Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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sanjeev sangamnerkar (service)     01 August 2008

legally enforceable debt

What do we mean by "legally enforceable debt"? If any repayment cheque is not presented within 3 years of loan given then do we have rights to get back money under sec 138 of NI Act or not?Supposedly if some loan is given in good faith and the party taking a loan gives repayment cheque only after completion of 3 years then remedy under NI Act is available or not for recovery of money?



 3 Replies


Dear Sanjeev,

Legally enforceable debt means the debt which is contracted in accordance with law and which is not opposed to public policy viz., wagering contracts, debt obtained for running brother or gambling house etc.,   The only prohibition contained under the limitation act is, the creditor can not sue the debtor in a court of law for recovery of the money.   It is settled law that, the law of limitation does not extinguish the right but only bars the remedy.  It is held by the Hon'ble Bombay High Court vide a Judgment reported in AIR 1939 Bombay 494 that, "where the recovery of a debt is barred by time, the right to the debt is not extinguished and if the debtor pays up the amount he cannot sue the creditor to refund the money to him on the ground that his claim for recovery of the debt become time barred.   After a period of three years, the creditor looses his right  to sue the debtor for recovery of money, but the liability of the debtor will not cease.  Thus, when a debtor issues a cheque and bounces it, you can prosecute him on the above principle.   Sec.138 of the N.I. Act reads, "Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part , of any debt or other liability , is returned by the bank unpaid, either because.........".  Thus, the N.I. Act does not make any distinction between the debt whether debt within time or time barred debt..   In this case, the Supreme Court in 2002(1) Crimes Page No.306 between A.V.Urthy Vs. B.S.Naga Basavanna, in directly referred to what is not legally enforceable liability.

Anil Agrawal (Retired)     14 January 2009

 Dear Sir,

Can you quote the case No. to enable me to get the judgement


PALNITKAR V.V. (Lawyer)     16 January 2009

the judgment of the SC is directly on the point and it is valuable.

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