Accused under S. 138 of NI Act acquitted on grounds of limitation

Karnataka High Court: A Single Judge Bench comprising of K. Somashekar, J., decided a criminal appeal, wherein order of acquittal of the accused passed by the trial court was upheld holding that the recovery of loan in the given case was hit by limitation.

The petitioner was prosecuted for offence punishable under Section 138 of Negotiable Instruments Act, 1881. The complainant alleged that the accused took a hand loan from him and issued cheques in lieu thereof. However, when the said cheques were presented in the bank, they were dishonoured and returned with a memo marked ‘insufficient funds’. The complainant issued a demand letter to the accused as required by the Act. However, the accused did not repay the loan even after the demand letter was issued to him. Consequently, the accused was prosecuted under the Act. The trial court, inter alia, found that the time gap between the giving of loan by the complainant to the accused and presenting of cheques for recovery thereof, was more than three years. Trial court held the case to be hit by limitation and acquitted the accused.

The High Court perused the record as well as provisions of the NI Act and the Limitation Act. The Court observed that the limitation period for recovery of a hand loan is three years from the date the loan is given. The Court found that, in the instant case, the loan was given in the year 2004 and the cheques were presented for its recovery only in the year 2008. The Court also held that there was no part repayment of the loan to the complainant by the accused, nor the accused acknowledged the presence of debt in this period to start a fresh period of limitation. The High Court, inter alia, held that the case of the complainant was barred by limitation of three years as provided in the Limitation Act.

Accordingly, the petition filed by the complainant against the order of acquittal of the accused passed by the trial court, was dismissed. [K.N. Raju v. Manjunath T.V., Crl. Appeal No. 302 of 2010, decided on 16.3.2018]


  • I am of the view that unless the cheque is admitted by the accused to be given in respect of enforceable liability and not in blank, the dishonour of said cheque would not extend the period of limitation

  • The limitation law only restricts the right to file civil recovery but does not de-recognize the Loan. Further a cheque issued in repayment of Debt is an admitted liability and its dishonour is an offence punishable under NI Act.

    I recommend an Appeal/SLP should be filed here.

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