2009 (2) TMI 852 - HC - Indian Laws

Summary

Issues Involved:
1. Application of mind in the summoning order.
2. Legally enforceable debt.
3. Competence of the respondent to initiate proceedings under the Punjab Registration of Moneylenders Act.
4. Delay in filing the petition.
5. Nature of the cheque (security vs. repayment).

Summary:

1. Application of Mind in the Summoning Order:
The petitioner argued that the summoning order dated 29.01.2005 lacked application of mind as it was a stereotyped, cyclostyled format. However, the court found this claim incorrect. The Metropolitan Magistrate had observed and scrutinized the preliminary evidence, noting the issue and dishonor of the cheque, service of legal notice, and non-payment within the statutory period. Thus, the court concluded that the Magistrate had applied judicial mind before issuing the summons.

2. Legally Enforceable Debt:
The petitioner contended that the complaint was filed for a debt that was not legally enforceable. The court referred to the written agreement between the parties, which acknowledged a loan of Rs. 10 lakhs to be repaid with interest. The cheque issued was for repayment of this loan, not as a security cheque. The court emphasized that the complaint was filed within the statutory period, and the cheque was dishonored due to insufficient funds. Therefore, the court found the debt to be legally enforceable.

3. Competence of the Respondent to Initiate Proceedings:
The petitioner claimed that the respondent was not competent to initiate proceedings as they were not registered under Section 4 of the Punjab Registration of Moneylenders Act. The court rejected this argument, stating that the proceedings under Section 138 of the NI Act are not recovery proceedings but are meant to punish the dishonor of the cheque. The court also noted that the petitioner voluntarily took the loan and executed an agreement to repay it.

4. Delay in Filing the Petition:
The summoning order was passed on 29.01.2005, and the petitioner did not challenge it within the limitation period. The petition was filed on 24.01.2009, after a delay of four years, without any explanation for the delay. The court found this delay to be an attempt to avoid repayment and escape liability, deeming the petition not bona fide.

5. Nature of the Cheque (Security vs. Repayment):
The petitioner argued that the cheque was a security cheque. The court found this claim to be a misnomer, as the written agreement and the complaint indicated that the cheque was issued for repayment of the loan. The court referred to the judgment in A.V. Murthy Vs. B.S. Nagabasavanna, which held that such matters should be agitated before the Magistrate by way of defense.

Conclusion:
The court concluded that:
- The summoning order was based on the materials available on record.
- The cheque was issued to repay the loan, not as a security cheque.
- The issue of the respondent not being a registered moneylender requires evidence and is raised mala fide.
- There was no miscarriage of justice or abuse of the process of the court in issuing the summons.

Order:
The petition was dismissed with a cost of Rs. 50,000 to be deposited with the Delhi High Court Mediation Cell within 15 days.