Prajan Kumar Jain vs Ravi Malhotra
2009 Latest Caselaw 4310 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                    Judgment Reserved on: 21st October, 2009
                    Judgment Delivered on: 26th October, 2009


+             CRL.M.C.1869/2007 & Crl.M.A.Nos.6479/2007
              & 12998/2007


        PRAJAN KUMAR JAIN                              ..... Petitioner
                       Through:       Mr.R.P.Sharma and
                                      Mr.Amit Punj, Advocates.

                    Versus


        RAVI MALHOTRA                              ..... Respondent
                          Through:    Mr.M.L.Mahajan and
                                      Mr.Gaurav Mahajan,
                                      Advocates.

CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

     1. Whether the Reporters of local papers may be
        allowed to see the judgment?

     2. To be referred to the Reporter or not?           Yes

     3. Whether the judgment should be reported in the
        Digest?                                      Yes

INDERMEET KAUR, J.

1. This petition seeks quashing of the complaint No.1535/1

titled as Sh.Ravi Malhotra vs. Sh.Prajan Kumar Jain filed under

Sections 138/142 of the Negotiable Instruments Act (hereinafter

referred to as NI Act) read with Section 420 of the Indian Penal

Code. Complainant is Ravi Malhotra. Prajan Kumar Jain has been

arrayed as the accused.

2. The short point raised in this petition is that the two cheques

i.e. cheque no.7375535 dated 25.3.2005 for Rs.5 lakhs and

cheque no.7375536 dated 30.4.2005 for Rs.5 lakhs do not come

within the ambit of a 'legally enforceable debt'. The said cheques

had been issued for the discharge of a liability arising out of an

agreement dated 14.6.2000; and having been issued on 25.3.2005

and 30.4.2005 were for the discharge of debt which had become

time barred. The complaint is thus liable to be quashed.

3. To appreciate this submission salient paragraphs of the

complaint filed by Ravi Malhotra are reproduced.:

"2. That by an agreement dated 14.06.2000, entered into by the complainant with the accused and his brother, Shri Vijay Kumar Jain, to purchase the agricultural land measuring 12 Bighas and 03 Biswas, bearing Mustatil No.54, Killa No.14/2 (3-12), 17 (2-19), 7 (4-17), 14/1 (0-15), situated at village Bharthal, Tehsil Vasant Vihar, New Delhi, for the consideration of rupees 2 Crores 30 Lakhs. The complainant paid a sum of rupees 30 Lakhs to the accused and his brother Shri Vijay Kumar Jain, who were jointly maintained as Party No.1 in the said agreement.

3. That after sometimes the parties agreed to terminate the agreement and the accused alongwith his brother, Shri Vijay Kumar Jain, promised to return the advance money of rupees 30 Lakhs paid by the complainant to the accused and his brother. This settlement took place on 26.01.2005, whereby the accused and his brother acknowledged to pay the

balance amount in short time and the agreement was terminated.

4. That in the discharge of his liability of debt arising out of the agreement dated 14.6.2000 between the accused and his brother, Shri Vijay Kumar Jain on the one hand and the complainant on the other, the accued agreed to pay a sum of Rs.10,00,000/- (Rupees ten lakhs) and in lieu thereof the accued issued two post dated cheques drawn on the Jammu & Kashmir Bank Ltd., Sector-3, Krishna Complex, Trikuta Nagar, Jammu in favour of the complainant. The details whereof are as under:-

1. 7375535 dated 25.3.2005 for Rs.5,00,000/-.

1. 7375536 dated 30.4.2005 for Rs.5,00,000/-.‖

4. Learned counsel for the petitioner has placed reliance upon

a judgment reported in Vijay Polymers Pvt. Ltd. & Anr. vs. Vinnay

Aggarwal 162 (2009) DLT 23 to support his submission that the

cheques issued in lieu of a time barred debt does not come within

the definition of a 'legally enforceable debt' as is contained in the

Explanation of Section 138 of the NI Act. Cheques issued for the

discharge of such a time barred debt cannot become the subject

matter of a complaint under Section 138 of the NI Act; the

agreement in this case having terminated on 14.6.2000 and

cheques having been issued almost five years later i.e. on

25.3.2005 and 30.4.2005, there being no enlargement of period of

limitation, it is clear that at this point of time the liability, if any,

qua the accused had become time barred. Reliance has also been

placed upon Sasseriyil Joseph vs. Devassia 2001 Crl.LJ 24 to

support this submission. It is further submitted that the

presumption which is contained in Section 139 of the NI Act only

raises a presumption that the said cheque has been issued for the

discharge of a debt or liability and the existence of a legally

recoverable debt is not a matter of presumption under the

aforestated provision of law. For this proposition reliance has

been placed upon Krishna Janardhan Bhat vs. Dattatraya G. Hegde

(2008) 4 SCC 54.

5. These submissions have countered by the learned counsel

for the complainant. It is submitted that it is not in dispute that the

parties had entered into an agreement dated 14.6.2000 which had

fizzled out and they had agreed to terminate the agreement. This

settlement had taken place on 26.1.2005 whereby the accused

and his brother had acknowledged to pay the balance amount

within a short time; thereafter the aforesaid two cheques dated

25.3.2005 and 30.4.2005 for Rs.5 lakhs each had been issued. It

is submitted that this acknowledgment to pay the balance amount

would constitute a fresh period of limitation and even otherwise

these are disputed questions of facts and being a matter of trial,

cannot become the subject matter of a quashing petition; if there

is documentary evidence which might amount to an

acknowledgment reviving the period of limitation such a question

can only be agitated before the Magistrate by way of a defence of

the respondent. Reliance has been placed upon A.V.Murthy vs.

B.S.Nagabasavanna (2002) 2 SCC 642 as also MMTC Ltd. and Anr.

vs. Medical Chemicals and Pharma (P) Ltd. and Anr. IV (2001) CCR

316 (SC) to support this argument. There is also no specific

requirement that the complainant must specifically allege in the

complaint that there was a subsisting liability; burden of proving

that there was no such existing debt or liability is on the

respondents which they have to discharge at the stage of trial. It

is submitted that in Woods & Ors. Vs. State & Anr. 121 (2005) DLT

314, it has been held that where there is no inherent defect in a

complaint under Section 138 of the NI Act, a petition under Section

482 of the Cr.PC would not be maintainable. Reliance has also

been placed upon Bishan Dayal vs. Dinesh Kumar Singal 2007 (2)

DCR 161 to support the argument that the question whether a

legally enforceable debt exists or not should not be pre-judged by

the High Court and the invocation of powers by the High Court in

such circumstances under Section 482 Cr.PC would not be

justified.

6. The record has been perused and the submissions have

been noted.

7. To better appreciate the contentions of the parties, the

provisions of Section 138 of the Negotiable Instruments Act are

reproduced hereunder:

―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 provision 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)..........

(b)..........

(c)..........

Explanation. - For the purposes of this section, ―debt or other liability‖ means a legally enforceable debt or other liability.‖

8. At this juncture, it would also be appropriate to take note of

Section 18 of the Limitation Act which inter alia reads as follows:

―18. Effect of acknowledgement in writing--(1) Where, before the expiration of the prescribed period for a suit or application in respect of 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 derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was so signed.

.........‖

9. Perusal of the complaint shows that an agreement dated

14.6.2000 had been entered into between the complainant and

the accused and his brother Vijay Kumar Jain to purchase

agricultural land for a consideration of Rs.2.30 crores. A sum of

Rs.30 lakhs was accordingly paid by the complainant to the

accused and his brother. Complaint further recites that after

sometime the parties had agreed to terminate this agreement and

the accused and his brother Vijay Kumar Jain promised to return

the sum of Rs.30 lakhs paid by the complainant to him. This

settlement took place on 26.1.2005 on which date the accused

and his brother had acknowledged to pay the balance amount in a

short time. Further part of the complaint states that in discharge

of this liability of the debt arising out of the agreement dated

14.6.2000 the accused agreed to pay a sum of Rs.10 lakhs vide

two post-dated cheques dated 25.3.2005 and 30.4.2005 of Rs.5

lakhs each.

10. The facts as detailed in the complaint show that the

agreement between the parties was dated 14.6.2000. Pursuant to

this agreement, the complainant had paid Rs.30 lakhs to the

accused which the accused had agreed to repay as the agreement

had terminated. On 26.1.2005 i.e. four and half years after the

termination of this agreement, the accused and his brother

acknowledged to pay the balance amount in a short time. This

acknowledgment 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

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

acknowledgment under Section 18 of the Limitation Act which is

admittedly not so in the instant case. In this case this

acknowledgment 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 being

in writing. It was thus not a valid acknowledgment. Cheques

issued on 25.3.2005 and 30.4.2005 were clearly outside the period

of limitation.

11. In Vijay Polymers Pvt. Ltd. & Anr.(supra), relying upon the

judgment of Hon'ble Supreme Court in Sasseriyil Joseph (supra) a

coordinate bench of this court had held that cheques issued on 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 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. The

existence of a legally recoverable debt is also not a matter of

presumption as has been held by the Supreme Court in Krishna

Janardhan Bhat (supra).

12. The judgments relied upon by the learned defence counsel

are distinct on their facts. In the case of A.V.Murthy (supra), the

hon'ble Supreme Court had held that the question of an

acknowledgment reviving the period of limitation could be

agitated before the Magistrate, in a case where there was

documentary evidence; in the said case the balance sheet of the

respondent had acknowledged his liability; there is no such

documentary evidence in this case.

13. The judgments of MMTC Ltd.& Anr. (supra) as also the

subsequent judgments of Woods & Ors. (supra) and Bishan Dayal

(supra) do not relate to the issue as to whether the transaction

had become time barred or not; the facts of the said cases would

be inapplicable.

14. In the instant case, the two cheques which are the subject

matter of this complaint were for the discharge of a liability of a

debt arising out of the agreement dated 14.6.2000 which debt had

become time barred. This debt was not a legally enforceable debt

within the meaning of Section 138 Explanation of the NI Act.

Complaint and all proceedings emanating therefrom are

accordingly quashed.

(INDERMEET KAUR) JUDGE

26th October, 2009 rb