The petitioner-defendant, in this civil revision petition, challenges the order dated 04.01.2024 passed by the XIV Additional City Civil and Sessions Judge at Bengaluru (CCH-28) in I.A. No. II in O.S. No. 5557/2017, whereby the application filed under Order VII Rule 11(d) of the Code of Civil Procedure , 1908 ( CPC ) was rejected. The petitioner seeks rejection of the plaint on the ground that the suit is barred by limitation.

1.1. The petitioner-defendant seeks the rejection of the plaint in a suit instituted for the recovery of monies allegedly invested by the plaintiff in an "Employee Benefit Scheme" upon solicitation by the defendant. The petitioner contends that the suit is based on a time-barred debt and a dishonoured cheque issued by the defendant in respect thereof. It is the specific contention of the petitioner-defendant that the issuance of a cheque in relation to a time-barred debt does not revive the expired period of limitation for the purpose of a suit for the recovery of amounts allegedly received by the defendant for the plaintiff's use.

2. The plaintiff filed a suit seeking a direction to the defendant to pay a sum of INR 48,00,000 along with interest at 12% per annum, amounting to INR 82,56,000, among other reliefs.

3. In the plaint, the plaintiff averred that the defendant had solicited him to invest in a scheme called the "Employee Benefit Scheme." Pursuant to this solicitation, the plaintiff transferred an -3- NC: 2025:KHC:7450 CRP No. 102 of 2024 amount of ₹48,00,000 to the defendant's bank account. Subsequently, the plaintiff, upon receiving reliable information, learned that the defendant had solicited money from several other individuals under the pretext of investing in a knowingly fraudulent scheme, thereby cheating them.

4. The plaintiff lodged a criminal complaint against the defendant for offences punishable under Sections 34 , 120B , 409 , 418 , 420 , 468 , and 471 of the Indian Penal Code, 1860, alleging criminal breach of trust. After an investigation, the police filed a charge sheet for offences related to criminal breach of trust. Thereafter, in April 2019, the defendant approached the plaintiff, requesting him to withdraw the criminal complaint and assuring him that she would repay the amount along with interest. In furtherance of this assurance, the defendant issued a cheque dated 13.06.2019 for INR 50,00,000/-

5. The defendant entered an appearance and filed an application under Order VII Rule 11(d) of the Code of Civil Procedure , 1908, contending that the alleged amount was paid by the plaintiff in October 2015. The issuance of the cheque dated 13.06.2019, she argued, would not bring the suit within the limitation period, as the defendant had not acknowledged the time- barred debt as required under Article 18 of the Limitation Act, 1963 . Consequently, the present suit, filed after the expiration of three years from the date of the cause of action, is not maintainable under Article 24 of the Limitation Act, 1963 .

NC: 2025:KHC:7450 CRP No. 102 of 2024 In support, reliance is placed on the following:

plaintiff contended that although the cheque was issued after the expiry of the limitation period, it was issued as a promise to pay a time-barred debt. Therefore, the claim falls within the purview of Section 25 of the Indian Contract Act, 1872. He further argued that the question of limitation is a mixed question of law and fact, and at this stage, the plaint cannot be rejected, as the matter requires consideration at the time of trial. Consequently, he submitted that the impugned order passed by the Trial Court does not warrant any interference and sought dismissal of the petition.

In support, he places reliance on the following decisions:

14.06.2019 with the remark "88 REKYC AWAIT PRESENT AGAIN." Upon inquiry, it was found that the cheque could not be processed because the defendant had not completed the RBI- mandated KYC process. (Plaint Document Nos. 2 and 3).

v. The plaintiff then issued a legal notice to the defendant on 01.07.2019 under Section 138 of the NI Act, 1881. In response, the defendant replied on 31.07.2019, refusing to make the payment. The plaintiff received this reply on 03.08.2019. (Plaint Document Nos. 7 and 8).

vi. Aggrieved by this, the plaintiff filed a criminal complaint against the defendant before the Court of CMM and SCCH Court, Bengaluru (SCCH-8), registered as CC No. 4389/2019. The case has reached the stage of cross-examination of the plaintiff, and the court has directed the defendant to pay 20% of the total claim under Section 143A of the NI Act.

vii. Since the full amount owed by the defendant cannot be recovered through the criminal case alone, the plaintiff filed the present civil suit on 08.10.2021.

viii. The plaintiff argues that the cause of action arose on 03.08.2019, when the defendant's reply dated 31.07.2019 clearly denied any liability to repay the plaintiff's investment along with interest.

11. Based on the above facts, the petitioner-defendant argues that the present suit is barred by limitation under Article 24 of the Limitation Act, 1963 . The defendant claims that the three- year limitation period to recover the principal amount and interest -8- NC: 2025:KHC:7450 CRP No. 102 of 2024 began in October 2015, when the plaintiff had transferred INR 48,00,000/-, to the defendant, and that the limitation period has since long expired.

12. The petitioner-defendant's counsel further submits that once the three-year period from the date of receiving the money has expired, the debt (both principal and interest) becomes legally unenforceable. Therefore, issuing a cheque after the limitation period does not revive the debt or create a fresh cause of action. The learned counsel also argues that the cheque dated 13.06.2019 was issued after the limitation period had expired and, thus, does not qualify as a valid acknowledgment under Section 18 of the Limitation Act, 1963. Accordingly, the defendant contends that the suit is time-barred, and the Trial Court should have rejected the plaint at the outset.

13. Before proceeding further, it is necessary to examine the relevant legal provisions and case laws cited by the counsels.

13.1. Article 24 of the Limitation Act, 1963 reads thus:

plaintiff for the money received by the defendant, for the plaintiff's use.

13.2. Section 18 of the Act of 1963 deals with acknowledgment of an existing debt, and reads thus -

NC: 2025:KHC:7450 CRP No. 102 of 2024

18. Effect of acknowledgement in writing.--(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.--For the purposes of this section,--

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,

(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and

(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.

13.3. Section 25(3) of the Indian Contract Act, 1872, deals with a promise to pay a time barred debt, and reads thus -

25. Agreement without consideration, void, unless it is in writing and registered,or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.--An agreement made without consideration is void, unless--

(1) it is expressed in writing and registered under the law for the time being in force for the registration of 1[documents], and is made on account of natural love and affection between parties standing in a near relation to each other ; or unless

NC: 2025:KHC:7450 CRP No. 102 of 2024 (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless;

(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract. Explanation 1.--Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2.--An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.

14. A plain reading of the above provisions shows that a suit to recover money deposited with the defendant for the plaintiff's use must be filed within three years from the date the money was received. However, Section 18 of the Limitation Act, 1963, and Section 25(3) of the Indian Contract Act, 1872, provide for a fresh start to the limitation period in certain cases.

14.1. Section 18 states that if an acknowledgment of an existing debt is made within the limitation period, the limitation period restarts from the date of such acknowledgment. On the other hand, Section 25(3) states that if a written and unconditional promise is made to repay a time-barred debt, it becomes a valid

NC: 2025:KHC:7450 CRP No. 102 of 2024 contract, creating a fresh cause of action and restarting the limitation period.

15. The learned counsel for the respondent-plaintiff has referred to the following case laws to support his argument:

A Court-appointed Receiver allegedly sold part of the estate through the Agricultural lands Tribunal without informing the plaintiffs, who only later discovered the transactions and filed the suit. The plaintiffs also alleged fraud and collusion between the Receiver and the Tribunal.

15.1.2. The Supreme Court held that if a party was unaware of proceedings before a quasi-judicial authority, they could approach a court upon discovering the issue, and limitation should not apply in such cases. It also stated that where notices were

NC: 2025:KHC:7450 CRP No. 102 of 2024 required but not served, the limitation question required evidence and had to be decided at trial.

15.1.3. Additionally, the Court ruled that if it was unclear whether a public notice had been issued, the defendant's claim of constructive notice could not be used to reject the suit at the outset.

15.1.4. Regarding the exclusion of the Civil Court's jurisdiction, the Supreme Court stated that if fraud and collusion were alleged in the sale and revenue record mutation, the Trial Court's jurisdiction could not be excluded.

15.2. In K Hymavathi v. State of Andhra Pradesh and Anr , (2023) SCC OnLine SC 1128, the Supreme Court considered an appeal against the quashing of a complaint. It ruled that a promissory note executed to discharge a time-barred debt falls under Section 25(3) of the Indian Contract Act, 1872, making it a valid and enforceable agreement.

15.2.1. The Court referred to Sections 118(a) and 139 of the Negotiable Instruments Act, 1881, which presume that negotiable instruments are issued for valid consideration and that a cheque is issued in discharge of a debt or liability unless proven otherwise, respectively.

15.2.2. The Supreme Court concluded that a cheque itself serves as a promise to pay, even if the debt is time-barred. It emphasized that Section 25(3) of the Contract Act is an exception to the general rule that agreements without consideration are void. The Court further held that whether a debt is time-barred in cases

NC: 2025:KHC:7450 CRP No. 102 of 2024 involving dishonored cheques is a question of fact and law, requiring trial and evidence.

15.2.3. The Court clarified that unless the debt is completely non-recoverable under the law (such as claims from a wagering contract, which are legally unenforceable), the limitation issue remains a mixed question of fact and law. Therefore, a plaint cannot be rejected at the outset solely on limitation grounds.

15.3. In Dinesh B Chokshi v. Rahul Vasudeo Bhatt , 2013 (2) MhLJ 130, the Bombay High Court's Division Bench held that issuing a cheque to settle a time-barred debt amounts to a promise under Section 25(3) of the Indian Contract Act, 1872. Such a promise creates a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881. The Court relied on the Supreme Court's ruling in National Insurance Company Ltd v. Seema Malhotra , (2001) 3 SCC 151, where it was observed that a cheque, as a bill of exchange drawn on a specified banker, carries an inherent promise to the payee that the bank will honor the payment.

16. Based on the above legal precedents, the key legal principles on this issue are as follows:

This promise, by itself, creates a legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.

NC: 2025:KHC:7450 CRP No. 102 of 2024 16.2. The issue of whether a suit for recovery of money based on the dishonor of such a cheque is barred by limitation or not, is a mixed question of fact and law. This issue must be determined through trial unless the debt is explicitly unenforceable under the law.

16.3. The question of limitation in such cases can only be decided after evaluating the evidence presented by both parties during trial. The legal presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881, may be challenged and disproved by evidence to the contrary.

17. Before delivering the final order, it is necessary to address the legal precedents cited by the petitioner's counsel.

17.1. In Sasseriyil Joseph v. Devassia, Cri . A. No. 161/1994 (DD 22.09.2000) - MANU/KE/0674/2000, the High Court of Kerala dismissed an appeal challenging an acquittal. The case dealt with whether dishonoring a cheque issued for a time-barred debt would attract criminal liability under Section 138 of the Negotiable Instruments Act, 1881. The Court held that a time- barred debt is not legally recoverable and that the appellant had not established an acknowledgment of debt within the limitation period, as required under Section 18 of the Limitation Act, 1963.

17.1.2. However, in the present case, the dishonored cheque was issued to settle a time-barred debt, which constitutes a valid contract and a legally enforceable obligation under Section 138 of

NC: 2025:KHC:7450 CRP No. 102 of 2024 the NI Act, 1881 . Therefore, this precedent does not apply to the current case.

17.2. In Mortulo Ramchandra Gad & Ors. v. John Pinto & Ors., FA No. 18/1999 (DD 11.08.2006) - MANU/MH/0736/2006, the High Court of Bombay at Goa dismissed a suit seeking recovery of a time-barred debt under Article 19 of the Limitation Act, 1963 . The debt had been acknowledged in writing by the borrower, who stated that repayment would be made upon demand.

17.2.1. The Court ruled that the acknowledgment was not a valid promissory note since it did not specify a repayment amount or terms thereof. The Court also found that the plaintiffs had failed to prove that repayment was due on the date claimed as the cause of action.

17.2.2. This precedent does not apply to the present case, as the acknowledgment of debt herein is in the form of a signed cheque issued by the defendant. Under Section 25(3) of the Indian Contract Act, 1872, such a cheque constitutes a valid promise to pay.

17.3. The petitioner's counsel also cited KH Hanumanthiah v. Prakashchand, CRP No. 77/2023 (DD 27.08.2024), wherein this Court rejected a suit for specific performance filed more than three years after the expiration of an 11-month period stipulated in a sale agreement. The Court referred to Article 54 of the Limitation Act, 1963 , and held that the limitation period starts either from the

NC: 2025:KHC:7450 CRP No. 102 of 2024 expiration of the agreed performance period or from the date the plaintiff is informed that performance is refused.

17.4. This precedent does not apply to the present case. The specific performance suit in Hanumanthiah was filed in 2016, nearly six years after the 11-month performance period ended in November 2007. Since the agreement had a fixed deadline, the suit was clearly time-barred. In instance , the present case concerns the enforceability of a cheque issued to settle a time- barred debt, which is governed by different legal principles.

17.5. In Kotak Mahindra Bank Limited v. Kew Precision Parts Private Limited & Ors. , (2022) 9 SCC 364, the Supreme Court distinguished between Section 18 of the Limitation Act, 1963, and Section 25(3) of the Indian Contract Act, 1872.

17.5.1. The Court noted that the National Company Law Appellate Tribunal (NCLAT) had failed to consider a settlement offer made by the corporate debtor, which demonstrated an acknowledgment of debt and a continuing cause of action. As a result, the Supreme Court held that the NCLAT's decision to dismiss an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, on limitation grounds was legally incorrect. The Court also pointed out that the NCLAT had not considered whether the delay could be condoned under Section 5 of the Limitation Act, 1963.

17.5.2. The Supreme Court further referred to its earlier decision in Bombay Dyeing & Manufacturing Co. Ltd. v. The

NC: 2025:KHC:7450 CRP No. 102 of 2024 State of Bombay, AIR 1958 SC 328, wherein the Court had held that a written promise to repay a time-barred debt is a valid contract. The Court clarified that under Section 25(3) of the Indian Contract Act, 1872, a time-barred debt is still a valid consideration for a fresh promise to pay.

17.5.2. The above case laws have merely clarified that a promise under Section 25(3) of the Indian Contract Act, 1872, constitutes novation and can serve as the basis for a separate suit, independent of the original debt. It is well established that while the remedy to enforce a debt may be barred by the passage of time, the debt itself is not extinguished. There is no dispute regarding this legal principle, and these precedents do not support the petitioner-defendant's case.

17.6. In N. Ethiraju Naidu v. K.R. Chinnikrishnan Chettiar , AIR 1975 Mad 333, the High Court of Madras explained the distinction between the operation of Section 18 of the Limitation Act, 1963, and Section 25(3) of the Indian Contract Act, 1872. The Court held that Section 25(3) requires an express promise made in writing and signed by the debtor. Nothing short of such an express promise can create a fresh period of limitation. While this principle is undisputed, it does not support the petitioner's contention that the plaint should be rejected.

18. Therefore, it can be reasonably concluded that when a suit for recovery of money is based on a dishonoured cheque issued to settle a time-barred debt, the plaint cannot be rejected outright under Order 7, Rule 11(d) of the Code of Civil Procedure

NC: 2025:KHC:7450 CRP No. 102 of 2024 ( CPC ) as being barred by limitation. This is because the issuance of the cheque itself signifies a promise to pay under Section 25(3) of the Indian Contract Act, 1872. Furthermore, the dishonour of the cheque gives rise to a fresh cause of action, making the debt legally enforceable under Section 138 of the Negotiable Instruments Act, 1881.

19. In the instant case, the plaint averments reveal that the subject cheque was allegedly issued on 13.06.2019. However, whether the alleged cheque was in fact, issued on the said date and upon the expiry of the period of limitation prescribed under Article 24 of the Limitation Act, 1963 , is a question of fact, which needs to be resolved in a trial, upon consideration of the relevant evidence, yet to be produced by the parties herein. In the present circumstances, the plaint ought not to be rejected at the threshold, as the contentions raised in the plaint warrant a trial.

20. In conclusion, where the averments in the plaint do not clearly disclose that the claim is barred by limitation, or involves a debt that is legally unenforceable, the issue of limitation is a mixed question of fact and law, which must be decided at trial.

Accordingly, the instant civil revision petition stands dismissed.

(HEMANT CHANDANGOUDAR) JUDGE TIN CT:BCK LIST NO.: 19 SL NO.: 2