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2018 DIGILAW 1490 (BOM)

Manohar v. Prabhakar

2018-06-22

MANISH PITALE

body2018
JUDGMENT Manish Pitale, J. (Oral) - These are the two appeals filed by the original complainant against the respondent no.1 alleging that the respondent no.1 was liable to be punished for having committed an offence under section 138 of the Negotiable Instruments Act, 1881. Since there were two cheques involved in the present cases, there were two complaints filed by the appellant resulting in two appeals before this Court. The Court of Judicial Magistrate First Class, Special Court, Nagpur acquitted the respondent no.1 by its judgments dated 06.07.2006 in Summary Criminal Case Nos.1788 of 2004 and 1789 of 2004, which are subject matter of the present two appeals. 2. In brief, the facts leading to the filing of these two appeals are that the appellant (original complainant) had given a hand loan of Rs. 80,000/to the respondent no.1 for a period of ninety days for business purpose. It was the case of the appellant that the respondent no.1 failed to repay the aforesaid loan amount and that the appellant pursued the matter with the respondent no.1 for a considerable period of time. According to the appellant, in order to repay the aforesaid loan, on 04.06.2003, the respondent no.1 issued a cheque for an amount of Rs. 30,000/in favour of the appellant and thereafter on 01.09.2004, the respondent no.1 issued another cheque for an amount of Rs. 50,000/in favour of the appellant. 3. But, when the said cheques were deposited by the appellant, they were dishonoured. The appellant issued notice to the respondent no.1 in respect of dishonour of the said cheques and thereafter, he was constrained to file criminal complaints against the respondent no.1 for having committed an offence under section 138 of the Negotiable Instruments Act, 1881. 4. The respondent no.1 claimed before the Court that he had repaid the said amount of loan and that the cheques in question had been handed over to the appellant by way of security. On this basis, it was contended that the cheques did not pertain to any legally enforceable debt or liability and therefore, the respondent no.1 could not be held guilty under Section 138 of the aforesaid Act. 5. By the impugned judgments and orders dated 06.07.2006, the trial Court has found that there was no material on record to show that the respondent no.1 had repaid the loan amount to the appellant. 5. By the impugned judgments and orders dated 06.07.2006, the trial Court has found that there was no material on record to show that the respondent no.1 had repaid the loan amount to the appellant. But, the trial Court acquitted the respondent no.1 in both the cases essentially on the ground that even if the claim of the appellant regarding advancement of hand loan to the respondent no.1 was accepted, the loan was given in the year 1999 and by the time the cheques in question were issued, the recovery of the said amount from the respondent no.1 had become barred by limitation and that therefore, the cheques issued by the respondent no.1 could not be said to be in discharge of legally enforceable debt. Consequently, the respondent no.1 could not be held to have committed an offence punishable under Section 138 of the said Act. 6. Mr. S.M. Mishrikotkar, learned counsel appearing on behalf of the appellant submits that the view taken by the trial Court was unsustainable because even if period of more than three years had elapsed from the time when the loan was advanced by the appellant to the respondent no.1, once it was found that the cheques were indeed issued by the respondent no.1, the presumption under Section 118 read with Section 139 of the said Act operated in favour of the appellant and it had to be presumed that the cheque had been issued in discharge of legal debt or liability. It was further contended that the moment the respondent no.1 signed the cheques in question on 04.06.2003 and 01.09.2004, he acknowledged his liability and therefore, upon dishonour of the said cheques, he was liable to be convicted and punished under section 138 of the Negotiable Instruments Act, 1881. 7. In support of his contention, the learned counsel relied upon the Division Bench judgment of this Court in the case of Dinesh B. Chokshi v. Rahul Vasudeo Bhatt & Another, dated 19.10.2012 passed in Criminal Application No.2933 of 2007 and connected matters. 8. In these appeals, although the contesting respondent no.1 was served, none appeared on behalf of the said respondent when these appeals were called out for hearing on 04.06.2018. Upon hearing the counsel for the appellant for some time, this Court had adjourned the appeals for hearing on 06.06.2018. 8. In these appeals, although the contesting respondent no.1 was served, none appeared on behalf of the said respondent when these appeals were called out for hearing on 04.06.2018. Upon hearing the counsel for the appellant for some time, this Court had adjourned the appeals for hearing on 06.06.2018. On the said date, learned counsel appearing on behalf of the appellant was heard in detail but, since there was no representation on behalf of the contesting respondent no.1 on 14.06.2018, this Court thought it fit to appoint Mr.R.D. Dharmadhikari as Amicus Curiae to appear on behalf of the said respondent. These appeals were then adjourned to enable the learned Amicus Curiae to prepare for arguments and the appeals were directed to be listed today. 9. Mr. R.D. Dharmadhikari, learned Amicus Curiae has appeared on behalf of the respondent no.1 and submitted that there was very little evidence placed on record by the appellant to demonstrate that hand loan as claimed by him was indeed advanced to the respondent no.1. According to the learned Amicus Curiae, the evidence in that regard was cryptic and that therefore, the order of acquittal granted by the trial Court deserved to be sustained. 10. Having heard the learned counsel for the parties, the crucial question that arises for consideration is as to whether the trial Court was justified in holding that the cheques in question were not issued in discharge of any legally enforceable debt or liability. The trial Court has found that since the appellant himself had contended that the loan was advanced in the year 1999, a period of more than three years had elapsed before the cheques in question were issued. On this basis, it has been held that when the debt itself had been barred by limitation, cheques issued by the respondent no.1 purportedly for repayment of such debt, could not be the basis for convicting the respondent no.1 under Section 138 of the aforesaid Act. 11. In the judgment of the Division Bench of this Court in the case of Dinesh Chokshi v. Rahul Bhatt & Another (Supra), relied upon by the learned counsel appearing for the appellant, the following two questions were referred to the Division Bench for consideration. 11. In the judgment of the Division Bench of this Court in the case of Dinesh Chokshi v. Rahul Bhatt & Another (Supra), relied upon by the learned counsel appearing for the appellant, the following two questions were referred to the Division Bench for consideration. "(i) Does the issuance of a cheque in repayment of a time barred debt amounts to a written promise to pay the said debt within the meaning of section 25(3) of the Indian Contract Act, 1872? (ii) If it amounts to such a promise, does such a promise, by itself, create any legally enforceable debt or other liability as contemplated by section 138 of the Negotiable Instruments Act, 1881?" 12. The first question was answered by the Division Bench of this Court in the following manner. "15. On plain reading of Section 13 of the said Act of 1881, a negotiable instrument does contain a promise to pay the amount mentioned therein. The promise is given by the drawer. Under Section 6 of the said Act of 1881, a cheque is a bill of exchange drawn on a specified banker. The drawer of a cheque promises to the person in whose name the cheque is drawn or to whom the cheque is endorsed, that the cheque on its presentation, would yield the amount specified therein. Hence, it will have to be held that a cheque is a promise within the meaning of Subsection (3) of section 25 of the Contract Act. What follows is that when a cheque is drawn to pay wholly or in part, a debt which is not enforceable only by reason of bar of limitation, the cheque amounts to a promise governed by the Subsection (3) of section 25 of the Contract Act. Such promise which is an agreement becomes exception to the general rule that an agreement without consideration is void. Though on the date of making such promise by issuing a cheque, the debt which is promised to be paid may be already time barred, in view of Subsection (3) of section 25 of the Contract Act, the promise/agreement is valid and, therefore, the same is enforceable. The promise to pay time barred debt becomes a valid contract as held by the Apex Court in the case of A.V. Moorthy (Supra). Therefore, the first question will have to be answered in the affirmative." 13. The promise to pay time barred debt becomes a valid contract as held by the Apex Court in the case of A.V. Moorthy (Supra). Therefore, the first question will have to be answered in the affirmative." 13. The second question was answered by the Division Bench of this Court in the following manner. "21. Therefore, while answering second question, we are specifically dealing with a case of promise created by a cheque issued for discharge of a time barred debt or liability. Once it is held that a cheque drawn for discharge of a time barred debt creates a promise which becomes enforceable contract, it cannot be said that the cheque is drawn in discharge of debt or liability which is not legally enforceable. The promise in the form of a cheque drawn in discharge of a time barred debt or liability becomes enforceable by virtue of Subsection (3) of section 25 of the Contract Act. Thus, such cheque becomes a cheque drawn in discharge of a legally enforceable debt as contemplated by the explanation to Section 138 of the said Act of 1881. Therefore, even the second question will have to be answered in the affirmative" 14. A perusal of the position of law enunciated in the aforesaid Division Bench judgment of this Court makes it clear that the view taken by the trial Court in the present case is not sustainable. Applying the ratio of the aforesaid judgment of the Division Bench of this Court to the facts of the present case, it becomes clear that even if period of more than three years had elapsed from the time when the appellant had advanced loan to the respondent no.1, the cheques issued by the said respondent on 04.06.2003and 01.09.2004 could not be said to be cheques not issued in discharge of legal debt or liability. In fact, the aforesaid Division Bench judgment of this Court completely covers the position of law in favour of the appellant, thereby demonstrating that the impugned judgments and orders passed by the trial Court are not sustainable. 15. In the light of the above, these appeals are allowed. The impugned judgments and orders passed by the trial Court are set aside. It is held that the respondent no.1 is guilty of having committed offence under Section 138 of the Negotiable Instrument Act, 1881. 15. In the light of the above, these appeals are allowed. The impugned judgments and orders passed by the trial Court are set aside. It is held that the respondent no.1 is guilty of having committed offence under Section 138 of the Negotiable Instrument Act, 1881. Accordingly, he is convicted under the said provision and he is directed to pay compensation to the tune of double the amount of the two cheques, which comes to Rs. 1,60,000/to the appellant under section 357(3) of the Code of Criminal Procedure, 1973. The said amount of compensation shall be paid by the respondent no.1 within a period of two months from the date of this order, failing which he shall suffer imprisonment for a period of three months. Both the appeals are disposed of in the aforesaid terms. 16. This Court places on record its appreciation for Mr.R.D. Dharmadhikari, learned counsel, who readily agreed to appear and assist this Court as Amicus Curiae on behalf of the respondent no.1.