Whether the court can hold surety liable for the dishonour of cheque if the complainant has failed to prove that accused had issued cheque toward liability of principal debtor?

Complainant in cross-examination further disclosed that he received the cheque Ex. 15 from Srushti Financer. However, there is no material on record nor it is the case of the complainant that any liability of Rs. 14,50,000 was existing against Srushti Financer and same is accepted by the accused and issued cheque Ex. 15 for discharging liability of Srushti Financer. No any document is placed on record by complainant to show any relation of the accused in respect of any loan transaction between the complainant and Srushti Financer. It is also not case of the complainant that accused accepted the liability of Srushti Financer and issued the cheque. No any document creating the liability of the accused is produced on record. If the cheque is drawn by the accused without accepting liability of another in writing, it does not attract Section 138 of N.I.Act. In this regard, reliance can be placed on the case of Hiten Sagar & Anr. v. IMC Ltd. & Anr. MANU/MH/0276/2001 : 2001 (3) CCC 571 (Bom.) : 2001 Cri. LJ 4311 wherein this Court has held that:

If the cheque drawn for discharge of liability of another person without creating any document, it does not come under section 138 of N.I.Act.

6. So, in view of the above reason, it is clear that on the date of cheque Ex. 15, no any evidence liability was existing against the accused and no any evidence that liability on the date of cheque was existing against the Srushti Financer and same was accepted by the accused and hence he issued the cheque.

IN THE HIGH COURT OF BOMBAY

Criminal Application No. 3661 of 2007

Decided On: 24.04.2008

 Nandkishore Mehra  Vs.  Sudhir Transport Ltd. and Ors.

Hon'ble Judges/Coram:

V.K. Tahilramani, J.

Citation: MANU/MH/1616/2008

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Whether court can draw presumption that cheque was issued legally enforceable debt or liability if accused admits his signature on cheque?

Coming back to the facts in the present case and considering the fact that the Accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time, after the earlier cheques were dishonoured and that even according to the Accused some amount was due and payable, there is a presumption Under Section 139 of the N.I. Act that there exists a legally enforceable debt or liability. of course such presumption is rebuttable in nature. However, to rebut the presumption the Accused was required to lead the evidence that full amount due and payable to the complainant has been paid. In the present case, no such evidence has been led by the Accused. The story put forward by the Accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time, after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the N.I. Act. It appears that both, the Learned Trial Court as well as the High Court, have committed error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption Under Section 139 of N.I. Act. As observed above, Section 139 of the Act is an example of reverse onus Clause and therefore once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the Accused to rebut such presumption by leading evidence.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 271 and 272 of 2020

Decided On: 14.02.2020

APS Forex Services Pvt. Ltd. Vs.  Shakti International Fashion Linkers and Ors.

Hon'ble Judges/Coram:

Ashok Bhushan and M.R. Shah, JJ.

Citation: MANU/SC/0179/2020

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Whether court can raise presumption U/S 139 of NI Act even if there is no pleading in complaint?

The use of the phrase “until the contrary is proved” in Section
118 of the Act and use of the words “unless the contrary is
proved” in Section 139 of the Act read with definitions of “may
presume” and “shall presume” as given in Section 4 of the
Evidence Act, makes it at once clear that presumptions to be
raised under both the provisions are rebuttable. When a
presumption is rebuttable, it only points out that the party on
whom lies the duty of going forward with evidence, on the fact
presumed and when that party has produced evidence fairly and
reasonably tending to show that the real fact is not as presumed,
the purpose of the presumption is over.
20. The accused in a trial under Section 138 of the Act has two
options. He can either show that consideration and debt did not
exist or that under the particular circumstances of the case the
non-existence of consideration and debt is so probable that a
prudent man ought to suppose that no consideration and debt
existed. To rebut the statutory presumptions an accused is not
expected to prove his defence beyond reasonable doubt as is
expected of the complainant in a criminal trial. The accused may
adduce direct evidence to prove that the note in question was
not supported by consideration and that there was no debt or
liability to be discharged by him. However, the court need not
insist in every case that the accused should disprove the nonexistence
of consideration and debt by leading direct evidence
because the existence of negative evidence is neither possible
nor contemplated. At the same time, it is clear that bare denial of
the passing of the consideration and existence of debt,
apparently would not serve the purpose of the accused.
Something which is probable has to be brought on record for
getting the burden of proof shifted to the complainant. To
disprove the presumptions, the accused should bring on record
such facts and circumstances, upon consideration of which, the
court may either believe that the consideration and debt did not
exist or their non-existence was so probable that a prudent man
would under the circumstances of the case, act upon the plea

that they did not exist. Apart from adducing direct evidence to
prove that the note in question was not supported by
consideration or that he had not incurred any debt or liability, the
accused may also rely upon circumstantial evidence and if the
circumstances so relied upon are compelling, the burden may
likewise shift again on to the complainant. The accused may also
rely upon presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act to rebut the presumptions
arising under Sections 118 and 139 of the Act.” [underlining
added].
18. In the present case, by examining himself as PW-1, the
complainant has discharged the initial burden cast upon him
that the cheques were issued for the rice bags purchased on
credit. With the examination of PW-1, the statutory
presumption under Section 139 of the Act arises that the
cheques were issued by the respondent-accused for the
discharge of any debt or other liability in whole or in part. The
courts below disbelieved the evidence of the complainant on
the ground that there are no averments in the complaint that
the commodities were sold for cash and that the rice bags were
sold on credit and the cheques were issued for the goods sold
on credit. Though the complaint contains no specific
averments that the cheques were issued for the purchase
made on credit, in his evidence, PW-1 clearly stated that the
cheques were issued for the commodities purchased on credit.

The courts below erred in brushing aside the evidence of PW-1
on the ground that there were no averments in the complaint as
to the purchases made by cash and purchase. The courts
below also erred in not raising the statutory presumption under
Section 139 of the Act that the complainant received the
cheques to discharge the debt or other liability in whole or in
part.
19. It is for the respondent-accused to adduce evidence to
prove that the cheques were not supported by consideration
and that there was no debt or liability to be discharged by him.
The receipts-Ex.-22/C (colly) relied upon by the respondentaccused
do not create doubt about the purchases made on
credit and the existence of a legally enforceable debt for which
the cheques were issued. The courts below erred in saying
that by the receipts-Ex.22/C (colly), the respondent-accused
has rebutted the statutory presumption raised under Section
139 of the Negotiable Instruments Act. The oral and the
documentary evidence adduced by the complainant are
sufficient to prove that it was a legally enforceable debt and that
the cheques were issued to discharge the legally enforceable

debt. With the evidence adduced by the complainant, the
courts below ought to have raised the presumption under
Section 139 of the Act. The evidence adduced by the
respondent-accused is not sufficient to rebut the presumption
raised under Section 139 of the Act. The defence of the
respondent that though he made payment for the
commodities/rice bags, the blank cheques were not returned by
the appellant-complainant is quite unbelievable and
unacceptable. The impugned judgment of the High Court
cannot be sustained and is liable to be set aside. 
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.61-62 OF 2011

M/S SHREE DANESHWARI TRADERS  Vs  SANJAY JAIN AND ANOTHER 

R . BANUMATHI, J.
Dated:August 21, 2019.

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Whether unregistered partnership firm can file criminal complaint for dishonour of cheque?

 Perusal of Section 138 of the Act shows that it has to be a transaction which relates to legally enforceable debt or other liability. It is quite clear that under Section 69(2) of the Partnership Act, the complainant, unregistered partnership could not have legally enforced the debt. If being unregistered partnership it cannot legally enforce the debt, it is not legally enforceable debt and would go out of the purview of Section 138 of the N.I. Act. When complaint was filed complainant was not a registered partnership and thus could not have, at that time, filed the complaint. In this view of the matter, the reasonings recorded by the Hon'ble High Court in the matter of Mr. Amit Desai, supra, appear to be apt for consideration of the present matter. Adopting the said view in the matter of Mr. Amit Desai, supra, I find that the trial Court did not err while rejecting the complaint and acquitting the accused.

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Criminal Appeal No. 426 of 2003

Decided On: 22.04.2016

Sai Accumulator Industries Sangamner Vs. Sethi Brothers Aurangabad

Hon'ble Judges/Coram:

A.I.S. Cheema, J.

Citation: 2017(2) DCR 359

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Whether court in cheque dishonour case can infer that there was no legal liability of accused by making calculations?

The trial Court also calculated the payments alleged to have been made by the respondent and upon adding the amount realized by selling of the vehicle, a finding was rendered that the respondent had repaid a specific amount to the appellant. While undertaking the said exercise, the trial Court took into account submission made by the Counsel on behalf of the respondent regarding the amount of loan disbursed. As noted above, the respondent did not adduce any oral or documentary evidence to counter the evidence led on behalf of the appellant. In these circumstances, the trial Court proceeded on the basis of statements made on behalf of the respondent to find the amount of down payment made by the respondent, adding value of shares and other aspects to calculate the amount that could have been due from the respondent. In the absence of any effort made by the respondent to adduce oral or documentary evidence to support his claim, in the backdrop of the presumption operating against him, the trial Court could not have indulged in making such calculations, in order to conclude that there was no legal debt or liability to be discharged by the respondent.

15. It was for the respondent to have rebutted the presumption on the touchstone of preponderance of probabilities. The respondent could not have emphasized on sale of the vehicle and the alleged procedural illegalities committed by the respondent while selling the vehicle at an allegedly lower price. 

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Cri Appeal No. 292 of 2017

Decided On: 16.08.2018

Dharampeth Mahila Urban Credit Co-Operative Society Ltd.

Vs.  Rambahadur and Ors.

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Whether complainant should prove source of fund in cheque dishonour case if accused has not discharged presumption U/S 139 of NI Act?

 Hereinabove, we have examined in detail the findings of the Trial Court
and those of the High Court and have no hesitation in concluding that the
present one was clearly a case where the decision of the Trial Court suffered
from perversity and fundamental error of approach; and the High Court was
justified in reversing the judgment of the Trial Court. The observations of the
Trial Court that there was no documentary evidence to show the source of
funds with the respondent to advance the loan, or that the respondent did not
record the transaction in the form of receipt of even kachcha notes, or that
there were inconsistencies in the statement of the complainant and his
witness, or that the witness of the complaint was more in know of facts etc.
would have been relevant if the matter was to be examined with reference to
the onus on the complaint to prove his case beyond reasonable doubt. These
considerations and observations do not stand in conformity with the
presumption existing in favour of the complainant by virtue of Sections 118
and 139 of the NI Act. Needless to reiterate that the result of such
presumption is that existence of a legally enforceable debt is to be presumed
in favour of the complainant. When such a presumption is drawn, the factors
relating to the want of documentary evidence in the form of receipts or
accounts or want of evidence as regards source of funds were not of relevant
consideration while examining if the accused has been able to rebut the
presumption or not. 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 508 OF 2019


ROHITBHAI JIVANLAL PATEL VS. STATE OF GUJARAT 

Dinesh Maheshwari, J.
Dated: 15th March, 2019.

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Whether court should draw presumption U/S 139 of NI Act if execution of cheque is proved?

The learned counsel for the respondent admitted that execution of the 

cheque and also the signature found in the cheque.  Therefore, once execution 

of cheque is admitted, it is a legal presumption under Section 139 of 

Negotiable Instrument Act.  The cheque was issued for discharging legally 

enforceable debt.  No doubt the presumption is rebuttable. Though, admitted 

that the said cheque was issued for only security purpose and the respondent 

was only a working partner and he has not invested or contributed any money 

to the partnership firm.  Therefore, at the time of admitting him in the 

firm, the respondent had executed the cheque for the security purpose. 

7.Once issuance of  cheque is being admitted and even for security 

purpose, the presumption under Sections 118 and 139 of Negotiable Instrument 

Act and it is for the accused has to rebut the presumption there is no 

legally enforceable debt and cheque has not been issued for legally 

enforceable debt.  Therefore, the contention raised by the learned counsel 

for the respondent is not acceptable and the authorities submitted by the 

respondent is not applicable for present case in the hand.

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

DATED: 19.01.2019

CORAM

 MR. JUSTICE P.VELMURUGAN

Crl.A.(MD).No.179 of 2008

A.K.Mohammed Farook    Vs. M.Syed Jaheer Hussain  

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How to interprete legally enforceable debt and liability in context of unregistered partnership firm?

The words,' legally enforceable debt or other liability' used in the
explanations to Section 138 of the Negotiable Instruments Act refer to the
enforceability in law of the debt or the liability in question and have no

reference to the right of the person enforcing it. If there is no legal impediment
for enforceability of a debt or other liability in general, disability of a particular
individual or entity to enforce such right to recover such debt or liability does
not render such debt or liability not legally enforceable debt or liability. The
intention of the legislature is to make non payment of amounts of cheques
despite service of notice as per the provisions of the Act an offence only when
the cheque has been issued for payment of a legitimate debt or liability. Amount
required to be paid as price of articles or goods is a legitimate debt or liability
and therefore it is a legally enforceable debt or liability. The disability of an
unregistered firm under Section 69(2) of the Indian Partnership Act to file a suit
to enforce a right arising out of a contract does not make such debt or liability
not a legally enforceable debt or liability.”

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 140 of 2018

Date of decision : 11.09.2018.

M/s Uttam Traders Ranghri Vs  Tule Ram alias Tula Ram

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Whether offence of dishonour of cheque is made out if post dated cheque is issued for repayment of loan?

(i) The question whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 

(ii) Though the word "security" is used in Clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due.Once the loan was disbursed and installments had fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 

(iii) As per the case of the Complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the dues under the loan agreement. While dealing with a quashing petition, the Court has ordinarily to proceed on the basis of averments in the complaint. The defence of the Accused cannot be considered at this stage. The Court considering the prayer for quashing does not adjudicate upon a disputed question of fact. 

(iv) The question was answered in favour of the Respondent and against the Appellant. Dishonour of cheque in the present case being for discharge of existing liability was covered by Section 138 of the Act, as rightly held by the High Court.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 867 of 2016 (Arising out of S.L.P. (Crl.) No. 5410 of 2014)

Decided On: 19.09.2016

 Sampelly Satyanarayana Rao Vs. Indian Renewable Energy Development Agency Limited

Hon'ble Judges/Coram:

Dipak Misra and A.K. Goel, JJ.

Citation:(2016) 10 SCC458

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Whether offence of dishonour of cheque is made out if there was no legally recoverable debt on the date of issue of cheque?

On hearing the learned counsel for the parties and on evaluating the material on record, I find that there is no illegality committed by the Trial Court, which calls for interference. It is to be seen that the cheque was not issued by the accused - respondent towards a legally recoverable debt. It was issued as a security for the loan which he had borrowed from the complainant. This is further fortified by the judgment relied on by the counsel for the appellant himself in Sampelly Satyanarayana Rao (supra), which reads that,

“If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise.”

In the High Court of Karnataka at Bengaluru

(Before K. Somashekar, J.)

Branch Manager, PCA & RD Bank Ltd., Belthangady,

v.

Suresh Das 

Criminal Appeal No. 425 of 2010

Decided on February 27, 2018

Citation: 2018 SCC OnLine Kar 492

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Whether prosecution for dishonour of cheque issued to money lender is permissible?

On   going   through   the   complaints,   the   evidence
adduced, I  find that the view taken by the Magistrate was a
reasonable one and based on the evidence adduced before him.
There were a number of suspicious features about the case of the
complainant which have been reflected in the judgments delivered
by the learned Magistrate.  On considering the facts of the case,
even this Court feels that the possibility of the complainant having
taken blank signed cheques from the accused, is apparent, and in
any case, cannot be ruled out.   Moreover, since the complainant
has   advanced   a   similar   loan   to   a   number   of   persons,   the
transactions in the present two cases are quite likely to be of the
type which   the provisions of the  Bombay Money Lenders Act
prohibit.   The conclusion arrived at by the learned Magistrate that
the cheques in question could not be said to have been issued for
the discharge of a legally enforceable debt or other liability,  does
not appear to be suffering from any infirmity or illegality.
16 The complainant vehemently contended that the loan
was   advanced   on   the   basis   of   a   bill   of   exchange,   and   that
therefore, in view of clause (f) of sub­section (9) of section 2 of
the Bombay Money Lenders Act 1946, it could not be termed as a
loan to which the provisions of the Bombay Money Lenders, 1946
would apply.  However, on a careful consideration on the facts of

the   case,   it   appears   that   in   reality,   there   was   no   genuine
transaction on the basis of any bill of exchange.  The complainant
simply   had   advanced   some   amounts   to   the   accused   no.1   on
interest, and had in all probability, taken the blank hundies and
blank signed cheques at that time itself.   There is a reason to
believe that the complainant was advancing money as and by way
of a business of money lending without having a valid licence.
This   conclusion   that   was   arrived   at   by   the   learned   Magistrate
cannot be said to be suffering from any infirmity or illegality.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.19 OF 2005
WITH
CRIMINAL APPEAL NO.21 OF 2005
Girdhari Parmanand Motiani .. Appellant
Versus
Vinayak Bhagwan Khavnekar

­­­
   CORAM :   ABHAY M. THIPSAY, J.
DATED  :    14th AUGUST, 2015
­­­
Citation: 2016 ALLMR(CRI)1909

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Whether drawer of cheque will be liable for dishonour of cheque when cheque was obtained under threat and force?

 It clearly shows under the guise of execution of any summons or warrant served on the accused in the crime registered by police, after referring the complaint to the police by the Court, P.Ws. 1 and 2 along with Sub Inspector and Head Constable, went to the house of the accused at Mumbai. There are no details what was the time taken for the said settlement and how the accused is responsible for the amount of Rs. 35,00,000/-, which was given to the father of the complainant and how the said amount of Rs. 35,00,000/- was arrived at Rs. 25,00,000/- in settlement, which are material facts but for mentioning as if a settlement already arrived and the five cheques were issued which include Ex. P.3. That also probablises the defence version apart from the complaint as well as evidence of P.Ws. 1 and 2 also silent regarding proof how the sum of Rs. 35,00,000/- was paid if at all to the accused when and by what source. The defence of the accused that his father was running that entity and after his death it became defunct and he was not even Director by then and not responsible for it and it is under the threat and force through police, P.Ws. 1 and 2 obtained the signatures on the blank cheques and on the so-called undertaking letter in the absence of showing the said amount due by the accused much less of Rs. 35,00,000/- and there from settlement of Rs. 25,00,000/- and how and why mere filing of a cheque is not sufficient despite the evidence of the accused and reply notice Ex. P.9, which is sometime prior to the presentation of the cheque and that too having filed the private complaint including this cheque and the allegations of cheating for non-payment, the survival of the cause of action for its dishonour also doubtful from the complainant version leave that as it is not a matter of dispute or controversy for any finding therein for purpose of the accused even taken it is after filing of the so-called cheating case and so-called Exs. P.2 and P.3 along with other cheques given, those show the complainant entity represented by P.Ws. 1 and 2 through police force went to the accused under the guise of securing his presence before the court in Cr. No. 29 of 2004 pending under the police investigation under threat and force, obtained signatures and misused the same and there is no legally enforceable debt. There is nothing to rebut the same even from cross-examination of D.W. 1 in this regard by producing any material regarding giving of Rs. 35,00,000/- much less to the accused and otherwise liability for the same by the accused and what the law laid down by the Apex Court in Narayan Menon (supra) in discharge of burden on the part of the accused in rebutting the presumptions if at all available against the accused under Section 118 and 139 N.I. Act is need not by coming to the witness box suffice even from showing preponderance of the probabilities of the version by putting to the fact the complainant and witnesses and by confronting with the documents and the accused need not disprove the case of the complainant, he can discharge even by direct or circumstantial evidence is said probable evidence to rebut the defence. In this case not only the suggestions to P.Ws. 1 and 2, but also admissions from the evidence of P.Ws. 1 and 2 in the cross-examination co-relating to Ex. P.2 date and contents therefrom substantiating the defence version that Ex. P.3 cheque and other cheques were obtained under threat and force by the complainant entity officials including P.Ws. 1 and 2 through Police force and thereafter proved that he is not liable for the amount and there is no legally enforceable debt or other liability as rightly concluded by the trial Court's with that finding supported by reasons from the factual matrix with reference to the law settled supra. Hence for this Court while sitting in appeal, there is nothing to interfere. Accordingly, point No. 1 is answered.

Equivalent Citation: 2015 (2) ALT (Crl.) 280 (A.P.),2015CRLJ(NOC)392 (HYD)

IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH

Criminal Appeal No. 1512 of 2007

Decided On: 04.06.2014

 Inden Power International Ltd.
Vs.
Chandan Pandya

Hon'ble Judges/Coram:Dr. B. Siva Sankara Rao, J.

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Dishonour of cheque- presumption of existence of legally enforceable debt or liability

Secondly, as far as the proposition canvased on the basis of the judgment in Krishna Janardhan Bhat (supra) is concerned, it must be noted that the same has been specifically held to be not a correct one in paragraph 26 of the judgment rendered by a three- Judge Bench in Rangappa vs. Sri Mohan, reported in [2010(11)SCC 441]. The judgment clearly held that the presumption under Section 139 of the Negotiable Instruments Act, 1881, includes the presumption of the existence at a legally enforceable debt or liability. That presumption is required to be honoured, and if it is not so done, the entire basis of making these provisions will be lost. Therefore, it has been held that it is for the accused to explain his case and defend it once the fact of cheque bouncing is prima facie established. The burden is on him to disprove the allegations once a prima facie case is made out by the Complainant.
SUPREME COURT OF INDIA

C. Keshavamurthy Vs. H.K. Abdul Zabbar

[Criminal Appeal No. 1026 of 2013 @ Special Leave Petition (CRL) No(S) 4628 of 2009]
Bench: H.L. Gokhale, J. Chelameswar

Dated; 23 -7 2013

Citation; 2013 (4) Crimes 393 SC

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Whether accused can avoid prosecution for dishonour of cheque by filing insolvency petition?

 In these circumstances, the drawer cannot escape from the criminal liability merely by filing an insolvency petition by putting forward the case that he is not bound to discharge the liability mentioned in the complaint filed before the criminal Court, as there is no existing liability or he cannot face the criminal proceeding as he is already sought to be declared as an insolvent, especially when there is a Section permitting the Court to presume that there is an existing liability and the issuance of cheque by the accused was made towards the discharge of the said liability, which is legally enforceable.

30. In these circumstances, I am of the view that mere presentation of the insolvency petition or pendency of the insolvency petition, while the complaint was filed, would not disentitle the complainant to seek for the speedy remedy by way of penal action before the criminal Court over the offence stated to have been already committed by the accused.

Madras High Court

C.T. Thangaraj vs Murugesan on 15 April, 1999

Equivalent citations: 1999 CriLJ 3436

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Whether cheque issued for discharge of time barred debt is promise as per S 25 of Contract Act?

 While recording our answer to the first Question, we have already held that a cheque issued for discharge of a debt which is barred by law of limitation is itself a promise within the meaning of Sub-section (3) of Section 25 of the Contract Act. A promise is an agreement and such promise which is covered by Section 25(3) of the Contract Act becomes enforceable contract provided that the same is not otherwise void under the Contract Act.

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 Sub- section (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.

Bombay High Court

Mr. Dinesh B. Chokshi vs Rahul Vasudeo Bhatt on 19 October, 2012

Bench: A.S. Oka, S.S. Jadhav

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