Delhi High Court: Drawing Cheque Revives Time-Barred Debt

Delhi High Court: Cheque for Time-Barred Debt Revives Liability

The Delhi High Court ruled that presenting a cheque for a time-barred debt revives the obligation under Section 25(3) of the Indian Contract Act, 1872. The court noted that issuing a cheque acts as an acknowledgment of the debt, allowing the creditor to enforce liability even if the debt is time-barred.

The court stated, “The furnishing of a cheque effectively resurrects the debt through a fresh agreement under Section 25(3).” It emphasized that drawing a cheque signals the drawer’s acknowledgment of the liability, thereby triggering provisions under Section 138 of the Negotiable Instruments Act. Denying the creditor the ability to invoke these provisions would be an unjust denial of their rights.

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