Court holds that issuance of cheque amounts to a fresh promise under Section 25(3) of the Contract Act; rejects plea of non-service of notice and dismisses criminal revision petition.
The Karnataka High Court has dismissed a criminal revision petition challenging a conviction under Section 138 of the Negotiable Instruments Act, holding that a cheque issued towards a time-barred debt can still be enforceable in law by virtue of Section 25(3) of the Indian Contract Act, 1872.
Justice H.P. Sandesh, while hearing the revision filed by Ganesh, upheld the findings of the trial court and the appellate court, both of which had convicted him for dishonour of a cheque issued in favour of the complainant, K.R. Puttaswamy.
According to the complainant, the accused had borrowed Rs. 4 lakh with a promise to repay it with interest. A cheque for the same amount was later issued, but it was dishonoured on presentation, leading to prosecution under Section 138 of the NI Act. The accused argued that the original transaction had taken place in 2015 and that the cheque was issued after the expiry of the limitation period, making the debt unenforceable.
Rejecting this argument, the High Court observed that the mere fact that the cheque was issued after three years from the original transaction would not defeat the complaint. The Court relied on the legal position that issuance of a cheque for a time-barred debt amounts to a fresh promise or acknowledgment under Section 25(3) of the Contract Act, thereby making the debt legally recoverable to the extent of the cheque amount.
The Court also noted that the Supreme Court’s dismissal of the special leave petition in Sasseriyil Joseph v. Devassia did not lay down any binding law on the issue of time-barred debt and therefore could not assist the petitioner. Referring to several other decisions, including A.V. Murthy, S. Natarajan, and K. Hymavathi, the Court reaffirmed that a cheque issued for a time-barred liability can still trigger Section 138 proceedings.
On the issue of notice, the petitioner contended that statutory notice was not served on the correct address. The High Court rejected this plea as well, pointing out that the legal notice, postal receipts, and postal acknowledgment were on record, and the address mentioned in the notice matched the one in the complaint. The Court held that service of notice was duly proved.
Since both the trial court and the appellate court had recorded concurrent findings of guilt and no illegality or perversity was shown, the High Court found no reason to interfere in revision. The petition was accordingly dismissed.
Bottom Line :
Negotiable Instruments Act, 1881 - Section 138 - Cheque issued towards time-barred debt - Such cheque can still attract Section 138 in view of Section 25(3) of the Indian Contract Act, 1872, as issuance of cheque amounts to a fresh promise/acknowledgment making the debt legally enforceable to the extent of the cheque amount - Plea of non-service of notice rejected where notice was sent to correct address and postal acknowledgment was produced.
Statutory provision(s): Section 138, Negotiable Instruments Act, 1881; Section 25(3), Indian Contract Act, 1872
Ganesh v. K.R. Puttaswamy, (Karnataka) : Law Finder Doc id # 2987228
