On behalf of the complainants, it was argued that the complaint could not be upheld under section 138 of the NIA because the cheque was issued as security and not against a legally enforceable debt or liability. In order to establish a criminal offence under section 138 of the Act, the complainant must, among other things, prove that the accused had a legally enforceable debt or liability to the complainant. In its decision in this case, the Supreme Court gave concrete form to the principle that a contract of sale constitutes a legally enforceable contract between the parties and, as such, any payment of consideration in this context is considered to be a payment made in connection with a duly enforceable debt or liability and does not fall outside the scope of section 138 of the Act. In other words, whether or not it results in a transfer of interest if a legally enforceable contract requires a party to pay, the payment must be interpreted as constituting a duly enforceable debt or liability sufficient to fall within the scope of section 138 of the Act. This decision may set a precedent for the degradation of the room for manoeuvre of a party seeking to waive its contractual payment obligations by obtaining the technical defence that there is no existing liability or debt to a party that has entered into a mere agreement of sale and not a deed of sale to promote the contract of sale. Section 138 of the Negotiable Instruments Act 1881 may fall either into the category of acts which are not criminal in the strict sense but which are punishable acts of public interest, or those for which proceedings may be continued but which are in reality only a summary form of enforcement of a civil right. Articles 138 to 142 were adopted to address the concerns of creditors in a growing and developing country with liberal economic policies and new avenues for trade, commerce and industry. The creation of no-fault liability is an effective measure by promoting greater vigilance in order to avoid the habitual and insensitive holding of cheque drawers during debt relief or otherwise. The legislative objective and purpose of Article 138 is clearly to regulate financial promises in the country`s growing commercial, commercial, commercial and industrial activities, and the strict responsibility of Article 138 promotes greater vigilance in the matters it covers. The inclusion of this provision is intended to preserve the creditor`s confidence in the cheque drawer, which is essential to the economic life of a developing country like India. Its purpose would be set aside if, in the course of prosecuting an offence under section 138 of the Negotiable Instruments Act, 1881, the defendant was allowed to present to the defence that, at the time the cheque was issued, he had no reason to believe that the cheque could be dishonoured on presentation. The monetary blood flow in the arteries of the commercial and commercial heart must not be calcified by the shame of checks issued by a debtor. If, by the legal fiction introduced by Article 138, the non-cashing of the cheque issued by a person in an account he holds with a banker for the payment of any sum of money to another person outside that account for the total or partial remission of debt or liability, either because of the amount of money on the credit of that account, is insufficient or that the amount to be paid to the account by an agreement with this bank must be considered a criminal offence, it is obvious that, for this absolute liability, the legal fiction must be fully applied.
The mere non-cashing of a cheque for the reasons set out in section 138 of the Negotiable Instruments Act, 1881 is sufficient to commit a crime under section 138 of the Negotiable Instruments Act, 1881, and it does not matter that, when the cheque was issued, he had reason to believe that the cheque could not be dishonoured on presentation. For an infringement of section 138 of the Negotiable Instruments Act 1881, “mens rea” is not essential, as is clear from a reading of section 138. That provision clearly excludes `mens rea` as a constituent part of the infringement.
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