K. HYMAVATHIversusTHE STATE OF ANDHRA PRADESH & ANR.

                  [2023] 14 S.C.R. 412 : 2023 INSC 811



                              CASE DETAILS
                              K. HYMAVATHI
                                       v.
            THE STATE OF ANDHRA PRADESH & ANR.
                    (Criminal Appeal No.2743 of 2023)
                           SEPTEMBER 06, 2023
   [A. S. BOPANNA AND PRASHANT KUMAR MISHRA, JJ.]
                               HEADNOTES


      Issue for consideration: High Court if justified in quashing the
criminal proceedings filed by appellant against respondent No.2-accused
u/ss.138 and 142 of the Negotiable Instruments Act, 1881 holding that it
was a fit case for quashing since the complaint filed seeking prosecution
was not in respect of a legally recoverable debt.
    Negotiable Instruments Act, 1881 – Debt if legally enforceable –
Exercise of power u/s. 482, CrPC – Scope:
      Held: Whether the debt in question is a legally enforceable debt or
other liability would arise on the facts and circumstance of each case and
in that light, the question as to whether the power u/s.482, CrPC is to be
exercised or not will also arise in the facts of such case – In the present case,
High Court misdirected itself in holding that since the date of issuance of
the cheque (2017) is beyond three years from the date of issuance of the
promissory note (2012) so it is a time-barred debt – When the respondent
had agreed to repay the amount within December, 2016, the cause of
action to initiate proceedings to recover the said amount if not paid within
December 2016 would arise only in the month of December, 2016 – Thus,
the limitation would be as provided under Article 34 to the Schedule in the
Limitation Act, 1963 – In respect of a promissory note payable at a fixed
time, the period of limitation being three years would begin to run when
the fixed time expires – Therefore, the time would begin to run from the
month of December, 2016 and the period of limitation would expire at the
end of three years thereto i.e. during December, 2019 – Thus, the cheque

                                      412
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                           413
                       ANR.

dated 28.04.2017 is well within the period of limitation – Complaint in CC
No.681 of 2017 was filed on 11.07.2017, as is the case in all the analogous
complaints – Therefore, not only the amount was a legally recoverable debt,
the complaint was also filed within time – No occasion to exercise power
u/s.482, CrPC to quash the complaint – Order impugned set aside – Code of
Criminal Procedure, 1973 – s.482 – Contract Act, 1872 – s.25(3) – Limitation
Act, 1963 – Article 34. [Paras 12, 13, 15-17]
     Negotiable Instruments Act, 1881 – Debt/liability if barred by
limitation, to be decided on evidence – Quashing u/s.482, CrPC justified
only if debt is non-recoverable:
      Held: Whether the debt or liability is barred by limitation is to be
decided based on the evidence to be adduced since the question of limitation
is a mixed question of law and fact – It is only in cases wherein an amount
which is out and out non-recoverable, towards which a cheque is issued,
dishonoured and for recovery of which a criminal action is initiated, the
question of threshold jurisdiction will arise – In such cases, the Court
exercising jurisdiction u/s.482, CrPC will be justified in interfering but not
otherwise – Entertaining a petition u/s.482, CrPC to quash the proceedings
at the stage earlier to the evidence would not be justified – Code of Criminal
Procedure, 1973 – s.482. [Para 10]
      Negotiable Instruments Act, 1881 – s.139 – Plea that if the cheque
is issued in respect of the debt which is not enforceable or a liability
which cannot be recovered, in such event, the presumption u/s.139
would not be available:
     Held: No need to tread that path to undertake an academic exercise
on that aspect of the matter, since on facts ex facie the claim made in the
complaint before the Trial Court based on the cheque which was dishonoured
cannot be construed as time-barred – Thus, it cannot be classified as a debt
which was not legally recoverable – Contract Act, 1872 – s.25(3) – Code
of Criminal Procedure, 1973 – s.482. [Para 12]
       LIST OF CITATIONS AND OTHER REFERENCES
     S. Natarajan v. Sama Dharman, (2021) 6 SCC 413; A.V. Murthy v.
B.S. Nagabasavanna, (2002) 2 SCC 642 : [2002] 1 SCR 906 – relied on.
414          SUPREME COURT REPORTS                       [2023] 14 S.C.R.


    Expeditious Trial of Cases u/s 138 of NI Act 1881, (2021) SCC Online
SC 325 – referred to.
       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES
     CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
2743 of 2023.
    From the Judgment and Order dated 12.02.2019 of the High Court of
Andhra Pradesh at Amravati in CRLP No.12675 of 2018.
      With
      Criminal Appeal Nos. 2746, 2744 and 2745 of 2023.
      Appearances:
    Sanchit Garga, Aman Chawla, Karan Dua, Nikunj Jain, Madhav Anand,
Kunal Rana, Advs. for the Appellant.
      Sidharth Luthra, Sr. Adv., Mahfooz Ahsan Nazki, Polanki Gowtham,
T Vijaya Bhaskar Reddy, Ms. Niti Richhariya, Ms. Rajeswari Mukherjee,
Mrs. K. Sarada Devi, R. Vijay Nandan Reddy, V. Krishna Swaroop, Advs.
for the Respondents.
       JUDGMENT / ORDER OF THE SUPREME COURT

                             JUDGMENT

      A. S. BOPANNA, J.
      1. Leave granted.
     2. The appellant is assailing the judgment dated 12.02.2019 passed
by the High Court of Andhra Pradesh at Amravati in Criminal Petition
No. 12675 of 2018 and analogous petitions. Through the judgment, the
High Court while allowing the petitions before it, quashed the criminal
proceedings against Respondent No. 2, being C.C. No.681 of 2017 and
analogous complaints on the file of II Additional Chief Metropolitan
Magistrate at Visakhapatnam. The appellant is the complainant in CC No.
681 of 2017 and the other complaints, filed against the accused – respondent
no.2 under Section 138 and 142 of the Negotiable Instruments Act (‘NI
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                          415
             ANR. [A. S. BOPANNA, J.]

Act’ for short). The appellant is therefore before this Court claiming to be
aggrieved by the said judgment.
      3. The brief facts of the case as narrated in the first of the above
appeal are that the appellant and respondent no.2 are known to each other.
Due to their acquaintance respondent no.2 approached the appellant to
borrow a sum of Rs 20,00,000/- stating that he required the amount to
finance his son’s higher education to study medicine and for domestic
expenses. In order to assure the re-payment, respondent no.2 executed a
promissory note on 25.07.2012 wherein it was agreed that the amount was
to be repaid in full and along with interest at 2% per month. There was
a condition in the promissory note that the full and final payment will be
made by December, 2016. The respondent No.2 failed to comply with the
condition in the promissory note but on 28.04.2017 issued a cheque bearing
No.548045 drawn on the Vijaya Bank, J.P. Marg, Visakhapatnam for a
sum of Rs. 10,00,000/- towards partial discharge of the debt. The cheque
when presented for collection was returned by the Bank on 15.05.2017
due to insufficient funds to honour the cheque. The appellant got issued
a legal notice dated 24.05.2017 to respondent No.2, which was replied
to by respondent No.2 on 01.06.2017. The appellant sent a rejoinder to
the said reply on 03.06.2017. Respondent No.2 sent a reply to the said
rejoinder on 07.06.2017. The appellant thereafter filed complaints under
Section 138 of the NI Act on 11.07.2017 before the Special Magistrate,
Vishakhapatnam vide CC No. 681 of 2017 and analogous complaints. The
learned Special Magistrate in accordance with law, took cognizance of
the complaint under Section 138 of NI Act against the respondent No.2 -
accused vide order dated 14.09.2018 and ordered the issue of summons.
      4. The fact situation in the analogous appeals is also similar except
for the date of the promissory note and the date of the cheque. However, in
all the promissory notes the period for repayment indicated is the same and
all other facts arising for consideration are similar. Hence for the purpose
of narration and consideration of the law, the facts relating to the appeal
arising out of SLP(Crl.) No.7455 of 2019 is referred herein.
    5. The respondent No.2 herein however filed the petition in CRL.P
No.12675 of 2018 and analogous petitions under Section 482 of the
Criminal Procedure Code, 1973 (for short ‘CrPC’) before the High Court
416          SUPREME COURT REPORTS                        [2023] 14 S.C.R.


praying to quash proceedings under CC No. 681 of 2017 and analogous
complaints. The High Court allowed the petitions filed under Section
482 CrPC by respondent no.2 herein, noting various judgments by this
Court and the various High Courts, and observing that the limitation for
enforcing the promissory notes had expired much prior to the issuance
of the cheques in question. As such, it was held this was a fit case for
quashing since the complaint filed seeking prosecution was not in respect
of a legally recoverable debt.
      6. Mr. Sanchit Garga, learned counsel appearing on behalf of the
appellant while assailing the judgment passed by the High Court, would
contend that the High Court did not appreciate that the promissory note
executed by respondent No.2 has the binding effect of a contract and
hence the complaint under Section 138 of NI Act is maintainable when a
cheque is drawn to pay wholly or in part, a debt which is enforceable and
there is no bar of limitation. The cheque amounts to a promise governed
by Section 25 (3) of the Indian Contract Act, 1872. Such promise which
is an agreement is an exception to the general rule that an agreement
without consideration is void. Though on the date of making such promise
by issuing a cheque, the debt which is promised to be paid, even if is
time-barred is a legally recoverable one. In view of Section 25 (3) of the
Indian Contract Act, the promise/ agreement is valid and therefore the
same is enforceable. The learned counsel for the appellant has argued
on the principle that the limitation act only bars the remedy and not
the right of a party. He has relied upon the decision of this Court in S.
Natarajan v. Sama Dharman, (2021) 6 SCC 413 and A.V. Murthy v.
B.S. Nagabasavanna, (2002) 2 SCC 642.
      7. Mr. Sidharth Luthra, learned senior counsel appearing as Amicus
Curiae on behalf of respondent No. 2 – accused who has failed to appear
despite service of notice, would however seek to sustain the judgment
passed by the High Court. The learned Amicus Curiae has fairly put on
record a compilation showcasing the different view taken by various High
Courts, as well as the position of law stated by this Court. It is contended
that the earlier view while considering that the presumption under Section
139 NI Act will apply, did not consider the scope in a criminal trial and the
bearing that Section 322 of CrPC would have in the light of the decision in
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                            417
             ANR. [A. S. BOPANNA, J.]

Expeditious Trial of Cases Under Section 138 of NI Act 1881, (2021) SCC
OnLine SC 325 and thus did not consider the jurisdictional fact for invoking
Section 138 NI Act. It is further contended that the debt being time-barred
was not a legally enforceable debt and where a debt is barred by law such
debt or liability based on a void contract is against public policy and NI Act
cannot apply in such cases. In order to attract Section 25(3) of the Indian
Contract Act, an express promise made in writing and signed by the person
is required is his contention.
      8. At the threshold it would be apposite to take note of the decisions
referred to by the learned counsel for the petitioner so as to place in
perspective the scope of consideration in a petition filed under Section 482
of CrPC seeking quashment of a complaint filed under Section 138 of NI
Act, more so keeping in view the presumption as incorporated under Section
139 of the NI Act. As noted, the learned counsel has relied on the decision
in the case of S. Natarajan vs. Sama Dharman & Anr. (2021) 6 SCC 413
wherein it is held as hereunder:
     “6. The High Court referred to Section 25(3) of the Contract Act, 1872
     on which reliance was placed by the complainant and observed that
     with regard to payment of time-barred debt, there must be a distinct
     promise to pay either whole or in part the debt; that the promise must
     be in writing either signed by the person concerned or by his duly
     appointed agent. The High Court then observed that unless a specific
     direction in the form of novation is created with regard to payment
     of the time-barred debt, Section 25(3) of the Contract Act cannot be
     invoked. The High Court then went into the question whether issuance
     of cheque itself is a promise to pay time-barred debt and referred to
     Sections 4 and 6 of the NI Act. After referring to certain judgments
     on the question of legally enforceable debt, the High Court stated that
     for the purpose of invoking Section 138 read with Section 142 of the
     NI Act, the cheque in question must be issued in respect of legally
     enforceable debt or other liability. The High Court then observed that
     since at the time of issuance of cheque i.e. on 1-2-2011, the alleged
     debt of the accused had become time-barred, the proceedings deserve
     to be quashed.
418           SUPREME COURT REPORTS                         [2023] 14 S.C.R.


      7. In our opinion, the High Court erred in quashing the complaint
      on the ground that the debt or liability was barred by limitation and,
      therefore, there was no legally enforceable debt or liability against
      the accused. The case before the High Court was not of such a nature
      which could have persuaded the High Court to draw such a definite
      conclusion at this stage. Whether the debt was time-barred or not
      can be decided only after the evidence is adduced, it being a mixed
      question of law and fact.”
     9. The Learned counsel has further referred to the decision in the case
of A.V. Murthy vs. B.S. Nagabasavanna (2002) 2 SCC 642 wherein it is
held as hereunder:
      “5. As the complaint has been rejected at the threshold, we do not
      propose to express any opinion on this question as the matter is
      yet to be agitated by the parties. But, we are of the view that the
      learned Sessions Judge and the learned Single Judge of the High
      Court were clearly in error in quashing the complaint proceedings.
      Under Section 118 of the Act, there is a presumption that until the
      contrary is proved, every negotiable instrument was drawn for
      consideration. Even under Section 139 of the Act, it is specifically
      stated that it shall be presumed, unless the contrary is proved, that
      the holder of a cheque received the cheque of the nature referred
      to in Section 138 for discharge, in whole or in part, of any debt or
      other liability. It is also pertinent to note that under sub-section (3)
      of Section 25 of the Indian Contract Act, 1872, a promise, made
      in writing and signed by the person to be charged therewith, or by
      his agent generally or specially authorized in that behalf, to pay
      wholly or in part a debt of which the creditor might have enforced
      payment but for the law for the limitation of suits, is a valid contract.
      Moreover, in the instant case, the appellant has submitted before
      us that the respondent, in his balance sheet prepared for every year
      subsequent to the loan advanced by the appellant, had shown the
      amount as deposits from friends. A copy of the balance sheet as
      on 31-3-1997 is also produced before us. If the amount borrowed
      by the respondent is shown in the balance sheet, it may amount
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                          419
             ANR. [A. S. BOPANNA, J.]

     to acknowledgment and the creditor might have a fresh period of
     limitation from the date on which the acknowledgment was made.
     However, we do not express any final opinion on all these aspects,
     as these are matters to be agitated before the Magistrate by way of
     defence of the respondent.
     6. This is not a case where the cheque was drawn in respect of a
     debt or liability, which was completely barred from being enforced
     under law. If for example, the cheque was drawn in respect of a
     debt or liability payable under a wagering contract, it could have
     been said that that debt or liability is not legally enforceable as it
     is a claim, which is prohibited under law. This case is not a case of
     that type. But we are certain that at this stage of the proceedings,
     to say that the cheque drawn by the respondent was in respect of
     a debt or liability, which was not legally enforceable, was clearly
     illegal and erroneous.”
      10. From a perusal of the legal position enunciated, it is crystal
clear that this Court keeping in perspective the nature of the proceedings
arising under the NI Act and also keeping in view that the cheque
itself is a promise to pay even if the debt is barred by time has in that
circumstance kept in view the provision contained in Section 25(3) of
the Contract Act and has indicated that if the question as to whether the
debt or liability being barred by limitation was an issue to be considered
in such proceedings, the same is to be decided based on the evidence
to be adduced by the parties since the question of limitation is a mixed
question of law and fact. It is only in cases wherein an amount which is out
and out non-recoverable, towards which a cheque is issued, dishonoured
and for recovery of which a criminal action is initiated, the question
of threshold jurisdiction will arise. In such cases, the Court exercising
jurisdiction under Section 482 CrPC will be justified in interfering but
not otherwise. In that light, this Court was of the view that entertaining
a petition under Section 482 CrPC to quash the proceedings at the stage
earlier to the evidence would not be justified.
     11. Notwithstanding the above, the learned Amicus Curiae would
submit that the decisions referred to hereinabove would have to be viewed
differently keeping in view the subsequent decision of a Constitution Bench
420          SUPREME COURT REPORTS                         [2023] 14 S.C.R.


of this Court in the case of the Expeditious trial of Cases under Section
138 of NI Act, 2021 SCC Online SC 325 to contend that in the said decision
the power of the Magistrate under Section 322 of CrPC being an aspect to
be taken into consideration was considered. In a case where the Trial Court
is informed that it lacks jurisdiction to issue process for complaints under
Section 138 of the Act the proceedings will have to be stayed in such cases.
Hence, it is contended that the power of the Trial Court to decide with regard
to its jurisdiction is not taken away and in that circumstance exercise of
power under Section 482 CrPC by the High Court would be justified. It is
further contended by the learned Amicus Curiae that even the position under
Section 25(3) of the Contract Act being applicable to criminal proceedings
for dishonour of cheque will have to be examined in the background of
the provision contained in the Explanation to Section 138 of NI Act which
specifies that the debt or other liability enforceable would be only a legally
enforceable debt or other liability. In such circumstances if the cheque is
issued in respect of the debt which is not enforceable or a liability which
cannot be recovered, in such event, the presumption under Section 139 of
NI Act would not be available.
      12. Having referred to the judgments cited, prima facie we are of the
opinion that the decision in S. Natarajan and A.V. Murthy (supra) has
taken into consideration all aspects. No other elaboration is required even
if the observations contained in the case of Expeditious Trial of Cases
under Section 138 of NI Act (supra) is taken note, since, whether the debt
in question is a legally enforceable debt or other liability would arise on
the facts and circumstance of each case and in that light the question as to
whether the power under Section 482 CrPC is to be exercised or not will
also arise in the facts of such case. Even otherwise we do not see the need
to tread that path to undertake an academic exercise on that aspect of the
matter, since from the very facts involved in the case on hand ex facie it
indicates that the claim which was made in the complaint before the Trial
Court based on the cheque which was dishonoured cannot be construed
as time-barred and as such it cannot be classified as a debt which was not
legally recoverable, the details of which we would advert to here below. In
that view, we have chosen not to refer to the cases provided as a compilation
as it would be unnecessary to refer to the same.
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                             421
             ANR. [A. S. BOPANNA, J.]

       13. In that regard the perusal of the impugned judgment would disclose
that the very narration as contained in para 4 of the impugned order would
indicate that the consideration therein was predicated only on two facts as
noted by the High Court, (i) that the promissory notes are of the year 2012,
(ii) that the cheques are issued in the year 2017. It is in that light the High
Court has indicated that the date of issuance of the cheque is beyond three
years from the date of issuance of the promissory note so as to classify it
as a time-barred debt. In this regard, on perusal of the records we note that
the High Court has in fact misdirected itself, has proceeded at a tangent and
has therefore erred in its conclusion.
     14. As already noted, the facts are almost similar in all four cases and
as such for the purpose of narration a perusal of the promissory note dated
25.07.2012 (Annexure P/1) would inter alia record as follows:
     “…..hereby admit to have availed a loan amount shown above for the
     purpose of meeting my own family expenses and for higher education
     of my children by collecting the cash amount of Rs.20,00,000/- (In
     words: Rupees Twenty Lakhs only) for which I do hereby further agree
     to pay a monthly interest of Rs.2/- (In words: Rupees Two only) per
     month and fully understand hereby that I am bound by virtue of
     the promissory to repay the capital or principal loan amount as
     well as the agreed payable monthly interest amount within the date
     of December 2016 by ensuring the total payment to you or any of
     your assignees as directed by you by taking the payable amount to
     your home and pay it there...”
                                                         (emphasis supplied)
      15. A perusal of the above-extracted and emphasised portion would
indicate that the promise is to repay the principal amount with the interest
accrued within December, 2016. Hence, when the respondent had agreed
to repay the amount within December, 2016, the cause of action to initiate
proceedings to recover the said amount if not paid within December
2016 would arise only in the month of December, 2016. In that light,
the limitation would be as provided under Article 34 to the Schedule in
the Limitation Act, 1963. For the purpose of easy reference, the same is
extracted here below:
422          SUPREME COURT REPORTS                          [2023] 14 S.C.R.


      THE SCHEDULE
                      PERIODS OF LIMITATION

      Description of suit           Period of limitation Time from which
                                                         period begins to
                                                         run


      PART II – SUITS RELATING TO CONTRACTS


      34. On a bill of exchange Three years                When the fixed
      o r p ro m i s s o r y n o t e                       time expires.
      payable at a fixed time,
      after sight or after demand.
                                                         (emphasis supplied)
       16. The provision would indicate that in respect of a promissory note
payable at a fixed time, the period of limitation being three years would
begin to run when the fixed time expires. Therefore, in the instant case,
the time would begin to run from the month of December, 2016 and the
period of limitation would expire at the end of three years thereto i.e. during
December, 2019. In that light, the cheque issued for Rs.10,00,000/- which
is the subject matter herein is dated 28.04.2017 which is well within the
period of limitation. The complaint in CC No.681 of 2017 was filed in
the Court of the Chief Metropolitan Magistrate on 11.07.2017. So is the
case in the analogous complaints. Therefore, in the instant case not only
the amount was a legally recoverable debt which is evident on the face of
it, the complaint was also filed within time. Hence there was no occasion
whatsoever in the instant case to exercise the power under Section 482 to
quash the complaint. In that view, the order impugned dated 12.02.2019
passed by the High Court in Criminal Petition Nos.12652, 12670, 12675,
and 12676 of 2018 is not sustainable.
      17. The order impugned is accordingly set aside.
     18. The complaints bearing CC No.681 of 2017, CC No.644 of 2017,
CC No.250 of 2018, and CC No.254 of 2018 are restored to the file of the
Chief Metropolitan Magistrate, Visakhapatnam. Keeping in view that the
 K. HYMAVATHI v. THE STATE OF ANDHRA PRADESH &                               423
             ANR. [A. S. BOPANNA, J.]

matter has been pending from the year 2017, the Trial Court shall now
proceed with the matters as expeditiously as possible but in any event shall
dispose of the matter within six months from the date on which a copy of
this judgment is furnished.
     19. Before parting with the matter, we would like to place on record
and command the usual, able assistance rendered by Mr. Sidharth Luthra,
learned senior counsel as Amicus Curiae in the absence of respondent, in
guiding this Court to arrive at its conclusion.
      20. The appeals are accordingly allowed with no order as to costs.
      21. Pending application, if any, shall stand disposed of.




Headnotes prepared by:                                            Appeals allowed.
Divya Pandey