A.V. Murthy vs B.S. Nagabasavanna

The Supreme Court held that under Section 138 of the Negotiable Instruments Act, 1881, a cheque issued in discharge of a legally enforceable debt is valid, and the presumption under Section 118 of the Act supports this. The Court found that the lower courts erred in quashing the complaint on the grounds of the debt being time-barred, as the acknowledgment of the debt in the respondent's balance sheet indicated its enforceability. Consequently, the Court allowed the appeal and reinstated the complaint proceedings against the respondent.