IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 8.12.2010 CORAM THE HONOURABLE MR. JUSTICE G.M. AKBAR ALI CRL.O.P.No.19551 of 2010 and M.P.No.1 of 2010 K. Kumaravel ... Petitioner vs R.P. Rathinam ... Respondent Criminal Original Petition filed under Section 482 Cr.P.C. for the reliefs as stated therein. For petitioner : Mr.S. Shanmugavelayutham Senior Counsel for Mr.R. Rajaramani For respondent : Mr.R. Karthikeyan for Mr.P. Mathivanan O R D E R The petition is filed seeking a direction to call for the records pertaining to the case in STC No.1126/2010 on the file of the learned Judicial Magistrate No.I, Mettur Dam and quash the same. 2. The respondent filed a private complaint under Sec.138 of Negotiable Instruments Act stating that the petitioner had business transaction with the complainant's wife Madheswari and she invested a sum of Rs.5,00,000/- to start a cloth store and the petitioner joined in the shop in order to help the complainant's wife. It is further submitted that the petitioner took over the business but has not furnished any accounts to the complainant's wife. The said Madheswari preferred a complaint and the petitioner came forward for a settlement and agreed to pay a sum of Rs.10,00,000/- and gave a post dated cheque for the same amount on 20.3.2010. However, the cheque was issued in the name of the complainant. The complainant deposited the cheque on 6.4.2010 with the State Bank of India, Mettur and on 13.4.2010, the cheque returned with an endorsement "Funds insufficient". The complainant issued a notice dated 27.4.2010 and the petitioner failed to pay the amount due under the cheque. Therefore, the proceeding has been initiated under Sec.138 of Negotiable Instruments Act. https://hcservices.ecourts.gov.in/hcservices/ 3. Aggrieved by taking cognizance of the private complaint the petitioner is before this court to quash the proceedings on the following grounds: i) There was no subsisting liability with the complainant and the cheque was not supported by any consideration. ii) The petitioner never borrowed any money from the respondent and did not issue any cheque to discharge any existing liability. iii) For the amount due to the respondent's wife, the respondent cannot receive the cheque and maintain a criminal complaint. iv) The alleged transaction took place in the year 2003 and therefore, it is time barred debt which is not legally enforceable debt. 4. Mr.S.Shanmugavelayutham, learned senior counsel for the petitioner submitted that even according to the complainant, the amount was due and payable only to one Madheswari, the wife of the complainant, but the cheque was issued in the name of the complainant and there is no legally enforceable debt . The learned senior counsel further pointed out that the complainant has claimed settlement of accounts for the business of the year 2003 and only in the year 2008 a demand was made and the alleged cheque was issued only in the year 2010 and therefore, the alleged amount itself is time barred debt and the proceedings are not maintainable. 5. The learned senior counsel relied on 1997 2 Crimes 658 (Giridhari Lal Rathi vs P.T.V Ramanujachari and another), wherein the Single Judge of Andhra Pradesh High Court has held as follows: " 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 loan. Thus it is crystal clear that the debt was not legally enforceable at the time of issuance of the cheque and therefore, vide https://hcservices.ecourts.gov.in/hcservices/ 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 of 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". 6. He also relied on 2001 MLJ Crl 115 (Joseph vs Devassia), wherein the Kerala High Court held as follows: "7. Thus, Sec.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. 7. The learned counsel relied on a decision reported in 2002 (2) MWN (Cr.)DCC (SC)46 (A.V. Murthy vs B.S. Nagabasavanna), wherein the Supreme Court held as follows: "6. This is not a case where the cheque was drawn in respect of a debt or liability, which was completely barred from being enforced under law. If for example, the cheque was drawn in respect of a debt or liability payable under a wagering contract, it could have been said that that debt or liability is not legally enforceable as it is a claim, which is prohibited under law. This case is not a case of that type. But we are certain that at this stage of the proceedings, to say https://hcservices.ecourts.gov.in/hcservices/ that the cheque drawn by the respondent was in respect of a debt or liability, which was not legally enforceable was clearly illegal and erroneous. 8. In 2005 (1) MWN (Cr.) DCC (Mad.) (Rajendra Finance rep by Power of Attorney Mr.A.R.G. Laxmi Narayana vs S. Alosius Thairiyanatham) where a learned single judge of this court has held as follows: "To attract Debt or Liability under Sec.138, N.I.Act, the cheque ought to have been 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 ay debt or other liability". 9. In 2009(3) MWN (Cr.) DCC 31 (S. Kamatchi and Others vs M/s Arkaa Medicament through its Managing Director, A. Dhanasekaran and another, where a learned single Judge of this court held as follows: "21. It is an everlasting principle of law that a person who institutes a legal proceeding is bound to say that the same is within the contour of limitation. But it is not the duty of opposite party to take the plea of limitation as a defence and the Court is having ample power to look into limitation even though the same has not been taken as a defence." 10. In 2002 (2) SCC 642 (A.V. Murthy vs B.S.Nagabasavanna), wherein the Apex Court has held as follows: "This is not a case where the cheque was drawn in respect of a debt or liability, which was completely barred from being enforced under law. If for example, the cheque was drawn in respect of a debt or liability payable under a wagering contract, it could have been said that the debt or liability is not legally enforceable as it is a claim, which is prohibited under law. This case is not a case of that type. But we are certain that at this stage of the proceedings, to say that the cheque drawn by the respondent was in respect of a debt or liability, which was not https://hcservices.ecourts.gov.in/hcservices/ legally enforceable, was clearly illegal and erroneous". 11. On the contrary, Mr.R. Karthikeyan, for Mr.P.Mathivanan submitted that only for a legally enforceable debt, the cheque was issued on 20.3.2010. The learned counsel pointed out that the petitioner had admitted the liability and only thereafter the cheque was issued. According to the respondents, the liability is not time barred and it is legally enforceable. 12. The point for consideration that arises in this petition is whether there is a legally enforceable debt in a time barred debt. 13. Heard both sides and perused the materials available on record. 14. According to the complainant, the petitioner was due and payable under a business transaction of the year 2003. The business transaction itself was with the complainant's wife Madheswari. According to the respondent the petitioner was maintaining the accounts and shared the profits with the said Madheswari. After five years, the complainant and his wife Madheswari, had made a demand in the profits from the petitioner. Only thereafter, the alleged cheque was issued. Issuing of cheque was not denied by the petitioner. However, the defence taken by the petitioner is that the debt itself was time barred and there is no legally enforceable debt. 15. To attract liability under Sec.138 of the Negotiable Instruments Act , cheque should have been drawn to discharge a legally enforceable debt or liability. In other words if a cheque has been given not for a legally enforceable debt or liability, the court cannot come to the conclusion the drawer of the cheque has committed an offence . There can be an acknowledgement for a time barred debt, but drawing of a cheque itself is not an acknowledgement unless the debt was enforceable on the date of issuance of a cheque. Sec.139 reads as follows: 16. Sec.139 of the Negotiable Instruments Act: It shall be presumed unless the contrary is proved that the holder of a cheque received the cheque of the nature referred to in Sec.138 for the discharge in whole or in part of any debt or other liability"...... 17. There is always a presumption of liability under Sec.139, however, it is also a rebuttable presumption. In 1997 2 Crimes 658 (Giridhari Lal Rathi vs P.T.V Ramanujachari and https://hcservices.ecourts.gov.in/hcservices/ another), it is held that by issuance of the cheque, the limitation for realising the loan amount cannot be taken as extended, because at the time of issuance of the cheque,a cheque should be for a legally recoverable debt. In 2002 (2) SCC 642 (A.V. Murthy vs B.S.Nagabasavanna), cited supra, the Supreme Court held "for example if the cheque was drawn in respect of a debt or liability payable under a wagering contract, it could have been said that the debt or liability is not legally enforceable as it is a claim which is prohibited under law. Likewise, a time barred debt is also not legally enforceable debt. 18. In the present case, the complainant himself admits that the business transaction was in the year 2003 and after five years, the complainant and his wife demanded the profit and on mediation, the petitioner agreed to pay a sum of Rs.10,00,000/- that too in advance to the settlement and issued a post dated cheque in the name of the complainant. Even assuming that there is a debt it was only payable to the complainant's wife and not to the petitioner. 19. Under Sec.482 Cr.P.C, Courts can interfere in a proceeding if it is found that there is abuse of process of law and the continuance of the proceedings is an harassment to the party. Therefore, it is a fit case to interfere. 20. In the result, the criminal original petition is allowed and the proceedings in STC No.1126/2010 on the file of the learned Judicial Magistrate No.I, Mettur Dam is quashed. Consequently, connected MP is closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar sr To 1. The Judicial Magistrate No.I, Mettur Dam. 2. -do- Through The Chief Judicial Magistrate, Salem. 1 cc To Mr.R.Rajamani, Advocate, SR.88091. Crl.O.P.No.19551 of 2010 KU(CO) RVL 23.12.2010 https://hcservices.ecourts.gov.in/hcservices/