Social Leasing (India) Ltd. vs Rajan Kumar Kanthwal

Headnote AI-drafted · Reviewed and approved

The appellant-complainant, Social Leasing (India) Ltd., filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the respondent-accused had issued a cheque for ₹3,73,000/- in discharge of a loan liability, which was dishonoured with the endorsement 'account closed'. The learned Trial Court dismissed the complaint, holding, inter alia, that the cheque was issued after the expiry of the period of limitation for recovery of the debt and therefore did not represent a legally enforceable liability, and that the complainant failed to prove that the loan was advanced by Social Leasing (India) Ltd. as distinct from Social Financing Company.

The appellant challenged the judgment contending that the Trial Court erred in appreciating evidence, that a statutory presumption arises under the NI Act that the cheque was issued for consideration in discharge of legal liability, that the accused failed to rebut such presumption, and that a cheque issued for repayment of a time-barred debt does attract the provisions of Section 138 of the NI Act. The respondent supported the Trial Court's judgment, arguing that a time-barred debt is not a legally enforceable debt or liability within the meaning of Section 138 of the NI Act.

The High Court heard arguments from both sides on the questions of whether the cheque was issued in discharge of a legally enforceable debt, whether the statutory presumption was rebutted, and whether the ingredients of Section 138 of the NI Act were satisfied on the facts of the case.

Catchwords: Negotiable Instruments Act · cheque dishonour · Section 138 · legally enforceable debt · time-barred debt · limitation · presumption · loan · account closed · criminal appeal

Cheque dishonour (Section 138 NI Act)