Aarikatla Srinivasa Reddy vs The State Of A.P., Rep. By Its P.P. ...
2022 Latest Caselaw 2772 AP

          THE HON'BLE SRI JUSTICE C. PRAVEEN KUMAR

                 Criminal Petition No. 9224 of 2013
ORDER:

1) The present application is filed under Section 482 of Code of

Criminal Procedure, 1973, ["Cr.P.C."] seeking quashing of

proceedings in C.C. No. 344 of 2012 on the file of Judicial Magistrate

of First Class, Macherla, Guntur District.

2) The 2nd Respondent herein filed a private complaint against the

Petitioner/Accused for an offence punishable under Section 138 of

Negotiable Instruments Act. The allegations in the complaint, are as

under:

(i) Both, the complainant and the accused are close friends and

there were money transactions between them since 2008. It is

said that, accused used to borrow money from the complainant

as and when he is in need of it.

(ii) On 07.05.2008 and 15.05.2008, the accused is said to have

received a sum of Rs.10,00,000/-, on both dates from the

complainant agreeing to pay the same with interest @ 24% per

annum. The said amount was paid by way of cheques through

his account at HDFC Bank, Kukatpalli Branch, Hyderabad.

Subsequent thereto, there were some transactions between the

accused and the complainant. On 27.06.2012, the

complainant found the total amount due by the accused was

about Rs.25,75,000/- and with a view to discharge the same, a

cheque bearing No. 629816 came to be issued, which was

drawn on Syndicate Bank, Snehapuri Colony, Borabonda,

Hyderabad, in favour of the complainant. Though the accused

represented the account was having sufficient funds to honour

the cheque, but when presented, the cheque was dishonoured

on the ground of "insufficient funds".

(iii) On 03.09.2012, the complainant again presented the said

cheque in his account at HDFC Bank, Macherla Branch and

the bank authorities forwarded the cheque to the accused

bank for collection, which was returned due to "stop payment

instructions" given by the accused.

(iv) A legal notice came to be issued on 21.09.2012 demanding

repayment of the amount due, which was served on

24.09.2012. Later on, the present complaint came to be filed

on 31.10.2012, which was taken on file as C.C. No. 344 of

2012 on the file of Judicial Magistrate of First Class, Macherla,

Guntur District. Challenging the same, the present application

is filed seeking quashing of proceedings only on the ground

that since the debt is time barred, proceedings under Section

138 of Negotiable Instruments Act, cannot be continued.

3) In other words, the argument of Sri. P. Nagendra Reddy,

learned Counsel for the Petitioner is that the accused borrowed

Rs.20,00,000/- in the year 2008 and the repayment period of three

years expired in the year 2011. When the complainant cannot

enforce the said liability as it is "time barred", entertaining a

complaint filed under Section 138 of Negotiable Instruments Act, is

bad in law. He relied upon the judgments of this Court in

A.Yesubabu V. D. Appala Swamy and Another1; Padala Veera

Venkata Satyanarayana Reddy V. State of A.P. represented by

Public Prosecutor2; and unreported Judgment of another learned

Single Judge in Gerard Kollian V. M/s. Weis Electronics and

Industrial Services (P) Limited, Secunderabad and another3, in

support of his plea.

4) On the other hand, learned Counsel appearing for the

Respondent No.2 - Sri. Srikanth Reddy Ambati, opposed the same

contending that in view of the subsequent judgment of the Hon'ble

Supreme Court in A.V. Murthy V. B.S. Nagabasavanna4 and the

recent judgment in S. Natarajan V. Sama Dharman And

Another5, the criminal petition has to be dismissed.

5) The point that arises for consideration is, whether an application under Section 482 Cr.P.C. can be entertained to quash a complaint on the ground that debt is "time barred", or in other words, whether the accused can be prosecuted for dishonour of cheque under Section 138 of the Negotiable Instruments Act, when there is no subsisting debt?

6) In A. Yesubabu [cited 1st supra], the learned Single Judge of

this Court in paragraphs Nos. 10, 11, and 12 held as under:

"10. The main contention of the learned Counsel appearing on behalf of the appellant-accused is that the debt covered by Ex. P1 and Ex. P2 receipts is time-barred and that there was no legally enforceable debt or liability for the complainant to

2003 (2) ALD (Crl.) 707 (AP)

2019 (1) ALT (Crl) 394 (S.B)

Crl.A. No. 1255 of 2008, dated 03.06.2014

(2002) 2 Supreme Court Cases 642

(2021) 6 Supreme Court Cases 413

recover the amount covered under Ex. P1 and Ex. P2 receipts through the process of the Court and, therefore, it is evident that the cheque in question was given for a time barred debt and, therefore, the accused has not committed the offence punishable under Section 138 of the Negotiable Instruments Act.

11. In support of his contention, the learned Counsel for the appellant relied upon a decision of this Court in Girdhari Lal Rathi v. P.T.V. Ramanujachari and Anr., 1997(2) Crimes 658, wherein this Court in para 7 held thus:

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 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".

12. To the same effect, a Division Bench of this Court in Mr.Amit Desai and Anr. v. Shine Enterprises and Anr., 2000 Crl. Law Journal 2386, held that the Explanation to Section 138 of the Negotiable Instruments Act 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 the Negotiable Instruments Act.

7) In Padala Veera Venkata Satyanarayana Reddy [cited 2nd

supra], the learned Single Judge of this Court observed as under:

8. 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 acknowledgment 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 no acknowledgment is alleged to have been obtained by the appellant from R1-accused, before expiry of three years from the date of loan. It was held that the debt was not legally enforceable at the time of issuance of 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 legally enforceable debt."

A Division Bench judgment of this Court was also relied upon by the High Court, which is 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.

9. 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."

8) From the judgments referred to above, it is very much evident

that the recovery sought to be made by way of suit, on a time barred

debt, proceedings under Section 138 cannot be initiated for the

cheques issued in discharge of the said debt.

9) However, in A.V. Murthy [cited 4th supra], the Hon'ble Apex

Court was dealing with a situation where the accused is said to have

issued a cheque in respect of sum advanced by the complainant four

years ago and the same was dishonoured for the reason "account

closed". Summons were issued by the Magistrate to the accused. The

Sessions Court quashed the entire proceedings on the ground that

the borrowing was barred by limitation [time barred], as at the time

of issuance of cheque, there was no legally enforceable debt or

liability against the accused and, therefore, the complaint was not

maintainable.

10) While dealing with the same, the Hon'ble Supreme Court

observed that, "under Section 118 of N.I. Act, there is a presumption

that until the contrary is proved, every negotiable instrument is

presumed to have been drawn for a consideration. The Hon'ble Apex

Court further held that, in Section 139 of the N.I. Act, it is

specifically stated that it shall be presumed, unless the contrary is

proved, that the holder of a cheque received the cheque of the nature

referred to in Section 138 for discharge, in whole or in part, of any

debt or other liability. The Hon'ble Apex Court also referred to

Section 25 (3) of the Indian Contract Act, 1872. Referring to facts,

the Hon'ble Apex Court observed that, the complainant therein has

submitted balance sheet prepared for every year subsequent to the

loan advanced by the complainant and as deposits from friends. As

the amount borrowed by the accused is shown in the balance sheet,

it amounts to acknowledgement and the creditor might have a fresh

period of limitation from the date on which the acknowledgement

was made and, accordingly, held that it is premature to say that

cheque drawn by the accused was in respect of time barred debt or

liability, which is not enforceable and, accordingly, set-aside the

order passed by the High Court upholding the order of the Sessions

Court.

11) In Rangappa V. Mohan6, the legal question before the Hon'ble

Court pertains to interpretation of Section 139 of the N.I. Act. The

Hon'ble Supreme Court observed that, Section 139 of N.I. Act,

includes a presumption that there exists a legally enforceable debt

or liability, which is a rebuttal one.

12) In S. Natarajan [cited 5th supra], the Hon'ble Supreme Court

was dealing with a situation where accused gave a cheque, dated

01.02.2011, which was presented by the complainant on

2010 (2) ALD (Cri) 234 (SC) : AIR 2001 SC

02.02.2011. The same was dishonoured on the ground that the

accused did not have sufficient funds in his account. It is also to be

noted that, the cheque was issued in respect of the amounts

received by the accused on 06.05.2006, 04.07.2006 and on

11.01.2007. After the dishonour of the cheque, a notice was issued

on 02.03.2011 calling upon the accused to pay the cheque amount

of Rs. 3,00,000/- and as no amount was paid, a complaint was filed

under Section 138 of N.I. Act. An application was moved before the

Madras High Court for quashing of proceedings mainly on the

ground that the debt is 'time barred'. The High Court quashed the

proceedings holding that the complaint was time barred, which was

challenged before the Hon'ble Supreme Court. After referring to

Section 25 (3) of the Contract Act; Section 139 of N.I. Act and the

judgments referred to above, the Hon'ble Supreme Court held that

the High Court could not have quashed the proceedings on the

ground that at the time of issuance of cheque, the debt was "time

barred".

13) The main ground on which the Hon'ble Supreme Court

opposed the findings of the Madras High Court was that there is a

presumption under Section 138 of N.I. Act, which postulates that, in

cheque bouncing cases, the initial presumption incorporated in

Section 139 of the N.I. Act favours the complainant and the accused

has to rebut the said presumption and discharge the reverse onus

by adducing evidence. In other words, the defence taken, namely

that it is a time barred debt has to be proved during the course of

trial and should not be quashed having regard to the presumption

under Section 139 of N.I. Act.

14) In view of the Judgment of the Hon'ble Supreme Court in

S.Natarajan [cited 5th supra], wherein the facts are identical to the

case on hand, I see no ground to quash the proceedings in C.C.

No.344 of 2012 on the file of Judicial Magistrate of First Class,

Macherla, Guntur District. Accordingly, the Criminal Petition is

dismissed. No order as to costs.

15) Consequently, miscellaneous petitions pending, if any, shall

stand closed.

______________________________ JUSTICE C.PRAVEEN KUMAR Date: 27.06.2022.

SM...

THE HON'BLE SRI JUSTICE C. PRAVEEN KUMAR

Criminal Petition No. 9224 of 2013

Date: 27.06.2022

SM.