sanjeev sangamnerkar (service) 01 August 2008

Impact of limitation act on NI Act

Thanks for enlightening a lot regarding my query “legally enforceable debt” .Kindly clarify further –

1) Loan was given to the accused on 09/10/2002 by demand draft.

2) Undated a/c payee cheque was given by the accused & the complainant put the date on the cheque as 19/11/2007 as the accused did not pay the amount for a long period of 5 years despite repeated verbal assurances.

3) The cheque was dishonoured when presented to bank on 03/12/ 2007.

4) Notice was issued within the limitation period & the complaint was also filed within time stipulated u/s 138 & 142

5) The accused pleaded that the complaint is barred by limitation provided under NIA since the complaint has been filed 5 years after giving debt/loan.

6) There are three elements in section 138 as under--

A) Recovery of cheque amount

B) Punishment maximum 2 yrs

C) Penalty maximum double the amount of cheque

Please clarify whether the case is within the limitation & the accused is liable to actions mentioned in A , B, & C above & also clarify what will be the impact of explanation to sec.138 on the above case.

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6 Replies

KANDE VENKATESH GUPTA (ADVOCATE) 01 August 2008

In the given set of circumstances, burden is heavy on the complainant to prove that, "the accused had issued cheque Dated: 19-11-2007". Admittedly, the undated cheque was given at the time of loan itself, which is in the year 2002. Here the important question to be considered is, "whether the cheque was issued by the accused" or "whether the complainant obtained undated blank cheque from the accused at the time of granting loan and subsequently the complainant got filled up the blanks". In the first case, the accused is liable for conviction and in the later case, he is not liable.

adv. rajeev ( rajoo ) (practicing advocate) 29 August 2009

Cause of action arises from the date of issuance of cheque, but burden lies on the complainant to prove that cheque is issues on 19/11/07

K D Pande (Advocate) 29 August 2009

Sec.25(3) of Contract Act. will supported to you to show that the existing liablity is not Time Barred.There is one Apex Court Judgment to support your case. At present i am not having the said Judgment , howevver can be inform on Monday.

(Guest)

I like to cliarify that these are the conditions to be satisfied for offence u/s 138 N.I Act

(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability].

Also sec. 114 of N.I act there are presumptions under this clause. So that the holder of the cheque can easily prove the presumption.

It is the duty of the accused to disprove or rebut the presumption.

DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE ) 21 November 2010

Shri Pandy ji you have refered 25(3) of contract act but it will not come in picture in given circumstances. The accused should have issued cheque after limitation willingly than only this provision will be useful.