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Cheque Dishonour & Cash Transactions

Cheque Dishonour & Cash Transactions


The wheel of justice has been clogged by Complaint Cases filed under Section 138 , Negotiable Instruments Act`1881. And in most of the cases, the Complainant relies upon either upon the cash transactions which are way above the the permissible cash transactions as per the income tax or undisclosed cash transactions. The docket of Trial Courts is overloaded with search falls and frivolous cases but the ingenuine litigants do not refrain from filing such false complaint cases as they understand the flaws of delay and traumatic experiences which innocent persons has to face while defending any false and frivolous complaint cases.

the superior courts of India including Honorable Supreme Court as well as Honorable High Courts have time and again developed the jurisprudence ousting the Complaint cases based on illegal cash transactions/ undisclosed cash transactions. It is important to point out that Our Country`s economy  is undergoing sea change And the present regime has taken extremely bold steps to weed out the termite of black money and in pursuance of the same , the Ld. Trial Courts have also followed the pursuit of Superior Courts.

It is important to point out that Hon`ble High Court of Bombay  held in “SANJAY MISHRA vs KANISHKA KAPOOR @NIKKI, CRL. APPLICATION NO . 4694 OF 2008”  in para 15 as follows:-

“15. The Apex Court has held that the laws relating to the said Act are required to be interpreted in the light of the object intended to be achieved by it despite there being deviation from general law. The Apex Court expressed that the object of section 138 of the said Act was to ensure that commercial and mercantile activities are conducted in smooth and healthy manner. The explanation to section 138 of the said Act clearly provides that a debt or other liability referred to in section means a legally enforceable debt or other liability. The alleged liability to repay an unaccounted cash amount admittedly not disclosed in the Income Tax Return cannot be a legally recoverable liability. If such liability is held to be a legally recoverable debt, it will render the explanation to section 138 of the said Act nugatory. It will defeat the very object of section 138 of the Act of ensuring that the commercial and mercantile activities are conducted in a healthy manner. The provision of section amount. A cheque 138 cannot be resorted to for recovery of an unaccounted issued in discharge of alleged liability of repaying “unaccounted” cash amount cannot be said to be a cheque issued in discharge of a legally enforceable debt or liability within the meaning of explanation of section 138 of the said Act. Such an effort to misuse the provision of section 138 of the said Act has to be discouraged.”

Further , the Courts in India have developed jurisprudence of ousting and rejecting Complaint Cases as well as Cases for recovery premised on unaccounted/illegal cash transactions being in contravention of the established law of land.

Courts have also invoked Section 269 SS of Income Tax Act which states that any transactions above Rs.20,000/- cannot be in cash and thereby concretizing the fact that such cash transactions are illegal and Courts cannot execute illegal transactions or transactions in contravention of Law of the Land.

Another aspect of illegal cash transactions are illegal committees , chit funds , which are in direct contravention of THE CHIT FUNDS ACT which lay down guards for such cash or illegal cash transactions.

Numerous orders/judgements have been passed thereby rejecting cases premises on committee or chit funds.

We have dealt with number of cases involving Cash transactions as well as illegal committees and the same have been successfully defended.

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