Sec 138 NI Act- No Legally Enforceable Debt If Cheque Issued For Illegal Consideration In A Void Contract : Karnataka HC

The High Court of Karnataka quashed a complaint filed for dishonour of cheque under Section 138 of the Negotiable Instruments Act on the ground that the complaint did not reveal any “legally enforceable debt”, in the case R.Parimala Bai v. Bhaskar Narasimhiah.

It was his contention that there was no legally enforceable debt in existence, as the cheque was given for illegal consideration received out of a void contract. It was contended on behalf of the complainant that the promise of securing job was a contract opposed to public policy, which was void as per Section 23 of the Contract Act. Specific reference was made to illustration (f) of Section 23, which covered a situation like the present case. Reliance was placed on a decision of Delhi High Court in Virender Singh v. Laxmi Narayain and another 2007 CrLJ 2262, which held that Sec.138 NI Act was not attracted for dishonour of a cheque issued for recovery of bribe paid for securing job.  Reference was also made to Supreme Court decision in Kuju Collieries Ltd v. Jharkhand Mines Ltd AIR 1974 SC 1892,  to buttress the point that when both contracting parties are equally at wrong, principle of restitution under Contract Act was not applicable.

Read more at: http://www.livelaw.in/sec-138-ni-act-no-legally-enforceable-debt-if-cheque-issued-for-illegal-consideration-in-a-void-contract/

 


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