Cheque Given for a Time-Barred Debt: Can a Section 138 Case Succeed

What is a time-barred debt?

A debt is time-barred when the period for filing a suit to recover it has run out. The Limitation Act 1963 sets most money claims at three years. For a loan payable on demand, the period generally runs from the date the loan was made. For a loan with an agreed repayment date, it runs from that date. For the price of goods sold on credit, it runs from delivery or from the end of the agreed credit period.

A time-barred debt is not wiped out. The borrower still owes the money in a moral and even legal sense; the creditor has simply lost the right to sue for it. If the borrower pays voluntarily, the payment cannot be recovered back. That distinction, between a debt that exists and a debt that a court will enforce, is what the Section 138 argument is about.

Section 3 of the Limitation Act requires a court to dismiss a suit filed after the period has run, even if the defendant does not raise the point. But a criminal complaint under Section 138 is not a suit for recovery, and the time-bar of the underlying debt comes in only through the words 'legally enforceable debt' in Section 138.

The provisions that decide the question

Six provisions do most of the work in these cases.

Does a cheque count as a written promise under section 25(3)?

This is the heart of the issue, and courts have not agreed. A cheque is an unconditional order to a bank to pay a sum, signed by the drawer. One line of reasoning says that when a debtor signs and hands over a cheque for an old debt, that is exactly the signed written promise section 25(3) describes. The promise creates a fresh, enforceable obligation, so the cheque is given for a legally enforceable liability, and Section 138 applies.

The other line says that Section 138 looks at the debt that existed when the cheque was issued, not at an obligation the cheque itself creates. On that view, if the debt was already barred, the cheque was not given for a legally enforceable debt, and the cheque cannot pull itself up by its own bootstraps. High Courts have gone both ways on this, and some later decisions have taken a middle position: a drawer who knowingly hands over a cheque for an old debt cannot then rely on limitation to avoid it.

Because the point is unsettled, a complainant should not rest the whole case on section 25(3). If there is anything else that kept the debt alive, such as a signed acknowledgment or a part payment before the three years ran out, that is a far stronger foundation. Section 25(3) is the fallback, not the first argument.

What has the Supreme Court said about time-barred cheques?

The Supreme Court has not laid down a final rule that a cheque for a time-barred debt always or never attracts Section 138. What it has done, repeatedly, is refuse to let High Courts quash such complaints at the threshold. In A.V. Murthy v B.S. Nagabasavanna (2002), the court set aside an order quashing a complaint on limitation grounds, noting that the company's balance sheets showed the amount as owing and that under section 25(3) a promise to pay a time-barred debt is enforceable. It said the point should be decided at trial.

In S. Natarajan v Sama Dharman (2021), the court again held that the High Court was wrong to quash a Section 138 complaint on the ground that the debt was time-barred, because limitation is a mixed question of law and fact that needs evidence. In K. Hymavathi v State of Andhra Pradesh (2023), the court set aside a quashing order where the High Court had counted limitation from the date of the promissory note instead of the date by which the borrower had promised to repay. Counted correctly, the cheque was within time.

The practical effect is that a drawer is unlikely to get a cheque complaint quashed by the High Court on limitation alone. The point has to be fought at trial, through cross-examination of the complainant and the documents. For a drawer, that means preparing for a full trial. For a complainant, it means the case will usually survive the early stages, but must be proved properly.

What if the cheque was given before the three years ran out?

Then the debt was not time-barred when the cheque was issued, and the limitation argument usually fails. This is the commonest situation in practice, and also the commonest mistake by drawers. People count from the date the money was handed over and conclude the debt is old, when the clock started later, or was restarted.

Three things restart or postpone the clock. First, an agreed repayment date: if the loan was repayable after two years, limitation runs from that date, not from the loan. Second, a written and signed acknowledgment before expiry, which under section 18 starts a fresh three years. Letters, signed account confirmations, a signed balance confirmation in a ledger, and in companies, debts shown in signed balance sheets, have all been treated as acknowledgments in suitable cases. Third, a part payment before expiry, acknowledged in writing under section 19.

A cheque issued within three years of any of these dates is a cheque for a live debt. When Advocate B.K. Singh is handed an old-loan cheque case, he begins by drawing a timeline on a single sheet: the date of the loan, the agreed repayment date, every payment, every signed message or letter, and the cheque date. In most files, the limitation argument either collapses or becomes clearly serious within ten minutes of that exercise.

Where does your case stand? Common timelines

Here are typical fact patterns, assuming a three-year limitation period. Real cases need the exact dates checked.

The last two rows are where cases are actually fought. In the rest, a drawer who argues limitation is usually counting from the wrong date.

Does the cheque amount have to match the debt due on the date of presentation?

Yes, and this catches complainants in old-debt cases more often than limitation itself. In Dashrathbhai Trikambhai Patel v Hitesh Mahendrabhai Patel (2022), the Supreme Court held that where the drawer has paid part of the debt after issuing the cheque, and the cheque is presented for the full amount without endorsing the part payment under section 56 of the NI Act, there is no offence. The cheque must represent the legally enforceable debt on the date it is presented.

In long-running informal loans, small payments in cash or by UPI are common. If those were made after the cheque was handed over and you present the cheque for the full original amount, the drawer has a clean defence regardless of limitation. Before presenting an old cheque, reconcile every payment received since it was given.

Interest raises a similar issue. If the loan carried no agreed interest, a cheque that includes interest the drawer never agreed to pay can be challenged as being partly for an amount not legally due. Where interest was agreed in writing, it can be included. Keep the cheque to what the documents support.

How does the drawer raise the time-bar defence?

The defence should appear from the very beginning: in the reply to the legal notice, in the answers recorded when the court explains the accusation under section 274 of the BNSS, and in the application to cross-examine the complainant. A drawer who first mentions limitation in final arguments will be asked why it was never put to the complainant.

The main work is cross-examination. The complainant is asked when the loan was given, in what form, whether there was an agreed date, what was paid back and when, and what writing exists between the loan and the cheque. If the complainant's own answers show a loan more than three years before the cheque with no acknowledgment or payment in between, the presumption under section 139 is under real pressure. The drawer can then add their own evidence, often bank statements showing no payments, or that the money was a gift or an investment rather than a loan.

A petition to quash the complaint in the High Court on limitation alone rarely succeeds after S. Natarajan. It may be worth filing only where the complaint itself, on its own words, shows a loan long past limitation with nothing to revive it. Even then, expect the High Court to say the complainant should be allowed to prove the case at trial.

How should the complainant frame the complaint?

Plead the dates fully. The complaint and the supporting affidavit should state when the money was given, how, whether there was a repayment date, every payment received, every acknowledgment in writing, and when and why the cheque was handed over. Attach the documents for each. A complaint that says only 'the accused took a friendly loan and issued the cheque in discharge' invites the limitation defence.

If the debt was kept alive by an acknowledgment or part payment, say so and file the proof. If it may have been barred before the cheque, say expressly that the cheque was a signed written promise to pay under section 25(3) of the Contract Act, and that the accused issued it knowing the amount was due. The Supreme Court's 2025 directions require every Section 138 complaint to carry a synopsis in a prescribed format; make sure the synopsis tells the same story as the body.

Do not overstate. A complainant caught in cross-examination claiming a written acknowledgment that turns out to be an unsigned WhatsApp message damages the whole case. Say what the document is and let the court decide what it proves.

Electronic records need care in their own right. If you rely on emails, messages or bank portal printouts, file them with a certificate under section 63 of the Bharatiya Sakshya Adhiniyam 2023, which replaced section 65B of the Evidence Act. A screenshot without the certificate invites an objection that can keep the acknowledgment out of evidence altogether, and in an old-debt case that acknowledgment may be the whole answer to limitation.

How to work out your limitation date

Do this before sending the legal notice, if you are the payee, or before replying to it, if you are the drawer.

1. Find when the debt became payable

   For a demand loan, usually the date the money was given. For a loan with a repayment date, that date. For goods on credit, the delivery date or the end of the credit period stated on the invoice.

2. Add three years

   That is the first expiry date. If the cheque was issued before it, the debt was live and limitation is not a real issue.

3. List every acknowledgment and payment

   Letters, signed confirmations, emails, messages, balance sheets, part payments with receipts or covering messages. Note the date of each and whether it was signed or in writing.

4. Restart the clock for each one made before expiry

   A valid acknowledgment or acknowledged payment before the current expiry date starts a fresh three years from its own date. Work forward to the cheque date.

5. Check the cheque amount

   Subtract every payment received after the cheque was handed over. If the cheque is for more than what was due on the presentation date, deal with that before presenting it.

6. Collect the proof for each date

   A date you cannot prove is a date the court will ignore. Bank statements, original letters and printed messages with phone details are the usual proof.

What if the old loan was in cash or never written down?

Cash loans are not barred from Section 138. In Sanjabij Tari v Kishore S. Borcar (2025), the Supreme Court held that a debt arising from a cash transaction above ₹20,000 is still a legally enforceable debt for Section 138, and that a breach of section 269SS of the Income Tax Act does not make the loan unenforceable. That removed a defence some High Courts had accepted.

Proof is the real problem. An old cash loan with no paper trail depends on the complainant showing they had the money at the time and actually lent it. The older the loan, the harder that is: bank records may no longer be easy to obtain, witnesses forget, and income tax returns from that year may not show the amount. The drawer's advocate will press every one of these points.

If you are a lender in this position, gather what exists now: your bank withdrawals around the loan date, any messages referring to the loan, and anyone who was present. If you are the borrower, the absence of such material, combined with the age of the alleged loan, is often a better defence than limitation itself.

Documents that show the debt was alive

For either side, these are the papers that decide a limitation dispute.

Mistakes on both sides

• Counting from the wrong date. Drawers often count from the date of the loan when repayment was agreed for later, or when a payment restarted the clock.
• Presenting the cheque for the original amount. Part payments after the cheque was given must be adjusted or endorsed, or the case fails under Dashrathbhai.
• Relying only on section 25(3). It is an unsettled argument. Look for acknowledgments and payments first.
• Calling an unsigned message a signed acknowledgment. Describe each document accurately and let the court weigh it.
• Raising limitation late. A drawer who does not put the dates to the complainant in cross-examination will struggle to argue them at the end.
• Filing a quashing petition expecting a quick end. After S. Natarajan, High Courts usually send limitation back to trial.

Should you rely on Section 138 for an old debt at all?

Sometimes the honest answer is that a Section 138 case on a very old, undocumented debt is a poor bet. The complainant faces the limitation argument, proof of the original loan, and the presumption being rebutted on probabilities. If the drawer has assets, a civil suit on the cheque, treated as a fresh written promise, may be worth filing within three years of the dishonour, alone or alongside the criminal case. Our post on choosing between a criminal case and a summary suit compares the two, and summary suits under Order 37 explains the civil route.

Where the debt is properly documented and was kept alive by payments or acknowledgments, the limitation point is usually a distraction, and the case proceeds like any other; see how a Section 138 case runs in Delhi. If the cheque was handed over as security long ago, the issues are different again, and security cheques under Section 138 deals with them.

If you want the dates in your file checked before you send or answer a notice, the team of Advocate B.K. Singh at B.K. Singh & Associates can go through the papers and tell you where the limitation argument stands; use our online enquiry form. For the civil side of recovering an old debt, see our civil law practice page.