The Punjab & Haryana High Court ruled that a cheque issued as repayment for a bribe cannot be treated as a legally enforceable debt under the Negotiable Instruments Act, 1881 (NI Act). Justice Manjari Nehru Kaul, delivering the judgment in Surinder Singh v. Ram Dev, reaffirmed that only legally valid obligations are covered by the Act, dismissing the appeal against the trial court’s acquittal.
Background of the Case
The case involved Surinder Singh, the appellant, who had filed a complaint against Ram Dev under Sections 138 and 142 of the NI Act after a cheque issued by Dev for ₹1,00,000 was dishonored. Singh claimed that the cheque was given as part of a settlement after a fraud related to securing employment in the Punjab Police.
In 2016, Singh had paid ₹1.2 crores to Ram Dev’s brother-in-law, believing that the amount would help secure police jobs. When no such jobs materialized, Singh alleged that he had been deceived and subsequently filed an FIR under Sections 420 and 120-B of the Indian Penal Code (IPC), alleging cheating and criminal conspiracy. Following this, Ram Dev proposed a settlement, issuing a cheque for ₹1,00,000. However, the cheque was dishonored when Singh attempted to encash it, as the account had been closed.
The trial court had previously acquitted Ram Dev, concluding that the cheque was issued in connection with an illegal bribe payment, which did not qualify as a legally enforceable debt under the NI Act. Singh appealed, arguing that despite the payment’s illicit nature, Dev’s acknowledgment of liability and issuance of the cheque were grounds for enforcement.
Legal Issues Involved
The key legal question was whether a cheque issued to repay a bribe could be enforced under the NI Act. Section 138 of the Act stipulates that a dishonored cheque can lead to criminal liability only if it is issued to settle a legally enforceable debt or liability.
The appellant contended that even if the original transaction was illegal, the respondent’s acknowledgment of the debt through a cheque created a legal obligation. The appellant further argued that Dev never denied issuing the cheque or his signature on it, which should have invoked the presumption of a valid debt under the NI Act.
However, the trial court disagreed, ruling that a payment made as a bribe, regardless of acknowledgment, cannot constitute a valid debt. The appellant’s admission during cross-examination—confirming that the payment was intended as a bribe—was critical to the trial court’s judgment.
Court’s Decision
Justice Manjari Nehru Kaul upheld the trial court’s decision, asserting that only debts arising from lawful obligations can be enforced under Section 138 of the NI Act. In her judgment, she noted:
“It is well-settled law that any debt or liability arising from a contract or promise that is unlawful, immoral, or not legally enforceable does not attract the provisions of Section 138 of the Act. A payment made as a bribe, being an illegal and immoral transaction, does not constitute a legally enforceable liability.”
The court reiterated that the appellant’s admission during trial—that the cheque represented payment for a bribe—was pivotal. Since the NI Act does not cover debts arising from illegal acts, the court concluded that the cheque could not trigger criminal liability.
Justice Kaul further emphasized that the NI Act’s primary objective is to ensure that negotiable instruments represent genuine, lawful financial obligations. The court observed that any attempt to extend its scope to cover illicit payments would undermine the integrity of the Act and the principles of law.
Case Details
– Case Name: Surinder Singh v. Ram Dev
– Case Number: CRM-A-233-2021
– Bench: Justice Manjari Nehru Kaul
