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of <h1>Acquittal based on lack of enforceable debt in cheque dishonor case under Section 138</h1> The court acquitted the accused based on the lack of a legally enforceable debt, as the appellant's money lending activities were found to be without a ... Dishonor of Cheque - legally enforceable debt or not - acquittal of the accused - Section 138 of Negotiable Instruments Act, 1881 - HELD THAT:- The trial Court rightly held that the cheque was not drafted by the accused and that the accused is not a rustic man or an illiterate and that if at all the accused issued the subject cheque towards discharge of legally enforceable debt, it should be for ₹ 1,24,000/- since the interest on the amount alleged to be borrowed was 24% per annum and that the circumstances reveal that Ex.P.1 cheque was not issued by the accused towards legally enforceable debt. Further, the admissions of the complainant in his evidence as P.W.1 clearly reveals that the complainant is doing money lending business without license in Telangana area. He did not file a single document to show that he was having a valid license to do money lending business. The Explanation to Section 138 of N.I.Act clearly states that the dishonoured cheque shall relate to a legally enforceable debt or liability. In the instant case, since the complainant had no valid money lending business, he cannot legally enforce such a debt of liability. Under these circumstances, the Court below rightly concluded that the complainant is not entitled to prosecute the accused for the offence under Section 138 of N.I.Act and therefore, the accused is entitled for acquittal. The conclusions reached by the trial Court are based on evidence on record. There is nothing to take a different view. The accusations against the accused under Section 138 of N.I.Act are not proved beyond reasonable doubt. The contentions raised on behalf of the complainant do not merit consideration. Criminal Appeal is dismissed. Issues:1. Legally enforceable debt as alleged by the appellant/complainant2. Whether the cheque was issued towards discharge of legally enforceable debt3. Validity of the judgment passed by the Judicial Magistrate and the liability of the accused under Section 138 of the Negotiable Instruments ActAnalysis:Issue 1: Legally enforceable debt as alleged by the appellant/complainantThe appellant/complainant claimed that the accused borrowed a specific amount and failed to repay it, leading to the issuance of a cheque that later bounced. The complainant provided evidence through witnesses and documents to support the existence of a legally enforceable debt. However, the accused argued that the cheque was not related to any enforceable debt but was given as collateral for a chit transaction. The trial court considered the evidence and concluded that the complainant was engaged in money lending without a valid license, casting doubt on the enforceability of the debt. Citing precedents, the court held that without a valid license, the debt could not be legally enforced, leading to the acquittal of the accused.Issue 2: Whether the cheque was issued towards discharge of legally enforceable debtThe appellant/complainant presented the cheque as evidence of the debt owed by the accused. However, the accused contested this claim, stating that the cheque was not for the alleged debt but for collateral purposes related to a chit transaction. The court examined the circumstances and the evidence, including the amount on the cheque and the lack of a valid license for money lending by the complainant. Based on these findings, the court determined that the cheque was not issued to discharge a legally enforceable debt, supporting the acquittal of the accused under Section 138 of the Negotiable Instruments Act.Issue 3: Validity of the judgment and liability under Section 138 of the Negotiable Instruments ActThe judgment delivered by the Judicial Magistrate acquitted the accused based on the lack of a legally enforceable debt and the nature of the cheque issuance. The court found that the complainant's actions, including conducting money lending without a license, undermined the enforceability of the debt. The court referenced the Explanation to Section 138 of the Negotiable Instruments Act, emphasizing the requirement of a legally enforceable debt for cheque dishonor cases. Considering the evidence and legal provisions, the court upheld the acquittal, dismissing the Criminal Appeal and confirming the judgment of the Judicial Magistrate.This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, the evidence considered by the court, and the legal reasoning behind the decision to acquit the accused under Section 138 of the Negotiable Instruments Act.
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