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BOMBAY HIGH COURT
A.P. Bhangale, J.
Smt. Nanda w/o Dharam
Nandanwar — Appellant
versus
Nandkishor s/o Talakram
Thaokar — Respondent
Criminal Appeal No. 467 of 2009
Decided on 12-01-2010
IMPORTANT POINTS
1. Only legally enforceable debt or liability can be enforced in the proceedings under section 138 of the said Act, because the explanation to the penal provision is abundantly clear that the dishonoured cheque must have been received by the complainant against a legally enforceable debt or liability.
2. A money lender can not enforce a loan transaction lawfully without production of valid money lending license operative at the time of transaction of loan to be recovered.
Headnote:Negotiable Instruments Act, 1881— Sections 138,139—Bombay Money Lenders Act, 1946—Section 10—Complaint alleging dishonour of cheque-Acquittal by Trial Court—Appeal—Held only legally enforceable debt or liability can be enforced in the proceedings under section 138 of the said Act, because the explanation to the penal provision is abundantly clear that the dishonoured cheque must have been received by the complainant against a legally enforceable debt or liability—The complainant in the instant case, was a money lender who had advanced loan to the accused on the basis of the two promissory notes for loan of Rs. 18,000 and Rs. 19,000/- respectively, at interest at the rate of 21 per cent per annum-Thus, it was incumbent upon the complainant to establish the fact that she held valid money lending license in accordance with the provisions of Bombay Money Lenders Act, 1946 for the relevant period of the transaction- The complainant-money lender did not produce such a valid money lending license at the time when complaint was instituted nor till it is decided although required- Furthermore, no such valid money lender’s license was produced even during pendency of present Appeal-A money lender can not enforce such loan transaction lawfully without production of valid money lending license operative at the time of transaction of loan to be recovered—Thus, no fault can be found with the trial Court as it was duty bound to dismiss the complaint by the complainant a money lender who was engaged in business of money lending without a valid money lending license at the time of transaction in view of clear provisions of Sec. 10 of the Bombay Lenders Act, 1946 as Court could not have assisted the complainant to facilitate or further the illegal claim or claim prohibited by law in the complaint—Thus, when transaction of money lending without valid license was prohibited by law, no court can help or assist a party money lender to enforce or recover a claim- Since the complainant failed to establish salutary or basic ingredients of offence punishable under Section 138 of the said Act or observed in Kusum Ingots ‘s case (supra ), the complaint was rightly dismissed and the finding as to acquittal was correct and logical by the trial Court- No ground made out so as to interfere in present Appeal—The acquittal of the accused held justified, as the cheque in question was, in fact, had not been issued for any legally enforceable debt or liability in view of the provisions of the Bombay Money Lenders Act, 1946-Appeal dismissed. (Paras 8 to 11)
Facts of the Case :
1. A Complaint alleging dishonour of cheque was filed herein in the instant case. Trial Court acquitted accused.
2. Present appeal has been filed against said order of acquittal.
Findings of the Court :
Held only legally enforceable debt or liability can be enforced in the proceedings under section 138 of the said Act, because the explanation to the penal provision is abundantly clear that the dishonoured cheque must have been received by the complainant against a legally enforceable debt or liability. The complainant in the instant case, was a money lender who had advanced loan to the accused on the basis of the two promissory notes for loan of Rs. 18,000/- and Rs. 19,000/- respectively, at interest at the rate of 21 per cent per annum. Thus, it was incumbent upon the complainant to establish the fact that she held valid money lending license in accordance with the provisions of Bombay Money Lenders Act, 1946 for the relevant period of the transaction. The complainant-money lender did not produce such a valid money lending license at the time when complaint was instituted nor till it is decided although required. Furthermore, no such valid money lender’s license was produced even during pendency of present Appeal. A money lender can not enforce such loan transaction lawfully without production of valid money lending license operative at the time of transaction of loan to be recovered. Thus, no fault could be found with the trial Court as it was duty bound to dismiss the complaint by the complainant a money lender who was engaged in business of money lending without a valid money lending license at the time of transaction in view of clear provisions of Sec. 10 of the Bombay Lenders Act, 1946 as Court could not have assisted the complainant to facilitate or further the illegal claim or claim prohibited by law in the complaint. Thus, when transaction of money lending without valid license was prohibited by law, no court can help or assist a party money lender to enforce or recover a claim. Since the complainant failed to establish salutary or basic ingredients of offence punishable under sec. 138 of the said Act or observed in Kusum Ingots ‘s case ( supra ), the complaint was rightly dismissed and the finding as to acquittal was correct and logical by the trial Court. No ground was made out so as to interfere in present Appeal. The acquittal of the accused held justified, as the cheque in question was, in fact, had not been issued for any legally enforceable debt or liability in view of the provisions of the Bombay Money Lenders Act, 1946.Appeal dismissed.
Result : Appeal dismissed.
A.P. Bhangale, J. —This Appeal at the instance of original complainant, is directed against the judgment and order dated 26th March, 2009 passed by learned Judicial Magistrate First Class, Nagpur in Criminal Complaint Case No.9037/2007, whereby the respondent-accused was acquitted of the charge under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “ the N. I. Act”).
2. The facts in nutshell which gave rise to this appeal are : The complainant claimed that she is carrying on the business in lending money to needy persons. It is her case that the accused had approached her on 3.2.2006 and 8.4.2006 with a request for loan in the sum of Rs. 18,000/- and Rs. 19,000/respectively for a period of two months and agreed to pay interest at the rate of Rs. 21% per annum, under two promissory notes executed before a Guarantor and accepted the cash. Further, according to the complainant, the accused had on 17.11.2006 issued a cheque in the sum of Rs. 40,000/- towards repayment of loan amount and part of interest. The cheque bearing No. 767789 was drawn upon Canara Bank, Sadar Bazar Nagpur. The cheque was presented by the complainant on 4.5.2007 to the State Bank of Indore, Gandhibagh, Nagpur, which came to be dishonoured with remarks “funds insufficient” as informed by the Bank, on 5.5.2007. The complainant by notice dated 21.5.2007 demanded a sum of Rs. 40,000/- and interest at the rate of 21 per cent within 15 days of the receipt of notice. The accused received the notice on 22.5.2007; but did not repay the amount. Hence the complainant filed complaint on 26.6.2007 in the Court of learned Judicial Magistrate, First Class, Nagpur seeking trial and punishment of the accused for offence punishable under section 138 of the N.I. Act.
3. The accused did not dispute the fact that he had issued the cheque under his signature and had received notice (Exh.22) from the complainant; but out rightly denied the complaint and any liability on the ground that the complainant was doing business of money lending without any requisite licence for money lending and that the complainant has failed to prove legally enforceable or recoverable debt or legal liability as against accused, in view of the provisions of the Bombay Money Lenders Act, 1946. The accused opposed the complaint stoutly on the ground that under section 139 of the N.I. Act, there can not be presumption of preexisting liability and complainant had failed to prove that the cheque was issued towards legally enforceable debt or liability.
4. The trial Court, after considering the evidence led and submissions at the Bar, recorded finding of “not guilty” and acquitted the accused of the offence punishable under section 138 of the N.I. Act.
5. Learned Advocate for the appellant, in support of the appeal, submitted that the accused ought to have been convicted by the trial Court for offence punishable under section 138 of the N.I. Act, since the accused had admitted issuance of cheque under his signature, which was returned dishonoured and remained unpaid. It is further contended that the complainant was not bound to produce money lending license in operation. Learned Advocate for the appellant submitted that the accused ought to have been held guilty. According to learned Advocate for the appellant, mere non-production of money lending license in the trial Court, was cited as the prime reason for acquitting the accused and, therefore, judgment and order impugned, be set aside.
6. None appeared for the respondent at the time of hearing of this Appeal.
7. In Krishna Janardhan Bhat vs. Dattatraya G. Hegde, AIR 2008 SC 1325 the Apex Court in Para No.20 observed that sec.138 of the N.I. Act has three ingredients, viz.:
(i) that there is a legally enforceable debt;
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes legally enforceable debt ; and,
(iii) that the cheque so i
