Whether money lender not having valid money lending license can file dishonour of cheque case?

Therefore, on the same analogy, once it is proved and the entire facts that the alleged Bahi entries are not negotiable instruments, which can be enforced, not alone sufficient to charge any person with liability, sequelly, the complainant was legally debarred to recover the alleged loan, as envisaged under the indicated provisions of the Money lender's Act and in view of such legal disabilities attached to the complaint, as discussed here-in-above, are put together, then, in that eventuality, to my mind, the conclusion is irresistible and inescapable that he (complainant) cannot adhere to initiate the criminal prosecution against the respondent within the meaning and in the garb of complaint u/s. 138 of the NI Act. Hence, the trial Court has correctly acquitted the respondent, by way of impugned judgment of acquittal dated 4.6.2014, which, in substance, is as under (paras 16 & 17):-

"16. Section 3 of the Act provides that the suit by a money lender for recovery of loan, lent within a valid license, shall be dismissed. Now the court was required to ascertain whether Section 3 of the Act would cover a complaint filed under Negotiable Instruments Act or not. To decide the same, reliance has to be placed upon the law laid down by the Hon'ble Bombay High Court, provisions of Bombay Money Lenders Act, 1946 and object behind the passing of the Punjab Registration of Money-lenders' Act as applicable to Haryana. Under the Bombay Money Lenders Act, 1946 the suit filed by a money lender for recovery of loan without a valid license has to be dismissed. The Hon'ble Bombay High Court in case titled as Smt. Nandc v. Nandkishor, MANU/MH/0069/2010: 2011 (7) R.C.R. (Criminal) 697 : 2010 (2) CCC 288 (Bombay) has held that the word "in any suit" are wider in scope and embrace any suit or proceeding initiated by a money lender who is required to hold and prove valid license for money lending for the relevant period of loan transaction or transactions. The Hon'ble High court held that the complaint filed by a money lender under Negotiable Instruments Act has also to be dismissed as the debt amounts to an unenforceable claim under Section 138 of Negotiable Instruments Act. In addition to this, the intent and object of the legislature behind the enactment of the Punjab Registration of Money-lenders' Act as applicable to Haryana appears to bar the rights of a money lender, lending money without a valid license, for recovering the loan amount in any manner. Therefore, any proceeding whereby the money lender would be intending to recover the loan amount, lent without a valid license, would be also barred. Had it not been the case, the legislature would not have debarred the money lender from filing a suit for recovery of loan amount.

Therefore, the claim by money lender (complainant) against borrower (accused) without a valid and operative money lending license covering period of transaction as unenforceable claim under section 138 of the Negotiable Instruments Act.

IN THE HIGH COURT OF PUNJAB AND HARYANA

C.R.A. No. A-1101-MA of 2014

Decided On: 13.11.2014

Appellants: Narsi Dass
Vs.
Respondent: Surender

Hon'ble Judges/Coram:Mehinder Singh Sullar, J.

 Citation: 2015ALLMR(Cri)114, 2015(1)RCR(Civil)108

1. The matrix of the facts & evidence, unfolded during the course of trial, which needs a necessary mention for the limited purpose of deciding the core controversy, involved in the instant petition for leave to appeal and emanating from the record, is that initially, petitioner-complainant Narsi Dass s/o. Kartar Singh (for brevity "the complainant"), who was running a shop of commission agent, styled as M/s. Ompal Satish Kumar, has instituted a criminal complaint, in which, respondent Surender s/o. Chanda Ram was summoned to face the trial for the commission of an offence punishable u/s. 138 of the Negotiable Instruments Act, 1881 (hereinafter to be referred as "the NI Act") by the trial Court. The case set up by the complainant, in brief in so far as relevant, was that the respondent was a Farmer at the relevant time. He used to borrow money from him for agricultural purpose with an understanding that he would repay the amount of loan along with interest at the rate of 24% per annum. At the same time, he had promised to sell his agricultural produce at the shop of complainant. Subsequently, he stopped doing so in the year 2010. Thereafter, the complainant requested the respondent to repay the amount borrowed by him along with interest. Instead of paying the loan amount, he had issued impugned cheque dated 16.5.2011 for ` 1,50,000/- drawn at Oriental Bank of Commerce, Nissing in his (complainant's) favour in discharge of part of his liability. The cheque was presented for encashment, but it was returned unpaid with the remarks "Insufficient Funds", vide memo dated 17.5.2011 by the bank. Thereafter, the statutory legal notice dated 23.5.2011 was served upon the respondent, by virtue of which, he was called upon to make the payment of the amount of impugned cheque within a stipulated period, but in vain. Then, the complainant filed a criminal complaint against the respondent in the manner depicted here-in-above.

2. Having completed the codal/statutory procedure of the trial and after closing the evidence by the complainant, the statement of the respondent was recorded. The entire incriminating material/evidence was put to enable him to explain any circumstance appearing against him on the record, as contemplated under section 313 Cr.P.C. He has stoutly denied the entire evidence of complainant in its totality and termed the pointed complaint as false.

3. Likewise, considering the entire oral as well as documentary evidence brought on record, the trial Court dismissed the complaint of complainant and acquitted the respondent from the indicated offence, by way of impugned judgment of acquittal dated 4.6.2014.

4. Aggrieved thereby, the complainant has preferred the present petition for leave to appeal to challenge the impugned judgment of acquittal, invoking the provisions of section 378(4) Cr.P.C. That is how I am seized of the matter.

5. Having heard the learned counsel for the petitioner, having gone through the evidence on record with his valuable assistance and after bestowal of thoughts over the entire matter, to my mind, there is no merit in the instant petition in this context.

6. At the very outset, it may be added here that the jurisdiction of the appellate Court in case of acquittal, was determined by the Hon'ble Apex Court in a celebrated judgment of Ghurey Lal v. State of U.P., MANU/SC/3223/2008 : 2008 (10) SCC 450. Having considering the scope of sections 378, 386Cr.P.C. and a line of various judgments on the point, it was ruled as under (Para 75):-

"75. In light of the above, the High Court and other appellate courts should follow the well settled principles crystallized by number of judgments if it is going to overrule or otherwise disturb the trial court's acquittal:

1. The appellate court may only overrule or otherwise disturb the trial court's acquittal if it has "very substantial and compelling reasons" for doing so.

A number of instances arise in which the appellate court would have "very substantial and compelling reasons" to discard the trial court's decision. "Very substantial and compelling reasons" exist when:

i) The trial court's conclusion with regard to the facts is palpably wrong;

ii) The trial court's decision was based on an erroneous view of law;

iii) The trial court's judgment is likely to result in "grave miscarriage of justice";

iv) The entire approach of the trial court in dealing with the evidence was patently illegal;

v) The trial court's judgment was manifestly unjust and unreasonable;

vi) The trial court has ignored the evidence or misread the material evidence or has ignored material documents like dying declarations/report of the Ballistic expert, etc.

vii) This list is intended to be illustrative, not exhaustive.

2. The Appellate Court must always give proper weight and consideration to the findings of the trial court.

3. If two reasonable views can be reached - one that leads to acquittal, the other to conviction - the High Courts/appellate courts must rule in favour of the accused."

7. Above being the legal position and evidence on record, now the short & significant question, though important, which invites an immediate attention of this Court and arises for determination in this case is as to whether the trial Court has committed such jurisdictional error to acquit the respondent and there are substantial and compelling reasons to set aside the judgment of acquittal or not in this respect?

8. Having regard to the contentions of learned counsel for petitioner, to me, the answer must obviously be in the negative, as the complainant has miserably failed in this relevant connection and the present petition deserves to be dismissed for the reasons mentioned here-in-below.

9. As is evident from the record that the case of complainant from the very beginning was that the respondent was a Farmer at the relevant time. He used to borrow money from him for agricultural purpose with an understanding that he would repay the amount of loan along with interest at the rate of 24% per annum. At the same time, the respondent had promised to sell his agricultural produce at the shop of complainant. Subsequently, he stopped doing so in the year 2010. Thereafter, the complainant filed the instant complaint against him in the indicated manner. The loan for agricultural purpose was allegedly advanced by the complainant to the respondent and it was stated to have been entered in the Bahi entries. No evidence, muchless cogent, is forthcoming on record even to suggest remotely, how, when, in what manner, on what date, how much amount was advanced, by means of Bahi entries and how much balance amount remains to be paid by the respondent to the complainant.

10. What cannot possibly be disputed here is that such Bahi entries are not the instruments of advancement of loan like pronote, bonds or Bill of exchange etc., which can legally be enforced, as recognized in the NI Act. These entries are only relevant u/s. 34 of The Indian Evidence Act, 1872, that too, in case, the same were kept regularly in the course of business. At the same time, such Bahi entries must be kept in conformity with some known system of accountancy, either in the official language or customary language well known to the parties and not otherwise. Where the books produced in a case are merely ledgers, these are not supported by any daybook or roznama, do not contain entries of transactions and there is no daily opening or closing balance, the same are meaningless. Therefore, such Bahi entries cannot and indeed should not be taken to be account book regularly kept in the course of business, as provided u/s. 34 of The Indian Evidence Act, in view of ratio of law laid down by the Assam High Court in case Chandi Ram Deka v. Jamini Kanta Deka, 1952 AIR (Assam) 92 and Orissa High Court in case Hira Meher and another v. Birbal Prasad Agarwala, 1958 AIR (Orissa) 4 and are not at all legally enforceable.

11. Not only that, it is now well settled principle of law that an entry in the Bahi Khata merely is an admission by its maker in his own favour and it is only admissible in evidence if it is accepted by the opposite side (loanee) and not otherwise, which is entirely missing in the instant case. Such entries shall alone be not sufficient to charge any person with liability, in view of ratio of law laid by Hon'ble Apex Court in case Chandradhar Goswami v. Gauhati Bank Ltd., MANU/SC/0031/1966 : AIR 1967 Supreme Court 1058 and Rajasthan High Court in case Pit Ram Singh v. Vimla Devi,MANU/RH/0035/1992: 1992 (2) R.C.R. (Rent) 606 : 1992 AIR (Raj.) 149.

12. Moreover, it is a matter of very common knowledge that commission agents used to obtain such blank/undated cheques from the Farmers as a security in good faith, not in lieu of any legal liability, to which, the court can take judicial notice of it. Therefore, once it is ruled that such Bahi entries are not negotiable instruments of advancement of loan, such as, pronote, bonds and Bill of exchange etc., which can legally be enforceable, as contemplated by the NI Act, not alone sufficient to charge any person with liability and such cheques were issued as a security of the loan amount, then, the complainant was debarred from filing the complaint u/s. 138 of the NI Act against the respondent.

13. Sequelly, there is yet another aspect of the matter, which can be viewed entirely from a different angle. The case set up by the complainant in his complaint was that he used to advance loan to the respondent for agricultural purpose from time to time and he was required to repay the loan along with interest at the rate of 24 per cent per annum. Not only that, he has also categorically acknowledged that he used to lend money on credit basis to different persons, but he did not possess any money lender's licence. That means, the complainant was engaged in money lending business to the public at large and did not possess the money lender's licence. Indisputably, The Punjab Registration of Money-lender's Act, 1938 (hereinafter to be referred as "the Moneylender's Act") is applicable to the State of Haryana by substituting the word "Haryana" by means of Adaptation of Law Order 1968. Section 4(2)postulates that no money lender shall carry on the business of advancing loans unless he gets himself registered under sub-section (1). Any money lender, who contravenes these provisions, shall be liable on conviction to a fine not exceeding one thousand rupees for the first offence and two thousand rupees for entry subsequent offence in this direction.

14. Likewise, Section 3 of the Act posits 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 or an application by a moneylender for the execution of a decree relating to a loan, shall, after the commencement of this Act, be dismissed, unless the money lender at the time of institution of the suit or presentation of the application for execution or at the time of decreeing the suit or deciding the application for execution is registered and holds a valid license, in such form and manner as may be prescribed, which is totally lacking in the present case in this relevant connection.

15. A conjoint and meaningful reading of the indicated provisions of social and beneficial legislation, would reveal that the complainant was only competent to advance agricultural loan if he holds the pointed valid licence/registration certificate. Having a money lender's license is a condition precedent to advance the loan to the Farmers. The advancement of loan by the complainant to the respondent without any valid licence is not only illegal, but, at the same time, he can be prosecuted u/s. 4 of the Moneylender's Act as well. Similarly, this Court in case Manjit Kaur v. Vanita,MANU/PH/1731/2009: 2010 (3) RCR (Criminal) 574 and Delhi High Court in case Prajan Kumar Jain v. Ravi Malhotra, MANU/DE/2779/2009 : 2010 (3) Civ. C.C. 410, have categorically held that in case a cheque is issued for time barred debt and it is dishonoured, then, it cannot be termed to have been issued, in lieu of legal enforceable liability/debt within the meaning of section 138 of the NI Act.

16. Therefore, on the same analogy, once it is proved and the entire facts that the alleged Bahi entries are not negotiable instruments, which can be enforced, not alone sufficient to charge any person with liability, sequelly, the complainant was legally debarred to recover the alleged loan, as envisaged under the indicated provisions of the Money lender's Act and in view of such legal disabilities attached to the complaint, as discussed here-in-above, are put together, then, in that eventuality, to my mind, the conclusion is irresistible and inescapable that he (complainant) cannot adhere to initiate the criminal prosecution against the respondent within the meaning and in the garb of complaint u/s. 138 of the NI Act. Hence, the trial Court has correctly acquitted the respondent, by way of impugned judgment of acquittal dated 4.6.2014, which, in substance, is as under (paras 16 & 17):-

"16. Section 3 of the Act provides that the suit by a money lender for recovery of loan, lent within a valid license, shall be dismissed. Now the court was required to ascertain whether Section 3 of the Act would cover a complaint filed under Negotiable Instruments Act or not. To decide the same, reliance has to be placed upon the law laid down by the Hon'ble Bombay High Court, provisions of Bombay Money Lenders Act, 1946 and object behind the passing of the Punjab Registration of Money-lenders' Act as applicable to Haryana. Under the Bombay Money Lenders Act, 1946 the suit filed by a money lender for recovery of loan without a valid license has to be dismissed. The Hon'ble Bombay High Court in case titled as Smt. Nandc v. Nandkishor, MANU/MH/0069/2010 : 2011 (7) R.C.R. (Criminal) 697 : 2010 (2) CCC 288 (Bombay) has held that the word "in any suit" are wider in scope and embrace any suit or proceeding initiated by a money lender who is required to hold and prove valid license for money lending for the relevant period of loan transaction or transactions. The Hon'ble High court held that the complaint filed by a money lender under Negotiable Instruments Act has also to be dismissed as the debt amounts to an unenforceable claim under Section 138 of Negotiable Instruments Act. In addition to this, the intent and object of the legislature behind the enactment of the Punjab Registration of Money-lenders' Act as applicable to Haryana appears to bar the rights of a money lender, lending money without a valid license, for recovering the loan amount in any manner. Therefore, any proceeding whereby the money lender would be intending to recover the loan amount, lent without a valid license, would be also barred. Had it not been the case, the legislature would not have debarred the money lender from filing a suit for recovery of loan amount.

Therefore, the claim by money lender (complainant) against borrower (accused) without a valid and operative money lending license covering period of transaction as unenforceable claim under section 138 of the Negotiable Instruments Act.

17. Although, it has been proved that the claim of the complainant was not enforceable under the Negotiable Instruments Act but to settle the controversy for once and all, it was essential to decide whether the accused was otherwise under any sort of debt or not. It has been the case of the complainant that the accused used to take loan from him from time to time. The cheque amount was found to be due against him. On the other hand, accused has taken a plea that the cheque in question was a blank cheque, not supported by any consideration and misused by the complainant to file a false complaint against him. In the present case, the claim of the complainant was not based upon a single transaction and the liability of `1,50,000/- was found to be due towards the accused on 19.5.2010. Meaning thereby, the accused must had taken loan from the complainant on various occasions & from time to time and his part liability was calculated to be ` 1,50,000/- on 19.5.2010. Under these peculiar facts & circumstances of the case, the court is of the view that accused did the best what he could have done by denying his liability for an amount of ` 1,50,000/- towards the complainant. The complainant belongs to the businessman fraternity and accordingly it was expected of him that he must be maintaining day book or ledger account of the accused in ordinary course of his business. The day book was the book in which the dealings of the complainant with all the persons should be entered on day to day basis and thereafter entries should be entered on the basis of day book in the ledger account of concerned person. It is a matter of common practice that the complainant/lender takes signatures of the accused/borrower either on the entries mentioned on the day book or in the concerned ledger account. Therefore, it was incumbent on the complainant to furnish the day book or ledger account in support of his version because the liability of the accused could not be ascertained in any other manner. The complainant only tendered day book and ledger account for the year 2010-11 but in absence of day book and ledger account 2004-05 onwards, neither the complainant could have determined the liability of the accused nor the court could so the same. In absence of the complete books of account, the amount lent to the accused on different occasions could not be ascertained and accordingly it could not be said that the amount of ` 1,50,000/- was due towards the accused on 19.5.2010. Reliance in this regard may be placed upon the law laid down by the Hon'ble Supreme Court of India, in case titled as M.S. Narayana Menon & Mani v. State of Kerala & Anr.,MANU/SC/2881/2006 : 2006 (3) R.C.R. (Criminal) 504 : 2006 (3) CCC 468 (SC) wherein it has held that "in case of dishonour of acheque (alleged to be issued towards outstanding dues) in business dealing, if account books not produced by the complainant, the contention of accused that cheque was issued as security can be believed and the conviction can be set aside." Last but not the least, the complainant did not furnish the Income Tax Returns of the relevant years i.e. 2004-05 onwards for the reasons best known to him. Had the complainant furnished his income tax returns then it could have been very easily ascertained if the total amount of ` 1,94,050/- was due towards the accused or not.

All these facts and circumstances clubbed together do create more than a reasonable doubt over the version of the complainant and lends reasonable support to the version of the accused that the cheque in question was a blank cheque and it was not issued in discharge of any legally enforceable debt/liability. The onus was shifted upon the complainant and he was required to prove his case beyond all shadows of reasonable doubt but, as discussed above, in absence of books of account maintained by him in ordinary course of business and income tax returns, he could not establish/prove his case beyond all shadows of reasonable doubt. Hence, it has been clearly established that the cheque was definitely not supported by a consideration of ` 1,50,000/- on the date of its issuance."

17. Meaning thereby, the trial Magistrate has examined the matter in the right perspective and recorded the cogent grounds in this behalf. The learned counsel for complainant did not point out any material, much less cogent, so as to warrant any interference in the present matter. Such articulated impugned judgment of acquittal, containing valid reasons, cannot possibly be interfered with by this Court, in exercise of limited jurisdiction u/s. 378(4)Cr.P.C., unless and until, the same is illegal, perverse and without jurisdiction. Since no such patent illegality or legal infirmity has been pointed out by the learned counsel for complainant, so, the impugned judgment of acquittal deserves to be and is hereby maintained in the obtaining circumstances of the case.

18. No other legal point, worth consideration, has either been urged or pressed by the learned counsel for the petitioner. In the light of aforesaid reasons, as there is no merit, therefore, the instant petition for leave to appeal is hereby dismissed as such.

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