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TMI Blog2024 (10) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... used person shall be refunded the said amount along with interest @ 14% per annum. 2b. To discharge his liability, the petitioner had issued a Cheque bearing No. 705852 dated 01.04.2019 for a sum of Rs. 25,00,000/- (Rupees Twenty-Five Lakhs) only drawn on Kotak Mahindra Bank Limited, Middleton Street Branch, Kolkata - 700 071 towards payment. After receiving the said Cheque, the complainant deposited the said cheque with his banker, HDFC Bank Ltd., Camac Street, Kolkata on 03.04.2019. 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 Return Memo dated 04.04.2019. 2c. The complainant, through his learned advocate, issued a demand notice dated 10.04.2019 under Section 138 of the Negotiable Instruments Act, 1881 and amendment thereto to the petitioner/accused intimating about the dishonour of the cheque and further demanded to pay the said amount within 15 days from the date of receipt of a demand notice. Demand notice was received by the petitioner/accused on 11.04.2019. 2d. After receiving the said notice, the petitioner/accused did not pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng licence under the Bengal Money-Lenders Act, 1940. So, it does not constitute any prima facie offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The proceeding 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 be set aside. 3a. Learned counsel for the petitioner/accused placed reliance of a judgment passed in the case of Mrs. Monica Sunit Ujjain Vs. Sanchu M. Menon and Ors. 2023 (1) BC 573 wherein the Hon'ble Bombay High Court has held that in cases of money lending business conducted without licence, a complaint case under Section 138 of Negotiable Instruments Act, 1881 are not attracted and any contract thereof is forbidden by law and same is void contract. 4. On the other hand, none represented the opposite party on call. Even on earlier occasion i.e. on 05.07.2024, none represented the opposite party. No accommodation had been sought fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Official Gazette, appoint in this behalf, no moneylender shall carry on the business of money-lending unless he holds an effective licence. Explanation.- An effective licence for the purposes of this Act comprises a licence issued to a person who is not disqualified for holding a licence. 13. Stay of suit when money-lender does not hold licence. - (1) No Court shall pass a decree or order in favour of a money-lender in any suit instituted by a money-lender for the recovery of a loan advanced after the date notified under section 8, or in any suit instituted by a money-lender for the enforcement of an agreement entered into or security taken, or for the recovery of any security given, in respect of such loan, unless the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety 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)"money-lender" means a person who carries on the business of money-lending in [West Bengal] or who has a place of such business in [West Bengal], and includes a Pawnee as defined in section 172 of the Indian Contract Act, 1872; 2 (14) "money-lending business" and "business of money-lending" mean the business of advancing loans either solely or in conjunction with any other business; 8. In view of the arguments made by the learned counsel for the Petitioner and considering the aforesaid provisions of the Bengal Money Lenders Act, 1940, I may refer to the provisions of the Bombay Money Lenders Act, 1946. Section 5 of the said Act lays down that no money lend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, if any, comes under the provisions of Bengal Money lenders Act, 1940. 12. The Negotiable Instruments Act, 1881 was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 has inserted new Chapter XVII comprising sections 138 to 142 with effect from 01.04.1989 in the Act. Section 138 of the Act provides the penalties in case of dishonour of cheques due to insufficiency of funds etc. in the account of the drawer of the cheque. However, sections 138 to 142 of the Act were found deficient in dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the drawer of the cheque to encourage the culture of use of cheques and enhancing the credibility of the instrument." 16. The Hon'ble Supreme Court further in the case Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. (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 payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability (ii) That cheque has been presented to the bank within a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur 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 due to reasons as mentioned in section 138 of the Act. 21. 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 Act came for consideration before different High Courts besides other related issues. 22. The Hon'ble Delhi High Court in Dhanjit Singh Nanda v. State, Crl.M.C.209/2009 decided on 09.02.2009 rejected the argument that the complainant is debarred from recovering loan amount as he is not a registered money lender. It was observed as under: - "The next argument add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 25. The complainant, in the complaint, alleges that amounts were advanced as financial assistance to the petitioner in pursuant to his request, the complainant had lent an advance a sum of Rs. 25,00,000/- (Rupees Twenty-Five Lakhs) only to the petitioner/accused by way of short-term unsecured loan for the purpose of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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 money lending business by the complainant is not a ground to throw the complainant's case out of Court. If it was a money suit for recovery of the money the accused petitioner would have been definitely in a better position and was entitled to the advantage of violation of Sections 23 and 24 of the Contract Act as well as nonexistence of money lending business of the money lender. The accused petitioner has only remedy in the trial to rebut the presumption u/s 139 of the NI Act, and to establish his case by leading evidence when he would be asked to enter into defence after his examination u/s 313 of the Code would be over. When all the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumptions 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 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. 32. It is reflecting that the Opposite party being complainant filed complaint under section 138 of the Act against the Petitioner as detailed herein above primarily on allegations that he had given money to the Petitioner. The complainant led pre-summoning evidence and thereafter cognizance for offence punishable under section 138 of the Act was take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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