Legally enforceable debt under cheque dishonour law excludes liabilities founded on unlawful agreements to compound non-compoundable offences.

A cheque issued in discharge of a liability arising from an agreement to compound a non-compoundable offence is not supported by a legally enforceable debt or other liability under Section 138 of the Negotiable Instruments Act, 1881. Because the underlying agreement was connected to an offence under Section 376 of the Indian Penal Code, 1860, and had an unlawful object, the claim founded on it was void and could not create an enforceable liability. Section 138 applies only where the cheque is drawn towards a legally enforceable debt or liability, so a cheque issued on such unlawful consideration does not attract penal liability.

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Issues: Whether a cheque issued towards a liability arising out of an agreement to compound a non-compoundable offence constitutes a legally enforceable debt or other liability under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: Section 138 applies only where the cheque is drawn towards a debt or other liability that is legally enforceable. The liability in question arose from an agreement connected with an offence under Section 376 of the Indian Penal Code, 1860, which is not compoundable in law. An agreement having an unlawful object or consideration is void, and a claim founded on such an agreement cannot be treated as an enforceable debt or liability for the purpose of Section 138.

Conclusion: A cheque issued in discharge of a liability arising from an unlawful agreement to compound a non-compoundable offence does not attract Section 138 of the Negotiable Instruments Act, 1881. Leave to appeal was therefore rightly refused.

Ratio Decidendi: Only a debt or liability that is legally enforceable can sustain prosecution under Section 138 of the Negotiable Instruments Act, 1881, and a liability founded on an unlawful agreement to compound a non-compoundable offence is not legally enforceable.

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