JUDGMENT
Shiv Narayan Dhingra, J.
Crl. L.P. No. 86/2004
The leave petition stands disposed.
Crl.Appeal No. 659/2007 (to be numbered)
1. The instant appeal has been preferred against the judgment dated 31st May, 2004 passed by the learned Metropolitan Magistrate whereby he acquitted the accused for offences under Sections 138 of Negotiable Instruments Act (in short ‘the NI Act’).
2. Brief facts relevant for the purpose of deciding this appeal are that two cheques issued by the respondent to the complainant, each for a sum of Rs. one Lac, got dishonoured for reasons of “account closed”. A legal notice of demand was sent to the accused but no payment was made. The complainant/appellant thereafter filed a complaint under Section 138 of the NI Act. The respondent admitted receipt of loan and execution of documents of loan and issuance of cheques. He, however denied the receipt of notice of demand as also his liability to pay the cheque amount. The complainant was the tenant of the respondent. The respondent alleged that the complainant was to hand over the possession of tenanted premises as a precondition but was still in possession of the premises. The other ground was that he was to give prior intimation and a notice to him before presenting these two cheques which was not done.
3. The learned trial court gave a finding that a valid notice of demand was served upon the respondent/accused. There was no necessity of sending an intimation to the accused before presenting the cheques. Section 138 was attracted even where cheques are dishonoured due to account being closed and the cheques were valid cheques. However, the learned trial court held that the debt for which these cheques were issued was not a legally recoverable debt on the ground that there was an agreement entered into between accused and the complainant. This agreement was a loan agreement and was proved as Ex. CW 1/A. There was a Clause 5, which prescribed that the complainant was required to issue one month’s notice to the accused who thereafter would return the loan amount and in case of his failure to return the loan amount, the complainant can take steps for recovery (by presenting the cheques to the bank). The trial court observed that in terms of the agreement, the complainant had not issued one month’s prior notice to the accused before presenting the cheques, so the complainant violated the terms and conditions of the agreement and thus by presenting cheques, complainant had taken advantage of his own wrongs. The learned trial court also observed that in view of the explanation provided in Section 138 of NI Act, it was not sufficient that there was a debt or liability but it must be legally enforceable. Though there was a debt and liability existing even on the date of presentation of cheques, but it could not be legally enforceable due to Clause 5 of the agreement which required a particular procedure to be followed in order to enforce it. Trial court, therefore, dismissed the complaint.
4. The view taken by the learned trial court is contrary to law. A loan given to a person becomes legally recoverable when it is not paid. There is no legal or mandatory requirement that in order to recover a loan from a person, a person has to serve a notice and then only a person can recover loan. A loan can be demanded orally. In the instant case, there is evidence to show that the tenant had given this amount of loan to the landlord during his tenancy and the loan amount was to be paid back to the tenant on tenant’s vacating the premises. It has also come in evidence that the tenant had vacated the said premises and had also obtained no due certificate from different authorities and sent it to the landlord before presenting the cheque. In fact, he waited for five months for the landlord to pay back the loan amount of Rs. 2 lac and when, despite his sending no due certificates and handing over the possession, the amount of Rs. 2 lac, was not paid back, he presented the cheques, issued by the landlord at the time of taking loan and the cheques got dishonoured. The cheques were presented within the limitation period of the loan as observed by the trial court and the loan was an existing liability.
5. I consider that the explanation ‘legally enforceable debt or liability’ only implies that the debt or liability was recoverable through a Court of law and there was no bar on its being recoverable through court of law. The loan advanced by complainant could have been recovered by the complainant through court of law without any notice to the respondent. Enforceability of the debt is not to be tested on touchstone of the procedure provided by the parties in an agreement. The realization or recovery of loan is to be tested on the touchstone of its enforceability through Court of law. Where a debt is an admitted debt, its legal enforceability within the period of limitation cannot be doubted. Merely because the agreement provided that one month’s notice should be given before taking steps for recovery, would not make the debt legally unenforceable, if notice is not given. The notice, given by the complainant after dishonour of the cheques itself was a sufficient notice to the respondent and the respondent should have paid this debt to the complainant. The defense of not receiving one month’s notice demanding the debt in terms of the agreement, is not a legally tenable defense under Section 138 of the NI Act. In order to make a debt legally unenforceable, there must be a provision in law which prohibits the enforceability of the debt.
6. In view of my foregoing discussion, I allow this appeal. The impugned order 31st May, 2004 is hereby set aside. The respondent is convicted under Section 138 of NI Act. He shall be heard on the question of quantum of sentence on 2nd November, 2007.