Saturday, 24 December 2022

Whether accused can be prosecuted for an offence U/S138 NI Act if he has given a cheque as Security for a Loan From an Unlicensed Money Lender?

 The learned Sessions Judge

while allowing the revision application preferred by

respondent Nos. 1 and 2 has observed that the contract

which is forbidden by law is void contract. In cases of

money lending business without license, the provisions

under Section 138 of Negotiable Instruments Act are not

attracted. According to the complainant huge amount of Rs.

4,50,000/- was parted to the accused. There was a

Memorandum Of Understanding (for short “MOU”) dated

22.02.2014 between M/s. Monika Sumit Ujjain as the lender

and M/s. Saga Infra as the borrowers. As per MOU it can be

gathered that the transactions was without license. Post

dated cheques were given by way of security. I have

perused the MOU and the other documents on record

considering the factual matrix of this case I do not find any

reason to interfere with the impugned order.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CRIMINAL APPELLATE JURISDICTION

CRIMINAL REVISION APPLICATION NO. 394 OF 2015

Mrs. Monica Sunit Ujjain  Vs Sanchu M. Menon

CORAM : PRAKASH D. NAIK, J.

DATE : 2nd AUGUST, 2022


1. The applicant is aggrieved by order dated 26.06.2015

passed by Additional Sessions & District Judge-3, Thane in

Criminal Revision Application No.134 of 2015.

2. The applicant is the original complainant in S.C.C.

No.7963 of 2015 pending before the Court of 4th Joint

Judicial Magistrate, First Class, Vashi at CBD Belapur, Navi

Mumbai. The complaint was fled alleging ofence

punishable under Section 138 of Negotiable Instruments

Act. The learned Magistrate issued process. The respondent

No.1 and 2 challenged order of process by preferring

revision application before the Sessions Court. The learned

Sessions Judge vide order dated 26.06.2015 allowed the

revision application and set aside the order issuing process

dated 09.04.2015 passed by learned JMFC, Vashi, Navi

Mumbai.

3. The case of the complainant is that the accused No.1

is partnership frm and accused No.2 and 3 are partners of

accused No.1. In February 2014, accused No.2 and 3

approached complainant for fnancial help and sought

friendly loan of Rs. 12,00,000/-. The complainant

transferred Rs.7,50,000/- to accused by RTGS on

22.02.2014 and sum of Rs.4,50,000/- was paid in cash to

accused on 22.02.2014. The accused executed MOU

admitting receipt of Rs.12,00,000/- and undertook to repay

the loan on or before 30.08.2014. The accused issued fve

cheques bearing Nos. 068172, 068173, 068166, 068170

and068168 in favour of complainant. The complainant

presented the cheques which were dishonoured for the

reason “Alteration”. The complainant suspected that the

accused have deliberately made mistake while writing

name of complainant on the cheque. The accused issued

fresh cheque dated 11.03.2015 for Rs.11,50,000/-. The

accused issued notice dated 02.03.2015 by which the

accused admitted the loan transaction and liabilities of

Rs.5,50,000/-. The accused however, made false claim in

the notice stating that cheques were issued by way of

security. Cheque were presented by the complainant which

was returned with remark “Payment stopped by the

drawer”. The demand notice dated 17.03.2015 was sent to

the accused. The complaint was fled before the Court of 4th

Joint Judicial Magistrate First Class, Vashi at CBD Belapur,

Navi Mumbai.

4. Learned Magistrate issued process for ofence under

Section 138 of Negotiable Instruments Act vide order dated

09.02.2015.

5. The applicant challenged the order of process before

the Sessions Court by preferring revision application which

has been allowed by the Sessions Court hence,

applicant/complainant has preferred this revision

application.

6. Learned advocate for the applicant submitted that the

impugned order passed by learned Sessions Judge is

contrary to law. Prima facie, case was made out against the

accused and the learned Magistrate after recording

verifcation statement and considering the document on

record issued process against the accused. Cheques were

dishonoured. Demand notice was sent to the accused. All

procedural safeguards were complied. Order of process

could not be set aside in Revisional Jurisdiciton. Learned

Sessions Judge has considered defence of the accused.

While deciding the revision application, the learned

Sessions Judge failed to consider the presumption under

Section 139 of Negotiable Instruments Act which has

required to be rebutted during trial. Learned Sessions Judge

has committed an error in observing that the MOU

suggested payment of interest by the accused. The

respondent No.1 and 2 has replaced the earlier cheques

which shows the admission of liabilities. The learned

Sessions Judge has committed an error in holding that the

cheques were given by way of security and thus out of

purview of Negotiable Instruments Act the accused had

admitted the execution of cheques giving rise to statutory

presumption under Section 118 and 139 of Negotiable

Instrument Act. The order passed by learned Sessions Judge

is required to be set aside. opportunity is required to be

given to the complainant to prove its case by adducing


evidence. The learned Sessions Judge however, set aside

the order of process on erroneous fnding.

7. Learned advocate for the applicant has relied upon

following decisions:-

(a) Sripati Singh (Since Deceased) Through His

Son Gaurav Singh Vs. State of Jharkhand and

Another1.

(b) Pulsive Technologies Private Limited Vs.

State of Gujarat and Others2.

(c) Mundalik Jewellers, Aurangabad and another

Vs. Bhilaji s/o Ganpat Patil3.

(d) Ganesh Madhavrao Hawaldar Vs. Mithalal

Keshaolal Dave4.

(e) Basalingappa Vs. Mudibasappa5.

(f) Madhukar V. Dessai Vs. Shaikh Abdul Riyaz6.

(g) K. sitaram And Another Vs. CFL Capital

Financial Service Limited and Another7.

(h) Kashinath Balu Gaonkar Vs. Sunita

Krishnajirao Dessai and Another8.

(i) Rangappa Vs. Sri Mohan9.

8. Learned advocate for respondent No.1 and 2

submitted that there is no illegality in the impugned order.

Continuation of proceedings against the respondent would

1 2021 SCC OnLine SC 1002

2 (2014) 13 SCC 18

3 2010 SCC OnLine Bom 1881

4 1998 SCC OnLine Bom 436

5 (2019) 5 SCC 418

6 2006 SCC OnLine Bom 1500

7 (2017) 5 SCC 725

8 2015 SCC OnLine Bom 390

9 (2010) 11 SCC 441


be abuse of process of law. The Sessions Judge was

empowered to entertain the revision application and set

aside the order issuing process. Learned Sessions Judge has

rightly taken into consideration the undisputed document

on record and set aside the order of process. It was rightly

held that in cases of money lending business without the

license, the proceedings was not maintainable in law. The

Court has observed that the transaction was loan

transaction without license post dated cheques were given

for security of the loan. Money lending without licence is

cognizable ofence. The respondents had lodged complaints

against the applicant. The order issuing process was

passed mechanically. It would not be possible to enforce

any agreement. The object of which is unlawful within

meaning of section 23 of Contract Act.

9. Learned advocate for respondents has relied upon the

following decisions :-

(a) Girdhari Parmanand Motiani Vs. Vinayak Bhagwan

Khavnekar and Ors.10.

(b) Smt. Nanda W/o Dharam Nandanwar represented

through PAO Dharam S/o Kisandas Nandanwar

Vs. Nandkishor s/o Talakram Thaokar11.

10 2016 ALL MR(Cri) 1909

11 MANU/MH/0069/2010


(c) Anil S/o Baburao Kataria Vs. Purshottam S/o

Prabhakar Kawane.2010 Cri.LJ 1217

(d) K. K. Sidharthan Vs. T. P. Praveena Chandran and

Anr. 1996 (4) Crimes 102 (SC)

(e) Rajendra Kumar Sitaram Pande Vs. Uttam and

Another. AIR1999SC1028

10. I have perused the order dated 26.06.2015 which is

impugned in this proceedings. The learned Sessions Judge

while allowing the revision application preferred by

respondent Nos. 1 and 2 has observed that the contract

which is forbidden by law is void contract. In cases of

money lending business without license, the provisions

under Section 138 of Negotiable Instruments Act are not

attracted. According to the complainant huge amount of Rs.

4,50,000/- was parted to the accused. There was a

Memorandum Of Understanding (for short “MOU”) dated

22.02.2014 between M/s. Monika Sumit Ujjain as the lender

and M/s. Saga Infra as the borrowers. As per MOU it can be

gathered that the transactions was without license. Post

dated cheques were given by way of security. I have

perused the MOU and the other documents on record

considering the factual matrix of this case I do not find any

reason to interfere with the impugned order, Hence I pass

the following order:-

ORDER

(i) Criminal Revision Application stands rejected and

disposed of.

(PRAKASH D. NAIK, J.)

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