The Madras High Court has ruled that bribe money cannot be recovered, even if a cheque issued for its repayment bounces, as it is not a legally enforceable debt. Justice K. Murali Shankar of the Madurai Bench made this pronouncement while upholding the acquittal of an accused in a cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881.
The case originated from a complaint filed by P. Kulanthaisamy against K. Murugan, an employee of the Tamil Nadu State Transport Corporation (TNSTC). Kulanthaisamy alleged that Murugan demanded ₹3 lakh to secure a conductor's job for him within the corporation. After the job did not materialize, Murugan issued a cheque for the same amount, which was dishonored due to insufficient funds. Subsequently, Kulanthaisamy initiated criminal proceedings. The Fast Track Judicial Magistrate Court in Srivilliputtur acquitted the accused, stating that the original transaction was unlawful, and thus, the cheque could not be considered as issued against a legally enforceable debt.
The complainant argued that the Magistrate erred in treating the cheque as unenforceable simply because the initial transaction involved an unlawful object. However, the High Court rejected this argument. Justice Murali Shankar referred to Section 23 of the Indian Contract Act, 1872, which states that a consideration that is unlawful or opposed to public policy renders an agreement void. The court observed that Kulanthaisamy had admitted that the payment was made to secure government employment. The agreement to secure a job in exchange for money is against public policy, making it void from the beginning.
The Madras High Court clarified that Section 65 of the Indian Contract Act is not applicable in this case. This section usually applies when parties enter into an agreement believing it to be valid, but it later turns out to be void. In such instances, the party who received an advantage must restore it. However, when an agreement is void from the start, the law leaves the parties as they are. The complainant, having knowingly paid money for an illegal purpose, could not claim restitution or seek to penalize the accused through a cheque.
The court emphasized that it cannot be used to recover illegal payments or bribes, as it would undermine public morality and contravene the principle of legality. It reiterated that an agreement with an unlawful object or consideration is void and unenforceable under Section 23 of the Indian Contract Act.
The High Court cited the doctrine "in pari delicto potior est conditio possidentis," which means "in equal fault, the condition of the possessor is better". This principle implies that when both parties willingly engage in an illegal transaction, neither can seek assistance from the legal system. Section 138 of the NI Act applies only to legally enforceable debts or liabilities, not to obligations arising from void or immoral agreements.
The court concluded that since the complainant's case was based on money paid for an unlawful purpose, no legally enforceable debt or liability existed. Therefore, the dishonor of the cheque did not constitute an offense under Section 138 of the NI Act. The High Court found the trial court's acquittal of the accused to be perfectly legal and dismissed the appeal.
