2008 (6) ABR (DOC) 140 (BOM) ::AIR 2009 SC (SUPP) 849(2) ::(2008) 2 BomCR(Cri) 606 ::(2008) 4 CurCriR 190 ::2008 (11) SCC 695 ::(2008) 10 Scale 174 ::(2009) 2 ChandCriC 228 ::(2008) 3 JCC 1929 (SC) ::(2008) 3 Raj Cri C 637

Bombay High Court

Hon'ble Judge(s): R. C. Chavan , J

(A) Negotiable Instruments Act (26 of 1881) S. 5, 6, 138 – Dishonour of Cheque – Cheque can be issued for time barred debt – A cheque is a promise to pay an amount and hence gives rise to a fresh contract and fresh set of obligation to pay the amount – Such cheque issued in respect of time barred obligations can be enforced {" A cheque may give rise to enforceable liability in two ways. If a cheque is issued as acknowledgment before the period of limitation for recovery of earlier debt comes to an end it would mark the commencement of a fresh period of limitation. A cheque could also be issued for a liability which a drawer of cheque acknowledges as existing, and desires to be bound by it. By issuing instruction to his banker in the form of a cheque, he would make a promise to pay a time barred debt to be discharged on behalf of the drawer by his bankers. Had the law snapped the link between “drawer” and “payee” and made only drawee liable on a negotiable instrument like cheque it would have been open to say that a cheque does not represent a promise to pay to “payee” since the law makes the drawer and not the drawee liable. On the other hand Section 30 of the Negotiable Instruments Act spells out liability of drawer towards holder upon dishonour of a bill of exchange and a cheque is by definition u/S. 6, a bill of exchange S. 5 of the Negotiable Instrument Act defining and describing a bill of exchange also refers to a p....