Ram purchased a second-hand car from his friend Rohan for ₹ 5 lakhs on 10 th November, 2023. He paid ₹ 4 lakh immediately and promised to pay ₹ 1…

Provisions of Law: According to section 138 of the Negotiable Instruments Act, 1881, where any cheque drawn by a person on an account maintained by him with a banker— for payment of any amount of money to another person from that account for the discharge, in whole or in part, of any debt or other liability, [A cheque given as gift or donation, or as a security or in discharge of a mere moral obligation, or for an illegal consideration, would be outside the purview of this section] is returned by the bank unpaid, either because of the— amount of money standing to the credit of that account is insufficient to honor the cheque, or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. Explanation: For the purpose of this section, “debt or other liability" means a legally enforceable debt or other liability. Analysis: (i) In the given question, Rohan received a cheque from Ram, for ₹ 51,000 as a gift for his marriage. In terms of section 138, cheque given as a gift does not fall within this section. Hence, Ram would not be held liable for dishonour of cheque. (ii) The explanation to the section provides that for the purpose of section 138 only a legally enforceable debt or other liability is to be taken into consideration. The cheque of ₹ 51,000 was issued in the nature of a gift and not as a part of the payment for the balance amount of car. Hence, Rohan was not justified in considering the dishonour of cheque, an offence under section 138 of the Negotiable Instruments Act, 1881. Conclusion: (i) Ram would not be held liable for the dishonour of the cheque under Section 138 of the Negotiable Instruments Act, 1881, because the cheque was issued as a gift, not in discharge of a legally enforceable debt or liability. (ii) Rohan was not justified in considering the dishonour of the cheque as an offence under Section 138 of the Negotiable Instruments Act, 1881, as the cheque was a gift and not for a legally enforceable debt or liability.