or night;
(b) the word "signed" means signed either .
personally or by an agent duly authorized in this behalf; and
(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right."
30. From a bare reading of section 18 of the Limitation Act, 1963, it becomes clear that ran acknowledgement of liability would mean extension of liability if the acknowledgement is made in writing and signed by the person, who is under the liability, provided that, as envisaged by section 18, the acknowledgement, in writing, is made before the period, prescribed for institution of suit (or making of application, as the case may be) expires. It is, therefore, clear that if there is an acknowledgement, in writing, of any debt or liability by a person, such acknowledgement would have the effect of extending the period of limitation for institution of suit or making of application, as the case may be, provided that the acknowledgement is made, as contemplated by section 18, before the expiry of the period of limitation meant for institution of the suit or for making of application; as the case may be. Conversely put, if an acknowledgement of liability is given, in writing, after expiry of the period of limitation, as contemplated by section 18, such acknowledgement would not have the effect of extending the period of limitation.
31. Reverting to section 25 of the Contract Act, 1872, which Mr. Purkayastha refers to, and relies upon, it may be noted that any agreement made without consideration is void unless, in the light of section 25(3), it is a promise made in writing and signed by the person to be charged therewith or by his agent generally and specially authorized in that behalf to pay, wholly or in part, the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 25 2025:HHC:22697-DB debt of which the creditor might have enforced payment, but for the law for the limitation of suits.
32. In other, words, in order to take recourse to section .
25(3), one has to show that a person, who would have been liable to repay a debt, but because of the period of limitation prescribed for institution of the suit, has made a promise, in writing, and signed the same. If such a 'promise', as contemplated by section 25(3), is made, it would make the 'promise' a contract and would, therefore, be legally enforceable.
33. It is, thus, clear that unless there is 'a promise' made, in writing, and signed by the person to be charged therewith, the writing would not lead to an enforceable contract. A cheque can, by no means, be treated as a 'promise' made, in writing, to make payment of a debt, which is, otherwise, not enforceable by law; more so, in the facts of the present case, wherein the recovery of the debt was already barred by the prescribed period of limitation."
23. It was held that Section 139 of the NI Act provides for the presumption of debt but not a legally enforceable debt. It was observed:
"42. While considering the provisions of section 138 vis- a-vis 139 of the NI Act, it is of utmost importance to note that in the absence of the Explanation of 'debt' or 'liability', as given in the Act, the expression, 'debt' or "other liability" would have, meant any debt or liability, irrespective of the fact as to whether the debt or liability was legally enforceable, or not the Explanation to section 138 has, however, changed the entire complexion of section 138 By making if crystal clear that, the expression, 'debt' or Pliability, appearing in section 138, shall mean a legally enforceable debt or other liability; This Explanation to section 138 is however, to be read for the purpose of section 138 alone and not for section 139 ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 26 2025:HHC:22697-DB inasmuch as the Explanation aforementioned has kept, itself confined to section 138 by laying down, if I may reiterate, thus, "For, the purposes, of this section, "debt or other liability" means a legally enforceable debt or;
.
other liability". In other words, the Explanation to section 138 has to be read for the purpose of section 138 alone.
43. When, therefore, section 139 is read de hors the Explanation to section 138, it logically follows that the presumption/which-section 139 contemplates, means merely a presumption that the holder of the cheque holds the cheque for discharge, in whole or in part, of any debt or liability and that the debt or liability, so/contemplated; may or may not be enforceable in law. If the debt or liability is found to be not enforceable, in law, section 138, in the light of its Explanation, would not apply.
xxxx
46. In the case at hand, too the issuance of the cheque, dated 3.7.2006, which forms the subject-matter of controversy, raises a presumption that the respondent issued the said cheque, in question, for the discharge, in whole or in part, of a debt or liability; but the said cheque did not give rise to any presumption that there was an existing or legally recoverable debt or liability.
47. Besides, therefore, proving that the cheque in question was issued by the respondent, the appellant ought also to have had also proved that the said cheque was issued in respect of an existing or legally enforceable or recoverable debt. Later part of the requirement of section 138 of the NI Act has not, however, been proved or satisfied by the appellant.
48. Because of the failure of the appellant to prove that the debt or liability, which the respondent sought to discharge, was a legally enforceable debt or liability, no offence, under section 138 of the N1 Act, could have been said to have been made out. The learned appellate court was, therefore, wholly correct in pointing out that when the debt or liability, in question, was time-barred and not ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 27 2025:HHC:22697-DB recoverable by institution of appropriate suit, the mere dishonour of the cheque, for insufficiency of fund, would not give rise to the commission of an offence punishable under section 138 if the debt or liability, which is sought .
to be discharged, in whole or in part, is not legally enforceable.
xxxx
53. What crystallises from the above discussion is that when the cheque, dated 3.7.2006, was issued, the debt or liability, which the respondent had incurred, already stood barred by limitation. Since the debt or liability had already stood barred by limitation, the debt or liability no longer remained enforceable in law, particularly when there was no acknowledgement, in writing, of the debt or liability before the expiry of the prescribed period of limitation.
54. Section 25(3) of the Contract Act could have come into play had there been a promise made, in writing, and signed by the respondent, to make payment of his time-
barred debt or liability. There was no such promise made. Section 25(3), too, was, therefore, not invokeable to the facts of the present case.
55. Consequently, the cheque, dated 3.7.2006, which came to be dishonoured, did not give rise to an offence under section 138 of the NI Act inasmuch as the cheque, which was dishonoured, had not been issued in respect of any existing or enforceable debt or liability. The conclusion, therefore, reached by the learned lower appellate court, that in respect of time-barred debt, when the cheque in question; had been issued and when such a cheque had come to be dishonored, though for insufficiency of fund, no offence could have been said to have been committed by the respondent under section 138 of the NL Act."
24. Delhi High Court also held in Jage Ram Karan Singh v.
State, 2019 SCC OnLine Del 9486 that the acknowledgement has ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 28 2025:HHC:22697-DB to be made within the limitation and the cheque issued after the limitation will not revive the same. It was observed:
.
"24. At this juncture, it would also be appropriate to take note of Section 18 of the Limitation Act, 1963, which deals with the effect of acknowledgement, which reads as under: --
"18. Effect of acknowledgement in writing.
(1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such r property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.
Explanation. --For the purposes of this section, --
(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,
(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 29 2025:HHC:22697-DB
(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right."
.
25. A bare perusal of the aforesaid provision clearly goes on to show that for analysing the limitation of a liability beyond a period of three years, the acknowledgement, if any, must be there before the period of limitation is over, which is not the case in hand.
26. Further, it has been held time and again by the Apex Court as well as by the various High Courts that mere giving of a cheque, without anything more, will not revive a time-barred debt, because cheque has to be given, as contemplated by the explanatory, in discharge of a legally enforceable debt. In this regard, it may be relevant to take note of the order dated 10.9.2001 relied upon by the learned counsel for the respondent No. 2 titled Sasseriyil Joseph v. Devassia (supra) wherein, in a similar case, it has been held by the Supreme Court that, a cheque which has been issued by the accused for a due which was barred by limitation, the penal provision under Section 138 of the NI Act is not attracted. The relevant observations made in this regard in the aforesaid judgment are reproduced hereunder: --
"We have heard learned counsel for the petitioner. We have perused the judgment of the High Court of Kerala in Criminal Appeal No. 161 of 1994 confirming the judgment/order of acquittal passed by the Addl. Sessions Judge, Thalassery in Criminal Appeal No. 212 of 1992 holding inter alia that the cheque in question, having been issued by the accused for a due which was barred by limitation, the penal provision under Section 138 of the Negotiable Instruments Act is not attracted in the case. On the facts of the case as available on the records and the clear and unambiguous provision in the explanation to Section 138 of the Negotiable Instruments Act, the judgment of the lower appellate Court as confirmed by the High Court is unassailed.::: Downloaded on - 15/07/2025 21:21:08 :::CIS 30
2025:HHC:22697-DB Therefore, the special leave petition is dismissed."
27. In Vijay Polymers Pvt. Ltd. v. Vinnay Aggarwal (supra), relying upon the judgment of the Supreme Court .
in Sasseriyil Joseph (supra), it has been observed that, cheques issued for a time-barred debt would not fall within the definition of 'legally enforceable debt', which is the essential requirement for a complaint under Section 138 of the NI Act; the extended meaning of debt or liability has been explained in the Explanation to the Section which means a legally enforceable debt or liability.
28. Useful reference may also be made to the case titled Prajan Kumar Jain v. Ravi Malhotra, 2009 SCC OnLine Del 3368, wherein, like the case in hand, it has been held by another Coordinate Bench of this Court that, an acknowledgment to be encompassed within the ambit of Section 18 of the Limitation Act has to be an acknowledgment in writing as also within the prescribed period of limitation. These are the twin requirements which have to be fulfilled in order to be a valid acknowledgement under Section 18 of the Limitation Act. Relevant portion of the aforesaid judgment is reproduced hereunder:
"10.... This acknowledgement, even as per the complaint, was much after the statutory period of three years, which is the prescribed period of limitation for the recovery of an outstanding amount. An acknowledgement to be encompassed within the ambit of Section 18 of the Limitation Act has to be an acknowledgement in writing, as also within the prescribed period of limitation. These are the twin requirements which have to be fulfilled in order to be a valid acknowledgement under Section 18 of the Limitation Act, which is admittedly not so in the instant case. In this case, this acknowledgement to pay the balance amount was in terms of the settlement dated 26.1.2005, i.e. much after the statutory period of three years; it also does not speak of the acknowledgement ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 31 2025:HHC:22697-DB being in writing. It was thus not a valid acknowledgement."
29. A perusal of the record reveals that, in the instant .
case, the last business transaction between the parties took place on 26.7.2005 and thereafter, no other business transaction took place between the parties. The Appellate Court has, hence, rightly held that in these circumstances, the cause of action to enforce the said liability, as per law, against the respondent No. 2 remained in existence only up to July 2008.
25. Karnataka High Court also held in Bidar Urban Co-
operative, Bank Ltd. v. Girish, 2020 SCC OnLine Kar 3415: ILR 2021 Kar 2437: (2021) 1 AIR Kant R 600: (2021) 2 ICC 26: 2021 ACD 551 that a cheque issued to discharge a time barred debt does not attract Section 138 of the NI Act. It was observed at page 2462:
"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 neither pleaded nor 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. In this regard, it is necessary to refer to the principles of law stated by the Hon'ble Supreme Court and other High Courts.
30. The Kerala High Court in a decision in the case of Sasseriyal Joseph v. Devassia [2001 Cri LJ 24], held that Section 138 of the N.L. Act is attracted only if there is a legally recoverable debt, and it cannot be said that a time-barred debt is a legally recoverable debt. The said Judgment rendered by the Kerala High Court in Sasseriyil Joseph's case was challenged before the Hon'ble Supreme ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 32 2025:HHC:22697-DB Court in Special Leave to Appeal (Crl.) No. 1785/20017, the Hon'ble Supreme Court by Judgment dated: 10-09-2001 affirmed the said view of Kerala High Court, and it is held as under:
.
"We have heard learned counsel for the petitioner. We have perused the judgment of the High Court of Kerala in Criminal Appeal No. 161 of 1994 confirming the judgment/order of acquittal passed by the Additional Sessions Judge, Thalassery in Criminal Appeal No. 212 of 1992 holding inter alia that the cheque in question, having been issued by the accused for a due which was barred by limitation, the penal provision under Section 138 of the Negotiable Instruments Act is not attracted in the case.
On the facts of the case as available on the records and the clear and unambiguous provision in the explanation to Section 138 of the Negotiable Instruments Act, the judgment of the lower appellate Court as confirmed by the High Court is unassailed.
Therefore, the special leave petition is dismissed. (underlined by me)
31. The said decision of Kerala High Court was confirmed by the Hon'ble Supreme Court in Special Criminal Appeal No. 1785/2001 dated: 10.09.2001 was referred by the Learned single Judge of this High Court in case of K.V. Subba Reddy v. N. Raghava Reddy [ Criminal Appeal No. 545/2010 dated: 28-02-2014.], and considering the material discrepancies in the evidence adduced by the complainant and also having regard to the question of limitation held that, the complainant has failed to prove the case and acquittal of the accused for offence under Section 138 of N. The I Act was confirmed. In the above case, also dishonour of a cheque issued to discharge time-barred debt was in question.
32. Further the High Court of Andhra Pradesh in case of Girdharilal Rathi v. P.T.V. Ramanujachari [(1997) 2 Crimes 658.], held that, in the case of cheque issued for ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 33 2025:HHC:22697-DB time barred debt was dishonoured, the accused cannot be convicted under Section 13 8 of Negotiable Instrument Act on the ground that the debt was not legally recoverable.
.
33. The High Court of Gujarat in the case of Jayanthilal Maganlal Brahmbhatt v. State of Gujarat [Criminal Appeal No. 35/2008DD: 14-02-2013], referred to the decision of the Bombay High Court in the case Smt. Ashwini Santosh Bhatt v. Jeevan Divakar, and also the Judgment of the Hon'ble Supreme Court in the case of Krishna Janardhanbhat v. Dattatraya Ghegde [(2008) 4 SCC 54], wherein at para No. 13 it is held as under:
Thus, for the purpose of falling within the ambit of Section 138 of the Act, one of the ingredients which is required to be satisfied is that there is a legally enforceable debt. In the facts of the present case, as noted earlier, the amounts in question had been paid during the period 1991 to 1997. Under the circumstances, the period of limitation, which is three years, had clearly expired by the end of the year 2000.
Therefore, the cheques which were issued in the year 2002. evidently were issued in respect of time-barred debts. In view of the explanation in Section 13.8 of the Act, a debt or liability referred to in Section 138 of the Act means a legally enforceable debt. Under the circumstances, even if the case of the complainant is accepted that such cheques had, in fact, been issued by the accused towards a debt of Rs. 42 lakhs, even then, the same would be relatable to a time barred debt and, therefore, cannot be said to have been issued in respect of a legally enforceable debt. The provisions of Section 138 of the Act would, therefore, not be attracted in the facts of the present case. (underlined by me) So, in view of the above discussion and decision of the Kerak High Court in Sasseriyal Joseph, referred supra, which was confirmed by the Hon'ble Supreme Court on the specific question of limitation, the contention of the complainant is not tenable.::: Downloaded on - 15/07/2025 21:21:08 :::CIS 34
2025:HHC:22697-DB
34. The High Court of Madras in the case of M.P. Farooo v. K. Sasikumar [ Appeal Nos. 4088/2018, 750/2017 in CS No. 75/2017 and Crl. O.P. No. 27379 2016, Crl. M.P. No. 13939 & 13940/2016 & 15581/2017, DD: 16-12-2019], in .
relying on the decision of Kerala High Court referred supra with regard to payment of time-barred debt, held that 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 Indian Contract Act cannot be invoked.
Therefore, in view of the principles stated in those decisions, the argument 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.
35. The High Court of Delhi in a case of Jage Ram Karan Singh v. State [SCC Online Del 9486.], in Criminal Revision No. 82/2013, dated: 31.07.2019, relying on the Judgment of Vijay Polymers Pvt. Ltd. v. Vijay Aggarwal [2009 (110) DRJ.], and the Judgment of Hon'ble Supreme Court in case of Sasseriyal Joseph, (supra) held that, the responsibility of the accused was time barred on the date of issuance of cheque. Relying on the Judgment of the Bombay High Court in the case of Kamalaksha Laxman Prabhu v. S.G. Mayekar [(2009) 1 Crimes 195 (Bom.)], at para Nos. 25, 26 & 27, it is held as under:
25. A bare perusal of the aforesaid provision clearly goes on to show that for analysing the limitation of a liability beyond a period of three years, the acknowledgement, if any, must be there before the period of limitation is over, which is not the case in hand.
26. Further, it has been held time and again by the Apex Court as well as by the various High Courts that mere giving of a cheque, without anything more, will ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 35 2025:HHC:22697-DB not revive a time-barred debt, because cheque has to be given, as contemplated by the explanatory, in discharge of a legally enforceable debt. In this regard, it may be relevant to take note of the order dated .
10.9.2001 relied upon by the learned counsel for the respondent No. 2 titled Sasserivil Joseph v. Devassia, (supra) wherein, in a similar case, it has been held by the Supreme Court that, a cheque which has been issued by the accused for a due which was barred by limitation, the penal provision under Section 138 of the NI Act is not attracted. The relevant observations made in this regard in the aforesaid judgment are reproduced hereunder:--
"We have heard ....
27. In Vijay Polymers Pvt. Ltd. v. Vinnay Aggarwal. (supra), relying upon the judgment of the Supreme Court in Sasseriyil Joseph, (supra), it has been observed that, cheques issued for a time-barred debt would not fall within the definition of 'legally enforceable debt', which is the essential requirement for a complaint under Section 138 of the NI Act; the extended meaning of debt or liability has been explained in the Explanation to the Section which means a legally enforceable debt or liability.
36. The High Court of Bombay in a decision in the case of Chander Mohan Mehta v. William Rosario Fern Andes [2008 SCC OnLine Bom 1590 : (2009) 4 BC 294.], referring to its earlier decisions and decision of Madras High Court in case of N. Ethirajulu Naidu v. K.R Chinnikrishnan Chettair [AIR 1975 Mad 333.], held at para Nos. 7 & 8 asunder:
7. In Narendra V. Kanekar v. Bardez Taluka Co-op Housing Mortgage (supra), this Court had also observed as follows:--
'There appears to be preponderance of judicial opinion, in support of the view that only if the cheque is issued in discharge of a legally enforceable debt or ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 36 2025:HHC:22697-DB other liability' that Section 138 of the Act is attracted but if a cheque is issued for the discharge of a time barred debt and it is dishonoured, the accused cannot be convicted under Section 138 of the Act. This view .
was first taken in Girdhciri Lal Rathi v. RT.V. Ramamijachari (1997) 2 Crimes 658, then by this Court in the case of Smt. Ashwini Satish Bhat v. Shrijeevan Divakar Lolienkar, (1999) 1 GLT 408) and Joseph v. Devassia, (2003 K.L.T. (3) 533), and it appears that the last Judgment also has the imprimatur of the Apex Court in Special Leave to Appeal (Cri) No. 1785/2001, which was dismissed by Order dated 10.09.2001."
8. The same is the view in Jagadamba Parishar Sahakari Pat Sanstha Maryadit, (supra), this Court had also observed that mere giving of a cheque without anything more will not revive a barred debt, because cheque has to be given, as contemplated by the explanation in discharge of a legally enforceable debt.
In this context, reference to the Judgment of the learned Division Bench in N. Ethirajulu Naidu v. K.R. Chinnikrishnan Chettiar (supra) can again be made. The learned Division Bench has stated that what Section 25(3) of the Contract Act requires is an express promise made in writing and signed by the person to be charged therewith. Nothing short of an express promise, therefore, will provide a fresh period of limitation. It is settled law that an implied promise is not sufficient. The learned Division Bench also noted the distinction between an acknowledgement under Section 18 of the Limitation Act, 1963 and a promise to pay under Section 25(3) of the Contract Act. 1872. Both have to be in writing. In the case of the first, it has to be before expiry of the period and in the case of the second, it could be beyond the period.
In view of the principles stated in the above-referred decision, it is evident that the provisions of Section 25(3) ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 37 2025:HHC:22697-DB of the Indian Contract Act, 1872, is not applicable to the facts and evidence in this case.
37. 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 the instrument. The definition of "bill of exchange" as stated in Section 5 and the definition of cheque contain only an unconditional order, which clearly distinguishes them from the definition of promissory note. In a promissory note, there must be an express undertaking upon the face of the instrument to pay the money. Therefore, in a promissory note, there is an unconditional undertaking, i.e., a promise to pay, but the definition of a bill of exchange and cheque contains 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.
38. In Chacko Varkey v. Thommen Thomas [AIR 1958 Ker 31], a Full Bench of the Kerala High Court considered the scope of Section 25(3) of the Indian Contract Act 1872, which also supports the accused's defence.
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 applies only to the cheques which are issued for the discharge in whole or in part, of any debt or other liability, which, according to the 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.
::: Downloaded on - 15/07/2025 21:21:08 :::CIS 382025:HHC:22697-DB This was elaborated in Sasseriyil Joseph's case (supra), which is affirmed by the Hon'ble Supreme Court as stated above. A cheque given in discharge of a time-barred debt will not constitute a promise in writing, not even an .
implied promise, so as to attract a criminal liability under Section 13 8 of N.I Act.
26. A similar view was taken by the Gujarat High Court in Dilipkumar Manharlal Vyas, since deceased through Legal heirs And Ors Vs. Girdliarlal Hirajibhai and ors 2023(2) Crimes 366 (Guj.) wherein it was observed:
9. On the "Second issue" of "time-barred debt" is concerned:
9.1 According to learned advocate Mr. J.R. Shah, appearing for the appellants-original complainant, the date of issuance of the cheque is 31.12.2004. As per his submission, once the cheque was drawn there was acknowledgment of the debt and unless contrary is proved by the accused, the presumption arose with regard to the fact that the cheque has been given or drawn for consideration as provided under Section 118(a) and the complainant is "holder" of such cheque for discharge of debt or liability.
9.2 On the other hand, learned advocate Mr. Dagli appearing for the respondent-accused, by referring to the authorities mentioned earlier as the cheque being handed over as security cheque way back in the year-1998, which being misused by the complainant though the amount outstanding being realized, and its presentation in the bank in the year-2004, makes such transaction invalid in the eye of law as the cheque ceased to be a negotiable "instrument" in view of Section138 of the N.I. Act. 9.3 Indisputably, the hand loan of an amount of Rs . 2 Lakhs as emerged on record relates to the date of transaction as 15.12.1998. The date inscribed on the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 39 2025:HHC:22697-DB disputed cheque goes to indicates that the cheque was drawn on 31.12.2004. If one accepts the case of the complainant that by the issuance of a cheque on 31.12.2004, there was acknowledgement of the debt by the .
accused, and hence, a fresh cause of action for the purpose of limitation is available to the complainant, the same is contrary to the legally settled position. A similar issue arose for consideration before the Hon'ble Apex Court in the case of Sasseriyil Joseph vs. Devassia, rendered in SLP (CRL) No.1785 of 2001, rendered on 10.09.2001. So far as the reliance placed by learned advocate Mr. Shah appearing for the appellants in the case of A.V. Murthy (supra) is concerned, it was a case where the appellant and his friends have advanced the loan about four years back and the "respondent-accused had acknowledged this liability in his balance- sheet". In such circumstances, even for the purpose of filing a civil suit, such debt or liability would not be treated as barred by limitation. The copy of the balance sheet dated 31.03.1997 was produced before the trial court. It was in the background of these facts, the Hon'ble Supreme Court held that the criminal proceedings should not have been terminated by the High Court at the threshold while exercising powers under Section 482 of Cr.P.C. The Hon'ble Supreme Court, therefore, quashed and set aside the order passed by the learned Single Judge of the High Court and allowed the appeal and remanded the matter back to the Magistrate to proceed with the complaint in accordance with law.
9.4 In the present case, at no stage has evidence been adduced by the complainant to show that within the prescribed period of limitation, the debt was acknowledged by the accused in writing, which is required under Sub-Section (3) of Section 25 of the Indian Contract Act. As noticed at Paragraph No.5.3 in the case of Sasseriyil Joseph (supra), wherein the Hon'ble Supreme Court, in no uncertain terms, after perusing the decision of the Kerala High Court in Criminal Appeal No.161 of ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 40 2025:HHC:22697-DB 1994 and after finding that the language in Section 138 of the N.I. Act was clear and unambiguous, confirmed the judgment of the Kerala High Court. In the said judgment of the Kerala High Court in Paragraph Nos. 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 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.::: Downloaded on - 15/07/2025 21:21:08 :::CIS 41
2025:HHC:22697-DB
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. "
9.5 In light of the aforesaid legal position and on the basis of evidence on record, the period of limitation of three years is to be computed as provided under Article 19 of the Limitation Act, which provides for the money payable within three years from the date of the loan. The date on which the loan was advanced makes the present transaction time-barred as of 31.12.2004. Admittedly, the date of loan as emerged on record is 15.12.1998, and by applying the prescribed period of three years, as per Article 19 of the Limitation Act, would come to an end on 15.12.2001, whereas the disputed cheque bears the date 31.12.2004. In the absence of any document being brought on record by the complainant that the debt was acknowledged during the prescribed period of limitation, the cheque was time-barred. In light of the decision of the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 42 2025:HHC:22697-DB Hon'ble Supreme Court in the case of Sasseriyil Joseph (supra), the same cannot be treated "as legally enforceable debt" or other "liability" as appeared in the Explanation attached to Section 138 of the N.I. Act."
.
27. It was held in Shriram Transport Finance Co. Limited vs. State of Gujarat and Ors. (27.09.2024 - GUJHC):
MANU/GJ/1613/2024 that a cheque issued to repay the time-
barred debt is not towards the legally enforceable debt. It was observed: -
"10. It appears that the trial Court has rightly dealt with the aforesaid two issues and after considering the oral as well as documentary evidence in light of the issues framed by the trial Court, the trial Court has come to a conclusion that the amount was to be repaid in June 2018 by 33 installments by the accused however, after 2016 the respondent accused has not paid installments regularly and therefore, the same is due and payable from June 2018 and present appellant original complainant has not initiated the proceedings under the period of limitation i.e. 3 years and therefore, the Court has acquitted the present respondent original accused.
11. Further in the similar set of facts, the Coordinate Bench of this Court has considered the similar issue in the judgment and order dated 14.2.2023 passed in Criminal Appeal No. 35 of 2008, wherein the Coordinate Bench of this Court has observed as under: -
"11. In the light of the evidence which has come on record, one thing is evident, that even according to the complainant, whatever amount was paid to the accused was between the periods 1991 to 1997. The complainant has nowhere stated any details regarding the time and the manner in which such amounts were paid. It appears to be the case of the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 43 2025:HHC:22697-DB complainant that he is entitled to recover Rs. 42 lakhs from the accused towards outstanding dues. Evidently, therefore, the period of limitation for instituting a suit for recovery of such amount would .
commence from the date on which the said amount was given to the accused, which would be different dates ranging from 1991 to 1997. Even taking the last date, namely, the year 1997, into account, the cheques which are alleged to have been issued in the year 2002 have clearly been issued after the period of limitation for instituting any proceedings for recovery of such amount had elapsed. Evidently, therefore, the cheques had been issued in respect of time-barred debts. The explanation to section 138 of the Act provides that for the purpose of the said section, "debt or liability" means a legally enforceable debt or other liability. Under section 138 of the Act, if any cheque issued in respect of any debt or liability is dishonoured, the person who has issued such cheque would be liable to be punished under the said provision. Therefore, the fact as to whether the cheque has been issued in respect of a legally enforceable debt is a very relevant factor for adjudicating any proceeding under section 138 of the Act. In Smt. In Ashwini Santosh Bhatt v. Shri Jeevan Divakar (supra), the Bombay High Court has held that a cheque which was issued after the expiry of three years from the date of the loan was in respect of a time-barred debt and dishonour of the said cheque would not attract section 138 of the Act.
12. In Krishna Janardhan Bhat v. Dattatraya G. Hegde, MANU/SC/0503/2008: 2008:INSC:44 : (2008) 4 SCC 54, the Supreme Court has held that section 138 of the Act has three ingredients viz. (i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 44 2025:HHC:22697-DB to insufficiency of funds. The proviso appended to the said section provides for compliance with legal requirements before a petition can be acted upon by a court of law. Section 139 of the Act merely raises a .
presumption regarding the second aspect of the matter. The existence of legally recoverable debt is not a matter of presumption under section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for the discharge of any debt or other liability. It was further held that whereas the prosecution must prove the guilt of an accused beyond a reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record.
13. The facts of the present case are to be evaluated in the light of the principles laid down in the above-referred decision. Thus, for the purpose of falling within the ambit of section 138 of the Act, one of the ingredients which is required to be satisfied is that there is a legally enforceable debt. In the facts of the present case, as noted earlier, the amounts in question had been paid during the period 1991 to 1997. Under the circumstances, the period of limitation, which is three years, had clearly expired by the end of the year 2000. Therefore, the cheques which were issued in the year 2002 were issued in respect of time-barred debts. In view of the explanation to section 138 of the Act, a debt or liability referred to in section 138 of the Act means a legally enforceable debt. Under the circumstances, even if the case of the complainant is accepted that such cheques had, in fact, been issued by the accused towards a debt of Rs. 42 lakhs, even then, the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 45 2025:HHC:22697-DB same would be relatable to a time-barred debt and, therefore, cannot be said to have been issued in respect of a legally enforceable debt. The provisions of section 138 of the Act would, therefore, not be attracted in the facts of .
the present case.
14. The Andhra Pradesh High Court in Girdhari Lal Rathi v. P.T.V. Ramanujachari & another, MANU/AP/0092/1997:
1997 (2) Crimes 658 on which reliance had been placed by the learned Magistrate in the impugned judgment, has held that in case 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. This court is in complete agreement with the view adopted by the Andhra Pradesh High Court."
12. In the impugned judgment and order, the trial Court has discussed the evidence in great length and detail and has given reasons in support of each of the findings recorded by it. On behalf of the appellant, nothing has been pointed out to show that the findings recorded by the learned Magistrate are, in any manner, perverse.
13. The trial Court has also observed that the debt in question was time-barred. Further, it reveals that from 2016, the respondent accused has not paid the installments regularly and if the cause was to be considered from 2016 then the complaint was required to be filed within period of three years i.e. 2019 and instead of that the complaint was filed in 2022 and therefore, after considering the sufficient evidence on record and after considering the submissions made by and on behalf of all the concerned before the trial Court and after evaluating the evidence in proper manner, the trial Court has rightly acquitted the present respondent accused..
14. In view of the above facts and view of the observations made by the Coordinate Bench of this Court in the above- referred decision, I am of the opinion that the complainant has not proved the charges levelled against ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 46 2025:HHC:22697-DB the accused beyond a reasonable doubt. The court is in full agreement with the reasoning adopted by the trial Court, which is a plausible view.
.
28. A similar view was taken in Muralilal Birdhichand Rawat vs. State of Gujarat and Ors. (03.07.2024 - GUJHC):
MANU/GJ/1212/2024, wherein it was held: -
5. A limited question which arises for consideration is whether the cheque which was issued to discharge the liability was for a time-barred debt or not. On perusal of the record and proceedings, it transpires that it is the case of the complainant in the complaint that the amount was lent through a bank from the account of a partnership firm on 11.07.2011. For repayment of the aforesaid amount, four cheques, duly signed by the respondent- accused, were issued in favour of the complainant firm on 26.05.2015. In order to rebut the presumption which is in favour of the complainant under sections 118 and 139 of the N.I. Act, the complainant was cross-examined by the respondent-accused, wherein below mentioned facts related to the present issues are admitted by him:
"We have issued the cheque to the accused on 11.07.2011 for the amount of Rs. 5,00,000/-. The amount was lent through the firm's account. It is true that the amount was lent prior to 6 years before the deposition date. A demand notice was issued, which was produced below Exh 11 and was dated 11.06.2015, which was after 4 years of the lending of the amount. With regard to the lending of an amount, no writings were executed with the respondent-accused. It is not true that for settling the account, the security cheque was taken and the same was misused. The partnership firm is dissolved. Partnership deed produced below Exh. 16 suggests that the share of the accused of 18% in the profit. How much profit was gained from that fact, I ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 47 2025:HHC:22697-DB am not aware. On 31.03.2012, Rs. 56,77,438/- was deposited in the account of the partnership firm. No amount is given to the accused towards his share. The partnership firm was dissolved on 31.03.2012, .
i.e within 1 year from the date of registration of the partnership deed. The account statement which was produced below Exh.17 was given to the accused and on 16.07.2011 had withdrawn through self cheque of Rs. 2 lakhs, on 18.07.2011 withdrawn amount of Rs. 3 lakhs, on 03.08.2011 other person namely Sandeep has withdrawn amount of Rs. 5 lakhs, on 19.08.2011 partner Shashikant withdrew Rs. 4,50,000/-. The account was operated with the joint signature of my and Bhavesh Bhai. The complainant has produced the reply to the demand notice below Exh . 13 wherein, the accused has contended that within 1 year, the firm was dissolved and to settle the accounts as per the understanding, undated Bank cheques were given to show in the books of accounts. The share of the partners was misused by the complainant with a view to evading the payment of his share as per the partnership deed. It is further contended that though the profit was made by the partnership firm, two persons have misappropriated the amount, and therefore, the partnership firm was dissolved. Statement of account of the partnership firm is produced below, Exh. 17 of the Kalupur Co-operative Commercial Bank suggests that there is an entry with regard to the clearing of the cheque on 12.01.2011 in the account of the respondent-accused of Rs. 5,00,000/-. Undisputedly, the cheque which was dishonoured was of 2015, which is after 4 years of lending of the amount."
6. At this stage, the judgment of the Apex court reported in the case of Sasseriyil Joseph Vs Devassia in S.L.P (Cri.) No. 1785 of 2001 decided on 10.09.2001 wherein, the Apex Court has held as under:
"6. The only question that arises for consideration in this appeal is whether the respondent who issued ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 48 2025:HHC:22697-DB 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 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 ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 49 2025:HHC:22697-DB MANU/AP/0092/1997: 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."
7. Considering the overall facts and the law laid down by the Apex Court in the case of Sasseriyil Joseph (supra), it transpires that the amount was lent by the complainant through bank to the respondent-accused in the year 2011 and for repayment of the aforesaid debt, cheque was issued in the year 2015 i.e after three years of the limitation period. During this period, there was no acknowledgement given by the respondent-accused acknowledging his liability towards the debt.
8. In view of the above, the learned appellate court was justified in reversing the judgment and order of conviction and acquitting the respondent-accused of the offence punishable under section 138 of the N.I. Act.
29. A similar view was taken by Kerala High Court in Laxmi Finance & Investments v. B. Mahalinga Shetty, 2024 SCC OnLine Kar 240, wherein it was observed:
"10. The complainant in the entire complaint averments did not plead anything about the loan borrowed by the accused on the executed on-demand promissory note. However, during his evidence, he produced the loan application of the accused for the grant of a loan of Rs 5000 payable within 3 months. P-7. The statement showing the details of the condition of the loan is at Ext. P-8, on-demand promissory note Ext. P-9. These documents Exts. P-7 to 9 would go to show that the accused availed a loan of Rs 5000 on 31-8-1996. There is no reference to these documents having been executed by ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 50 2025:HHC:22697-DB the accused either in the complaint averments or in the demand notice issued by the complainant, Ext. P-6 dated 9-5-2007. Complainant has not pleaded any other transaction other than the one stated in Exts. P-7 to 9 on .
31-8-1996. PW 1 admits in his cross-examination regarding the confronted letter of the complainant, and the same is marked as Ext. D-1. On perusal of the same, it would go to show that the loan availed by the accused on 31-8-1996 is completed. However, PW 1 denies that the accused has repaid the entire loan amount. The said denial is contrary to the own letter of the complainant, Ext. D-1. Complainant has not produced any documents to show that as on the date of issuance of the cheque, Ext. P-1 dated 19-4-2007 accused was in due of Rs 12,500. Therefore, the complainant has failed to establish a nexus between the loan transaction on 31-8-1996 vide Exts. P-7 to 9 and Ext. D-1 with the issuance of a cheque for the lawful discharge of the said loan, Ext. P-1.
11. The accused has also contended that the claim of the complainant to recover the amount of the loan dated 31- 8-1996 based on on demand promissory note, Ext. P-9 is time-barred. Therefore, as on the date of issuance of the cheque on 19-4-2007, there was no legally enforceable debt. The time fixed under an on-demand promissory note, Ext. P-9 for repayment of the loan is three months.
The loan application reveals about three months' time sought for repayment of the loan. Therefore, the period of three months from 31-8-1996 will come to an end on 1- 12-1996. If there is any balance of amount recoverable under an on-demand promissory note, Ext. P-9 is within three years from 1-12-1996, and three years have come to an end on 1-12-1999. Whereas the cheque in question is issued on 19-4-2007 after nearly about seven and a half years from 1-12-1999 to 19-4-2007 (7 years 4 months 19 days). Therefore, the claim of the complainant to enforce any amount due under the promissory note, Ext. P-9 was already time-barred. Therefore, as on the date of issuance ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 51 2025:HHC:22697-DB of the cheque dated 19-4-2007, there was no legally enforceable debt.
12. Learned counsel for the complainant has argued that .
issuance of cheque Ext. P-1 itself is an acknowledgement of debt, and the years commences from the date of issuance of the cheque. In support of such contention, reliance is placed on the judgment of the Hon'ble Apex Court in K. Hymavathi v. State of Andhra Pradesh, AIR 2023 Supreme Court 4369, wherein it has been observed and held that:
"In respect of a promissory note payable at a fixed time, the period of limitation, being 3 years, would begin to run when the fixed time expires"
13. In the said case before the Hon'ble Apex Court, the cheque was issued within a period of three years.
Therefore, the principles enunciated in this judgment have no application to the facts of the present case.
14. Learned counsel for the accused in support of his contention that time-barred debt cannot be enforced as it is not legally recoverable debt as on the date of issuance of the cheque, Ext. P-1 relied on the Coordinate Bench Judgment of this Court in Sri Nandi Greens Agro Farms and Developers(Private) Limited v. Sri K.S. Jagannathan in Crl. A. No. 226/2015, wherein it has been observed and held at para 3 as under:
"3. It is apparent that if any money was to be recovered under the transaction of the year 2008, the time to recover the same would have expired in the year 2011, and any acknowledgement of such debt beyond that period would also not save the limitation period. Therefore, the court below, having held that there was no legally enforceable liability, may be in order. There is no merit in this appeal. The same is rejected".
15. On the same principle of time-barred debt, it is profitable to refer to the judgment of the Hon'ble Delhi High Court on similar facts involved in this case in Vijay ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 52 2025:HHC:22697-DB Polymers Pvt. Ltd., v. Vinnay Aggarwal, 2009 SCC OnLine Del 1075, wherein it has been observed and held as under:
"S. 138 of NI Act-Limitation Act, 1963-S. 18-Dishonour of .
cheque-Complaint-Cheques issued in lieu of a debt which was not legally recoverable-Acknowledgement, if any, must be there before the period of limitation is over. The magistrate was right in coming to the conclusion that it had not been proved that the dishonour of the cheque was in relation to a legally enforceable debt or liability in law- Dishonoured cheque admittedly issued after five years. The debt was not legally enforceable at the time of issuance of cheque-Proceedings not maintainable.
16. In view of the principles enunciated in the aforementioned two judgments, it is evident that the time-barred debt does not fall within the ambit of legally enforceable debt in terms of S. 138 of the NI Act. If at all, there is any acknowledgement of debt, then such acknowledgement must be within the period of limitation. Therefore, the contention of learned counsel for the complainant that issuance of cheque Ext. P-1 itself is an acknowledgement that time-barred debt cannot be legally sustained.
17. In the present case, the transaction is covered under a demand promissory note, Ext. P-9 dated 31-8-1996, the time fixed for repayment of the loan is three months, the same will come to an end as on 1-12-1996. Thereafter, within three years, the right to recover money due under the promissory note under Ext. P-9 should have been exercised. The complainant has not produced any documents to show that the accused has acknowledged the debt within a period of three years. If no such documents are executed by the accused acknowledging the debt, then the claim of the complainant based on Ext. P-1 is seeking to enforce that the time-barred debt cannot be legally sustained. The claim of the complainant is based on a time-barred debt. Therefore, the contention of learned counsel for the complainant that issuance of cheque Ext. P-1 itself amounts to an acknowledgement ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 53 2025:HHC:22697-DB that time-barred debt cannot be accepted in view of the principles enunciated in the aforementioned judgment.
30. A similar view was taken by the Andhra Pradesh High .
Court in Padala Veera Venkata Satyanarayana Reddy v. State of Andhra Pradesh, 2019 SCC OnLine AP 8, wherein it was observed:
8. The proposition laid down by the Apex Court that by virtue of Section 25(3), the purpose for which the cheque is issued becomes a promise on the part of the drawer of the cheque will hold good only if there is a reciprocal promise. The failure of the drawer of the cheque towards premium, to fulfil the promise of paying the premium, would relieve the promisee from the obligation that underlies the insurance of the cheque, but does not become a basis for prosecution or action. Such a promise, which is an agreement, becomes an exception to the general rule that an agreement without consideration is void, is what is said by the Supreme Court. There was a reciprocal promise in the case before the Apex Court, which can be considered as the consideration. A promise without consideration would be a gratuitous promise and has no legal force. A mere moral duty to perform a promise, like a promise to subscribe to a charitable institution, is without consideration and void. This ratio is reflected in the judgment of the Hon'ble High Court of Madhya Pradesh reported in a case between Firm Gopal Co. Ltd. v. Firm Hazari Lai and Co., AIR 1963 MP 37. The case of the promisor issuing a cheque towards the discharge of a time barred debt, would only be a promise to fulfil a moral duty and breach of such promise may subject him to civil liability, if the promise is construed as an agreement or even criminal liability if any criminality is made out from such promise. Section 25 of the Indian Contract Act makes a promise to discharge time-barred debt a valid agreement. But such an agreement cannot be made a basis for prosecution under Section 138 of N.I. Act.::: Downloaded on - 15/07/2025 21:21:08 :::CIS 54
2025:HHC:22697-DB A cheque issued for discharge of debt no doubt carries a promise to discharge the time-barred debt, but, for a prosecution under Section 138 N.I. Act, there should be a legally enforceable debt by the date of issuance of the .
cheque. Such a cheque becomes an agreement between the promisor and the promisee and becomes enforceable, but does not allow prosecution. Unless there is a legally enforceable debt, the cheque issued, promising to discharge a time-barred debt, will not make the promisor liable under Section 138 of the N.I. Act. In a case under Section 138 of N.I. Act, the issuance of the cheque itself must be towards a legally enforceable debt. Hence, the reasoning given by the Hon'ble High Court of Bombay does not persuade this Court.
9. The Counsel for the petitioner relies on two judgments of this Court in Rakesh Agarwal v. K. Narasimha Rao, 2016 (1) ALT (Crl.) 136 (AP) and A. Yesubabu v. D. Appala Swamy, 2003 (2) ALD (Crl.) 707 (AP). In Rakesh Agarwal's case (supra), the Court held that once the promissory note debt is barred by time, it cannot be brought within Section 25 of the Contract Act, treating the cheque as an acknowledgement of the time-barred debt. In A. Yesubabu's case (supra), this Court held that if any cheque is issued by the accused after expiry of the limitation for releasing the debt, it cannot be said that it was issued for a legally enforceable debt. In the said case, the cheque was issued on 25.8.1994, nearly 7 years after the taking of the amount from the complainant. The Court considered the earlier ruling of this Court in Giridhar Lai Rathi v. P.T.V. Ramanujachar, 1997 (2) Crimes 658, wherein the loan was advanced in the year 1985 and the cheque was issued in the year 1990. It was held therein that by the time the cheque was issued, the debt appears to have been barred by limitation because there is no acknowledgement alleged to have been obtained by the appellant from R1-accused, before expiry of three years from the date of the loan. It was held that the debt was not legally enforceable at the time of issuance of the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 55 2025:HHC:22697-DB cheque and, therefore, vide explanation to Section 138 of N.I. Act, which reads as under:
"Explanation. --Until the debt is legally recoverable, .
the drawer of the cheque cannot be fastened with liability under Section 138 of N.I. Act" the cheque cannot be said to have been issued towards discharge of a legally enforceable debt."
10. A Division Bench judgment of this Court was also relied upon by the High Court, which was rendered in Mr. Amit Desai v. Shine Enterprises, 2000 (1) ALD (Crl.) 587 (AP): 2000 Cri. LJ 2386, wherein it was specifically laid down that the debt or other liability means a legally enforceable debt or other liability and enforcement of legal liability has to be in the nature of civil suit because the debt or other liability cannot be recovered by filing a criminal case and when there is a bar of filing a suit by unregistered firm, the bar equally applies to criminal case as laid down in Explanation (2) of Section 138 of Negotiable Instruments Act.
11. In these cases, as already observed, the limitation for enforcing the promissory notes expired much prior to the issuance of the cheques in question. Hence, in view of the above, this Court opines that the impugned complaints cannot be sustained and that these are fit cases for quashing of the proceedings against the petitioners.
31. A similar view was taken in A Yesubabu (supra), Vijay Polymers (supra), Kiran Finance (supra), and M/s Arkaa Medicament (supra).
32. Reliance was placed upon the judgment of the Hon'ble Supreme Court in K. Hymavathi v. State of A.P., 2023 SCC OnLine SC 1128, but the Hon'ble Supreme Court found that the debt was within limitation and the complaint could not have ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 56 2025:HHC:22697-DB been quashed on the ground that the debt was time-barred. It was observed:
.
12. Having referred to the judgments cited, prima facie, we are of the opinion that the decision in S. Natarajan and A.V. Murthy (supra) has taken into consideration all aspects. No other elaboration is required even if the observations contained in the case of Expeditious Trial of Cases under Section 138 of NI Act (supra) is taken note, since, whether the debt in question is a legally enforceable debt or other liability would arise on the facts and circumstance of each case and in that light the question as to whether the power under Section 482 CrPC is to be exercised or not will also arise in the facts of such case. Even otherwise we do not see the need to tread that path to undertake an academic exercise on that aspect of the matter, since from the very facts involved in the case on hand ex facie it indicates that the claim which was made in the complaint before the Trial Court based on the cheque which was dishonoured cannot be construed as time-barred and as such it cannot be classified as a debt which was not legally recoverable, the details of which we would advert to here below. In that view, we have chosen not to refer to the cases provided as a compilation, as it would be unnecessary to refer to the same.
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6. The provision would indicate that in respect of a promissory note payable at a fixed time, the period of limitation, being three years, would begin to run when the fixed time expires. Therefore, in the instant case, the time would begin to run from the month of December 2016, and the period of limitation would expire at the end of three years thereto, i.e. during December 2019. In that light, the cheque issued for Rs. 10,00,000/-, which is the subject matter herein, is dated 28.04.2017, which is well within the period of limitation. The complaint in CC No. ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 57 2025:HHC:22697-DB 681 of 2017 was filed in the Court of the Chief Metropolitan Magistrate on 11.07.2017. So is the case in the analogous complaints. Therefore, in the instant case, not only the amount was a legally recoverable debt, which .
is evident on the face of it, but the complaint was also filed within time. Hence, there was no occasion whatsoever in the instant case to exercise the power under Section 482 to quash the complaint. In that view, the order impugned dated 12.02.2019, passed by the High Court in Criminal Petition Nos. 12652, 12670, 12675, and 12676 of 2018 are not sustainable.
33. Delhi High Court found in Rajeev Kumar v. State (NCT of Delhi), 2024 SCC OnLine Del 6421 that the debt was within limitation and the cheque was not towards time time-barred. It was observed:
34. Regarding the facts of the case in question, the presentation of the cheque to the father was 5-6 months before the death of his father, i.e. in the months of January/February 2014. On that basis, even though the loan was allegedly taken in 2012 as per the finding of the Trial Court, the earlier cheque presented in 2014 would amount to an acknowledgement in writing of the liability and therefore, a fresh period of limitation would commence as per section 18 of The Limitation Act, 1963. Therefore, the furnishing of the cheque in question on 31st December 2015 would still be for a legally enforceable debt or liability. This is notwithstanding the other aspect, which had been pleaded by the appellant, that he had an oral settlement post the death of the father with the accused.
34. Thus, the learned Trial Court had taken a reasonable view while holding that the cheque was issued towards the ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 58 2025:HHC:22697-DB time-barred debt, which does not fall within the definition of a legally enforceable debt, and this dishonour will not attract the .
provisions of Section 138 of the NI Act.
35. The complainant-Company examined B.D. Kanthwal, Project Manager, who admitted in his cross-examination that Social Leasing (India) Ltd. and Social Finance Company were two separate Companies and they were separately registered. He admitted that he was the Manager of both Companies. He admitted that the Reserve Bank of India had banned the Social Financing Company in 1999. The accused stated in his statement recorded under Section 313 of Cr.P.C. that he had taken a loan from Social Financing Company and not from Social Leasing (India) Ltd. The cheque (Ex.CW1/D) is written in English, whereas the signatures have been put by the accused in Hindi. It clearly shows that the cheque was not filled by the accused. This witness admitted that a record of the loan was maintained by the Company. The returns were submitted to the RBI, in which liabilities were shown. He did not produce any record. The production of the record was necessary in view of the admissions that there are two different Companies, i.e., Social Leasing (India) Ltd. and Social Finance Company, B.D. Kanthwal ::: Downloaded on - 15/07/2025 21:21:08 :::CIS 59 2025:HHC:22697-DB (CW1) is the Branch Manager of both Companies, and the cheque was not filled by the accused. In the absence of the record, the .
learned Trial Court had rightly declined to accept the version of B.D. Kanthwal (CW1) that the loan was advanced to the accused by Social Leasing (India) Company Ltd.
36. G Veeresham (supra), Raman Finance Corporation (supra), and Rajaram (supra) deal with the rebuttal of the presumption; Om Prakash (supra) and Prakash Chimanlal Shah (supra) deal with the cross-examination of the complainant, Atma Ram (supra), Sharma Associates (supra) and Akram (supra) deal with Section 273 of CrPC which are not relevant to the adjudication of the dispute before the Court.
37. Therefore, the learned Trial Court had taken a reasonable view while acquitting the accused, and this Court will not interfere with the reasonable view of the learned Trial Court while deciding the appeal against the acquittal. Therefore, no interference is required with the judgment passed by the learned Trial Court.
38. No other point was urged.
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39. In view of the above, the present appeal fails, and the same is dismissed.
.
40. A copy of the judgment and the record of the learned Trial Court be sent back forthwith.
(Rakesh Kainthla) Judge 15th July, 2025 (Chander) ::: Downloaded on - 15/07/2025 21:21:08 :::CIS