Loan against cheque and receipt is not barred money lending; cheque dishonour liability stands when repayment defence fails.

A loan advanced against a receipt and cheques was treated as a loan transaction, not as the carrying on of an unlicensed money-lending business merely because the lender lacked a licence. The Bombay Money Lenders Act, 1946 was applied as a bar to civil recovery decrees, not as a defence to prosecution under Section 138 of the Negotiable Instruments Act. Where cheque issuance, dishonour, service of notice, and the statutory presumption under Section 139 are established, the accused must rebut the legally recoverable debt with evidence; a bare plea of repayment is insufficient. The result is that cheque dishonour liability can be proved notwithstanding the money-lending objection.

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Issues: (i) Whether the advance evidenced by the receipt and cheques constituted a loan and not a business of money lending so as to attract the bar under the Bombay Money Lenders Act, 1946. (ii) Whether the ingredients of the offence under Section 138 of the Negotiable Instruments Act were proved and the defence of repayment was established.

Issue (i): Whether the advance evidenced by the receipt and cheques constituted a loan and not a business of money lending so as to attract the bar under the Bombay Money Lenders Act, 1946.

Analysis: The advance was supported by the receipt showing payment by cheque and cash, and the cheque issued towards repayment was not disputed. The Court held that a loan advanced on the basis of a negotiable instrument falls within the meaning of loan and does not, by itself, amount to the business of money lending. The prohibition under Section 10 of the Bombay Money Lenders Act, 1946 was treated as a bar against passing of a decree in a civil recovery suit and not as a bar to prosecution under Section 138 of the Negotiable Instruments Act. The definitions in Sections 2(2) and 2(9) of the Bombay Money Lenders Act, 1946 were applied to hold that the transaction did not justify non-suiting the complainant on the ground of lack of licence.

Conclusion: The objection based on the Bombay Money Lenders Act, 1946 failed and the advance was treated as a loan, not as an unlicensed money lending business.

Issue (ii): Whether the ingredients of the offence under Section 138 of the Negotiable Instruments Act were proved and the defence of repayment was established.

Analysis: The cheque issuance and dishonour were not disputed. The statutory presumption under Section 139 of the Negotiable Instruments Act operated, and the defence of repayment was found unsubstantiated by evidence or effective cross-examination. Service of notice was also treated as duly complied with. On the evidence, the legally recoverable debt and liability stood proved, and the trial court's contrary finding was held unsustainable.

Conclusion: The offence under Section 138 of the Negotiable Instruments Act was proved and the defence of repayment was rejected.

Final Conclusion: The acquittal was set aside, the complainant's appeal succeeded, and the respondent was convicted with a fine-based sentence for the cheque dishonour offence.

Ratio Decidendi: A loan advanced on the basis of a negotiable instrument is not treated as a business of money lending merely because the lender lacks a licence, and the bar under the Bombay Money Lenders Act, 1946 does not defeat a prosecution under Section 138 of the Negotiable Instruments Act where the cheque and legally recoverable liability are otherwise proved.

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