- Bookmark
- Share
- CaseIQ
Girdhari Lal Rathi v. P.T.V Ramanujachari And Another
Factual and Procedural Background
The appellant-complainant, engaged in the manufacture of general merchandise, had business dealings with the first respondent who allegedly owed Rs. 5,45,000 as per a settlement dated March 31, 1990. To discharge this liability, the first respondent issued a cheque for Rs. 5,45,000 drawn on Canara Bank, Sultan Bazar, Hyderabad. The cheque was presented for payment but was dishonoured. Subsequently, the appellant issued a registered notice to the first respondent on June 26, 1990, demanding payment, which was not made. Consequently, the appellant initiated prosecution under section 138 of the Negotiable Instruments Act, 1881. The first respondent was charged, pleaded not guilty, and defended himself by examining himself. The trial court acquitted the first respondent, finding that the appellant failed to prove the issuance of the cheque in discharge of any legally enforceable debt and noting that the account with the bank was closed at the relevant time. The appellant has filed this appeal against the acquittal.
Legal Issues Presented
- Whether the first respondent issued the cheque in question in discharge of a legally enforceable debt to the appellant.
- Whether the debt evidenced by the cheque was barred by limitation at the time of issuance, affecting the applicability of section 138 of the Negotiable Instruments Act.
- Whether issuance of a cheque for a time-barred debt can extend the limitation period or attract liability under section 138.
- Whether the closure of the account on which the cheque was drawn affects the liability under section 138.
Arguments of the Parties
Appellant's Arguments
- The appellant claimed that the first respondent owed Rs. 5,45,000 arising from business dealings and had issued a cheque to settle this amount.
- The appellant also stated that the first respondent had taken loans of Rs. 2,00,000 and Rs. 1,00,000 on separate occasions evidenced by receipts, which were settled by issuance of the cheque.
- The appellant argued that the issuance of the cheque extended the limitation period for recovery of the loan amount.
First Respondent's Arguments
- The first respondent denied the charge and contended that the cheque was not issued in discharge of any legally enforceable debt.
- It was highlighted that the account with Canara Bank was closed before the cheque was allegedly issued.
- The first respondent disputed the authenticity and relevance of the receipts produced by the appellant, noting material omissions and contradictions in the appellant’s case.
- The respondent asserted that the debt was barred by limitation and therefore not recoverable under section 138.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The court examined the appellant’s evidence and found significant discrepancies and omissions, particularly regarding the alleged loans and the receipts evidencing them. The omission of these loan allegations from the complaint was held to be a material contradiction, undermining the credibility of the appellant’s claims. The court noted that the original receipts were not produced and that the xerox copies filed were insufficient. Further, the court observed that the debt was incurred in 1985, while the cheque was issued in 1990, exceeding the three-year limitation period for recovery of the debt without any acknowledgment by the first respondent. The court relied on the Explanation to section 138 of the Negotiable Instruments Act, which states that liability under section 138 arises only when the debt is legally recoverable. The court rejected the appellant’s argument that issuance of the cheque extended the limitation period, emphasizing that the debt must be legally enforceable at the time the cheque is issued. The closure of the account on which the cheque was drawn was considered immaterial given the absence of a legally recoverable debt. On these grounds, the court upheld the acquittal of the first respondent.
Holding and Implications
The court dismissed the appeal against the acquittal of the first respondent under section 138 of the Negotiable Instruments Act, 1881.
The decision directly affects the parties by affirming the acquittal of the first respondent due to the absence of a legally enforceable debt at the time of issuance of the cheque. No new precedent was established by this ruling.
1. This is an appeal against the acquittal of the first respondent of the charge levelled against him under section 138 of the Negotiable Instruments Act, 1881.
2. The case of the appellant-complainant in brief is that he deals in manufacture of general merchandise and had business dealings with the first respondent who owed a sum of Rs. 5,45,000 as per the settlement of account dated March 31, 1990. The first respondent, in discharge of his liability to pay the said amount, issued a cheque for Rs. 5,45,000 drawn on Canara Bank, Sultan Bazar, Hyderabad. The appellant presented the cheque with his banker which sent it for realisation to the bank of the first respondent but it was dishonoured, and, therefore, the appellant issued a registered notice which was served on the first respondent on June 26, 1990. But, the first respondent/accused did not make the payment and, therefore, he is liable to be convicted under section 138 of the Negotiable Instruments Act.
3. Charge under section 138 of the Negotiable Instruments Act was framed and explained to the first respondent-accused who denied the guilt. He examined himself in defence.
4. The trial court, on assessment of the evidence on record, found that the appellant has failed to establish that the first respondent-accused has issued the cheque in question in the discharge of his liability to pay any amount to the appellant. It also reached the conclusion that by the time the cheque was alleged to have been issued, the first respondent-accused had closed his account with the Canara Bank. The lower court on assessment of the evidence on record disbelieved the case of the appellant and acquitted the first respondent-accused.
5. Feeling aggrieved by the impugned judgment of acquittal, the complainant has preferred this appeal.
6. The appellant examined himself as PW-1. He has deposed that in the year 1985, the first respondent-accused has taken a loan of Rs. 2,00,000 from him and his family members by executing a receipt evidencing loan. He again took a loan of Rs. 1,00,000 from his family members and issued receipts to them. About after one and half years, the first respondent-accused settled the account and gave a cheque for Rs. 5,45,000 drawn on Canara Bank, Hyderabad. In the complaint, the appellant has not stated regarding the allegation that the accused had borrowed Rs. 2,00,000 at one time and another amount of Rs. 1,00,000 on another occasion from him and his family members or had executed receipt evidencing the same. The case of the appellant, as set out in the complaint, is that he had business dealings with the first respondent-accused and after settling the account, the accused-respondent has issued a cheque for an amount of Rs. 5,45,000. It is well-settled that no amount of evidence can be looked into without allegations made in the complaint. The omission in the complaint regarding advancing of the amount of Rs. 3,00,000 on two different occasions is a material omission amounting to contradiction and it makes the statement of PW-1 doubtful whether an amount of Rs. 3,00,000 had been advanced by him to the first respondent-accused. It is also pertinent to note that the original receipts have not been filed by the appellant and instead, xerox copies of certain receipts have been filed by him. The explanation given by PW-1 during his examination that at the time of issuing the cheque, the first respondent-accused has taken back all the original receipts has not been accepted by the trial court and rightly because no such allegation has been made in the complaint. The copy of the receipt exhibit P-7 shows that it was issued in favour of one Laxminarayana Reddy evidencing a loan of Rs. 15,000. But, PW-1 in cross-examination admitted that he did not know any person by name Laxminarayana Reddy.
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 acknowledgment 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."
8. There appears to be no force in the contention of learned counsel for 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.
9. For the foregoing reasons, no fault can be found out with the findings of the acquittal recorded by the learned lower court and under these circumstances whether a cheque was issued after the closure of account or not does not assume relevance in this case.
10. In the result, the appeal against the acquittal, being without merit, is dismissed.
Alert