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TMI Blog2024 (10) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... , the present case falls under the provision of Bengal Money Lenders Act, 1940 and those cases circumstances are totally different. The Hon ble Supreme Court in the case Electronics Trade Technology Development Corporation Ltd., Secunderabad v. Indian Technologists Engineers (Electronics) (P) Ltd. [ 1996 (1) TMI 398 - SUPREME COURT ] 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 Bengal Money Lenders Act, 1940 and Chapter XVII of the Negotiable Instruments Act, 1881 which was incorporated by the Banking, Public Financial Institutions and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation of the complainant that in pursuant to the request made by the present petitioner, the complainant had lent an advance a sum of Rs. 10,00,000/- (Rupees Ten Lakhs) only to the petitioner/accused by way of short-term unsecured loan for business. It was agreed by the petitioner/accused that he will pay the said loan amount along with interest @ 14% per annum. 2b. To discharge his liability, the petitioner had issued a Cheque bearing No. 000063 dated 01.08.2019 for a sum of Rs. 46,795/- (Rupees Forty-Six Thousand Seven Hundred Ninety-Five) only drawn on Kotak Mahindra Bank Limited, Middleton Street Branch, Kolkata 700 071 towards payment of its outstanding amount as accrued on account of interest dues. After receiving the said Cheque, the complainant deposited the said cheque with his banker, State Bank of India, Dalhousie Square Branch, Kolkata 700 001 on 06.09.2019. But, the said cheque was dishonoured for non-payment by the bankers of the accused with remark Insufficient Funds . The intimation was received by the complainant from his banker through CTS Return Memo Report dated 07.09.2019. 2c. The complainant through his learned advocate issued a demand notice dated 24.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Negotiable Instruments Act, 1881 is not at all attracted in the instant criminal proceeding. It is not at all maintainable in the eye of law because there was no such transaction or grant of loan or advance to the petitioner arise. He has no authority to lend and advance of Rs. 10 Lakhs as short-term unsecured loan for business charging abnormal interest thereupon @ 14% per annum. The complainant is not a money lender. He does not possess the money lending licence under the Bengal Money-Lenders Act, 1940. Therefore, question of granting loan on interest does not arise at all. Actually, the amount was invested by the complainant in the business as a partner. So, it does not constitute any prima facie offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The proceeding before the Learned Magistrate is not at all maintainable in the eye of law for which ultimate chances of conviction is remote and bleak. Hence, there is no useful purpose to proceed with the instant proceeding. It would be an abuse of process of law and in expedient interest of justice, the above criminal proceeding deserves to the quashed and all orders passed thereof are also liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory provisions. In this eventuality, Doctrine of Harmonious Construction needs to be adopted. The legal provisions contained in one particular statute cannot be read to defeat legal provisions contained in another statute and both legal provisions contained in different statute should be given maximum effect in their operation and applicability. Proceedings initiated under Section 138 of the N.I. Act cannot be quashed only on primarily on ground that the complainant has violated the provisions of the Bengal Money Lenders Act, 1940 as he was engaged in business of money lending without licence. Therefore, provisions of the Bengal Money Lenders Act or Contract Act has no manner of application so far as the proceedings under Section 138 of the Negotiable Instruments Act, 1881 is concerned, as such, the revisional application is liable to be dismissed. Learned counsel has placed reliance of judgments to buttress his aforesaid submissions as follows: i. Samarendra Nath Das vs. Supriya Maitra (2006) 3 CHN 518 ; ii. Jupiter Brokerage Services Ltd. Vs. Ektara Exports Pvt. Ltd. (2016) 2 E Cr N 469 ; iii. Sanjoy Agarwala Vs. Ajoy Sarkar 2023 SCC OnLine Cal 5364 ; iv. Hansraj Bansal Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, [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. 7. Sections 8 and 13 of the Bengal Money Lenders Act, 1940 and definitions of Interest as per section 2(8), Lender as per Section 2(9), Loan as per Section 2(12), Money Lender as per Section 2(13) and money lending business and business of Money Lending as per section 2(14) which reads as under: Section 8. Money-lending business not to be carried on except under licence. - After such date not less than six months after the commencement of this Act as the [State] Government shall, by notification in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der means a person who advances a loan and includes a money lender; 2(12) loan means an advance, whether of money or in kind, made on condition of repayment with interest and includes any transaction which is in substance a loan but does not include- [* * * **] [* * * * *] (c) a loan taken or advanced by [by the Central Government or any State Government] or by any local authority in [West Bengal]; (d) a loan advanced before or after the commencement of this Act- (i) by a bank; or (ii) by a co-operative life insurance society, co-operative society, insurance company, life assurance company, [Life Insurance Corporation of India,] mutual insurance company, provident insurance society or provident society or from a provident fund; (e) an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note; [* * * * *.] [* * * * *.] (h) a loan made to or by the Administrator-General and Official Trustee of [West Bengal] or the Commissioner of Wakfs or the Official Assignee or the Official Receiver of the High Court in Calcutta; (i) a loan or debenture in respect of which dealings are listed on any Stock Exchange; 2 (13) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10. Similarly, the Bombay High Court in Mrs. Monica Sunit Ujjain Vs. Sanchu M. Menon and Ors. observed therein that in cases of money lending business without licence, proceedings could not be maintainable. Therefore, proceedings under Section 138 of Negotiable Instruments Act, 1881 are also not attracted since the money lending business was without license and the contract which is forbidden by law is void contract. 11. However, such provisions of the Bombay Money Lenders Act, 1946 is not applicable in the present facts and circumstances of this case because the present case falls within the jurisdiction of the State of West Bengal. Therefore, money lending business and proceedings thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. 15. The Hon ble Supreme Court in the case Indian Bank Association v. Union of India (UOI), Writ Petition (Civil) No. 18 of 2013 decided on 21.04.2014 also observed that Sections 138 to 142 of the Act were found to be deficient in dealing with the dishonoured cheques. The legislature inserted new Sections 143 to 147 by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 and earlier to this the Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 whereby a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency of funds in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this eventuality, Doctrine of Harmonious Construction needs to be adopted. The legal provisions contained in one particular statute cannot be read to defeat legal provisions contained in another statute and both legal provisions contained in different statute should be given maximum effect in their operation and applicability. 19. The Bengal Money Lenders Act, 1940 and Chapter XVII of the Negotiable Instruments Act, 1881 which was incorporated by the Banking, Public Financial Institutions and 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. 20. There is no apparent conflict between provisions of the Bengal Money Lenders Act, 1940 which is not 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 dishonour of a cheque d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anced by her is dishonoured by the bank for want of funds and the drawer of the cheques fails to make payment within the prescribed time, after receipt of legal notice from the lender. Section 3 of the Punjab Registration of Money Lenders' Act, 1938, which applies to Delhi, to the extent it is relevant provides that notwithstanding anything contained in any other enactment for the time being in force, a suit by a money lender for the recovery of a loan shall, after the commencement of the Act, be 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . 29. The High Court of Judicature at Calcutta in Samarendra Nath Das v. Supriyo Maitra, C.R.R. No. 175/05 and application being C.R.A.N. No. 598/05 decided on 16.12.2005 observed that alleged violation of provisions of Money Lenders Act does not bar continuation of proceedings under Section 138 of the Act. It was held as under: 11. The submissions made by Mr. Ukil not at all applicable in the present matter. Had it been a money suit instituted by the money lender for the recovery of the loan advanced by him together with interest and for accounting all these submissions would have been relevant. In a criminal proceeding u/s 138 of the NI Act these are not relevant at all. In the instant matter a Magistrate is to consider whether the offence as alleged was committed or not and whether evidence is sufficient to prove complainant's case. Legality or illegality of the contract and existence and non-existence of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney-Lender's Act, 1940 which is basically a Regulatory Act and regulates the business of money lending. It was held as under: There cannot be any dispute to the fact that the presumptions both in Sections 138 and 139 of the N.I. Act are rebuttable presumptions. In the present case the only point for rebuttable of such presumptions for the respondents/accused is that the transactions in question are illegal transactions as the appellant/complainant has no money-lending licence. As held earlier, lending money without having a moneylending licence itself is not prohibited under the Bengal Money-Lender's Act, 1940. So, the presumptions in favour of the appellant/complainant stand unrebutted. The respondents/accused cannot, therefore, escape from the liability under Section 138 of the N.I. Act, especially when there is no denial of the fact that the respondents/accused issued the cheques in question which were dishonoured due to insufficient fund in the account of the respondents/accused. 31. It is acceptable proposition of law that provisions of the Bengal Money Lenders Act, 1940 does not limit operation of section 138 of the Act and both are independent and mutually exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X
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