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2009 (11) TMI 1011 - HC - Indian LawsDishonour of Cheque - assessee is into money lending business without licence - discharge of legally enforceable debt or not? - whether carrying on money lending business without licence debars a person from doing money lending and recovering the amount through court? - HELD THAT - It is not the case of present applicant complainant that he has any money lending licence. Section 10 of the Act lays down that no court shall pass a decree in favour of a moneylender in any suit to which said Act applies unless the court is satisfied that at the time when the loan or any part thereof, to which the suit relates was advanced, the moneylender held a valid licence, and if the court is satisfied that the moneylender did not hold a valid licence, it shall dismiss the suit. As per explanation to Section 138 of the Negotiable Instruments Act debt or other liability means a legally enforceable debt or other liability. So, a loan advanced by a money lender who is doing business of money lending without licence is not a debt or other liability and provisions of Section 138 of the Act will not apply to such transaction. In the light of above, it cannot be said that in the present case, that the cheque issued by the Respondent in favour of the applicant was for the liability enforceable in law. Section 32B(b) of the said Act, which lays down that whoever carries on the business of money lending at any place without holding a valid licence authorising him to carry on such business at such place, shall, on conviction, be punished for the first offence with imprisonment of either description which may extend to one year or with fine which may extend to rupees one thousand and five hundred or with both and for the second or subsequent offence, in addition to, or in lieu of, the penalty specified in Clause (i) with imprisonment which shall not be less than two years, where such person is not a company, and with fine which shall not be less than rupees five thousand, where such person is a company. Hence, this is not a case wherein application for leave to file appeal can be granted. Hence, application rejected.
Issues involved:
- Application for leave to file appeal against judgment and order of acquittal under Section 138 of the Negotiable Instruments Act - Allegations of financial transaction, cheque dishonor, and money lending without a license - Interpretation of evidence, income tax returns, and business activities - Legal implications of carrying out money lending business without a license under the Bombay Money Lenders Act - Rejection of the application for leave to file appeal Comprehensive analysis: The judgment pertains to an application for leave to file an appeal against the judgment and order of acquittal passed by the learned Judicial Magistrate in a case involving a financial transaction and dishonor of a cheque under Section 138 of the Negotiable Instruments Act. The applicant had provided a loan of Rs. 4.00 lakhs to the respondent, who failed to repay the amount, leading to the issuance of a cheque that was subsequently dishonored due to insufficient funds. The trial court considered various documents and the testimony of witnesses, including the income tax returns of the applicant, to assess the credibility of the transaction. The trial court highlighted the discrepancy between the income of the applicant and the substantial loan amount provided, casting doubt on the nature of the transaction. It was argued that the transaction was not a simple hand loan but rather a money lending business conducted without a license. The respondent contended that the applicant had obtained blank cheques as security and misused them to file the case under Section 138 of the Act. The trial court also noted the involvement of multiple individuals in similar cases, suggesting a pattern of money lending activities by the applicant. Furthermore, the judgment delved into the provisions of the Bombay Money Lenders Act, emphasizing that carrying out money lending business without a license is prohibited under the law. Section 5 of the Act mandates that no money lender shall engage in money lending without a valid license, and Section 10 restricts courts from passing decrees in favor of unlicensed money lenders. The judgment elucidated that transactions with unlicensed money lenders do not constitute legally enforceable debts under Section 138 of the Act, thereby affecting the applicability of the provisions. In conclusion, the court rejected the application for leave to file an appeal based on the evidence presented, the interpretation of the Bombay Money Lenders Act, and the implications of conducting money lending activities without a license. The judgment underscored the legal consequences of engaging in money lending business without proper authorization and highlighted the importance of compliance with licensing requirements under the relevant legislation.
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