Cheat due to alleged undervaluation rejected where cheque backed admitted property liability and dishonour ingredients were satisfied.

A cheque issued in an admitted property transaction remained enforceable under the Negotiable Instruments Act despite the defence that the underlying acknowledgment reflected undervalued consideration and stamp-duty evasion. The court treated the acknowledgment as part of the parties' mutual arrangement and held that the drawer, having benefited from that arrangement and issued the cheque towards the liability, could not deny enforceability on the basis of the alleged illegality in the documentation. On the facts, the cheque dishonour prosecution satisfied the statutory requirements, and the conviction was upheld.

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Issues: Whether a cheque issued in relation to an admitted property transaction could be treated as supporting a legally enforceable debt for the purpose of prosecution under Section 138 of the Negotiable Instruments Act, 1881, notwithstanding the plea that the underlying acknowledgment reflected undervaluation and was therefore unenforceable.

Analysis: The transaction between the parties was admitted, the issuance of the cheque was not disputed, and the cheque was dishonoured for insufficiency of funds. The defence rested on the contention that the sale deeds reflected a lower consideration and that the separate acknowledgment for the balance amount was executed to suppress the true value and evade stamp duty. The Court held that, on the facts, the acknowledgment formed part of a mutual arrangement between the parties and that the revision petitioner, having benefited from the arrangement and having issued the cheque in discharge of that liability, could not rely on the alleged undervaluation to deny enforceability. The statutory requirements under Sections 138 and 139 of the Negotiable Instruments Act, 1881 were found to have been satisfied.

Conclusion: The liability was held to be legally enforceable, and the conviction under Section 138 of the Negotiable Instruments Act, 1881 was upheld.

Final Conclusion: The challenge to the cheque dishonour conviction failed because the pleaded illegality in the underlying property documentation did not defeat the enforceability of the admitted cheque liability.

Ratio Decidendi: A drawer who issues a cheque in an admitted transaction cannot defeat a prosecution under Section 138 of the Negotiable Instruments Act, 1881 by relying on alleged undervaluation or stamp-duty evasion in the underlying arrangement, where the cheque was issued towards an enforceable liability arising from that transaction.

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