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2023 DIGILAW 1031 (BOM)

Pradeep Yashwant Nagrale v. Vyankanna Laxmanna

2023-04-24

G.A.SANAP

body2023
JUDGMENT/ORDER 1. Heard. 2. Admit. The application is heard finally with the consent of the learned Advocates for the parties at the admission stage. 3. In this criminal revision application, challenge is to the judgment and order dtd. 6/2/2017 passed by the learned Additional Sessions Judge, Chandrapur, whereby the learned Additional Sessions Judge dismissed the appeal filed by the applicant/accused against his conviction and sentence for the offence punishable under Sec. 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the N.I. Act" for short). The learned Chief Judicial Magistrate, Chandrapur, on conviction, had sentenced the applicant/accused to undergo simple imprisonment for six months and to pay compensation of Rs.1, 45, 000.00 and in default of payment of compensation to further suffer simple imprisonment for six months. 4. The facts are as follows: In this judgment, the parties would be referred by their nomenclature in the complaint. The applicant is the accused and the non-applicant No.1 is the complainant. The complainant and accused are family friends. It is the case of the complainant that the accused had promised a job to his son in railway department. The complainant, as agreed between them, paid Rs.1, 20, 000.00 to the accused. The accused did not provide the job to the son of the complainant. He did not fulfill his promise. The complainant, therefore, demanded his money back from the accused. The accused initially avoided to meet the demand. However, after great persuasion, he issued five cheques of Rs.18, 000.00 each, drawn on his account maintained with Central Bank of India, Paldi Branch, Ahmedabad. The complainant presented the said cheques for encashment through his bank. The bank of the complainant informed in writing to the complainant that the cheques were dishonoured on account of insufficient funds in the account of the accused to honour the cheques. The complainant, therefore, issued a notice to the accused and made the demand. The accused did not pay the amount. The complainant, therefore, filed a complaint. The learned Magistrate took congnizance of the offence and issued the process against the accused. The complainant examined himself as a sole witness. The accused has also examined himself. He examined one independent witness to substantiate his defence. The learned Magistrate, on appreciation of the evidence, held the accused guilty and sentenced him as above. The learned Magistrate took congnizance of the offence and issued the process against the accused. The complainant examined himself as a sole witness. The accused has also examined himself. He examined one independent witness to substantiate his defence. The learned Magistrate, on appreciation of the evidence, held the accused guilty and sentenced him as above. The appeal filed by the accused against his conviction and sentence came to be dismissed. The accused is, therefore, before this Court. 5. I have heard Mr A. R. Patil, learned advocate for the accused and Ms Sonali Saware-Gadhwe, learned advocate (Amicus Curiae) for the complainant. Perused the record and proceedings. 6. Learned Advocate for the accused submitted that the complaint filed under Sec. 138 of the N.I. Act was not maintainable. Learned Advocate submitted that the facts stated in the complaint would show that the contract between him and the complainant was void ab initio. The said amount, according to the complainant, was paid to the accused as per their agreement to secure a job to his son in railway department. Learned Advocate submitted that this admitted fact stated in the complaint by the complainant has not been properly appreciated by the Courts below. Learned Advocate submitted that the agreement between the parties was not enforceable by law. Learned Advocate submitted that the agreement which is not enforceable by law is void agreement. Learned Advocate submitted that the consideration and object of the agreement was unlawful. Learned Advocate heavily relied upon Sec. 23 of the Indian Contract Act, 1872 (hereinafter referred to as 'the Contract Act'). Learned Advocate further submitted that the illegality of the agreement was known to the parties when they entered into the agreement. Learned Advocate further submitted that in this case Sec. 65 of the Contract Act would not be applicable. Learned Advocate further submitted that on this ground alone the accused is entitled for acquittal. 7. Learned Advocate Ms Sonali Saware-Gadhawe, appointed to represent the complainant, submitted that the illegality of the agreement was not known to the complainant at the inception. Learned Advocate submitted that the accused demanded money from the complainant and at that time assured the complainant to provide a job to his son and therefore, the complainant paid the amount. Learned Advocate submitted that the consideration and object of the agreement was lawful and as such enforceable. Learned Advocate submitted that the accused demanded money from the complainant and at that time assured the complainant to provide a job to his son and therefore, the complainant paid the amount. Learned Advocate submitted that the consideration and object of the agreement was lawful and as such enforceable. Learned Advocate, therefore, submitted that the cheques issued by the accused were towards discharge of his legally enforceable debt or liability. Learned Advocate submitted that the Courts below have recorded concurrent findings of fact in favour of the complainant and therefore, in the revisional jurisdiction the interference is not warranted in the said findings of fact. 8. In the backdrop of the submissions advanced by the learned Advocates for the parties, the only question that needs to be addressed is whether the agreement between the accused and complainant was enforceable by law. As per Sec. 2(h) of the Contract Act it is provided that an agreement enforceable by law is a contract. Sec. 2(g) of the Contract Act provides that the agreement not enforceable by law is void. Sec. 10 of the Contract Act provides for what agreements are contract. One of the conditions for the agreement to become a contract is that it must be for lawful consideration and for lawful object. Sec. 23 of the Contract Act provides as to what considerations and objects are lawful, and what are not lawful. Sec. 23 is extracted below. "23. What considerations and objects are lawful, and what not.-The consideration or object of an agreement is lawful, unlessit 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 each of these 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." Illustration (f) to Sec. 23 is relevant for our purpose. It is reproduce below. "(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." 9. It is reproduce below. "(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." 9. In the context of the dispute, it would be necessary to mention that the basic contention of the accused is that in view of Sec. 23 of the Contract Act, the payment made to the accused by the complainant was not lawful and therefore, it was not a legally enforceable contract. It is therefore contended that the debt or liability was not legally enforceable. In this context, it would be necessary to reproduce Sec. 138 of the N. I. Act with explanation. It reads thus: "138. Dishonour of cheque for insufficiency, etc., of funds in the account. It is therefore contended that the debt or liability was not legally enforceable. In this context, it would be necessary to reproduce Sec. 138 of the N. I. Act with explanation. It reads thus: "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 be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this Sec. 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 thirty 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 Sec., "debt or other liability" means a legally enforceable debt or other liability." Perusal of this Sec. 138 of the N. I. Act and explanation would show that for the purpose of this Sec., "debt or other liability" means legally enforceable debt or other liability. Explanation.- For the purposes of this Sec., "debt or other liability" means a legally enforceable debt or other liability." Perusal of this Sec. 138 of the N. I. Act and explanation would show that for the purpose of this Sec., "debt or other liability" means legally enforceable debt or other liability. In a complaint, under Sec. 138 of the N. I. Act, this aspect has to be proved. There is a presumption of existence of debt or other liability subject to proof of certain facts. The legally enforceable debt or other liability in the cases like the one before this Court has to be considered and decided keeping in mind the nature of transaction between the parties. 10. According to the accused, the complainant admittedly made a payment to him to secure a job to his son in railway department and therefore, the consideration and object of the said contract was forbidden by law and opposed to the public policy and as such, the agreement itself was void. It is submitted that in view of this, no legally enforceable debt or liability was created. It is therefore contended that the cheques issued by the accused could not be said to have been issued in discharge of any debt or other liability as contemplated under Sec. 138 of the N.I. Act. It is to be noted that as per Sec. 23 of the Contract Act the consideration or object of an agreement is unlawful if it is contrary to what has been stated in Sec. 23 of the Contract Act. It provides that the every agreement of which the object or consideration is unlawful is void. 11. In the above context, the facts of the case on hand are required to be considered. The complainant has stated in his complaint that the accused demanded Rs.1, 20, 000.00 from him. He advanced the money to the accused because he gave an assurance to him that he will give employment to the son of the complainant by name Sanjay Gorantiwar in the railway department. It is stated that the accused failed to perform his promise and provide employment to his son. The complainant, therefore, approached the accused on many occasions and demanded the money from him. It is stated that the accused failed to perform his promise and provide employment to his son. The complainant, therefore, approached the accused on many occasions and demanded the money from him. The accused, at last, issued five cheques to the complainant of Rs.18, 000.00 each drawn on his account maintained with Central Bank of India, Paldi Branch, Ahmedabad District. According to the complainant, the accused had promised employment to his son in railway department and therefore, on his demand he paid Rs.1, 20, 000.00 to him. The facts of this case are fully covered by illustration (f) to Sec. 23 of the Contract Act. It is, therefore, crystal clear that the agreement between the accused and the complainant was void as the consideration and object was forbidden by law as well as against the public policy. The accused agreed for providing public employment to the son of the complainant on acceptance of Rs.1, 20, 000.00. The complainant also agreed to the same and paid Rs.1, 20, 000.00 to the accused. In this case, therefore, the parties must be held to be pari delicto. In this case the consideration and object of the agreement was unlawful. The agreement of which the consideration and object is unlawful is not enforceable by law. Such an agreement is void at the very inception. It is to be noted that as per explanation to Sec. 138 of the N. I. Act it has been provided that "the debt or other liability" means a legally enforceable debt or other liability. If the facts of this case are considered keeping in mind the provisions of Contract Act as well as provisions of Sec. 138 of the N. I. Act, it leaves no manner of doubt in my mind that the consideration and object of the agreement was unlawful and as such, the agreement was void ab initio. In the facts and circumstances, therefore, the amount could not be said to be a legally enforceable debt or liability. In this case, therefore, the provisions of Sec. 138 of the N. I. Act have not been properly considered by the Courts below. The Courts below have missed the very crux of the matter. 12. At this stage, it would be necessary to make a useful reference to the two decisions, one of the Karnataka High Court and second of Delhi High Court. The Courts below have missed the very crux of the matter. 12. At this stage, it would be necessary to make a useful reference to the two decisions, one of the Karnataka High Court and second of Delhi High Court. The decision of the Karnataka High Court is in the case of R. Parimala Bai .v/s. Bhaskar Narasimhaiah, reported in, 2019 ALL MR (Cri) JOURNAL 1 and decision of the Delhi High Court is in the case of Virender Singh .v/s. Laxmi Narain and Anr., reported in, 2007 Cri.L.J.2262. The facts in the above two decisions are identical to the facts of the case on hand before me. In these decisions, it has been held that if the consideration and object is unlawful then the agreement is not enforceable by law. It is held that the debt or other liability under such agreement could not be said to be a legally enforceable debt or other liability. 13. It is further pertinent to mention that in this case Sec. 65 of the Contract Act would not become applicable. Sec. 65 makes a distinction between an agreement and a contract. Sec. 2 of the Contract Act provides that the agreement which is enforceable by law is a contract and an agreement which is not enforceable by law is said to be void. Therefore, when the earlier part of the Sec. 65 speaks of an agreement being discovered to be void, it means that the agreement is not enforceable and is therefore, not a contract. It is a void agreement. In a given case, it may happen that parties or one of the parties to the agreement may not have known that the agreement was in law not enforceable when they entered into an agreement. They might have come to know later that the agreement was not enforceable. The second part of Sec. 65 refers to a case where an agreement which was originally enforceable becomes void due to subsequent happenings. In both these cases, any person who has received any advantage under such agreement or contract is bound to restore such advantage or to make compensation for it to the person from whom he received the same. In this case, Sec. 65 would not apply. In both these cases, any person who has received any advantage under such agreement or contract is bound to restore such advantage or to make compensation for it to the person from whom he received the same. In this case, Sec. 65 would not apply. It is settled principle of law that the Court will refuse to enforce an illegal agreement at the instance of a person who is itself party to an illegality or fraud. This principle has been expressed by a maxim pari delicto potior est conditio defendentis. In this case both the parties were in pari delicto. The parties knew at the very inception of the transaction that it was for unlawful consideration and object. The complainant agreed to pay the money because the accused had promised to give employment to his son in railway department. They signified the assent to each others proposal. They were certain and sure about the consideration for their promise. The promise ultimately culminated into an agreement. Therefore, the accused alone cannot be blamed for this. The complainant is equally responsible for this transaction. Therefore, in this case Sec. 65 of the Contract Act cannot be invoked by the complainant. 14. In the facts and circumstances, I am of the view that the judgment and order passed by the learned Chief Judicial Magistrate and confirmed in appeal by the learned Sessions Judge, Chandrapur cannot be sustained. The facts noted above clearly indicate that the Courts below committed the manifest error in convicting the accused. Therefore, on this ground the revision deserves to be allowed. 15. The revision application is accordingly allowed. 16. The judgment and order dtd. 31/7/2010 passed by the learned Chief Judicial Magistrate, Chandrapur in S.C.C. No. 11652 of 2004 and confirmed by learned Sessions Judge, Chandrapur in Cri. Appeal No. 93 of 2010 on 06/2/2017, are quashed and set aside. 17. Applicant/accused - Pradeep S/o. Yashwant Nagrale is acquitted of the offence punishable under Sec. 138 of the Negotiable Instruments Act, 1881. 18. Mrs. Sonali Saware-Gadhawe, Advocate has assisted the Court as per the request of the Court. Hence, the legal fees of the learned Advocate is quantified at Rs.5000.00. This Court appreciates the assistance rendered by both the Advocates for the parties. The amount of compensation, if any, deposited by the accused be refunded to him. 19. The criminal revision stands disposed of.