2014 (11) TMI 1263 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - Seeking leave to appeal - acquittal of the accused - issuance of summon to face the trial for the commission of an offence punishable u/s 138 of the Negotiable Instruments Act, 1881 - whether the trial Court has committed such jurisdictional error to acquit the respondent and there are substantial and compelling reasons to set aside the judgment of acquittal or not in this respect? HELD THAT - The complainant was only competent to advance agricultural loan if he holds the pointed valid licence/registration certificate. Having a money lender's license is a condition precedent to advance the loan to the Farmers. The advancement of loan by the complainant to the respondent without any valid licence is not only illegal, but, at the same time, he can be prosecuted u/s 4 of the Money- lender's Act as well. Once it is proved and the entire facts that the alleged Bahi entries are not negotiable instruments, which can be enforced, not alone sufficient to charge any person with liability, sequelly, the complainant was legally debarred to recover the alleged loan, as envisaged under the indicated provisions of the Money lender's Act and in view of such legal disabilities attached to the complaint, as discussed here-in-above, are put together, then, in that eventuality, to my mind, the conclusion is irresistible and inescapable that he (complainant) cannot adhere to initiate the criminal prosecution against the respondent within the meaning and in the garb of complaint u/s 138 of the NI Act. Meaning thereby, the trial Magistrate has examined the matter in the right perspective and recorded the cogent grounds in this behalf. The learned counsel for complainant did not point out any material, much less cogent, so as to warrant any interference in the present matter. Such articulated impugned judgment of acquittal, containing valid reasons, cannot possibly be interfered with by this Court, in exercise of limited jurisdiction u/s 378(4) Cr.PC, unless and until, the same is illegal, perverse and without jurisdiction - Since no such patent illegality or legal infirmity has been pointed out by the learned counsel for complainant, so, the impugned judgment of acquittal deserves to be and is hereby maintained in the obtaining circumstances of the case. There is no merit, therefore, the instant petition for leave to appeal is hereby dismissed as such.

Summary

Issues Involved:
1. Validity of the Bahi entries as evidence of loan.
2. Requirement of a money lender's license.
3. Legality of the loan transaction and enforceability under the Negotiable Instruments Act (NI Act).
4. Adequacy of evidence provided by the complainant.
5. Acquittal of the respondent by the trial court.

Issue-wise Detailed Analysis:

1. Validity of the Bahi entries as evidence of loan:
The complainant alleged that the respondent borrowed money for agricultural purposes, recorded in Bahi entries. However, the court noted that Bahi entries are not legally enforceable instruments like promissory notes or bonds under the NI Act. These entries are only relevant under Section 34 of The Indian Evidence Act, 1872, if kept regularly in the course of business and in conformity with a known system of accountancy. The court found no evidence supporting the Bahi entries' validity, rendering them insufficient to establish the loan.

2. Requirement of a money lender's license:
The complainant admitted to lending money without possessing a money lender's license, violating The Punjab Registration of Money-lender's Act, 1938. Section 4(2) of the Act mandates registration for advancing loans, and Section 3 requires dismissal of suits by unregistered money lenders. The court emphasized that a valid license is a prerequisite for advancing loans, and the complainant's lack of a license invalidated his claim.

3. Legality of the loan transaction and enforceability under the NI Act:
The court ruled that loans advanced without a money lender's license are illegal and unenforceable. Consequently, the cheque issued by the respondent, allegedly in discharge of the loan, could not be considered issued for a legally enforceable debt under Section 138 of the NI Act. The court referenced precedents where claims by unlicensed money lenders were deemed unenforceable.

4. Adequacy of evidence provided by the complainant:
The complainant failed to produce complete books of account or income tax returns to substantiate the loan. The court noted that the absence of day books and ledger accounts from 2004-05 onwards made it impossible to ascertain the loan amount. The court also highlighted that the complainant's failure to provide income tax returns further weakened his case. The court cited the Supreme Court's ruling in M.S. Narayana Menon & Mani Vs. State of Kerala, which emphasized the necessity of account books in proving business transactions.

5. Acquittal of the respondent by the trial court:
The trial court acquitted the respondent, concluding that the complainant did not prove the loan's existence or the cheque's issuance for a legally enforceable debt. The appellate court upheld this decision, noting that the trial court had examined the matter comprehensively and provided cogent reasons for acquittal. The appellate court found no substantial or compelling reasons to overturn the trial court's judgment, as required by the principles established in Ghurey Lal v. State of U.P.

Conclusion:
The petition for leave to appeal was dismissed, affirming the trial court's judgment of acquittal. The complainant's failure to provide adequate evidence, lack of a money lender's license, and the unenforceability of the loan under the NI Act were pivotal in the court's decision. The appellate court emphasized the necessity of substantial and compelling reasons to disturb an acquittal, which were absent in this case.