This judgment is a strong precedent against the misuse of cheque bounce laws for enforcing debts arising out of unlawful agreements—a concern increasingly seen in private admission dealings , bribery, and underhand financial transactions.

The complainant, a police officer by profession, filed ICC Case No.208 of 2021 before the learned SDJM, Bhadrak, alleging that:

 She was approached by the son of the petitioner, Smt. Anupama Biswal, with an assurance that he could secure a MBBS seat in a Government Medical College for her son.

 On this assurance, the complainant handed over a significant sum of cash to the petitioner's son for arranging the admission.

 The petitioner's son failed to deliver on his promise and could not secure the seat.

 Following repeated demands for refund, the mother of the accused, i.e., the petitioner, issued two cheques from her own bank account in favour of the complainant.

When the cheques were presented for clearance, they were dishonoured due to insufficiency of funds. After the statutory notice under Section 138 NI Act was sent and went unanswered, the complainant filed a criminal complaint against the petitioner.

The petitioner approached the Orissa High Court under Section 482 Cr.P.C. seeking quashing of the criminal complaint. Her counsel, Mr. D.R. Mohapatra, argued that:

 The cheque was issued not for any legally enforceable debt, but for money obtained by the son in an illegal transaction—promising a medical college seat in return for cash.

 Since the original transaction itself was immoral and illegal, no liability can be enforced under Section 138 NI Act, which mandates a legally recoverable debt or liability.

 The law does not support recovery from transactions that are opposed to public policy.

To substantiate the argument, several judicial precedents were cited:

1. N.V.P. Pandian v. M.M. Roy, AIR 1979 Mad 42 – Where the Madras High Court held that any transaction involving payment for medical college admission is opposed to public policy and not legally enforceable.

2. Virender Singh vs. Laxmi Narain, MANU/DE/9709/2006 – The Delhi High Court held that when both parties willingly engage in an illegal act (e.g., bribery or illicit influence), no enforcement can be allowed under Section 138.

3. R. Parimala Bai vs. Bhaskar Narasimhaiah, 2018 SCC OnLine Kar 3989 – Karnataka High Court ruled that even if the cheque was issued, if the underlying purpose was illegal or void, Section 138 does not apply.

4. Jeyaramachandran v. Babu @ A.M. Iqbal, Crl.A.Nos.534 & 535 of 2013 – The Madras High Court reiterated that the doctrine of “in pari delicto” prevents any benefit to either party when both are guilty of illegal conduct.

Justice Sibo Sankar Mishra, after carefully evaluating the facts and relying on the case laws, held:

“The cheques were issued to discharge an immoral debt, i.e., money received by the petitioner’s son to illegally procure a government medical seat. The complainant, being a party to this illegal transaction, cannot seek legal remedy under Section 138 of the Negotiable Instruments Act.”

The Court further emphasized the principle of “ex turpi causa non oritur actio”, which means:

“No action arises from an immoral or illegal cause.”

Moreover, the complainant being a serving police officer was expected to uphold the law and not engage in such unethical transactions. The court took serious note of this.

1.  Legally Enforceable Debt: Section 138 of the NI Act applies only when the cheque is issued to discharge a lawful liability. If the liability is based on immoral or unlawful consideration, it cannot be enforced.

2. Doctrine of In Pari Delicto: If both parties are at fault, neither can seek the help of the law.

3. Abuse of Process: Continuing a criminal prosecution in such cases would amount to misuse of court process and cause undue harassment to the accused.

4. Public Policy Supremacy: Courts must refuse to aid individuals who violate ethical or legal norms to fulfill personal ambitions.

The criminal proceedings in ICC Case No.208 of 2021 were quashed.

 The Court held that the cheque was not issued for a legally recoverable debt, and thus, no     offence under Section 138 NI Act was made out against the petitioner.

 However, the Court clarified that this ruling does not affect any other criminal trial pending against the petitioner's son.

This decision reiterates the moral backbone of cheque bounce laws. It sends a clear message that the judicial system will not support recoveries made from illegal transactions, even if formalities like cheques and notices are followed.

It upholds the integrity of the law by refusing to let criminal law be used as a recovery tool for underthetable dealings.

As a practicing lawyer handling Section 138 NI Act cases across Delhi, including Rohini Court, Tis Hazari, Karkardooma, and Dwarka Court, I have encountered several cases where complainants attempt to misuse the law to recover money from dubious deals. This judgment strengthens our ability to defend honest clients against such wrongful prosecution.

If you're facing a cheque bounce case where the underlying transaction was illegal, immoral, or fraudulent, you may have strong grounds for quashing the complaint under Section 482 Cr.P.C. based on this precedent.

Facing prosecution under Section 138 NI Act?  

 Was the cheque issued for an unlawful or questionable purpose? 

 Want to protect your rights and reputation?

Contact Advocate Akanksha Roy, a trusted legal expert in Delhi NCR with over a decade of experience in cheque bounce defense and criminal law.

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