2023 LiveLaw (SC) 752 : 2023 INSC 811

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION
A.S. BOPANNA; J., PRASHANT KUMAR MISHRA; J.
September 06, 2023
CRIMINAL APPEAL NO. 2743 OF 2023 (Arising out of SLP (Crl) No. 7455 of 2019)
K. Hymavathi versus The State of Andhra Pradesh & Anr.
Negotiable Instruments Act, 1881; Section 138, 139 - Code of Criminal Procedure,
1973; Section 482 - If the question as to whether the debt or liability being barred
by limitation was an issue to be considered in such proceedings, the same is to be
decided based on the evidence to be adduced by the parties since the question of
limitation is a mixed question of law and fact. It is only in cases wherein an amount
which is out and out non-recoverable, towards which a cheque is issued,
dishonoured and for recovery of which a criminal action is initiated, the question of
threshold jurisdiction will arise. In such cases, the Court exercising jurisdiction
under Section 482 CrPC will be justified in interfering but not otherwise.
with Crl. Appeal No………of 2023 @ SLP (Crl) No. 7459 of 2019 Crl. Appeal No………of 2023 @ SLP
(Crl) No. 7457 of 2019 Crl. Appeal No………of 2023 @ SLP (Crl) No. 7458 of 2019
(Arising out of impugned final judgment and order dated 12.02.2019 in CRLP No. 12675/2018 passed by
the High court of Andhra Pradesh at Amravati)
For Appellant(s) Mr. Sanchit Garga, AOR Mrs. Mithu Jain, Adv. Mr. Aman Chawla, Adv. Mr. Karan Dua,
Adv. Mr. Nikunj Jain, Adv. Mr. Kunal Rana, Adv. Mr. Ujjwal Rajoria, Adv.
For Respondent(s) Mr. Mahfooz Ahsan Nazki, AOR Mr. Polanki Gowtham, Adv. Mr. T Vijaya Bhaskar
Reddy, Adv. Ms. Niti Richhariya, Adv. Ms. Rajeswari Mukherjee, Adv. 2 Mr. Sidharth Luthra, Sr. Adv. Mr.
Pankaj Singhal, Adv. Mr. R.vijay Nandan Reddy, Adv. Mr. V.krishna Swaroop, Adv. Mr. Shakti Singh, Adv.
Mr. Ayush Agarwal, Adv. Mrs. K. Sarada Devi, AOR
JUDGMENT
A.S. Bopanna, J.
1. Leave granted.
2. The appellant is assailing the judgment dated 12.02.2019 passed by the High Court
of Andhra Pradesh at Amravati in Criminal Petition No. 12675 of 2018 and analogous
petitions. Through the judgment, the High Court while allowing the petitions before it,
quashed the criminal proceedings against Respondent No. 2, being C.C. No.681 of 2017
and analogous complaints on the file of II Additional Chief Metropolitan Magistrate at
Visakhapatnam. The appellant is the complainant in CC No. 681 of 2017 and the other
complaints, filed against the accused – respondent no.2 under Section 138 and 142 of the
Negotiable Instruments Act (‘NI Act’ for short). The appellant is therefore before this Court
claiming to be aggrieved by the said judgment.
3. The brief facts of the case as narrated in the first of the above appeal are that the
appellant and respondent no.2 are known to each other. Due to their acquaintance
respondent no.2 approached the appellant to borrow a sum of Rs 20,00,000/- stating that
he required the amount to finance his son’s higher education to study medicine and for
domestic expenses. In order to assure the re-payment, respondent no.2 executed a
promissory note on 25.07.2012 wherein it was agreed that the amount was to be repaid
in full and along with interest at 2% per month. There was a condition in the promissory
note that the full and final payment will be made by December, 2016. The respondent No.2
failed to comply with the condition in the promissory note but on 28.04.2017 issued a
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cheque bearing No.548045 drawn on the Vijaya Bank, J.P. Marg, Visakhapatnam for a
sum of Rs. 10,00,000/- towards partial discharge of the debt. The cheque when presented
for collection was returned by the Bank on 15.05.2017 due to insufficient funds to honour
the cheque. The appellant got issued a legal notice dated 24.05.2017 to respondent No.2,
which was replied to by respondent No.2 on 01.06.2017. The appellant sent a rejoinder to
the said reply on 03.06.2017. Respondent No.2 sent a reply to the said rejoinder on
07.06.2017. The appellant thereafter filed complaints under Section 138 of the NI Act on
11.07.2017 before the Special Magistrate, Vishakhapatnam vide CC No. 681 of 2017 and
analogous complaints. The learned Special Magistrate in accordance with law, took
cognizance of the complaint under Section 138 of NI Act against the respondent No.2
accused vide order dated 14.09.2018 and ordered the issue of summons.
4. The fact situation in the analogous appeals is also similar except for the date of the
promissory note and the date of the cheque. However, in all the promissory notes the
period for repayment indicated is the same and all other facts arising for consideration are
similar. Hence for the purpose of narration and consideration of the law, the facts relating
to the appeal arising out of SLP(Crl.) No.7455 of 2019 is referred herein.
5. The respondent No.2 herein however filed the petition in CRL.P No.12675 of 2018
and analogous petitions under Section 482 of the Criminal Procedure Code, 1973 (for
short ‘CrPC’) before the High Court praying to quash proceedings under CC No. 681 of
2017 and analogous complaints. The High Court allowed the petitions filed under Section
482 CrPC by respondent no.2 herein, noting various judgments by this Court and the
various High Courts, and observing that the limitation for enforcing the promissory notes
had expired much prior to the issuance of the cheques in question. As such, it was held
this was a fit case for quashing since the complaint filed seeking prosecution was not in
respect of a legally recoverable debt.
6. Mr. Sanchit Garga, learned counsel appearing on behalf of the appellant while
assailing the judgment passed by the High Court, would contend that the High Court did
not appreciate that the promissory note executed by respondent No.2 has the binding
effect of a contract and hence the complaint under Section 138 of NI Act is maintainable
when a cheque is drawn to pay wholly or in part, a debt which is enforceable and there is
no bar of limitation. The cheque amounts to a promise governed by Section 25 (3) of the
Indian Contract Act, 1872. Such promise which is an agreement is an exception to the
general rule that an agreement without consideration is void. Though on the date of
making such promise by issuing a cheque, the debt which is promised to be paid, even if
is time-barred is a legally recoverable one. In view of Section 25 (3) of the Indian Contract
Act, the promise/ agreement is valid and therefore the same is enforceable. The learned
counsel for the appellant has argued on the principle that the limitation act only bars the
remedy and not the right of a party. He has relied upon the decision of this Court in S.
Natarajan v. Sama Dharman, (2021) 6 SCC 413 and A.V. Murthy v. B.S.
Nagabasavanna, (2002) 2 SCC 642.
7. Mr. Sidharth Luthra, learned senior counsel appearing as Amicus Curiae on behalf
of respondent No. 2 – accused who has failed to appear despite service of notice, would
however seek to sustain the judgment passed by the High Court. The learned Amicus
Curiae has fairly put on record a compilation showcasing the different view taken by
various High Courts, as well as the position of law stated by this Court. It is contended
that the earlier view while considering that the presumption under Section 139 NI Act will
apply, did not consider the scope in a criminal trial and the bearing that Section 322 of
CrPC would have in the light of the decision in Expeditious Trial of Cases Under Section
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138 of NI Act 1881, (2021) SCC OnLine SC 325 and thus did not consider the
jurisdictional fact for invoking Section 138 NI Act. It is further contended that the debt being
time-barred was not a legally enforceable debt and where a debt is barred by law such
debt or liability based on a void contract is against public policy and NI Act cannot apply
in such cases. In order to attract Section 25(3) of the Indian Contract Act, an express
promise made in writing and signed by the person is required is his contention.
8. At the threshold it would be apposite to take note of the decisions referred to by the
learned counsel for the petitioner so as to place in perspective the scope of consideration
in a petition filed under Section 482 of CrPC seeking quashment of a complaint filed under
Section 138 of NI Act, more so keeping in view the presumption as incorporated under
Section 139 of the NI Act. As noted, the learned counsel has relied on the decision in the
case of S. Natarajan vs. Sama Dharman & Anr. (2021) 6 SCC 413 wherein it is held as
hereunder:
“6. The High Court referred to Section 25(3) of the Contract Act, 1872 on which reliance was
placed by the complainant and observed that with regard to payment of time-barred debt, there
must be a distinct promise to pay either whole or in part the debt; that the promise must be in
writing either signed by the person concerned or by his duly appointed agent. The High Court
then observed that unless a specific direction in the form of novation is created with regard to
payment of the timebarred debt, Section 25(3) of the Contract Act cannot be invoked. The High
Court then went into the question whether issuance of cheque itself is a promise to pay time-
barred debt and referred to Sections 4 and 6 of the NI Act. After referring to certain judgments on
the question of legally enforceable debt, the High Court stated that for the purpose of invoking
Section 138 read with Section 142 of the NI Act, the cheque in question must be issued in respect
of legally enforceable debt or other liability. The High Court then observed that since at the time
of issuance of cheque i.e. on 1-2-2011, the alleged debt of the accused had become time-barred,
the proceedings deserve to be quashed.
7. In our opinion, the High Court erred in quashing the complaint on the ground that the debt or
liability was barred by limitation and, therefore, there was no legally enforceable debt or liability
against the accused. The case before the High Court was not of such a nature which could have
persuaded the High Court to draw such a definite conclusion at this stage. Whether the debt was
time-barred or not can be decided only after the evidence is adduced, it being a mixed question
of law and fact.”
9. The Learned counsel has further referred to the decision in the case of A.V. Murthy
vs. B.S. Nagabasavanna (2002) 2 SCC 642 wherein it is held as hereunder:
“5. As the complaint has been rejected at the threshold, we do not propose to express any opinion
on this question as the matter is yet to be agitated by the parties. But, we are of the view that the
learned Sessions Judge and the learned Single Judge of the High Court were clearly in error in
quashing the complaint proceedings. Under Section 118 of the Act, there is a presumption that
until the contrary is proved, every negotiable instrument was drawn for consideration. Even under
Section 139 of the Act, it is specifically stated that it shall be presumed, unless the contrary is
proved, that the holder of a cheque received the cheque of the nature referred to in Section 138
for discharge, in whole or in part, of any debt or other liability. It is also pertinent to note that under
sub-section (3) of Section 25 of the Indian Contract Act, 1872, a promise, made in writing and
signed by the person to be charged therewith, or by his agent generally or specially authorized in
that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but
for the law for the limitation of suits, is a valid contract. Moreover, in the instant case, the appellant
has submitted before us that the respondent, in his balance sheet prepared for every year
subsequent to the loan advanced by the appellant, had shown the amount as deposits from
friends. A copy of the balance sheet as on 31-3-1997 is also produced before us. If the amount
borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgment

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and the creditor might have a fresh period of limitation from the date on which the
acknowledgment was made. However, we do not express any final opinion on all these aspects,
as these are matters to be agitated before the Magistrate by way of defence of the respondent.
6. This is not a case where the cheque was drawn in respect of a debt or liability, which was
completely barred from being enforced under law. If for example, the cheque was drawn in respect
of a debt or liability payable under a wagering contract, it could have been said that that debt or
liability is not legally enforceable as it is a claim, which is prohibited under law. This case is not a
case of that type. But we are certain that at this stage of the proceedings, to say that the cheque
drawn by the respondent was in respect of a debt or liability, which was not legally enforceable,
was clearly illegal and erroneous.”
10. From a perusal of the legal position enunciated, it iscrystal clear that this Court
keeping in perspective the nature of the proceedings arising under the NI Act and also
keeping in view that the cheque itself is a promise to pay even if the debt is barred by time
has in that circumstance kept in view the provision contained in Section 25(3) of the
Contract Act and has indicated that if the question as to whether the debt or liability being
barred by limitation was an issue to be considered in such proceedings, the same is to be
decided based on the evidence to be adduced by the parties since the question of
limitation is a mixed question of law and fact. It is only in cases wherein an amount which
is out and out non-recoverable, towards which a cheque is issued, dishonoured and for
recovery of which a criminal action is initiated, the question of threshold jurisdiction will
arise. In such cases, the Court exercising jurisdiction under Section 482 CrPC will be
justified in interfering but not otherwise. In that light, this Court was of the view that
entertaining a petition under Section 482 CrPC to quash the proceedings at the stage
earlier to the evidence would not be justified.
11. Notwithstanding the above, the learned Amicus Curiaewould submit that the
decisions referred to hereinabove would have to be viewed differently keeping in view the
subsequent decision of a Constitution Bench of this Court in the case of the Expeditious
trial of Cases under Section 138 of NI Act, 2021 SCC Online SC 325 to contend that
in the said decision the power of the Magistrate under Section 322 of CrPC being an
aspect to be taken into consideration was considered. In a case where the Trial Court is
informed that it lacks jurisdiction to issue process for complaints under Section 138 of the
Act the proceedings will have to be stayed in such cases. Hence, it is contended that the
power of the Trial Court to decide with regard to its jurisdiction is not taken away and in
that circumstance exercise of power under Section 482 CrPC by the High Court would be
justified. It is further contended by the learned Amicus Curiae that even the position under
Section 25(3) of the Contract Act being applicable to criminal proceedings for dishonour
of cheque will have to be examined in the background of the provision contained in the
Explanation to Section 138 of NI Act which specifies that the debt or other liability
enforceable would be only a legally enforceable debt or other liability. In such
circumstances if the cheque is issued in respect of the debt which is not enforceable or a
liability which cannot be recovered, in such event, the presumption under Section 139 of
NI Act would not be available.
12. Having referred to the judgments cited, prima facie we are of the opinion that the
decision in S. Natarajan and A.V. Murthy (supra) has taken into consideration all aspects.
No other elaboration is required even if the observations contained in the case of
Expeditious Trial of Cases under Section 138 of NI Act (supra) is taken note, since,
whether the debt in question is a legally enforceable debt or other liability would arise on
the facts and circumstance of each case and in that light the question as to whether the
power under Section 482 CrPC is to be exercised or not will also arise in the facts of such
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case. Even otherwise we do not see the need to tread that path to undertake an academic
exercise on that aspect of the matter, since from the very facts involved in the case on
hand ex facie it indicates that the claim which was made in the complaint before the Trial
Court based on the cheque which was dishonoured cannot be construed as time-barred
and as such it cannot be classified as a debt which was not legally recoverable, the details
of which we would advert to here below. In that view, we have chosen not to refer to the
cases provided as a compilation as it would be unnecessary to refer to the same.
13. In that regard the perusal of the impugned judgmentwould disclose that the very
narration as contained in para 4 of the impugned order would indicate that the
consideration therein was predicated only on two facts as noted by the High Court, (i) that
the promissory notes are of the year 2012, (ii) that the cheques are issued in the year
2017. It is in that light the High Court has indicated that the date of issuance of the cheque
is beyond three years from the date of issuance of the promissory note so as to classify it
as a time-barred debt. In this regard, on perusal of the records we note that the High Court
has in fact misdirected itself, has proceeded at a tangent and has therefore erred in its
conclusion.
14. As already noted, the facts are almost similar in all fourcases and as such for the
purpose of narration a perusal of the promissory note dated 25.07.2012 (Annexure P/1)
would inter alia record as follows:
“…..hereby admit to have availed a loan amount shown above for the purpose of meeting my own
family expenses and for higher education of my children by collecting the cash amount of
Rs.20,00,000/- (In words: Rupees Twenty Lakhs only) for which I do hereby further agree to pay
a monthly interest of Rs.2/- (In words: Rupees Two only) per month and fully understand hereby
that I am bound by virtue of the promissory to repay the capital or principal loan amount
as well as the agreed payable monthly interest amount within the date of December 2016
by ensuring the total payment to you or any of your assignees as directed by you by taking the
payable amount to your home and pay it there...”
(emphasis supplied)
15. A perusal of the above-extracted and emphasised portion would indicate that the
promise is to repay the principal amount with the interest accrued within December, 2016.
Hence, when the respondent had agreed to repay the amount within December, 2016, the
cause of action to initiate proceedings to recover the said amount if not paid within
December 2016 would arise only in the month of December, 2016. In that light, the
limitation would be as provided under Article 34 to the Schedule in the Limitation Act, 1963.
For the purpose of easy reference, the same is extracted here below:
THE SCHEDULE
PERIODS OF LIMITATION
Description of suit Period of limitation Time from which period begins to run
PART II – SUITS RELATING TO CONTRACTS
34. On a bill of exchange or Three years When the fixed time expires.
promissory note payable at
a fixed time, after sight or
after demand.
(emphasis supplied)
16. The provision would indicate that in respect of a promissory note payable at a fixed
time, the period of limitation being three years would begin to run when the fixed time
expires. Therefore, in the instant case, the time would begin to run from the month of
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December, 2016 and the period of limitation would expire at the end of three years thereto
i.e. during December, 2019. In that light, the cheque issued for Rs.10,00,000/- which is
the subject matter herein is dated 28.04.2017 which is well within the period of limitation.
The complaint in CC No.681 of 2017 was filed in the Court of the Chief Metropolitan
Magistrate on 11.07.2017. So is the case in the analogous complaints. Therefore, in the
instant case not only the amount was a legally recoverable debt which is evident on the
face of it, the complaint was also filed within time. Hence there was no occasion
whatsoever in the instant case to exercise the power under Section 482 to quash the
complaint. In that view, the order impugned dated 12.02.2019 passed by the High Court
in Criminal Petition Nos.12652, 12670, 12675, and 12676 of 2018 is not sustainable.
17. The order impugned is accordingly set aside.
18. The complaints bearing CC No.681 of 2018, CCNo.644 of 2018, CC No.250 of
2018, and CC No.254 of 2018 are restored to the file of the Chief Metropolitan Magistrate,
Visakhapatnam. Keeping in view that the matter has been pending from the year 2017,
the Trial Court shall now proceed with the matters as expeditiously as possible but in any
event shall dispose of the matter within six months from the date on which a copy of this
judgment is furnished.
19. Before parting with the matter, we would like to placeon record and command the
usual, able assistance rendered by Mr. Sidharth Luthra, learned senior counsel as Amicus
Curiae in the absence of respondent, in guiding this Court to arrive at its conclusion.
20. The appeals are accordingly allowed with no order asto costs.
21. Pending application, if any, shall stand disposed of.

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