Time Limits and Compliances in cases of Cheque Dishonour under Section 138 of Negotiable Instruments Act, 1881

Time Limits and Compliances in cases of Cheque Dishonour under Section 138 of Negotiable Instruments Act, 1881

The aspect of time limits has been examined in a recent judgment pronounced in the month of October 2025. Once the signature and execution of the cheque is admitted, a statutory presumption arises under Section 118 and 139 of the “N.I. Act” that the cheque was issued in discharge of a debt or a liability. This presumption is rebuttable but the burden lies on the accused to adduce cogent evidence.

As regards limitation, it is equally settled that for the purpose of Section 138 of “N.I. Act”, a cheque must be issued towards a legally enforceable debt or liability. A time-barred debt is not enforceable. However, it is significant to note that under Section 25(3) of the Indian Contract Act, 1872 even a time-barred debt can form valid consideration if there is a written promise signed by the debtor. A cheque constitutes such a promise. Therefore, when a cheque is issued towards a time-barred debt and is dishonoured, the liability under Section 138 of the “N.I. Act” squarely arises. The contention that the debt was not legally enforceable is without merit.

A meaningful reading of Sections 20, 118 and 139 of the “N.I. Act” makes it clear that a person who signs a cheque and delivers it to the payee remains liable unless he successfully rebuts the statutory presumptions.

In this case, it was not in dispute that the accused has signed all the cheques. Even if contention raised by the accused is allowed that the cheques were issued as a security pursuant to a financial transaction then too, cannot be considered as a worthless piece of paper.

In the present case, the accused has not produced any material to substantiate repayment of the loan taken in the year 2009. The plea of cheques being a mere security also remains unproved. On the other hand, the execution and delivery of the cheques stand admitted by the accused. In the absence of any rebuttal evidence, the presumption under Section 139 of the “N.I. Act” continues to operate.

Conviction of accused found to be justified.

For more details refer Ratiram Yadav v. Govind Sharma [2025] GCtR 1665 (Jaipur, Rajasthan).