Cheque dishonour conviction upheld where alleged cash-loan and money-lending objections did not defeat enforceability of debt.

A cheque dishonour conviction was upheld because the lender was not shown to be carrying on the business of money-lending so as to require registration under the Punjab Registration of Money Lenders Act, 1938. The court held that lending to a few persons was insufficient to make the lender a money-lender in the statutory sense. It also ruled that any breach of Section 269SS of the Income-tax Act, 1961, may attract tax consequences but does not by itself make the underlying debt unenforceable or defeat recovery. Since the borrower admitted receipt of the loan, the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 remained unrebutted and liability under Section 138 was sustained.

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Issues: Whether the cheque dishonour conviction could be interfered with on the ground that the underlying loan was unenforceable because the lender was allegedly carrying on money-lending activity without registration and because the loan was advanced in cash in breach of tax law.

Analysis: The material did not establish that the respondent was carrying on the business of advancing loans so as to attract the registration requirements of the Punjab Registration of Money Lenders Act, 1938. Mere lending to a few persons was insufficient to treat the respondent as a money-lender within the statutory sense. The alleged violation of Section 269SS of the Income-tax Act, 1961, at the highest, attracted tax consequences and penalties, but did not by itself render the debt unenforceable or bar recovery. The petitioner had admitted receipt of the loan and had therefore not rebutted the statutory presumption that the cheque was issued in discharge of a legally recoverable liability under Section 139 of the Negotiable Instruments Act, 1881.

Conclusion: The challenge to the conviction failed and the liability under Section 138 of the Negotiable Instruments Act, 1881 was upheld.

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