Unlicensed money-lending defeats Section 138 liability where the cheque is issued for a non-enforceable debt.

Repeated lending transactions and the surrounding circumstances supported the inference that the complainant was carrying on money-lending without a licence under the Bombay Money Lenders Act, 1946. Because unlicensed money-lending is prohibited and courts cannot grant relief in favour of an unlicensed money-lender, the amount advanced was treated as not constituting a legally enforceable debt or liability. A cheque issued towards such a transaction therefore could not sustain prosecution under Section 138 of the Negotiable Instruments Act. On that basis, leave to appeal against the acquittal was refused and the acquittal was allowed to stand.

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Issues: Whether leave to appeal against the acquittal deserved to be granted where the complainant's transaction was found to be part of unlicensed money-lending activity and, consequently, whether the cheque represented a legally enforceable debt for the purposes of Section 138.

Analysis: The applicant's own admissions and surrounding circumstances showed repeated lending transactions with several persons, supporting the inference that he was carrying on money-lending business. The Bombay Money Lenders Act, 1946 prohibits carrying on money-lending without a licence, bars court relief in favour of an unlicensed money-lender, and provides penal consequences for such business. On that footing, the amount advanced was not treated as a legally enforceable debt or liability, and the cheque issued towards such transaction could not attract Section 138 of the Negotiable Instruments Act. The trial court's view was found to be a reasonable and proper inference from the evidence.

Conclusion: Leave to appeal was not granted and the application was rejected.

Final Conclusion: The order of acquittal was allowed to stand because the complaint did not disclose a legally enforceable liability capable of sustaining prosecution under Section 138.

Ratio Decidendi: A cheque issued in respect of a loan advanced by an unlicensed money-lender in the course of prohibited money-lending activity does not represent a legally enforceable debt or liability for the purposes of Section 138.

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