High Court Under S. 482 CrPC Should Not Decide Whether Debt In Cheque Dishonour Case Is Time-Barred: Supreme Court

The Supreme Court recently reiterated that in proceedings under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), the question of whether the underlying debt is time-barred is based on the evidence. Thus, the High Court should not decide the same in a petition under Section 482 (quashing of FIR) of the CrPC.

“Undoubtedly, the question regarding the time-barred nature of an underlying debt or liability in proceedings under Section 138 of the NI Act is a mixed question of law and fact which ought not to be decided by the High Court exercising jurisdiction under Section 482 of the CrPC.,” ordered Justices Vikram Nath and Satish Chandra Sharma.

Reliance was placed on Yogesh Jain v. Sumesh Chadha. Therein, the Court, while dealing with a similar moot point, ordered:

“8. Once a cheque is issued and upon getting dishonoured a statutory notice is issued, it is for the Accused to dislodge the legal presumption available Under Sections 118 and 139 reply of the N.I. Act. Whether the cheque in question had been issued for a time barred debt or not, itself prima facie, is a matter of evidence and could not have been adjudicated in an application filed by the Accused Under Section 482 of the CrPC.”

In a nutshell, the appellant/ complainant had filed a complaint under section 138 on allegations that the respondent/ accused issued a cheque to discharge their liability. However, the same was dishonored due to “Payment Stopped by Drawer.” Pursuant to this, the respondent approached the Delhi High Court to quash the complaint.

The High Court relied upon an agreement between the respondent/ accused and the appellant in 2011. Based on this, the Court observed that the liability was incurred in 2011. However, noting that the cheque was issued in 2017, the Court opined that the debt was barred by limitation.

“The accused cannot be prosecuted for offence under section 138 of the Negotiable Instruments Act, 1881 for issuance of a cheque for time-barred liability or debt.” the High Court held.

Thus, by holding the prosecution of the Respondent/ accused to be improper, the High Court quashed the complaint for cheque dishonour. It is against this order the appellant/ complainant approached the Supreme Court.

The Top Court echoed the findings of Yogesh Jain and held:

“From a perusal of legal position enunciated above, it is clear that the classification of the underlying debt or liability as being barred by limitation is a question that must be decided based on the evidence adduced by the parties. We agree with aforesaid opinion.”

Accordingly, the appeal was allowed, and the proceedings were restored to the Trial Court.

Case Title: ATAMJIT SINGH vs. STATE (NCT OF DELHI)., Diary No.- 40619 – 2022

Citation : 2024 LiveLaw (SC) 76

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