2022 (7) TMI 85 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt and liability or not - raising of presumption under Sections 118 and 139 of the Negotiable Instruments Act - HELD THAT - The appellant/complainant himself admits that the cheque was issued for the purpose of securing job in Midhani company which is not by any legal means. In the said circumstances, when the cheque was drawn not for the purpose of securing any debt or liability, but pursuant to an illegal contract of an agreement entered into between the complainant and the accused, it cannot be said that it is a legally enforceable debt and such contracts/agreements are prohibited under law. For the said reason, as the cheque drawn was not in support of any debt or liability, the same cannot be legally enforceable. The argument of the learned counsel for the appellant that the case be remanded for denovo trial cannot be entertained for the reason of the appellant not making out any grounds to remand the matter for fresh trial. There is no illegality either procedural or otherwise committed by the learned Magistrate to remand the matter back for fresh trial as urged by the appellant/complainant. Appeal dismissed.

Summary

Issues:
1. Acquittal under Section 138 of Negotiable Instruments Act.
2. Legal presumption under Sections 118 and 139 of Negotiable Instruments Act.
3. Enforceable debt requirement for presumption under Section 139.
4. Burden of proof on accused regarding debt or liability.
5. Legally enforceable debt in case of illegal agreements.
6. Remand for fresh trial grounds.

Analysis:

1. The appeal was filed by the complainant against the acquittal of the respondent for an offence under Section 138 of the Negotiable Instruments Act. The appellant alleged that the respondent failed to provide a promised job and issued a cheque that bounced due to insufficient funds.

2. The appellant argued that once a cheque is dishonored, the court must raise a presumption under Sections 118 and 139 of the Negotiable Instruments Act. The trial court erred by delving into the reasons for the payment, stating that the legality of the debt is irrelevant if the essential elements of Section 138 are met.

3. The respondent contended that the amount taken for securing a job was illegal, lacking an enforceable debt. Citing a Karnataka High Court judgment, the respondent emphasized the necessity for the complainant to prove the debt's legality to trigger the presumption under Section 139.

4. Referring to a Supreme Court judgment, the respondent highlighted that the burden of proving the cheque was not issued for a debt or liability rests with the accused after the initial burden is discharged.

5. The court examined the legality of debts arising from illegal agreements, citing precedents. It was emphasized that debts or liabilities arising from unlawful contracts are not enforceable under Section 138, as illustrated by the appellant's admission of the cheque being issued for an illegal purpose.

6. The appellant's plea for a remand for fresh trial was rejected as no grounds were established for such action. The court found no procedural or substantive illegality in the trial court's proceedings warranting a retrial, ultimately dismissing the appeal due to lack of merit.