Deceased Father's Dues Qualify As 'Legally Enforceable Debt', Complaint U/S 138 NI Act Against Son Maintainable: Karnataka High Court

A single judge bench of Justice K Natarajan rejected the argument canvased by one respondent/accused B T Dinesh, that there is no legally enforceable debt against him as the loan was borrowed by his father, who expired before filing of the complaint under Section 138 of the Negotiable Instruments Act.

The bench said “As a legal representative of the father, the accused is liable to repay the loan to the complainant.” The bench in coming to this findings relied on Section 29 of the Act which pertains to the legal representative of the deceased person liable to discharge the liability.

Case Details:

As per the complaint filed by Prasad Raykar, the father of the respondent-accused - Bharamappa is said to have borrowed Rs.2,60,000, from the complainant appellant on 07.03.2003 for his business and his family necessities and agreed to pay 2% interest per month by executing the on-demand promissory note in favour of the complainant.

In the meantime, Bharamappa died leaving behind his son-accused as a legal heir i.e., prior to filing of the private complaint. On the death of Bharamappa, the complainant asked the accused for repayment of the loan amount and the accused requested for some time. But he has paid Rs.10,000 to the complainant on 10.06.2005 and the complainant asked the accused to clear the dues of his father.

Later, the accused is said to have issued two cheques for the sum of Rs.2,25,000 each dated 07.06.2006 and 07.07.2006 respectively. The cheques came to be dishonoured as the account was closed. A notice was served on the accused but he did not pay the amount. Hence, the private complaint came to be filed before the Magistrate under sections of the Negotiable instruments act.

The trial court convicted the accused. However, the appellate court reversed the order and acquitted the accused. Following which the complainant filed an appeal.

Finding:

The bench noted that as per Section 29 of the N.I. Act, the legal representative of the deceased issued a cheque and he is liable personally. Then referring to the Supreme Court judgment in the case of ICDS Ltd. vs. Beena Shabeer & Anr., it held:

“As a legal representative of the father, the accused is liable to repay the loan to the complainant. Therefore, the contention raised by the respondent counsel is not acceptable. The cheque was dishonoured thereby the accused is liable for the punishment under Section 138 of N.I. Act and the complaint is maintainable.”

The Court also rejected the argument of the respondent that the debt is time barred since his father had borrowed the loan in the year 2003 and the cheque was issued after four years. It observed, “The complainant has stated and it is specifically mentioned that the accused has undertaken to repay the amount and he has paid Rs.10,000, within two years towards his father’s liability and thereafter in the year 2006, he has issued two cheques in this behalf.”

Accordingly it held, “Therefore, once the amount was already repaid, the question of taking contention that it is barred debt does not arise and it gets renewed. Therefore, the accused once paid Rs.10,000 by cash and subsequently, he issued a cheque to discharge the liability, he is liable for discharging his liability of his father.”

Following which it allowed the appeal and set aside the judgement of the appellate court and confirmed the order of the trial court convicting the accused. 

Case Title: Prasad Raykar v. B T Dinesh

Case No: Criminal Appeal 725 of 2011

Citation: 2022 LiveLaw (Kar) 10

Date of Order: 02-01-2023

Appearance: Advocate Anand Shetty for Advocate Rajashekar for appellant.

Advocate R Nagendra Naik for respondent.