Prosecution under Section 138 of N.I. Act is unsustainable if cheque is presented beyond three-month validity period.

The complainant alleged that the petitioner borrowed ₹1,50,000/- for financial assistance and issued a post-dated cheque dated 13.06.2018 to facilitate repayment.

While the cheque was dated in June, the complainant did not present it until 05.12.2018, at which point it was returned for insufficient funds.

Following a failed demand notice, the Trial Court in C.C.No.444/2019 convicted the petitioner under Section 138 of the Negotiable Instruments Act, a decision later upheld by the Appellate Court in Crl.A.No.62/2023.

The petitioner approached the High Court in revision, arguing that the cheque was presented beyond its legal validity period.

Section 138 of the Negotiable Instruments Act, which requires a cheque to be presented within six months or its period of validity, whichever is earlier.

Section 35A of the Banking Regulation Act, 1949, under which the Reserve Bank of India issued a directive (dated 04.11.2011) reducing the validity of cheques from six months to three months effective from 01.04.2012.

Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001) regarding the necessity of presentation within the statutory period.

The Court noted that the cheque in question was dated 13.06.2018 but was only presented to the bank on 05.12.2018, which is approximately five months and twenty-two days later.

Although the bank returned the cheque for "funds insufficient" rather than "instrument expired," the Court held that the legal validity of the instrument had already lapsed under the RBI-mandated three-month rule.

The court reasoned that since the statutory prerequisite for Section 138—presentation within the validity period—was not met, the underlying criminal proceedings were fundamentally flawed.

The Court found that both the Trial and Appellate courts failed to properly evaluate this jurisdictional fact despite it being raised during the appellate stage.

The High Court allowed the revision petition and set aside the judgments of conviction and sentence passed by the Trial Court and the Appellate Court.