2023 (4) TMI 756 - HC - Indian Laws

Dishonour of Cheque - legally recoverable debt or not - rebuttal of presumption - perjury against the complainant for interpolation in the cheque - HELD THAT - The cheque in question was issued towards discharge of existing liability and the transaction is not hit by the provisions of the Bombay Money Lenders Act, 1946. There are compliances about proving reason for dishonour as not arranged for , issuing notice in time, receipt of notice and failure to make payment. There are two witnesses from the bank, one is Pradeep Vaidya, from Syndicate Bank, who is banker of the complainant and another is Atul Jadhav from Thane Janta Sahakari Bank on whom the cheque was drawn. So the complainant has satisfied all ingredients for the offence punishable under section 138 of the NI Act. He has proved commission of offence by accused - accused is liable to be dealt with as per law. The trial Court has sentenced the accused to undergo rigorous imprisonment for six months and to pay fine of Rs.5,000/- - Section 138 of NI Act gives various options, either there may be imprisonment or there may be fine being twice the amount of cheque or both. In this case, the accused can be sentenced to fine of double the amount of cheque which comes, to Rs. 8,00,000/- out of that compensation can be paid to the Appellant. Appeal allowed.

Summary

Issues involved:
The judgment addresses the issue of whether a solitary transaction of lending money constitutes a money lending transaction under the Bombay Money Lenders Act, 1946, and the implications of carrying out money lending business without a license. The judgment also delves into the interpretation of the nature of the transaction based on the issuance of a cheque for repayment, specifically in the context of the offence under section 138 of the Negotiable Instruments Act.

Money lending transaction interpretation:
The High Court analyzed a case involving a complaint filed against the accused for an offence under section 138 of the NI Act. The Appellate Court had set aside the conviction, stating that the cheque issued was for security, not liability. However, the High Court disagreed, emphasizing that the issuance of the cheque was towards the discharge of an existing liability of Rs.4,00,000, supported by a promissory note. The Court highlighted that the mere reference to security in the promissory note did not alter the nature of the transaction as a legally enforceable debt under the NI Act.

Interpretation of money lending license requirement:
The Appellate Court had ruled that the absence of a money lending license rendered the debt unenforceable. However, the High Court examined relevant provisions of the Bombay Money Lenders Act and cited precedents to establish that an isolated money lending transaction, especially when based on a negotiable instrument like a cheque, may not fall within the purview of the Act's licensing requirements. The Court emphasized that the primary objective of the transaction and continuous engagement in money lending business are crucial factors in determining applicability.

Conclusion:
After thorough analysis, the High Court overturned the Appellate Court's decision, holding that the transaction in question was not subject to the Bombay Money Lenders Act. The Court found the accused liable under section 138 of the NI Act and imposed a fine of Rs.8,00,000, with a portion to be paid to the complainant. The judgment highlighted the fulfillment of legal requirements for the offence and opted for a fine instead of rigorous imprisonment, considering the circumstances and options under the NI Act.