Whether prosecution for dishonour of cheque is maintainable if cheque was issued for refund of money taken for securing Job in private company?

There is no dispute regarding the fact that the respondent No. 1-accused was working in the said Company. The case of the complainant is that accused informed that there was a post of Branch Manager in the company and he could manage the same for the complainant with the help of Company Manager, for which complainant would have to incur expenses. The complainant had given consent and paid amount of Rs. 1,00,000/- to the accused in presence of the witnesses as mentioned.

Similarly another Rs.25,000/- was paid. According to the complainant, accused told him that the amount has been paid to Mr. Kulkarnisaheb of the Company at Mumbai and to Vikrant Darak Officer at Pune and assured the complainant that he will get order within few days. According to the complainant, accused asked for further amounts, which were paid and thus total amount of Rs. 1,45,000/- was given to the accused. Subsequently, accused denied that he will secure the job. Thus complainant demanded money back. Then, cheque was issued by accused which, however bounced and then prosecution under section 138 of the Negotiable Instruments Act was filed.

6. The trial court invoked Section 23 of the Contract Act and relied on illustration (f) and has acquitted respondent No. 1-accused.

7. I have gone through the judgment in the matter Fancis Mathew Vs. State of Kerla (supra), relied on by the learned counsel for the appellant. In similar set of facts, the Kerla High Court has observed that accused cannot be permitted to be benefited by retaining the amount which was received unlawfully and illegally. However, I am  unable to agree that in a transaction in which parties are indulging in unlawful and illegal activity the machinery of the court can be used for recovery of such money, which is clearly against public policy.

8. Illustration (f) of section 23 of the Contract Act refers to "public service". It is only an illustration which is required to be referred for guidance to interpret the main Section.

Section 23 reads as under:

"23. What considerations and objects are lawful, and what not:- The consideration or object of an agreement is lawful, unless-

It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void."

(Emphasis supplied) . Illustration (f) reads as under:-

"A promises to obtain for B an employment in the public service, and B promises to pay 1,000 rupees to A. The agreement is void as the consideration for it is unlawful."

9. It cannot be said that when such act is unlawful in public service it would be lawful in private sector. Such acts are not in interest of society. No employer would appoint a person whom he will give salary if he is not competent. His Subordinates cannot indulge in such acts at the costs of the Employer. It is trite to suggest that a Manager who without letting Company know makes money while making appointments does not indulge in unlawful act. This cannot be in interest of public life in society. It would be against public policy.

 Bombay High Court

Suhas Bhanudasrao Jadhav vs Sachin Murlidhar Tarkase And ... on 22 January, 2015

Bench: A.I.S. Cheema

Citation; 2015 (3) Crimes 590 Bom

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When employer can not restrain employee from taking job in rival company?

These principles have been clearly stated in the case of (Shree Gopal Paper Mills Ltd. v. Surendra K. Ganeshdas Malhotro Y, , Justice A.N. Ray has observed as follows:

"21. In contracts of service it is the proprietary interest owned by the master that requires protection. As Lord Parkar said in 1961-1 AC 688.

"The reason, and the only reason for upholding such a restraint on the part of an employee is that the employer has some proprietary right whether in the nature of trade connection or in the nature of trade secrets, for the protection of which such a restraint is - having regard to the duties of the employee - reasonably necessary. Such a restraint has, so far as I know, never been upheld if directed only to the prevention of competition or against the use of a personal skill and knowledge acquired by the employee in his employer's business."

In master and servant contracts restraint can be imposed upon a servant in respect of trade secrets and business connection of the master. In the case of Forster and Sons Ltd. v. Suggett, 1918 35 T.L.R. 87 the works manager of the plaintiff who were chiefly engaged in making glass and glass bottles was instructed in certain confidential methods concerning inter alia the correct mixture of gas and air in the furnaces. He agreed that during the five years following the determination of his employment he would not carry on in the United Kingdom or be interested in glass bottle manufacture or in any other business connected with glass making as conducted by the plaintiffs. The restraint for protection of trade secrets was held to be reasonable. It is indispensable that the employer must prove definitely that the servant has acquired substantial knowledge of some secret process or mode of manufacture used in the course of his business. In our country the restriction beyond the period of employment would not however be valid. Similarly, an employer is entitled to protect his trade connection. The nature of the business and the nature of the employment are important considerations justifying a restraint. It may appear that the servant had no access to the trade secrets of his master or to his customers. If that is so, the covenant is in gross and unenforceable. As Farwell, J., said in Town End v. Jaran, 1900 2Ch 698 at P. 703:

"Now, if one man apart from any business takes a covenant in gross from another man, that he will not trade at all, that is simply oppressive. He does not require it to protect his own interest, because he has no interest to protect."

In the Herbert Morris case, 1916-1-688 Lord Atkinson said that an oppressive agreement meant that it would, if enforced, deprive a person for lengthened period of the power of employing that mechanical and technical skill and knowledge which his own industry, observation and intelligence have enabled him to acquire in the very specialised manufacturing business, thus forcing him to begin life afresh as it were, depriving him of the means of supporting himself and his family. Lord Atkinson further said that the general public suffer with him for it is in the public interest that a man should be free to exercise his skill and experience to the best advantage for the benefit of himself and of all those who desire to employ him. See 1961-1 688 at pp. 698 per Lord Atkinson.

21. In all cases of covenants of restraint between master and servant the two questions are first what are the interest of the employer that are to be protected and secondly, against what is he entitled to have them protected. The master is entitled to be protected in regard to his interests in trade secrets and secret process of manufacture. That protection is secured by restraining the employee from divulging those trade secrets or putting them to the use of the servant, the master is also entitled to be protected against invasion of his customers or clientele but the master is not entitled to be protected against competition..."

Bombay High Court

Jet Airways (I) Ltd. vs Mr. Jan Peter Ravi Karnik on 17 April, 2000

Equivalent citations: 2000 (4) BomCR 487

S. S. Nijjar, J.

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