Kerala High Court
J. Daniel vs The State Of Kerala And Anr. on 28 July, 2005
Equivalent citations: 2006(1)ALD(CRI)43, I(2006)BC273, [2006]132COMPCAS510(KER), 2005CRILJ4095, 2005 CRI. L. J. 4095, 2006 (1) AJHAR (NOC) 6 (KER), 2006 (1) ALL LJ NOC 77, 2006 (1) ABR (NOC) 83 (KER), 2006 (1) AKAR (NOC) 6 (KER), (2006) 1 BANKCAS 273, (2006) 1 CIVILCOURTC 530, (2005) 4 RECCIVR 641, (2006) 1 ICC 669, (2006) 1 ALLCRILR 390, (2006) 2 CIVLJ 389, (2005) 4 RECCRIR 952, (2005) 3 KER LJ 29, (2006) 132 COMCAS 510
Author: K. Thankappan
Bench: K. Thankappan
ORDER K. Thankappan, J.
1. This is a petition to grant leave to file an appeal against the judgment in C.C. No. 259/2004 on the file of the Court of the Judicial First Class Magistrate-I, Nedumangad. The above case was on a complaint filed by the petitioner alleging that the 2nd respondent committed an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, hereinafter referred to as 'the Act'. It is stated in the complaint that the 2nd respondent issued Ext.Pl cheque in favour of the petitioner in discharge of an amount of Rs. 60.000/- alleged to have been owed by him and on presentation of the same, it was dishonoured stating "funds insufficient". The petitioner caused a statutory notice to the 2nd respondent demanding the amount covered by the cheque. Though the 2nd respondent received the notice, the amount was not paid. Hence the complaint was filed. The trial Court took cognizance of the offence and tried the case. Before the trial Court PWs. 1 to 4 were examined on the side of the prosecution and marked Exts. P1 to P9. On the side of the defence 2nd respondent himself was examined as DW1 and Exts.Dl to D5 were marked. After considering the evidence, the trial Court acquitted the 2nd respondent holding that the petitioner failed to prove the service of statutory notice to the 2nd respondent and that the cheque was in discharge of legally enforceable debt. Aggrieved by the above, the petitioner has approached this Court.
2. Learned counsel for the petitioner submits that the finding of the trial Court that the notice was issued not within the statutory time limit is not correct. The learned counsel also submits that the finding of the trial Court that Ext.P1 cheque issued by the 2nd respondent was not a legally enforceable debt or other liability is not correct.
3. Section 138 of the Act deals with dishonour of cheque for insufficiency, etc. of funds in the account, which reads as follows :-
"138. Dishonour of cheque for insufficiency, etc., of funds in the account - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall apply unless-
a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability"
A reading of the above provision would indicate that the execution of the cheque is not sufficient to constitute an offence punishable under Section 138 of the Act, unless it is proved that the debt or other liability is a legally enforceable one.
4. The trial Court considered the factual matrix, which was the basis for issuance of Ext. P1 cheque, and found that the debt or liability which had arisen out of an agreement for compounding S.C. No. 304/1995 before the Principal Sessions Court, Thiruvananthapuram. The trial Court also found that in the petition filed before the Bar Council of Kerala the appellant had stated that Ext.P1 cheque was issued for repayment of the amount which 2nd respondent accepted from two accused in S.C. No. 304/1995 in which the daughter of the petitioner was a victim.
5. From the facts now revealed, it can be seen that the debt or liability covered by Ext. P1 had arisen out of an agreement which was not in accordance with law. As a matter of fact, S.C. No. 304/1995 was relating to an offence punishable under Section 376, IPC which was not a compoundable one. If that be so, the liability arising out of an agreement for compounding a non-com-poundable offence is not a legally enforceable debt or other liability. The learned counsel for the petitioner invites the attention of this Court to a decision reported in Gray v. Southouse, (1949) 2 All ER 1019. In the above decision the Court considered a claim made by sub-tenants for recovery of the sums paid as consideration for a non-executable contract. The Court held that the sub-tenants were entitled to recover the money paid as a consideration. The facts in the above case are entirely different from the present case.
6. Section 376, IPC which relates to an offence is not compoundable in the eye of law. If any contract is entered into between parties without consideration or for a consideration which fails, would not create any obligation or liability as per Section 43 of the Act. Apart from that it can be seen that the cheque in question was issued for a consideration which is unlawful. Section 23 of the Indian Contract Act reads as follows ::-
"23. The consideration or object of an agreement is lawful, unless-
It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In such cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void." A reading of the above would show that any agreement opposed to law or forbidden by law is not enforceable. Every debt or liability upon which a cheque is issued is not enforceable. For example, if an officer of defence force receives a cheque for consideration on the basis of an agreement to pass on military secrets, such a cheque is not enforceable under Section 138 of the Act. It can be interpreted that any debt or liability arising out of a contract or promise, which is unlawful or not legally enforceable, would not constitute an offence under Section 138 of the Act.
7. In Words and Phrases Vol. 14A, the term "enforceable" is defined as "not invalid as contrary to public policy because bargaining contrary to the law as to venue, word "enforceable" not necessarily implying actual force or coercion but meaning to be executed and to cause to take effect." Explanation to Section 138 clearly says that for the purpose of the section "debt or other liability" means a legally enforceable debt or other liability. Hence, only a claim arising out of an enforceable debt or other liability will constitute an offence under Section 138 of the Act.
8. From the discussions made above, this Court is of the view that the judgment under appeal requires no interference by this Court. Hence, leave is rejected.