legally enforceable debt
Querist :
Anonymous
(Querist) 10 April 2011
This query is : Resolved
whether a time barred debt is a legally enforceable debt, and whether a complaint for a cheque issued for time barred debt can sustain? please provide latest case laws
Advocate. Arunagiri
(Expert) 10 April 2011
Time barred debt can not be claimed by 138 case. Because it is not a legally enforceable debt.
Kirti Kar Tripathi
(Expert) 10 April 2011
I do not agree with Arun, by issuing cheque for time barred debt, a fresh cause of action has started. Thus it is enforceable and also action under section 139 NI Act can be initiated.
Deekshitulu.V.S.R
(Expert) 10 April 2011
Good suply Mr. Arvind. I also feel that the cheque becomes an acknowledgment of debt.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 10 April 2011
A good citation by ARVIND , but do not jump to conlusions.
1) It is an ex party judgment.
2) The SC has kept the question of legality of debt open to be contested at trial court.
3) It is a settled law that a time barred debt can not be validated after expiry. But in the instant case the accused had acknowledge it earlier in his balance sheet.
PLEASE TO THROUGH THE ENTIRE CITATION BEFORE JUMPING ON CONCLUSIONS.
H. S. Thukral
(Expert) 10 April 2011
issuance of cheque without any other proof of acknowlegement of debt will not be suficient to hold that it was issued for acknowledged debt revoking the limitation. if it were so the provision of law in this regard shall become meaningless.
R.Ramachandran
(Expert) 10 April 2011
It is because of such wishy-washy judgements, that the cases in the courts are pending for long.
The Karnataka HC Decision is blatantly faulty for the following reasons:
1. It is true that u/s. 118 of the N.I. Act there is a presumption that the cheque is issued for consideration, unless rebutted. But, unfortunately, the HC seems to have not applied its mind while giving the decision, to the fact that the complainant's averment itself links the cheque to the time-barred cheque. If only the complainant had merely said that a cheque was issued by the accused which got bounced, then the accused should be called to explain and rebut the presumption. But when the complainant himself has stated in his complaint that the cheque was in respect of a debt which was four year old, on the face of the record, the presumption u/s. 118 cannot at all be drawn.
2. Further more, showing the amount as deposit in the balance sheet cannot be treated as an 'acknowledgement' qua the complainant. It is for income tax purposes of the accused to show as to where from he received the money. The moment he will take out the entry from the 'deposit' category, it will become his income and the accused has to pay income tax over the said income.
In the instant case, I doubt whether any such balance sheet entry is available.
Advocate. Arunagiri
(Expert) 11 April 2011
Nice explanation given by Mr.Ramachandran.
Majority of us agree that time barred debt can be claimed as legally enforceable debt.
malipeddi jaggarao
(Expert) 13 April 2011
Thanks to Mr.Arvind and Mr.Ramachandran. The judgement amounts to circumvention of provisions of Limitation Act and needs to be scrutinized. As far as query is concerned, it is clear that time-barred debt can not be legally enforceable. This means in the present query, the creditor can not take further legal recourse. As regards to the second part of the query, it is separate and independent to the first part. This is nicely explained by both Mr.Arvind and Mr.Ramachandran.
