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        Case ID :

        2017 (12) TMI 970 - HC - Indian Laws

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        Cheque dishonour for unlawful consideration cannot sustain liability where no legally enforceable debt exists. A cheque issued to repay money paid for securing employment did not support liability under the Negotiable Instruments Act because the underlying ...
                          Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                              Cheque dishonour for unlawful consideration cannot sustain liability where no legally enforceable debt exists.

                              A cheque issued to repay money paid for securing employment did not support liability under the Negotiable Instruments Act because the underlying consideration was unlawful. For an offence under Section 138, the cheque must be drawn towards a legally enforceable debt or liability; where the transaction itself is tainted by illegality, no such enforceable debt arises and the statutory presumption cannot aid the complainant. The trial court's acquittal was therefore sustained, as the cheque did not satisfy the statutory requirement of lawful consideration and enforceable liability.




                              Issues: Whether a cheque issued towards repayment of money paid for securing a job, being consideration with unlawful object, could found an prosecution under Section 138 of the Negotiable Instruments Act.

                              Analysis: The complaint arose from an admitted payment made to secure employment, which the Court treated as money paid for an unlawful purpose. For an offence under Section 138, the cheque must be drawn for discharge of a legally enforceable debt or other liability. The Court further held that where the underlying transaction itself is tainted by illegality and the consideration is not lawful, no legally enforceable debt arises. In that situation, the statutory presumption could not assist the complainant, and the acquittal recorded by the trial Court was found to be based on sound principles.

                              Conclusion: The cheque was not issued in discharge of a legally enforceable debt, and the acquittal was correctly sustained.

                              Final Conclusion: The appeal failed and the order of acquittal remained undisturbed.

                              Ratio Decidendi: A cheque issued in respect of an underlying transaction founded on unlawful consideration does not satisfy the requirement of a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.


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