A.V. MURTHY versus B.S. NAGABASAVANNA

Citation: [2002] 1 S.C.R. 906 · Decided: 08-02-2002 · Supreme Court of India · Bench: R.P. SETHI · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
A.V. MURTHY 
V. 
B.S. NAGABASAVANNA 
FEBRUARY 8, 2002 
B 
[R.P. SETHI AND K.G. BALAKRISHNAN, JJ.] 
Negotiable Instruments Act, 1881: 
Section 138 and explanation thereto-Dishonour of cheque drawn in 
C respect of debt or liability for amount advanced earlier-Proceedings under 
the Section-Magistrate issued summons to the accused-Accused filed revision 
petition alleging that complaint was not maintainable-Sessions Court and 
High Court held there was no legally enforceable debt or liability a11d thus 
quashed the proceedings-On appeal, held, debt or liability not barred from 
D being enforced under law-At the stage of issue of summons, it is incorrect to 
hold that such debt or liability not legally enforceable--Matter remanded to 
the Magistrate. 
Appellant and his friends advanced certain amount to respondent. Four 
years later, respondent issued a cheque in favour or appellant which was 
E dishonoured. Appellant then filed a complaint under Section 138 or the 
Negotiable Instruments Act, 1881. Magistrate issued summons to the 
respondent. Thereafter, respondent filed Criminal Revision alleging that the 
complaint was not maintainable as the amount was advanced four years prior 
to the date of issue or cheque and in view of the explanation to Section 138 
F there was no legally enforceable debt or liability against respondent. Sessions 
Judge allowed the Revision Petition in view of bar of limitation and quashed 
the complaint proceedings under Section 138. High Court upheld the Order. 
Hence the present appeal. 
Appellant contended that Sessions Judge was incorrect to hold that there 
G was no legally enforceable debt or liability on the part of the respondent. 
H 
Further more, the respondent had acknowledged the liability in his balance 
sheet. 
Allowing the appeal, the Court 
906 
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A.V. MURTHY v. B.S. NAGABASAVANNA [K.G. BALAKRISHNAN, J.) 907 
HELD : 1.1. Courts below were in error in quashing the complaint A 
proceedings under the Negotiable Instruments Act, 1881 as this is not a case 
where the cheque was drawn in respect of a debt or liability which Wll3 
completely barred from being enforced under law. Further at the stage of 
issue of summons it was clearly illegal and erroneous to say that the cheque 
drawn by the respondent in respect of debt or liability was not legally B 
enforeCllble. (909-D-E) 
1.2. As regards the contention that the respondent had acknowledged 
.,. 
the liobility in his bolance-sheet no final opinion is expressed as the matter is 
remanded to the Mllgiltrote. [902-C-D) 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. C 
206 of 2002. 
From the Judsment and Order dated 24.11.2000 of the Kamataka 
High Court ill Crl. R.P. No. 910 of 2000. 
Jagdeep Dhankar, Naresh Kaushik, Ms. Shilpa Chohan, Devashish D 
Bharuka and Lalita Kaushik for the Appellant. 
The Judgment of the Court was delivered by 
K.G. BALAKRISHNAN, J. Leave granted. 
This appeal is directed against the order passed by a learned Single 
Judge of the High Court of Karnataka. The appellant herein tiled a complaint 
before the Magistrate alleging that the respondent herein had committed an 
offence punishable under Section 138 of the Negotiable Instruments Act, 
1881 [for short, "the Act"]. The appellant alleged that he and his two friends 
E 
had advanced a sum of Rs. 7.5 lakhs to the respondent about four years back F 
to enable him to start a petrol pump and that the respondent did not pay back 
the said amount despite repeated demands and finally at the request of the 
appellant, on 30.3.1998 the respondent issued a cheque in favour of the 
appellant. The appellant presented the cheque for payment, but the cheque 
was dishonoured by the bank for the reason "Account closed". Thereafter, G 
the appellant issued a statutory demand notice and as the respondent failed 
to pay the amount, a complaint was filed before the Magistrate by the appellant. 
In the complaint, it was alleged that the appellant and his two friends advanced 
the said sum of Rs. 7 .5 lakhs to the respondent about four years prior to the 
date of issue of the cheque by the respondent. The learned Magistrate issued 
summons to the respondent. The respondent filed a Criminal Revision before H 
908 
SUPREME COURT REPORTS 
[2002) 1 S.C.R. 
A the llnd Addi. Sessions Judge, Mysore, alleging that the complaint was not 
maintainable as the amount advanced by the appellant to him was about four 
years prior to the date of issue of the cheque, and in view of

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