Delhi District Court
Cc Ni Act. 294 Of 2020 Rkd Fin. Serv. Ltd. vs . Vikas Page No. 1 on 28 March, 2022
CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 1
IN THE COURT OF MS. AISHWARYA SHARMA,
METROPOLITAN MAGISTRATE (NI ACT) DIGITAL COURT02,
SOUTHEAST DISTRICT, SAKET COURT COMPLEX, NEW DELHI
Criminal Complaint No.: CC NI ACT/294/2020
RKD FINANCIAL SERVICES LTD. ... Complainant
Versus
VIKAS ... Accused
1. Name & address of the complainant : RKD Financial Services Ltd
having its Registered Office at 308
309, Bhandari House, 91, Nehru
Place, New Delhi 110019
Through its AR Sh. Dharmendra
Lingwal
2. Name & address of the accused : Vikas
S/o Sh. Baley Ram
R/o H. No. 53,
Gharoli Village,
New Delhi 110096
3. Offence complained of : U/S 138, The Negotiable
Instruments Act,1881.
4. Plea of accused : Pleaded not guilty.
5. Final Arguments : 28.02.2022
6. Date of Institution of case : 09.12.2020
7. Date of decision of the case : 28.03.2022
JUDGEMENT
1. Vide this judgment, I shall dispose of the aforementioned complaint case filed Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:10 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 2 by the complainant, RKD Financial Services Ltd Through it's AR Sh. Dharmendra Lingwal (hereinafter referred to as the 'complainant') against accused, Vikas (hereinafter referred to as the 'accused').
2. Factual Matrix: The complainant's case is that the complainant is a company established under the provisions of Companies Act engaged in the business of hirepurchase and financial services. The accused approached the complainant for vehicle loan of Rs.35,000/ which was repayable in 12 monthly installments of Rs.3,442/. The complainant paid installments for some time, but later on stopped paying it. When the complainant approached the accused for payment, settlement was arrived and towards discharge of his liability, the accused issued cheque bearing No.050438 dt. 15.10.2020 drawn on Bank of Maharashtra, Mayur Vihar, Phase III, Delhi (hereinafter referred to as the 'cheque in question) in favour of the complainant with the assurance that the same will be encashed on it's presentation. However, when the complainant presented the cheque in question with his bank Oriental Bank of Commerce, Nehru Place, New Delhi, the same was dishonored on 20.10.2020 due to insufficient funds. The complainant thereafter, sent a legal demand notice dated 03.11.2020 to the accused calling upon him to repay the loan amount within fifteen days of the receipt thereof. The complainant has claimed that the said legal notice was duly served on the address of the accused through speed post on 04.11.2020. However, the accused did not come forward to repay his debt within the prescribed period of fifteen days. Hence, being aggrieved, the complainant filed the present complaint under section 138 of The Negotiable Instruments Act, 1881 on 09.12.2020.
3. Prayed for: The complainant has sought that the accused be summoned, tried and punished under section 138 of The Negotiable Instruments Act, 1881 and fine equivalent to double the cheque amount be imposed upon the accused.
4. Summoning of accused: The learned predecessor court summoned the accused after hearing the arguments at the stage of presummoning vide order dated 12.01.2021 and the accused entered appearance in the present case on 29.11.2021 and he was admitted to bail vide same order.
5. Notice: the court has framed notice of accusation under Section 251 Cr.P.C.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date: 2022.03.28
15:04:16 +0530
CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 3
against the accused pursuant to arguments being advanced on the point of consideration thereof on 07.12.2021. The substance of accusation was read over and explained to the accused and after being satisfied that the accused comprehended the same, the court recorded his plea.
6. Plea of the accused: The accused pleaded not guilty and claimed trial. He stated in his defence that the cheque in question was given as security. He admitted his signatures on the impugned cheque. He also admitted that the address mentioned in the demand notice is his correct address, however he denied having received the legal demand notice. He further admitted having obtained loan of Rs.35,000/ from the complainant company which was repayable in 12 equal monthly installments of Rs.3,442/. He stated that he has paid 78 installments. However, the complainant company has misused the cheque in question which was given as security. During admission and denial, accused admitted the dishonor memo.
7. Evidence on behalf of complainant : To prove his case prima facie, the AR of the complainant has examined himself as CW1 and has filed his evidence under Section 200 of the Cr.P.C. by way of an affidavit which is Ex. CW1/A wherein the AR of the complainant averred the same facts as are averred in the complaint. He has also filed Ex.CW1/A, which is the Board Resolution dt. 10.08.2020 authorizing him to prosecute this complaint.
8. Documentary evidence: To prove the above claims, the AR of the complainant has filed Ex.CW1/B the original cheque in question dated 15.10.2020, Ex.CW1/C the return memo dt. 20.10.2020 in respect of the cheque in question, Ex. CW 1/D the legal notice dated 03.11.2020 sent to the accused by the complainant after dishonor of cheque, Ex.CW1/E the postal receipt qua the same and Ex.CW1/F the tracking report.
9. Thereafter, CW1 was subjected to cross examination by Ld. Counsel for accused. During his crossexamination, he stated that the complainant company possess the NBFC license approved by RBI and follow the guidelines of RBI. He further stated that they charge 18% interest rate on vehicle loan. He further admitted that the accused had paid 78 monthly installments of Rs.3,442/. He also admitted that the complainant company Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:27 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 4 obtains security cheque from borrowers. He also admitted that no written agreement regarding settlement was executed between the parties when the accused defaulted in the payment of the installment. He stated that the settlement was verbal. He further admitted that the amount and date on the cheque has been filled by the company, however he denied that on the day of presentation, the outstanding amount was lower than the debt amount and he stated that the outstanding amount was equal to the cheque amount.
10. Examination of the accused under section 313 Cr.P.C.: The accused was examined under section 313 Cr.P.C. on 08.12.2021, wherein he admitted obtaining vehicle loan of Rs.35,000/ from the complainant repayable in 12 monthly installment of Rs.3,442/. He also admitted that he has paid 78 installments and later on, he defaulted. He denied having issued the cheque in question upon default of installments and stated that the cheque in question was given as security at time of sanction of loan. He also admitted that the cheque got dishonored due to insufficient funds in his account vide retuned memo dated 20.10.2020. He denied having received legal demand notice dated 03.11.2020 and not making payment to complainant despite receiving the same. He also admitted his signature on the cheque in question. However, he denied filling up the particulars in the same. He refused to lead defence evidence.
11. Final Arguments : Ld. Counsel for the complainant argued that the complainant has proved his case as it is proved that the accused was having financial transaction with the complainant. The complainant has also proved that the accused had issued the cheques in question to discharge his legal liability. It has also been proved that the cheques were dishonoured. Service of legal notice has also been proved. The accused was liable to make the payment, however, he did not make the payment within stipulated time despite service of legal notice. It is also proved that all the steps were taken by the complainant within the time provided by the law. The accused has failed to rebut the presumption provided in the law. Hence, the accused may be convicted for the offence punishable under Section 138, NI Act.
12. Per contra, Ld. counsel for the accused argued that the complaint itself is Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:32 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 5 not maintainable as it is time barred. He submitted that as per the loan agreement, the loan was obtained in October, 2014 and the last installment was due on 05.10.2015 and the limitation period to enforce the legally recoverable debt is 3 years, as such, the period of limitation expired in year 2018 and the cheque in question has been presented on 20.10.2020 which is much beyond the period of limitation. In support of these submissions Ld. Counsel for accused has placed reliance upon the following authorities 1) Ms. Jage Ram Karan Singh & Anr. vs.State & Anr (Crl. Rev. P. 82/2013) decided on 31.07.2019, 2) Sasseriyil Joseph vs. Devassia 2001 Cri LJ 24, 3) Vijay Polymers Pvt.Ltd. & Ors vs. Vinnay Aggarwal Crl. M C 1682/2008 & Crl. MA Nos. 6167/2008 & 12878/2008., 4) Girdhari Lal Rathi Vs. PTV Ramanujachari 1997 (2) Crimes 658 and 5) Smt. Ashwini Satish Bhat vs. Shri Jeevan Divakar Lolienkar &.. decided on 05.02.1999.
13. To counter these authorities, Ld.Cousnel for complainant has also placed reliance upon the Smt. Kabita Sharma vs. Sukra Baro (Criminal) Appeal Case 23/18, which is the judgement of District Court of a different State, as such the same is not a binding precedent to this court. He has further relied upon M Shantilal & Co. Vs. Abbaji Maruti Jadhav, & Ors Crl. Appeal NO. 904 of 1998. However, the same is also not binding upon this court and has only pursuasive value. Further, this judgement is not applicable as facts of this case are different. In this case, the cheques in question itself was issued for discharge of a time barred debt, however, in the present case, the cheque was issued at the time of advancement of loan. Ld. Counsel for complainant has further relied upon, Order of Hon'ble Delhi High court in Crl. M C 990/2013 in Manjit Singh vs. S K Mehta & Co., however, in that order no ratio was given and the trial court was directed to decide certain issues as ordered by Hon'ble High Court.
14. Ld. Counsel for accused has further argued that admittedly the accused Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:37 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 6 had paid 78 installments, though he only had liability to pay approximately Rs. 14,000/ and not Rs. 60,000/ as claimed by the complainant. Since, the amount claimed is more than the amount due, Section 138 of NI Act is not attracted. In support of his submissions he has relied upon "Lyca Finance Ltd. Vs. State & Anr. Decided by Hon'ble High Court of Delhi on 15.07.2016". Further, Ld. Counsel for accused has submitted that the accused did not receive the legal notice, therefore, the complaint is not maintainable. Hence, the accused can not be convicted for the offence punishable under Section 138 N I Act. With these submissions, accused has prayed that he may be acquitted.
15. I have heard the rival submissions of the Ld. Counsels of the parties and carefully perused the material available on record.
16. The law as laid down in relation to the Negotiable Instruments Act is discussed in various judgments. It is settled position of law that there is a presumption in favour of the complainant and against the accused. However, the presumption is rebuttable. Hon'ble Supreme Court of India in Rangappa v. Sri Mohan (2010) 11 SCC 441 has discussed the law in detail. The Hon'ble Supreme Court has held as under:
"15. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:41 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 7 undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
17. Thus, it has been settled that there is a presumption in favour of the complainant and against the accused, that the cheque was issued for consideration. However, the presumption is rebuttable. The accused can prove that the cheque was not issued for consideration and that the accused did not have any liability to pay the amount. It has also been held that the accused need not lead evidence in support of his defence. He can prove it on the balance of probabilities by showing the contradictions in the material produced by the complainant.
18. In the present case, the accused has admitted his signatures on the cheque. It is also admitted that the cheque is drawn on account of the complainant. It is also proved that the cheque was presented for encashment and that the same was dishonored. The accused has however disputed service of legal notice. It has been argued that there is no material on record to show that legal notice was duly served upon the accused as per law.
19. I have considered the submissions. However, there are no merits in it.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date: 2022.03.28
15:04:46 +0530
CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 8
The complainant has filed the copy of legal notice and postal receipt along with tracking report. The postal receipt is not disputed. The accused has also admitted in his notice U/s 251 Cr.P.C and his statement recorded U/s 313 Cr. P.C that the address mentioned on the legal notice is his address. Once it is shown by the complainant that he had posted the legal notice at the correct address of the accused, the requirement of law stands satisfied. No further proof of service of legal notice is required. Further, as per the tracking report, the legal notice has been delivered upon the accused on 04.11.2020. The duty of the complainant was to give a legal notice. He has proved that he had given a legal notice to the accused under Section 138 N. I. Act. Hence, he has discharged the burden. It has been proved that complainant had issued a legal notice under Section 138 N.I. Act within limitation period after dishonouring of the cheque. The complaint is therefore maintainable on this aspect. I get strength from the judgment of the Hon'ble High Court of Delhi in Mayank Pathak Vs. Elcome Trading Company Pvt. Ltd. and Anr. 231 (2016) DLT 308. In the abovesaid matter before the Hon'ble High Court of Delhi, one of the ground of defence taken by the accused was that legal notice under Section 138 N. I. Act was not served upon him as it was not sent at the correct address of the petitioner. The Hon'ble High Court of Delhi, while dismissing this ground, has held that service of summons in such cases can be considered as service of notice and drawer of the cheque is having option to make the payment within 15 days of the receipt of the summons of the Court alongwith the copy of the complaint under Section 138 of the Act. The Hon'ble High Court has held as under:
"16. Other limb of argument advanced by the counsel for the petitioner is that the legal notice sent to the petitioner was never received by the petitioner as the same was never sent to the correct address of the petitioner.
"17. Perusal of record shows that legal notice Ex.CW1/9 was sent on two addresses of the petitioner i.e. L7, Back Side Ground Floor, Lajpat NagarII, New Delhi and I90, Lower Ground Floor, Lajpat Nagar, Delhi. The legal notice sent on the former address was received back with the report that the addressee had left the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:51 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 9 address. Whereas, the notice sent on the latter address was not received back. The contention of the petitioner is that his address was never of I90, Lajpat Nagar but was L90, Lajpat NagarII. Even if for the sake of arguments, it is believed that the address was not correctly mentioned on the legal notice, the judgment of Hon'ble Apex Court in the case of Alavi Haji v. Papaletty Muhammed & Anr. 2007 (2) JCC (NI) 25 makes it clear that a if person does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot contend that there was no proper service of notice as required under Section 138 of the Act. Relevant para from the judgments is quoted hereunder: "It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring the statutory presumption to the contrary under Section 17 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation.
As observed in Bhaskaran's case (supra), if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act." "12. In C.C. Alavi Haji's case (supra), it is made clear that drawer of the cheque is having option to make the payment within 15 days of the receipt of the summons of the Court along with the copy of the complaint under Section 138 of the Act. But in the present case, it is nowhere the case of the petitioner that despite having received the copy of the summons of the Court along with a copy of the complaint under Section 138 of the Act, he had made the payment. So, the service of legal notice was not mandated and the petitioner was having the opportunity to make the payment within 15 days of the receipt of the summons of the Court. Now, he cannot contend that there was no proper service of notice."
20. I have been enlightened by the judgment of the Hon'ble High Court of Delhi in Mayank Pathak v. Elcom Trading Company Pvt. Ltd. (supra). I have also been enlightened by the judgment of the Division Bench of the Hon'ble High Court of Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:04:55 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 10 Delhi in Prakash Jewellers vs A.K. Jewellers 99 (2002) DLT 244. The judgment of the Division Bench is of the year 2002. In the said case also, the accused had taken the defence that he had not received the notice under Section 138 N. I. Act. The Hon'ble High Court dismissed the objections and held as under:
"8. There is no dispute with the proposition that a statutory obligation is cast on the holder of the cheque or the payee to give notice of demand to the drawer of the cheque asking him to make a payment of the amount covered by the cheque. It is a mandatory requirement to be satisfied for constituting an offence under Section
138. "9. It is also settled that it is not the giving of the notice which makes out an offence but its receipt which furnishes a cause of action to the complainant to file the complaint within statutory period.
"10. As it is, Section 138 does not prescribe any mode for giving of demand notice by the payee or holder of the cheque. But where such notice is served by post through registered post or postal certificate, etc. with the correct address of the drawer written on it, it would raise a presumption of service unless the drawer proves that it was not received by him in fact and that he was not responsible for such nonservice. This is in tune with the principle embodied in Section 27 of the General Clauses Act or even Rule 19A of Order V CPC.
"11. Section 27 of General Clauses Act deals with the presumption of service of notice sent by post and provides that service of such notice shall be deemed to have been affected unless the contrary is proved. This principles is equally applicable to the service of notice for purpose of Section 138 of Negotiable Instrument Act also. The same could be said about the provision of Rule 19A or Order V CPC which requires a court to make a declaration of summons having been duly served and dispatched through registered post notwithstanding that AD Card had been lost or misplaced or not received back within 30 days for some other reason. The relevant proviso provides: "Provided that where the summons was properly addressed, prepaid and duly sent by registered post, acknowledgement due, the declaration referred to in this subrule shall be made notwithstanding the fact that the acknowledgement having been lost or mislaid, or for other reason, has not been received by the Court within thirty days from the date of the issue of the summons." "12. Proceeding on this premise and going by this logic, we find no hitch in taking the view that payee or the holder of a cheque was as much entitled to claim the benefit of presumption of service once he had dispatched the demand notice through registered post or postal certificate on the correct address of the sendee Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:01 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 11 written on it and where he had proved such dispatch through original receipts. It becomes inconsequential whether sender had not received back the AD card or that he could not produce or prove it for having misplaced it or for some other reason."
(Emphasis supplied).
21. In the present case also, the complainant has proved that he had issued a legal notice under Section 138 N.I. Act at the correct address of the accused and as per the tracking report the same has been delivered. In any case, the service of legal notice is to be presumed in view of the judgment of the Hon'ble High Court of Delhi in Mayank Pathak Vs. Elcome Trading Company Pvt. Ltd. and Anr. 231 (2016) DLT 308. Therefore, the argument that the complaint is not maintainable on the ground of non service of legal notice is without any merits. I hold that the complaint is maintainable on this aspect.
22. Ld. Counsel for the accused has also argued that the accused did not fill other particulars of the cheques in question and therefore presumption must be drawn that the accused is not liable to make any payment and that the complainant had misused the cheques.
23. I have considered the submission. I do not find any merits in it. It is no more res integra that the defence that particulars of the cheque were not filled by the accused is no defence in a trial under Section 138 NI Act. The accused is liable for the offence under Section 138 NI Act, even if particulars of the cheques are not filled by the drawer of the cheque, if the liability of the drawer of the cheque / accused is proved as per law. Hon'ble High Court of Delhi in Ravi Chopra vs State And Anr., decided on 13 March, 2008 : (2008) 102 DRJ 147: 2008 SCC OnLine Del 351 has discussed in detail the issue related to the defence that there was no liability as cheque was given in blank. It has been held that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either implicitly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee. In the present Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:05 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 12 case also, therefore, the defence taken by the accused that the cheque was blank is no defence to avoid the liability as the accused has admitted his signatures. Therefore, now the only question to be decided by the Court is whether there was any legally enforeceable debt or liability or not.
24. In the present case, the accused has admitted his signatures on the cheque. However, the accused has denied giving any cheque to the complainant in discharge of any legal liability and submitted that the cheque in question was obtained at the time of advancement of loan and he had not filled the particulars in cheque. Be that as it may, the first question which requires consideration in the present case is whether the complaint of the complainant is legally maintainable or not. The question is with regard to the meaning to be assigned to the expression 'legally enforceable debt or other liability' as contained in explanation to section 138 of the N.I. Act.
25. Perusal of the testimony of the complainant and loan aggreement Ex.CW1/G, would show that the loan was advanced on 08.10.2014 and its first installment was to be paid on 05.11.2014 and last installment was to be paid on 05.10.2015. Further, in his cross examination CW1 has admitted that the cheque in question was blank and it was given as security at the time of advancement of loan. As per the records, the cheque was presented for encashment on 20.10.2020 i.e. after more than 6 years of issuing of the cheque and the year of the alleged loan. As per law, limitation period to recover a loan amount is three years. Therefore, the period to recover the loan amount, even if the contention of complainant is accepted, had expired in the year 2017 or 2018 maximum. Thus, on the date of presentation of the cheque in question the debt had become barred by law of limitation.
26. The question is whether the time barred debt is a legally enforceable debt u/s 138 N.I. Act. This issue has been dealt with in Sasseriyil Joseph v. Devassia 2001 Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:10 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 13 CriLJ 24. The Hon'ble High Court of Kerala has 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 S. 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 acknowledgment 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 S. 25(3) of the Indian Contract Act. No doubt, the promise to pay a time barred cheque is valid and enforceable, if it is made in writing and signed by the person to be charged therewith. But, it is clear from S. 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 S. 138 defines the expression 'debt or other liability' as a legally enforceable debt or other liability. The explanation to S. 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, S. 138 is attracted only if the cheque is issued for the discharge of alegally 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 S. 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."
27. Similarly, Hon'ble High Court of Delhi, in M/s. Vijay Polymers Pvt. Ltd. vs M/s. Vinnay Aggarwal, Crl.M.C.1682/2008, decided on 24 April, 2009, has also discussed the law whether a complaint filed under Section 138 of the Negotiable Instruments Act is maintainable in law if the same is based upon the dishonor of a cheque which was issued in lieu of a debt which was not legally recoverable at the time of issuance of the said cheque. It has been held as under:
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date: 2022.03.28
15:05:16 +0530
CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 14
"12. A perusal of the aforesaid provision clearly goes to show that for analyzing the limitation of a civil liability beyond a period of three years, the acknowledgement, if any, must be there before period of limitation is over, which is not the case. "13. It may also be relevant to take note of the judgment delivered by the Bombay High Court in Smt. Ashwini Satish Bhat Vs. Shri Jeevan Divakar Lolienkar & Another [2000(5) Bom CR 9], wherein also in a similar case when a cheque was dishonoured which issued beyond the period of limitation the appeal filed by the complainant was dismissed. The relevant observations made in this regard in the aforesaid judgment are reproduced hereunder: "3. On the other hand, learned Advocate Shri C.A. Ferreira, appearing for the respondent, submitted before me that the dishonoured cheque in question was not in respect of a legally enforceable debt and in view of Explanation to section 138 of the said Act, the Magistrate has rightly acquitted the respondent on the said count as well as on the ground that there was doubt as to whether the amount mentioned in the said cheque was in the handwriting of the respondent as the defence of the respondent is that he had handed over to the appellant a blank cheque. In support of his submission that the dishonoured cheque in question is not in connection with any legally enforceable debt, reliance was placed by him on Girdhari Lal Rathi v. P.T.V. Ramanujachari and another, 1998 Bank J. 127 : 2000 Do Ch. (A.P.)420. He, therefore, submits that there is no case for interference with the acquittal. "4. The complainant, respondent and one Shankar Prabhudessai had entered into partnership vide Partnership Deed Exhibit P.W. 1/D on 24th August 1990. This partnership was dissolved on 13th June 1991 after an agreement was executed between the parties under which the respondent agreed to pay a sum of Rs. 1,53,724 to the appellant/complainant within 12 months and in case he fails to make the said payment during the said period, the said amount was to carry bank interest from the date of the agreement. The case of the complainant further is that the respondent did not pay the amount as agreed under the said Agreement dated 13th June, 1991, but on 19th July, 1996 the respondent issued cheque for Rs. 3,87,500/ and this cheque has bounced.
"5. The defence had taken the stand that the dishonoured cheque was not in relation to any legally enforceable debt and, as such, the respondent could not be held guilty under section 138 of the said Act. The contention of learned Advocate for the appellant is that this cheque dated 19th July 1996 itself is an acknowledgement of debt and, as such, there is no merit in the submission of the defence that the liability under dishonoured cheque is not on account of legally enforceable debt. Insofar as the dishonoured cheque is concerned, the stand taken by the respondent is that the cheque was not written by him and it is not in his handwriting and that he had, in fact, issued a blank cheque in favour of the appellant for certain purpose. This stand was specifically taken by the respondent in the course of the trial and, as such, it was Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:20 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 15 necessary for the complainant to have sought the opinion of handwriting expert in case her case was that the cheque in question was in the handwriting of the respondent, so as to rebut the theory of blank cheque taken by the respondent. It is in these circumstances that the Magistrate had come to the conclusion that the dishonoured cheque in question cannot be treated as acknowledgement under section 18 of the Limitation Act, since the acknowledgement should be before the period of limitation is over and that it should be in writing. In view of this position, the Magistrate was right in coming to the conclusion that it had not been proved that the dishonoured cheque was in relation to a legally enforceable debt or liability in law. The dishonoured cheque admittedly was issued after 5 years of the said Agreement dated 13th June 1991.
"6. 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 limitation because no acknowledgement was obtained before the expiry of 3 years from the date of loan. In these circumstances, it was held there that the debt was not legally enforceable at the time of issuance of cheque and the accused could not be punished under section 138 of the said Act. In the light of 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. "7. For the aforesaid reasons, I do not find any merit in this appeal and the appeal is liable to be dismissed. The appeal is accordingly dismissed. "14. No contrary judgment has been cited on behalf of the complainant/respondent. Accordingly the petition is allowed..."
28. Hon'ble High Court of Delhi in M/s. Jage Ram Karan Singh & Anr vs State & Anr, Crl. Rev. P. no. 82/2013, decided on 31 July, 2019, has summarized the law in this regard. It has been held as under:
"A bare perusal of the aforesaid provision clearly goes on to show that for analyzing the limitation of a liability beyond a period of three years, the acknowledgment, if any, must be there before the period of limitation is over, which is not the case in hand."
29. 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 timebarred debt, because cheque has to be given, as contemplated by the Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:25 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 16 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 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."
30. In Vijay Polymers Pvt. Ltd. & Anr. 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.
31. In the light of discussion herein above, I am of the considered opinion that the complaint is based upon a time barred debt and therefore it is not maintainable. Further, during evidence though the CW1 has admitted that the complainant had already paid 78 installments and only 34 installments were due Digitally signed by AISHWARYA AISHWARYA SHARMA SHARMA Date: 2022.03.28 15:05:29 +0530 CC NI Act. 294 of 2020 RKD Fin. Serv. Ltd. vs. Vikas Page No. 17 amounting to approximately Rs. 14,000/. Contrary to this, CW1 has denied in his cross examination that the amount due was lesser than the cheque amount, however, he has not tendered any document or any account statement in evidence to establish as to how the accused had liability of Rs. 60,000/ towards the complainant. Admittedly, the part payment of loan amount was made before the dishonour of the cheque in question, however, the complainant presented the cheque for amount higher than the loan amount without filing any account statement in evidence. In Alliance Infrastructure Project Pvt. Ltd. vs. Vinay Mittal (Crl. M C NO. 2224/2009, the Hon'ble High Court of Delhi has held that if the cheque is presented for an amount more than the amount actually payable to the payee, such a complaint should not be maintainable and the drawer of the cheque will not guilty of offence U/s 138 of NI Act.
32. Since, the first ingredient of the offence U/s 138 NI Act i.e. the issuance of the cheque in question in discharge of any legally enforceable debt or any other liability, has not been satisfied, there is no need to discuss the remaining elements of the offence. Upon consideration of facts of the case and discussion made above, I am of the considered opinion that the complainant has failed to establish the guilt of the accused and this complaint itself is not maintainable. Accordingly, the accused is hereby acquitted of offence U/s 138 of NI Act.
Digitally signed by AISHWARYA AISHWARYA SHARMA
SHARMA Date: 2022.03.28
Announced in the open court on (Aishwarya Sharma)
15:05:34 +0530
this day i.e. 28.03.2022 MM (N.I. ACT)Digital Court02/SED,
Saket Courts, New Delhi