A Time-barred Debt, an Unclaimed Notice and a Stopped Cheque
Thekhana Hospitality Private Limited bought chemicals worth ₹9,20,000 from Avi Chemicals under an invoice dated 10 June 2022. No payment was made, and by June 2025 the claim had run out of limitation. On 8 September 2025 Thekhana's managing director, Anil, sent Avi a WhatsApp message: 'We admit the ₹9,20,000 due on your 2022 invoice and will settle it this quarter.' On 26 September 2025 Anil signed a cheque for ₹9,20,000 drawn on the company's account in Avi's favour. Avi presented it on 28 October 2025; it came back on 30 October 2025 with the bank's remark 'payment stopped by drawer'. Avi posted a demand notice under section 138 by registered post on 20 November 2025 to the company's registered office; the postal cover was returned with the endorsement 'unclaimed - addressee not available'. Anil neither replied nor paid. Avi filed a complaint before the Magistrate on 20 December 2025.
1. Anil says the debt was time-barred in June 2025 and therefore not a legally enforceable debt for section 138. Is that defence sound?
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Section 138 requires a legally enforceable debt or other liability, and here there is one. Three strands support Avi.
First, section 18 of the Limitation Act, 1908. A written acknowledgment of liability signed by the party liable, made before the limitation period expires, gives a fresh period of limitation from the date of the acknowledgment. Anil's WhatsApp message of 8 September 2025 - sent on the company's behalf by its managing director, and admissible as an electronic record under the Information Technology Act, 2000 - acknowledges the ₹9,20,000 as due on the 2022 invoice. Even though limitation had already expired in June 2025, it operates together with the next point.
Second, section 25(3) of the Indian Contract Act, 1872. A promise to pay a debt barred by limitation is enforceable if it is in writing and signed by the person to be charged or his agent. The message is a signed writing within the meaning of that provision; the cheque issued on 26 September 2025 reinforces it.
Third, section 139 of the Negotiable Instruments Act, 1881. Once the cheque is dishonoured, the court shall presume that it was received for the discharge of a debt or liability. The drawer must rebut that presumption with cogent evidence, which Anil cannot do here. The time-bar defence fails.
2. Was the section 138 notice validly served, and is the complaint of 20 December 2025 within limitation? Show the computation.
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The notice is deemed served. Section 138 requires a written demand within thirty days of receipt of information of dishonour. Avi received the return memo on 30 October 2025; thirty days ran to 29 November, and the notice was posted on 20 November - in time. Section 144 read with section 27 of the General Clauses Act, 1897 provides that service by registered post at the correct address is deemed good service even if the addressee refuses it or leaves it unclaimed, unless the sender used a wrong address. The registered office is the correct address, so the 'unclaimed' endorsement does not assist Anil.
Computation under section 142(1)(b). The cause of action arises only when the fifteen-day period after receipt of the notice expires without payment. Taking deemed service at the point the cover was returned, the fifteen days expire in early December 2025, so the cause of action arose around 10 December. The complaint must be filed within one month of that date, that is, by about 10 January 2026. The complaint filed on 20 December 2025 is comfortably within limitation.
Watch the margin. If the notice had been posted after 29 November, or the complaint filed after the one-month window, the complaint would have been dismissed as time-barred irrespective of the merits.
3. Anil also says the cheque was presented 32 days after its date, 'beyond the 30 days allowed', and that stopping payment is not a dishonour under section 138. Assess both objections.
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There is no thirty-day rule for presentment. The proviso to section 138 only requires that the cheque be presented within the period of its validity. A cheque is valid for three months from its date under the Reserve Bank of India's directions, subject to the account being live. A cheque dated 26 September 2025, presented on 28 October 2025 and returned on 30 October 2025, was presented well within its validity. The objection is based on a mistaken premise and is not a defence.
'Payment stopped' is a dishonour for section 138. Section 138 covers a cheque returned unpaid either because the funds are insufficient or because it exceeds the arrangement with the banker. Where the drawer himself instructs the bank to stop payment, the return is a dishonour attributable to the drawer, and courts have consistently held that a drawer cannot escape section 138 by stopping payment to defeat a legitimate claim. Section 139 then presumes the cheque was issued in discharge of a debt.
Consequence. The conditions of section 138 stand satisfied: a legally enforceable debt, presentment within validity, dishonour, a demand within thirty days, failure to pay within fifteen days, and a complaint within one month. Under section 141 the company and Anil, as the person in charge of and responsible for its business at the time the offence was committed, can both be proceeded against, and Anil cannot claim the protection of section 141(2) unless he proves he had no knowledge and exercised due diligence.