2018 (6) TMI 901 - HC - Indian Laws

Principles of Natural Justice - non-appraisal of evidences on record - dishonor of cheque - Money Lending Business - Held that - The learned trial Court has not appraised the entire evidence on record in a wholesome and harmonious manner apart therefrom the analysis of the material on record by the learned trial Court, suffers, from, a gross perversity or absurdity of mis-appreciation and non appreciation of evidence on record - appeal allowed.

Summary

Issues Involved:
1. Legally recoverable debt under Section 138 of the Negotiable Instruments Act.
2. Applicability of the H.P. Registration of Money Lenders Act, 1976.
3. Evaluation of evidence and appreciation of material on record.

Issue-wise Detailed Analysis:

1. Legally Recoverable Debt under Section 138 of the Negotiable Instruments Act:
The complainant lent sums of ?1 lac and ?72,000 to the accused, which were to be repaid within specified periods. The accused issued a cheque for ?1,72,500, which was dishonored due to "funds insufficient." The complainant served a legal notice, which the accused did not comply with. The trial Court acquitted the accused, but the complainant contended that the acquittal was based on a misappreciation of evidence. The High Court evaluated the evidence, noting the accused did not deny her signature on the cheque and failed to provide corroborative evidence for her defense. The High Court concluded that the amounts in the dishonored cheque were legally recoverable debts, thus reversing the trial Court's acquittal and convicting the accused under Section 138.

2. Applicability of the H.P. Registration of Money Lenders Act, 1976:
The trial Court concluded that the complainant was a money lender and, under Section 3 of the H.P. Registration of Money Lenders Act, 1976, an unregistered money lender is barred from enforcing claims. The High Court found this conclusion to be misfounded, as the accused did not provide evidence of the complainant being a professional money lender or charging interest. The High Court emphasized that even if the complainant were an unlicensed money lender, the bar under Section 3 applies to civil suits, not to complaints under Section 138 of the Negotiable Instruments Act. Therefore, the lending was construed as a legally recoverable and enforceable debt.

3. Evaluation of Evidence and Appreciation of Material on Record:
The High Court criticized the trial Court for not appraising the evidence in a wholesome and harmonious manner. The trial Court's conclusion that the complainant was a money lender was based on surmises and lacked corroborative evidence. The High Court noted that the complainant's transactions were corroborated by witness testimony, and the accused's defense lacked substantiation. The High Court found the trial Court's analysis to suffer from gross perversity and misappreciation of evidence. Consequently, the High Court quashed the trial Court's judgment, convicted the accused, and scheduled a hearing for sentencing.

Conclusion:
The High Court reversed the trial Court's acquittal, holding that the complainant's claim was a legally recoverable debt under Section 138 of the Negotiable Instruments Act. The High Court found no evidence to support the trial Court's conclusion that the complainant was an unlicensed money lender and emphasized that the bar under the H.P. Registration of Money Lenders Act does not apply to complaints under Section 138. The High Court convicted the accused and scheduled a hearing for sentencing.