Tamil Nadu

High Court dismisses cheque bounce case

Says time-barred debt not legally enforceable

Holding that a time-barred debt cannot be termed as a legally enforceable debt, the Madras High Court has said that a person cannot be prosecuted under Section 138 (dishonour of cheque) of the Negotiable Instruments Act of 1881 if a cheque issued in 2010 was presented in the bank only in 2013.

Justice G.K. Ilanthiraiyan passed the ruling while allowing a petition filed by a private firm and its partners to quash the Section 138 proceedings initiated against them by a supplier of copper materials. The judge held that the cheque ought to have been presented within its validity period of three months.

Though the complainant had claimed that the cheque was issued to him only in 2013, the judge on perusing the records found that it had actually been issued in 2010, since the same complainant had lodged another complaint under Section 138 against the petitioners in 2011 for dishonour of a cheque whose number was much higher.

The judge also pointed out that the petitioners’ case of having issued the cheque in March 2010 appeared to be correct since they had issued stop payment advice, with respect to the cheque, to their banker on June 1, 2010. “Admittedly, the said cheque was presented by the respondents only on May 7, 2013 that too after a period of three years.

“The value of a cheque is only three months and as such the said cheque ought to have been presented within a period of three months from the date of issuance of the cheque. When the cheque became invalid, it cannot be considered for payment in due course and therefore, it was not issued in discharge of any legally enforceable debt or liability,” the judge said.

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Printable version | May 23, 2020 9:36:46 AM | https://www.thehindu.com/news/national/tamil-nadu/high-court-dismisses-cheque-bounce-case-madras-high-court-2019/article26751461.ece

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