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Our Legal Correspondent

Chennai , Oct. 15

THE Madras High Court has rejected the plea of a debtor that issuance of cheques in rupees to clear the debt in pound sterling would amount to violation of the Foreign Exchange Regulations Act.

Upholding the orders of lower courts awarding jail term and fine to Mr B.V. Sainath Rao of Chennai, for the offence committed under Section 138 of the Negotiable Instruments Act, Mr Justice Chockalingam observed that in a case under the said section, what was required was the existence of the debt or liability. In this case, admittedly, such a liability was actually available.

The debtor (Mr Rao), in discharge of the liability, had issued four cheques, all of which had bounced. Hence, he could not be allowed to plead that the issuance of the cheques would amount to violation of the provisions of the FERA.

In his present revision petition in the High Court, Mr Rao contended that the complainant had not established that the debt was legally enforceable. In view of the provisions of Section 9(1)(C) and (d) of FERA, the amount could not be repaid in Indian currency without the permission of RBI. Under Section 56, the repayment was also punishable. Hence, the debt or the liability under the four cheques was not legally enforceable, and therefore, no offence was made out against him, he contended.

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`Rupee discharge of pound debt no FERA offence'

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