Cheque dishonour liability survives money-lender objection where the debt is legally enforceable and issuance and dishonour are proved.

A complaint under Section 138 of the Negotiable Instruments Act was held not to fail merely because the complainant was alleged to be an unlicensed money lender; the Money Lenders Act bar was treated as directed to civil suits and execution, not as an automatic defence to cheque dishonour proceedings. On the evidence, the cheque, dishonour memo and admitted signature established issuance and dishonour, while the defence evidence was found insufficient to displace the complainant's case. The acquittal was reversed because the debt was treated as legally enforceable and the ingredients of Section 138 were proved.

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Issues: (i) Whether the bar under Section 3 of the H.P. Registration of Money Lenders Act, 1976, could defeat the complaint under Section 138 of the Negotiable Instruments Act, 1881, on the ground that the complainant was an unlicensed money lender and the cheque represented no legally enforceable debt; (ii) Whether the evidence proved issuance, dishonour, and liability under Section 138 of the Negotiable Instruments Act, 1881, so as to warrant reversal of the acquittal.

Issue (i): Whether the bar under Section 3 of the H.P. Registration of Money Lenders Act, 1976, could defeat the complaint under Section 138 of the Negotiable Instruments Act, 1881, on the ground that the complainant was an unlicensed money lender and the cheque represented no legally enforceable debt.

Analysis: The bar under the Money Lenders Act was held to operate against civil suits and execution proceedings, and not by itself against a complaint under Section 138 of the Negotiable Instruments Act, 1881. In the absence of evidence that the advance was tainted by any entrenched prohibitive vice, or that interest had in fact been charged on the transaction, the lending could not be treated as outside the scope of a legally recoverable or legally enforceable debt. The trial court's inference that the complainant was an unlicensed professional money lender was found to rest on misappreciation of evidence.

Conclusion: The statutory bar did not defeat the complaint, and the debt was held to be legally enforceable.

Issue (ii): Whether the evidence proved issuance, dishonour, and liability under Section 138 of the Negotiable Instruments Act, 1881, so as to warrant reversal of the acquittal.

Analysis: The cheque and dishonour memo established issuance and dishonour for insufficiency of funds. The accused did not dispute her signature on the cheque. The complainant's version of the loan transaction was supported by corroborative testimony, while the defence evidence was found uncorroborated and insufficient to displace the complainant's case. The acquittal was held to suffer from gross perversity and non-appreciation of evidence.

Conclusion: The ingredients of Section 138 were held proved, and the acquittal was reversed.

Final Conclusion: The acquittal was set aside and the accused was convicted under Section 138 of the Negotiable Instruments Act, 1881.

Ratio Decidendi: A complaint under Section 138 of the Negotiable Instruments Act, 1881, is not barred merely because the complainant is alleged to be an unlicensed money lender, unless the transaction is shown by cogent evidence to be legally unenforceable; where cheque issuance and dishonour are proved and the defence fails, conviction must follow.

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