Immoral Transaction Like Bribe Not Enforceable Under Negotiable Instruments Act: Punjab & Haryana High Court

The Punjab & Haryana High Court has made it clear that a bribe amount does not constitute as a legally enforceable liability under the Negotiable Instruments (NI) Act.

Justice Manjari Nehru Kaul said, "A payment made as a bribe, being an illegal and immoral transaction, does not constitute a legally enforceable liability. Thus, the learned trial Court correctly concluded that no legally enforceable debt existed in this case, and the cheque issued in furtherance of an unlawful act cannot give rise to criminal liability under the Negotiable Instruments Act."

These observations were made while hearing the plea against the acquittal of accused Ram Dev in a cheque bounce case under Sections 138, 142 of the NI Act.

According to the complainant Dev, in collusion with his brother-in-law Amandeep and others, had deceived the complainant by providing a false assurance that if the complainant paid Rs. 1.2 lakh to Amandeep, he would secure employment for certain individuals in the Punjab Police.

Acting upon this fraudulent assurance, an amount of Rs.1.2 crore was given to Amandeep. However, it soon became apparent that no such appointments were secured, and the complainant realized that a fraud had been committed, it was alleged.

Consequently, an FIR, was registered under Sections 420 and 120-B of the IPC against Dev's brother-in-law and other accomplices for the offences of cheating and criminal conspiracy.

Dev later proposed a settlement under which he issued a cheque for Rs.1 lakh in favour of Singh. However, the same was dishonoured by the bank, with the noting that Dev's account had been closed.

A complaint of cheque bounce was filed under NI Act but the Court acquitted the accused observing that the cheque amount is given in bribe. Hence this appeal.

After hearing the submissions, the Court noted that, the appellant himself unequivocally admitted during his cross-examination before the trial Court that the cheque amount was paid as a bribe to the respondent for securing Government employment in the Punjab Police by certain job aspirants.

"Given this admission, it is imperative to clarify that the cheque amount cannot, under any circumstances, be deemed to have been issued in discharge of a legally enforceable debt or liability," the judge added.

Justice Kaul highlighted that under Section 138 of the NI Act, the mere issuance of a cheque does not constitute an offence unless it is proven that the cheque was issued for the discharge of a debt or liability that is legally enforceable.

The Court explained that 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.

Consequently, the Court held that the Trial Court is in consonance with the settled principles of law governing the enforcement of negotiable instruments

"The trial Court was right in acquitting the respondent, as the cheque amount did not represent a legally enforceable debt or liability, and therefore, no offence under Section 138 of the NI Act was made out," added the Court.

In the light of the above, the plea was dismissed.

Ramesh Kumar Jha, Advocate,for the applicant-appellant

Title: Surinder Singh v. Ram Dev

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