Time-barred debt and cheque liability: a cheque may revive enforceability as a fresh promise, while Section 139 presumption still applies.

A cheque issued towards an existing liability, even if the underlying debt is argued to be time-barred, can still support enforcement where it operates as a fresh promise under Section 25(3) of the Indian Contract Act, 1872. The statutory presumption of liability under Section 139 of the Negotiable Instruments Act, 1881 remains rebuttable, but the accused must displace it on a preponderance of probabilities with credible evidence. On the stated facts, the loan documents, later mortgage deed, demand letter, and issuance of cheques indicated continuing liability, and the repayment defence was found unsupported and inconsistent.

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Issues: Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 could be interfered with on the grounds that the cheques were security cheques, the underlying debt was time-barred, and the alleged repayment had been proved.

Analysis: The admitted execution of the loan documents, the later mortgage deed, the demand letter, and the issuance of the cheques in March 2018 showed that the liability had not ceased and that the cheques were not proved to be mere security cheques. Even assuming the debt had become barred by limitation, a cheque issued towards such liability operates as a written promise and attracts Section 25(3) of the Indian Contract Act, 1872, thereby creating a fresh enforceable liability. The accused also failed to rebut the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881, because the alleged repayment was unsupported by credible evidence and the defence version was inconsistent with the documents and testimony on record.

Conclusion: The challenge to the conviction failed and the finding of guilt under Section 138 of the Negotiable Instruments Act, 1881 was sustained.

Ratio Decidendi: A cheque issued towards a time-barred debt can constitute a fresh enforceable promise under Section 25(3) of the Indian Contract Act, 1872, and the drawer must rebut the statutory presumption of liability under Section 139 of the Negotiable Instruments Act, 1881 on a preponderance of probabilities.

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