Rajasthan High Court: Cheque for Time-Barred Debt Enforceable, Dishonour Attracts NI Act Liability

The Rajasthan High Court held that a cheque issued for repayment of a time-barred debt constitutes a valid and legally enforceable contract under Section 25(3) of the Indian Contract Act, 1872. 

The Court further ruled that if such a cheque is dishonoured, criminal liability under Section 138 of the Negotiable Instruments Act, 1881 can be imposed. 

The ruling came while hearing five criminal revision petitions arising from a case where the complainant alleged that four cheques issued by the accused were dishonoured due to insufficient funds, triggering criminal proceedings.

[Ratiram Yadav v Gopal Sharma and other connected petitioners]