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Issues: (i) Whether issuance of a cheque towards a time-barred debt can create a legally enforceable liability for the purposes of Section 138 of the Negotiable Instruments Act, 1881 by virtue of Section 25(3) of the Indian Contract Act, 1872. (ii) Whether the complaint and summoning order could be quashed at the threshold on the plea that the debt had become time-barred and the cheque was not issued against a legally enforceable liability.
Issue (i): Whether issuance of a cheque towards a time-barred debt can create a legally enforceable liability for the purposes of Section 138 of the Negotiable Instruments Act, 1881 by virtue of Section 25(3) of the Indian Contract Act, 1872.
Analysis: Section 138 of the Negotiable Instruments Act, 1881 applies where a cheque is issued for discharge of a legally enforceable debt or liability. Section 25(3) of the Indian Contract Act, 1872 saves and enforces a written promise to pay a debt barred by limitation, and Section 29(1) of the Limitation Act, 1963 preserves that position. The cheque, when issued in the context of an outstanding loan and continued payment of interest, may amount to a promise or acknowledgment capable of reviving enforceability. The pleaded facts therefore disclosed a debatable issue as to whether the cheque represented a legally enforceable liability.
Conclusion: The issuance of a cheque in such circumstances can constitute a legally enforceable liability, and the plea that the debt was time-barred does not, by itself, negate Section 138 of the Negotiable Instruments Act, 1881.
Issue (ii): Whether the complaint and summoning order could be quashed at the threshold on the plea that the debt had become time-barred and the cheque was not issued against a legally enforceable liability.
Analysis: The question of limitation in the context of an alleged dishonoured cheque may involve mixed questions of law and fact, including whether there was an acknowledgment or promise extending or reviving liability. At the stage of quashing, the Court does not adjudicate disputed evidence, and the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 operate in favour of the holder of the cheque subject to rebuttal at trial. The complaint contained sufficient averments to proceed, and the matter was not one for interference under Section 482 of the Code of Criminal Procedure, 1973.
Conclusion: The complaint and summoning order could not be quashed at the threshold on the ground of limitation.
Final Conclusion: The petition was held to be without merit, and the criminal proceedings for dishonour of cheque were allowed to continue.
Ratio Decidendi: A cheque issued in repayment of a time-barred debt may, in the circumstances contemplated by Section 25(3) of the Indian Contract Act, 1872, amount to a written promise creating a legally enforceable liability for Section 138 of the Negotiable Instruments Act, 1881, and limitation-related objections ordinarily cannot be finally adjudicated at the quashing stage when they depend on mixed questions of law and fact.
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