The Madurai Bench of the Madras High Court has affirmed that a cheque issued for the repayment of money originally paid to illegally secure a public service job is not considered to be for a “legally enforceable debt or liability.” Consequently, the dishonour of such a cheque does not attract the offence under Section 138 of the Negotiable Instruments (NI) Act.
Justice K. Murali Shankar dismissed a criminal appeal (Crl.A.(MD)No.758 of 2022) filed by a complainant, P. Kulanthaisamy, upholding a trial court’s judgment that had acquitted the accused, K. Murugan.
The legal issue before the High Court was whether the cheque in question, issued to return Rs. 3 lakhs paid by the complainant to the accused for procuring a conductor job in the Tamil Nadu State Transport Corporation (TNSTC), was for the discharge of a legally enforceable debt.
Background of the Case
The appellant, P. Kulanthaisamy, filed a private complaint alleging that the accused, K. Murugan, who worked in the TNSTC and claimed to have influence through the Labour Union, demanded Rs. 3 lakhs to arrange a conductor job for him. The complainant stated he paid this amount on February 10, 2016.
When the accused failed to secure the job, the complainant demanded the money back. The accused allegedly issued a cheque dated December 31, 2016, which was returned by the bank as “old and invalid.” Subsequently, the accused issued another cheque (Ex.P.1) dated February 28, 2017, for Rs. 3 lakhs.
This second cheque was presented for collection but was returned dishonoured on the grounds of “want of sufficient amount” in the accused’s account. The complainant sent a legal notice dated March 14, 2017, which the accused received but neither replied to nor complied with.
The complainant then filed a case (C.C.No.32 of 2017) before the Fast Track Judicial Magistrate Court, Srivilliputtur. On January 4, 2018, the learned Magistrate acquitted the accused under Section 255(1) Cr.P.C., holding that the cheque was not issued for discharging a legally enforceable debt. The complainant challenged this acquittal in the present appeal before the High Court.
Submissions of the Parties
The counsel for the appellant (complainant) argued that the complaint was not based on the original agreement for the job but on the cheque subsequently issued, which provided a “different cause of action.”
The counsel for the respondent (accused) contended that the cheque was not issued towards a legally enforceable debt. It was argued that since the money was paid for securing a job, the transaction was “opposed to public policy,” and therefore, Section 138 of the NI Act could not be invoked.
Court’s Analysis and Findings
The High Court, after considering the submissions, focused on the sole issue of whether the cheque was for a legally enforceable debt. Justice K. Murali Shankar noted that the complainant (P.W.1) and his witness (P.W.2) both reiterated in their evidence that the Rs. 3 lakhs was given “for securing a job for the complainant.”
The Court held that “such payment for securing Government employment would be considered a bribe and is opposed to public policy.”
Citing the legal maxim “in pari delicto potior est conditio possidentis” (in equal fault, the condition of the possessor is better), the Court observed, “This doctrine means when the parties to a dispute are equally at fault or equally favour for an immoral act, the Court will not assist either party”.
The judgment extensively relied on Section 23 of the Indian Contract Act, 1872, which renders agreements with unlawful considerations or objects void. The Court found Illustration (f) to Section 23 to be a “fitting answer” to the issue:
“(f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.”
Based on this, the Court concluded, “In our case also, the agreement between the complainant and the accused is to be considered as void, as the consideration of Rs.3 lakhs was in the nature of an illegal gratification and was unlawful.”
The Court also distinguished the case from the principle of restitution under Section 65 of the Indian Contract Act. It cited the Supreme Court’s decision in Kuju Collieries Ltd Vs. Jharkhand Mines Ltd (AIR 1974 SC 1892) to hold that Section 65 applies only when an agreement is discovered to be void, not when the parties knowingly enter into an agreement that is void ab initio (void from the very beginning), as in this case.
The High Court also referred to a similar decision by the Delhi High Court in Virender Singh Vs. Laxmi Narain and another (2007 Crl. L.J. 2262), where it was held that parties were “in pari delicto” and no legally enforceable debt existed for a cheque issued under similar circumstances.
The Decision
Concluding its analysis, the High Court held that the complainant’s own case was that the money was given for securing a job and the cheque was issued to repay this specific amount.
“In light of the legal position,” Justice K. Murali Shankar ruled, “this Court holds that there is no legally enforceable debt or liability. Consequently, Section 138 of the NI Act is not applicable. The impugned judgment acquitting the accused is perfectly legal and deserves no interference.”
The criminal appeal was dismissed.
