The Supreme Court on Thursday (September 25) set aside the judgment of the Kerala High Court which held that a debt created by a cash transaction above Rupees Twenty Thousand in violation of the Income Tax (IT) Act, 1961 cannot be considered as a "legally enforceable debt" under Section 138 of the Negotiable Instruments Act.

A bench comprising Justice Manmohan and Justice R Mahadevan, while deciding an appeal against a Bombay High Court Judgment, observed that the Kerala High Court's recent judgment in P.C. Hari v. Shine Varghese and Anr, delivered on June 25, 2025 was wrong.

It may be noted that the bench was not deciding an appeal against the Kerala High Court's judgment. The Special Leave Petition filed against the Kerala High Court's judgment, on which the Supreme Court l

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