Justice P V Kunhikrishnan made the declaration whereas permitting a plea for setting apart the conviction and sentence of a person accused in a cheque dishonor case.
The accused was sentenced to 1 12 months and imposed with a high quality of Rs 9 lakh by a classes courtroom for the offence of dishonour of cheque resulting from insufficiency of funds within the account below part 138 of Negotiable Devices (NI) Act.
In his enchantment within the Excessive Court docket towards the classes courtroom choice, the accused claimed that as the quantity of Rs 9 lakh given to him by the complainant was in money, it was an unlawful transaction in line with the Earnings Tax legal guidelines.
“Subsequently, a debt created by an unlawful transaction can't be handled as a legally enforceable debt,” the accused had claimed.
Agreeing with the accused's competition, Justice Kunhikrishnan mentioned that if a legal courtroom “not directly legalises such unlawful transactions in violation of the IT Act” by treating them as a legally enforceable debt, it will likely be towards the purpose of the nation to discourage money transactions above Rs 20,000. The Excessive Court docket mentioned that discouraging money transactions above Rs 20,000 was additionally “part of the ‘digital India' dream of our nation, which is propounded by our Prime Minister to avoid wasting our financial system and to curb a parallel financial system in our nation”. “If the debt arises by way of an unlawful transaction, that debt can't be handled as a legally enforceable debt. If the courtroom regularises such transactions, that may encourage unlawful transactions by the residents. Even black cash shall be transformed into white cash by way of the legal courts,” the Excessive Court docket mentioned.
It additional mentioned that in such circumstances the accused ought to problem such transactions in proof and has to rebut the presumption below part 139 of the NI Act that “the holder of a cheque acquired it for the discharge of a debt or different legal responsibility”.
Within the instantaneous case, the accused had rebutted the presumption by claiming that the complainant doesn't have the supply to mortgage out Rs 9 lakh and due to this fact, the debt alleged to be resulting from him can't be handled as a legally enforceable one, the HC mentioned.
It allowed the accused's revision petition and acquitted him by setting apart his conviction and sentence by the decrease courtroom.
The Excessive Court docket mentioned if anyone pays an quantity in extra of Rs 20,000 to a different individual by money in violation of the IT Act and thereafter receives a cheque for that debt, he ought to take accountability to get again the quantity, until there's a legitimate rationalization for such money transactions.
“If there isn't a legitimate rationalization in tune with provisions of the IT Act, the doorways of the legal courtroom shall be closed for such unlawful transactions,” the HC mentioned.
It additionally made it clear that its findings can be potential in nature.
