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TMI Blog2023 (9) TMI 859X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respondent had been carrying out the activity of money lending as a business. It is acceptable proposition of law that section 3 of Punjab Registration of Money Lenders Act, 1938 does not limit operation of section 138 of the Act and both are independent and mutually exclusive to each other. If a person advances a loan even without having a valid money lending licence or certificate he can institute and prosecute complaint under section 138 of the Act on basis of cheques and he has to satisfy only the mandatory requirements of section 138 of the Act. The trial court dismissed the complaints at pre-trial stage without giving an opportunity to the petitioner to lead evidence. The IN RE : EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. [ 2021 (4) TMI 702 - SUPREME COURT] as argued and cited by the counsel for the petitioner has held that Section 258 of Cr. P.C. is not applicable to a summons case instituted on a complaint and as such section 258 Cr. P.C does not have any role to play in respect of the complaints filed under Section 138 of the Act. The trial court is not vested with inherent power either to review or recall the order of issuance of process. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luon basis of cheque bearing no. 911693 dated 28.06.2013 amounting to Rs. 3,00,000/- drawn on Punjab National Bank which returned unpaid due to Signature of the Drawer Differs; 227/13 (subject matter of Crl. Rev. Petition bearing no 236/2017) titled as Hansraj Bansal V Sarfaraz Ahmed on basis of cheque bearing no. 078860 dated 21.02.2009 amounting to Rs. 9,60,000/- drawn on Standard Chartered Bank which returned unpaid due to Insufficiency of Funds; 478/13 (subject matter of Crl. Rev. Petition bearing no 237/2017) titled as Hansraj Bansal V Shis Pal Tomar on basis of cheque bearing no. 636617 dated 17.03.2009 amounting to Rs. 2,50,000/- drawn on HDFC which returned unpaid due to Insufficiency of Funds; 464/13 (subject matter of Crl. Rev. Petition bearing no 238/2017) titled as Hansraj Bansal V Abdul Ahad on basis of cheque bearing no 188868 dated 05.04.2009 amounting to Rs. 11,71,600/- drawn on ICICI Bank which returned unpaid due to Payment Stopped by Drawer and 401/13 (subject matter of Crl. Rev. Petition bearing no 239/2017) titled as Hansraj Bansal V Sarfaraz Ahmed on basis of cheque bearing no. 078861 dated 20.03.2009 amounting to Rs. 14,90,000/- drawn on Standard Chartered Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 478/13 titled as Hansraj Bansal V Shish Pal Tomar, 948/13 titled as Hansraj Bansal V Faruq @ Babloo, 387/13 titled as Hansraj Bansal V Sabir Ali,265/13 titled as Hansraj Bansal V Faruq @ Babloo,100/13titled as Hansraj Bansal V Komal Parsad and 725/13 titled as Hansraj Bansal V Arshad Ahmad. 3.1 The petitioner did not pursue further remedy to impugn order dated 15.07.2015 in respect of complaint bearing no 387/13 titled as Hansraj Bansal V Sabir Ali and 100/13 titled as Hansraj Bansal V Komal Parsad. 3.2 The trial court vide order dated 20.08.2015 dismissed three complaints bearing no 298/13; 227/13 and 401/13 all titled as Hansraj Bansal V Sarfaraz Ahmed. 3.3 The trial court did not dismiss complaint bearing no. 354/13 titled as Hansraj Bansal V Sher Pal Nagar; 585/13 titled as Hansraj Bansal V Vinod Kumar; 456/13 titled as Hansraj Bansal V Salim @ Guddu and bearing no. 022/13 titled as Hansraj Bansal V Manju Gupta. 3.4 The trial court vide orders dated 15.07.2015 and 20.08.2015 dismissed complaints as mentioned hereinabove primarily on ground that the petitioner has violated the provisions of the Punjab Registration of Money Lenders Act, 1938 as he was engaged in bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two complaints bearing no. 227/13 and 401/13 both titled as Hansraj Bansal V Sarfaraz Ahmed observed that the petitioner alleged that the respondent no 2 is engaged in the business of committee (chit fund) and has sought financial assistance from the petitioner against pronotes and on completion of the date of each pronote, cheques were issued in discharge of the liability. Accordingly, transactions are covered by the definition of loan. The trial court in respect of complaint bearing no. 298/13 titled as Hansraj Bansal V Sarfaraz Ahmed observed that the petitioner has alleged that the respondent no 2 used to borrow money against pronotes followed by issuance of post-dated cheques upon completion of the period of pronotes. Accordingly, transaction is covered by the definition of loan. 3.5 The trial court in orders dated 15.07.2015 and 20.08.2015 referred section 3 of the Punjab Registration of Money Lenders Act, 1938 and definitions of loan as per section 2(8) and money lender as per section 2(9) which reads as under:- 3. Suits and applications by money-lenders barred, unless money-lender is registered and licensed. - Notwithstanding anything contained in any other enact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with trade usage; (vii) an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note. 2(9) Money-lender means a person, or a firm carrying on the business of advancing loans as defined in this Act, and shall include the legal representatives and the successors-in-interest whether by inheritance, assignment or otherwise, of such person or firm; provided that nothing in this definition shall apply to - (a) a person who is the legal representative or is by inheritance the successor-in-interest of the estate of a deceased money-lender together with all his rights and liabilities; provided that such person only - (i) winds up the estate of such money-lender; (ii) realises outstanding loans; (iii) does not renew any existing loan, nor advance any fresh loan; (b) a bona fide assignment by a money-lender of a single loan to any one other than the wife or husband of such assignor, as the case may be, or any person, who is descended from a common grand-father of the assignor. 3.6 The trial court in orders dated 15.07.2015 and 20.08.2015 observed that amount adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by a money lender who is required to hold and prove valid license for money lending for the relevant period of the loan transaction or transactions. The trial Court was, therefore, entitled to insist upon the complainant for production of valid license for money lending and also to infer in view of Section 114 (g) of the Evidence Act that the document withheld was unfavourable to the complainant who withheld it. Thus, the legal position cannot be disputed that Courts are bound to dismiss the suit by money lender for recovery of loans when such money lender was found carrying on business of money lending on the date or dates of the transaction without having valid money lending license. 3.6.1 The trial court ultimately opined that the petitioner has violated the provisions of the Punjab Registration of Money Lenders Act, 1938 as he is engaged in the business of money-lending without requisite license and accordingly dismissed the complaints as mentioned hereinabove. 4. The petitioner filed a Criminal Revision Petition bearing no 825/2015 titled as Hansraj Bansal V State othersto impugn orders dated 15.07.2015 and 20.08.2015 which was allowed to be dismissed as withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in general, and particularly in a case under section 138 of the Act, once cognizance has already been taken and process issued under Section 204 Cr.P.C. The counsel for the petitioner argued that the trial court should not have abruptly dismissed the complaints filed by the petitioner after taking cognizance and issuing process to the respondents no 2 till the completion of trial. 6.2 The counsel for the petitioner raised issue of applicability of provisions of the Punjab Registration of Money Lenders Act, 1938 to the complaints filed under the Act and whether this issue can be decided without evidence being led to show that the petitioner was a money lender. He cited Samarendra Nath Das V Supriyo Maitra, 2005 SCC OnLine Cal 628 and Jupiter Brokerage Services Ltd. V Ektara Exports Pvt. Ltd., 2015 SCC OnLine Cal 10514 decided by the Calcutta High Court, Dhanjit Singh Nanda V State another, 2009 SCC OnLine Del 261 decided by this court, Ravinder Paul V Ashwani Kumar, 2020 SCC OnLine P H 4606 decided by Punjab Haryana High Court Satyanarayana V M/s Sandeep Enterprises, 2004 SCC 8 OnLine Kar 427 decided by Karnataka High Court. The counsel argued that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed around 15-20 complaints under section 138 of the Act against 12 persons. A show cause notice was also issued to the petitioner to explain as to whether he is engaged in business of money lending and is having any statutory licence for doing money lending business. The petitioner in response to show cause notice replied that he is not engaging in business of money lending. The trial court vide order dated 15.07.2015 dismissed nine complaints and vide order dated 20.08.2015 dismissed three complaints as detailed herein above primarily on ground that the petitioner is not having valid money lending licence as per the Punjab Registration of Money Lenders Act, 1938. 9. The Punjab Registration of Money Lenders Act, 1938 was enacted to register money-lenders and to regulate their business. Section 3 bars suits and applications by money-lenders unless money lender is registered and licensed. It provides that a suit by a money lender for the recovery of a loan or an application by a money lender for the execution of a decree relating to a loan shall be dismissed unless the money-lender is registered and holds a valid licence or a certificate under section 11. Section 4 deals with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Secunderabad V Indian Technologists Engineers (Electronics) (P) Ltd. and another, (1996) 2 SCC 739 observed that the object of bringing section 138 on statute appears to inculcate the faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments and section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. The Supreme Court again in Goa Plast (P) Ltd. V Chico Ursula D Souza, (2004) 2 SCC 235 while dealing with the objects and ingredients of Sections 138 and 139 of the Act observed as under:- The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section shall apply unless (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation . For the purposes of this section, debt or other liability means a legally enforceable debt or other liability. 10.2.1 The Supreme Court in Kusum Ingots Alloys Ltd. V Pennar Peterson Securities Ltd. others, (2000) 2 SCC 745 laid down the following ingredients for taking cognizance under section 138 of the Act:- (i) A person must have drawn a cheque on an account maintained by him in a bank for pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Negotiable Instruments Laws (Amendment) Act, 1988 for providing penalties in case of dishonour of cheques with an objective to encourage the culture of use of cheques and enhancing the credibility of the instrument. Both statutory provisions were enacted with different objectives and intent and are operational in independent and separate legal spheres. There is no apparent conflict between section 3 of the Punjab Registration of Money Lenders Act, 1938 which apparently bars civil remedy for a money lender who is not having valid licence or certificate for doing business of money lending and Chapter XVII of the Act which provides criminal remedies and penalties in case of dishonor of a cheque due to reasons as mentioned in section 138 of the Act. 12. The legal issue that if a complainant who is not having valid licence or certificate for money lending can institute and prosecute complaint under section 138 of the Actcame for consideration before different High Courts besides other related issues. 12.1 The Delhi Court in Dhanjit Singh Nanda V State Another, Crl.M.C.209/2009 decided on 09.02.2009 rejected the argument that the complainant is debarred from recovering loan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed unless the money lender at the time of institution of the suit is registered and holds a valid license or holds a certificate from the Commissioner granted under Section 11 of the Act, specifying the loan in respect of which the suit is instituted or if he is not already a registered or licensed money lender, he satisfies the court that he has applied for such registration or license but the application is pending. The aforesaid provision does not debar a money lender from instituting a complaint under Section 138 of the Negotiable Instruments Act, 1881, which is a remedy enforceable before a criminal court, and totally independent of a civil suit. The criminal liability is incurred only in case a cheque is issued in discharge of a debt or other liability, the said cheque is dishonoured for want of funds and the borrower fails to make payment of the amount of the cheque even after receipt of a notice from the lender. This court in Guddo Devi @ Guddi V Bhupender Kumar, Crl.Rev.P. 1246/2019 decided on 11.02.2020 observed that there is no material to conclude that the respondent was carrying on the business of advancing loans. Merely because the respondent had lent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence u/s 138 of the NI Act is present sufficient to issue process this, Court would not interfere into the order of the learned Magistrate and would not quash the criminal proceeding or set aside the order of the learned Magistrate. The accused petitioner has remedy only to lead evidence by examining witnesses and producing documents to prove that there was no transaction with complainant or that he did not issue any cheque in favour of the complainant and that there was no existing debt or liability at the time of his entering into defence and leading his evidence. 12. The point for consideration before the learned Magistrate would be whether act or omission of the accused petitioner completed offence u/s 138 of the NI Act. It would not be a matter for consideration before the learned Magistrate whether the complainant had money lending licence or not. This is not a suit or proceeding under Money Lenders Act and accordingly provisions of Money Lenders Act are not at all relevant for consideration in the trial before the learned Magistrate. The High Court of Judicature at Calcutta in Jupiter Brokerage Services Ltd. V Ektara Exports Pvt. Ltd. others, C.R.A. No. 936 of 2013 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he does not become a money lender under the Karnataka Money Lenders Act .. So, a stray instance of lending money does not show carrying on the business of money lending as profession or with profit motive. 12.5 It is acceptable proposition of law that section 3 of Punjab Registration of Money Lenders Act, 1938 does not limit operation of section 138 of the Act and both are independent and mutually exclusive to each other. If a person advances a loan even without having a valid money lending licence or certificate he can institute and prosecute complaint under section 138 of the Act on basis of cheques and he has to satisfy only the mandatory requirements of section 138 of the Act. 13. The trial court in complaint bearing no 346/13 titled as Hansraj Bansal V Abdul Ahad after cognizance being taken under section 138 of the Act and notice under section 251 Cr.P.C. was given for offence under section 138 of the Act, vide proceedings dated 04.09.2013 abruptly examined the petitioner under section 165 of Indian Evidence Act, 1872 wherein the petitioner stated that he has filed around 15-20 complaints under section 138 of the Act against 12 persons and he had given money to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by the Bombay High Court was misplaced under given facts and circumstances of present petitions. There is legal force in arguments advanced by the counsel for the petitioner that the provisions of the Punjab Registration of Money Lenders Act, 1938 are not applicable to the complaints filed under the Act and the complaints can be decided without evidence being led to show that petitioner was a Money Lender. The arguments advanced by the counsel for the respondents on this issue are without any legal basis and are legally unsustainable. 13.1 The trial court dismissed the complaints at pre-trial stage without giving an opportunity to the petitioner to lead evidence. The Supreme Court in Re: Expeditious Trial of Cases under Section 138 of N.I. Act, 1881, AIR 2021 SC 1957 as argued and cited by the counsel for the petitioner has held that Section 258 of Cr. P.C. is not applicable to a summons case instituted on a complaint and as such section 258 Cr. P.C does not have any role to play in respect of the complaints filed under Section 138 of the Act. The trial court is not vested with inherent power either to review or recall the order of issuance of process. It was also obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble without resorting to filing appeals . The arguments advanced by the counsel for the respondents are without legal force. 13.3 The counsel for the respondents argued that the petitioner by not invoking the appropriate jurisdiction before the sessions court and without giving sound reasons cannot file present revision petition before this court directly and as such present petitions deserve to be dismissed being not maintainable. The counsel for the petitioner after referring CBI V State of Gujarat, (2007) 6 SCC 156 argued that the revision petition against an order passed by Magistrate can be filed directly before the High Court. Section 397 of the Code of Criminal Procedure, 1973 gives concurrent jurisdiction to both High Court and Sessions Court and such present revision petitions can be filed directly to the High Court over the Sessions Court. The present petitions are as such maintainable before this court. 14. The arguments advanced and case law cited by respective counsel for the petitioner and the respondents no 2 are perused and appropriately appreciated in right perspective. The present petitions are allowed and the orders dated 15.07.2015 and 20.08.2015 are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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