2020 (2) TMI 1706 - HC - Indian Laws

Dishonour of Cheque - main reason for dismissal of the complaint was that the complainant is a money lender and the alleged advance stated to have been made by him to the accused could not be considered to be out of the purview of the money lending business of the complainant - HELD THAT - In SAMARENDRA NATH DAS VERSUS SUPRIYO MAITRA 2005 (12) TMI 607 - CALCUTTA HIGH COURT , a Single Bench of Calcutta High Court had observed that when in a complaint under Sections 138 and 139 of the Negotiable Instruments Act, 1881, an application for discharge of accused was moved for alleged violation of provisions of 138 of the Act, therein it was observed that the alleged violation of provisions of Income Tax Act and Contract Act and Money Lenders Act does not bar continuation of proceedings under Section 138 of the said Act. In V. SATYANARAYANA VERSUS SANDEEP ENTERPRISES 2004 (9) TMI 675 - KARNATAKA HIGH COURT by a Division Bench of Karnataka High Court while dealing with interpretation of money lender, it was observed that money lending must be carrying on as profession and if the money lending was not with profit motive or not carried on as profession, he or she does not become a money lender; a stray instance of lending money does not show carrying on the business of money lending as profession or with profit motive. The trial Court had dismissed the complaint mainly for the reason that the complainant was a money lender, lending money without licence. The Magistrate had not gone into the merits of the case as to whether the necessary ingredients of Section 138 of the Act were established or not. Therefore, the impugned judgment dismissing the complaint for the reason of complainant having been found to be a professional money lender practicing money lending without licence is not sustainable, in view of the judgments referred to learned counsel for the appellant/complainant. The judgment is accordingly set aside by way of acceptance of the appeal and the matter is remanded to learned Magistrate for giving a fresh decision on merits after hearing learned counsel for the parties.

Summary

Issues:
Complaint under Section 138 of Negotiable Instruments Act, 1881 dismissed by trial Magistrate on grounds of complainant being a money lender without license.

Analysis:
1. The complainant filed a complaint under Section 138 of the Negotiable Instruments Act against the accused for dishonoring a cheque issued for a friendly loan. The accused denied the allegations during trial.
2. After preliminary evidence, the trial Magistrate dismissed the complaint, citing the complainant's status as a money lender without proper registration under the Punjab Registration of Money Lender's Act, 1938.
3. The trial Magistrate relied on a Bombay High Court judgment to conclude that the complainant's status as an unregistered money lender raised doubts about the enforceability of the debt, impacting the applicability of Section 138 of the Act.
4. The complainant appealed, arguing that being a money lender without a license should not affect the complaint under Section 138. Citing relevant judgments, the appellant contended that the lack of registration does not bar the application of Section 138.
5. Referring to judgments from Delhi, Calcutta, and Karnataka High Courts, the appellant emphasized that the absence of a license does not automatically invalidate a complaint under Section 138.
6. The High Court allowed the appeal, setting aside the trial Magistrate's judgment, and remanded the matter for a fresh decision on the merits, emphasizing the need to consider the essential elements of Section 138 rather than focusing solely on the complainant's money lending status.
7. The High Court directed the trial Magistrate to issue a notice to the absent accused and scheduled a new hearing date for the appellant/complainant to appear, ensuring a fair reconsideration of the case based on legal principles rather than the complainant's licensing status.