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2025 Supreme(Online)(KAR) 10560
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
SHIVASHANKAR AMARANNAVAR, J
Allamprabhu S/o. Veerabhadrappa Sarwad – Appellant
Versus
Halachandra S/o. Ramappa Parasannavar – Respondent
CRIMINAL PETITION NO. 101086 OF 2024
For the Appellant :SRI. JOSHI SHRIPRASAD JAYATEERTH & SRI. RAVIRAJ C. PATIL, ADVOCATES
An agreement to secure employment for a fee is void, resulting in no legally recoverable debt under Section 138 of the Negotiable Instruments Act.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Indian Contract Act, 1872 - Section 23 - Quashing of proceedings for dishonour of cheque - Agreement to secure a Government job for consideration of Rs.4,50,000/- deemed void as it involves unlawful consideration - No legally recoverable debt exists under Section 138 as the cheque was issued for repayment of an amount received under a void agreement. (Paras 5, 11, 14)
(B) Legal enforceability - The court emphasized that for a cheque to attract Section 138, there must be a legally recoverable debt, which was absent in this case due to the nature of the agreement. (Paras 25, 14)
Facts of the case:
The petitioner was accused of issuing a dishonoured cheque for Rs.4,50,000/- to the respondent, who claimed the amount was for securing a Government job, which was not provided. The petitioner contended that the agreement was void under Section 23 of the Indian Contract Act.
Findings of Court:
The court found that the agreement was void due to unlawful consideration, leading to the conclusion that no legally enforceable debt existed.
Issues: The main issues were whether the agreement constituted a legally enforceable debt and if the cheque was issued for a lawful consideration.
Ratio Decidendi: The court ruled that an agreement to secure employment for a fee is void, and thus, the cheque issued for repayment does not create a legally enforceable liability under Section 138 of the N.I. Act.
Result: The petition is allowed, and the proceedings against the petitioner are quashed.
Certainly. Based on the provided legal document, here are the key legal points:
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An agreement to secure employment in exchange for consideration is deemed void if it involves unlawful consideration, such as promising to obtain a government job, which is prohibited by law and public policy. Such agreements are considered void from the outset (!) (!) .
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When an agreement is void due to unlawful consideration, any amount paid under that agreement cannot be considered a legally recoverable debt. Therefore, a cheque issued for repayment of such an amount does not establish a legally enforceable liability under the relevant section of the Negotiable Instruments Act (!) .
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For a cheque to attract liability under Section 138 of the Negotiable Instruments Act, there must be an existing, legally recoverable debt. If the underlying transaction is unlawful or void, the cheque cannot be deemed to represent a legally enforceable debt (!) .
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Transactions based on illegal or immoral considerations, such as paying money to secure a job through a void agreement, do not create enforceable liabilities. Consequently, proceedings initiated under Section 138 of the Act in such contexts are considered an abuse of process of law (!) .
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The court emphasized that agreements involving unlawful consideration, especially those that involve promises to obtain employment in public service, are void and cannot serve as a basis for legal claims or liabilities (!) (!) .
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In cases where the transaction is found to be immoral or against public policy, even if a cheque is issued, it does not establish a legally enforceable debt, and proceedings based on such a cheque are liable to be quashed (!) (!) .
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The legal enforceability of a debt or liability is fundamental to proceedings under the Negotiable Instruments Act; without it, the initiation of such proceedings is unjustified and can be dismissed (!) .
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When a transaction is inherently illegal or immoral, the courts are inclined to quash proceedings related to dishonour of cheque if it is established that the underlying agreement was void or unlawful (!) (!) .
These points collectively establish that agreements involving unlawful consideration, such as promises to secure employment through payment, are void and do not give rise to legally enforceable debts, thereby invalidating related proceedings under Section 138 of the Negotiable Instruments Act.
ORAL ORDER
This petition is filed by petitioner/accused No.1 under Section 482 of Cr.P.C., praying to quash the entire proceedings in C.C.No.221/2024, registered for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’, for short) pending on the file of Principal Civil Judge and JMFC, Gokak.
2. Respondent/complainant initiated proceedings against the petitioner and another for offence punishable under Section 138 of N.I. Act in P.C.No.332/2023. The learned Principal Civil Judge and JMFC, Gokak has taken cognizance only against petitioner/accused No.1 for offence punishable under Section 138 of N.I. Act and registered in C.C.No.221/2024. The proceedings of the said criminal case are sought to be quashed.
3. It is the case of the respondent/complainant in his complaint that he had given Rs.4,50,000/- to the petitioner/accused for securing Government job to him and inspite of two to three years, the petitioner/accused did not secure him the Government job and when request made by the respondent/complainant to the petitioner/accused for return of said amount, he had issued a cheque for Rs.4,50,000/- and it came to be dishonoured.
4. Heard learned counsel for the petitioner. Inspite of service of notice, respondent/complainant remained absent and unrepresented.
5. Learned counsel for petitioner would contend that the agreement between the petitioner and respondent is void in view of Section 23 of the Indian Contract Act, 1872 . He submits that illustration ‘f’ of Section 23 itself indicates that any promise to obtain an employment in public service is a void agreement as the consideration for it is unlawful. He contend that in the present case, the agreement between petitioner and respondent for consideration of Rs.4,50,000/- is to secure a Government job. On that point, he places reliance on the decision of co-ordinate Bench of this Court in the case of R. Parimalabai V/s Bhaskar Narasimhaiah in Crl.P.No.1387/2011 decided on 06.07.2018. He submits that there is no legally recoverable debt as cheque is issued for payment of money received under a void agreement.
6. Learned counsel for petitioner further submits that as the said agreement between the petitioner and respondent was to secure a Government job for a consideration of Rs.4,50,000/- is a void agreement and cheque issued for repayment of the amount received at the time of agreement cannot be said to be issued towards legally enforceable liability. With this, he prayed to quash the proceedings.
7. Having heard learned counsel, the Court has perused the materials placed on record.
8. Paragraph Nos.3 and 4 of private complaint No.332/2023 filed by the respondent against the petitioner and another indicate that the petitioner in order to secure a Government job to the respondent/complainant has assured him and received Rs.4,50,000/- and as he did not secure a Government job, he had issued a cheque for Rs.4,50,000/- in favour of respondent for repayment of the said amount. Therefore, the agreement between the petitioner and respondent is to secure a Government job by the petitioner for consideration of Rs.4,50,000/-.
9. Section 23 of the Indian Contract Act, 1872 reads thus:
“23. What consideration and objects are lawful, and what not.- 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 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.’
10. Illustration ‘f’ appended to Section 23 of the Indian Contract Act, 1872 reads thus:
f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agre
