2015 (12) TMI 1895 - HC - Indian Laws

Dishonour of Cheque - acquittal of accused - discharge of existing liability or not - case is barred under the West Bengal Money Lenders Act 1940 or not. Whether cheque was issued in discharge of existing liability? - HELD THAT - It is a settled law that the holder of a cheque carries with him a presumption that the cheque was rightly issued. It is true that as per the decision of the Apex Court in Krishna Janardhan Bhat v. Dattatraya G. Hedge 2008 (1) TMI 827 - SUPREME COURT it was held that even though the holder of such cheque carries such presumptive value but it is the liability of the complainant to prove that the said cheque was issued in respect of one legally enforceable debt. If the evidence of P.W.1 is scrutinized vis- -vis the documentary evidence mainly Ext. 1 that is Chukti Patra this Court can very well say that the said cheque was issued in favour of the present appellant in respect of one legally enforceable debt. Whether this case is barred under the provisions of the West Bengal Money Lenders Act 1940? - HELD THAT - The money lending without licence is not totally barred or prohibited by the said Act. It is one regulatory Act and it regulates the business of money lending. Section 8 of the said Act says that after certain notification in the official gazette no money lender shall carry on the business of money lending unless he holds an effective licence. But the provision is not mandatory if one reads Section 13 of the said Act then he must say in the same tone with me that even if a money lender fail to file a money lending licence before the court while instituting the suit for recovery of a loan then filing of such suit is not barred. In the present case before this court P.W.1 claimed that he had money lending licence but could not produce the same. This is not a civil litigation and as such the rigors of Section 13 of the Money Lenders Act cannot be made applicable in this case. Thus lending of money even without licence has not been specifically barred by the West Bengal Money Lenders Act and as such the payment made by the complainant to the respondent was perfectly valid by the said Act of 1940. If that be so the argument of the respondent that the complainant appellant had no legally enforceable debt as against the respondent cannot have any leg to stand on. The decision of the learned trial court on this point that there was no legally enforceable debt is not tenable and this Court respectfully differs with that view. Thus this Court is of the view that the learned trial court erred in acquitting the present accused in respect of the charge punishable under Section 138 of the N.I. Act. The impugned order of acquittal passed in C. Case No. 435 of 2006 by the Judicial Magistrate Baruipur 24 Parganas (South) is hereby set aside. Appeal disposed off.

Summary

Issues Involved:
1. Whether the cheque was issued in discharge of an existing liability.
2. Whether the case is barred under the West Bengal Money Lenders Act, 1940.
3. Whether the judgment of the Trial Court can be supported.

Detailed Analysis:

1. Whether the cheque was issued in discharge of an existing liability:
The complainant alleged that the accused borrowed Rs. 40,000 and issued a post-dated cheque as repayment. The cheque was dishonored due to "insufficient funds." The complainant presented documentary evidence, including the cheque, bank memo, and a document admitting the debt (Exbt.4). The accused, during his examination under Section 313 Cr.P.C., contradicted his own statements, claiming he borrowed only Rs. 5000 and was coerced into issuing a cheque for a larger amount. The court found the "Chukti Patra" (Exbt.1) and other documentary evidence credible, establishing that the cheque was issued in discharge of an existing liability.

2. Whether the case is barred under the West Bengal Money Lenders Act, 1940:
The defense argued that the complainant, being a money-lender without a valid license, could not enforce the debt under Section 13 of the Bengal Money-Lenders Act, 1940. The court examined Sections 8 and 13 of the Act, noting that while money lending without a license is regulated, it is not entirely prohibited. The Act requires the money-lender to pay a penalty for non-compliance, but it does not bar the recovery of the loan. The court concluded that the complainant's failure to produce a money-lending license did not invalidate the debt or the applicability of Section 138 of the N.I. Act.

3. Whether the judgment of the Trial Court can be supported:
The Trial Court acquitted the accused, reasoning that the complainant, being a money-lender, could not seek protection under Section 138 of the N.I. Act. The High Court disagreed, emphasizing that the presumption under Section 139 of the N.I. Act favors the complainant, who must prove that the cheque was issued in discharge of a legally enforceable debt. The High Court found that the Trial Court erred in its judgment by not considering the documentary evidence and the legal provisions correctly. The High Court set aside the acquittal, finding that the complainant had established a legally enforceable debt.

Judgment:
The High Court reversed the Trial Court's acquittal, sentencing the respondent to 10 days of rigorous imprisonment and ordering compensation of Rs. 80,000 with 9% interest per annum from 01.05.2006. The court directed that in default of payment, the respondent would undergo six months of simple imprisonment. The appeal was disposed of on contest without cost, and the Trial Court was instructed to take necessary action if the order was not complied with within two months.