TaxTMI 
TaxTMI 
2023 (4) TMI 756
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.... provisions of section 32B of the Act. So also the provisions of section 10 of the said Act put fetters on the power of Court to pass decree in favour of money lender in any suit unless a money lender holds valid license. In other words, if money is lent without license as part of money lending business and if the cheque is issued towards discharge of that debt, it cannot be said as legally recoverable debt and the prosecution under section 138 of NI Act will not be maintainable. 2. This issue has arisen in Summary Case No.811 of 2002 filed before the Court of 5th Judicial Magistrate, First Class, Thane. The Appellant was complainant and present Respondent was accused therein. The trial Court has not treated money advanced by the complaina....
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....d his business as exporter of tobacco. Learned Advocate Mr. Jha expressed his surprise for reference to his business as exporter of tobacco. The complaint was filed by the proprietor through Power of Attorney Shri Babu Singh Purohit and he too gave evidence. Whereas the accused is proprietor of Dhanesha Jewellers. The complainant lent an amount of Rs.4,00,000/- to accused. There are two documents. They are as follows : (i) Agreement dated 24th July 2001, thereby evidencing lending of amount of Rs.4,00,000/-. (ii) Promissory note dated 24th July 2001, executed by accused in favour of Proprietor Arun Joshi. 6. In fact when cheque is issued and signature is admitted, presumption comes into picture that there is consideration for wh....
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....rge of a liability is performed, then security would not have any legal force". 9. On the basis of above observations, the Appellate Court made following observations --- "There was promissory note to repay on or before 21st January 2002 along with interest at the rate of 12%. If it is so, then the complainant ought to have taken action on the basis of this promissory note. If accused has not repaid on the basis of said promise, question of depositing cheque could have arisen at that time only. That's why it is observed that cheque was issued not for repayment but by way of security". 10. The differentiating factor is that in case of Pawan Enterprises (supra) prior to deposit of the cheque, accused has paid some of the amount from rem....
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....ose of executing promissory note is to seek a promise from the borrower to pay the amount. On that basis a summary suit for recovery of money can be filed. However, that remedy does not debar the lender/complainant to initiate action for the offence under section 138 of the NI Act. The agreement dated 24th July 2001, thereby evidencing advancement of loan does not require registration. The interest column of promissory note was blank. The authorised representative through Vinod Sharma was not instructed to send letter, (asking the accused to make payment otherwise the cheque will be deposited). All above facts does not affects liability. It was there at the time of issuance of cheque. Hence, I am of considered opinion that the first Appella....
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....ion is done on the basis of Negotiable Instrument, that transaction also does not fall within purview of the Money Lenders Act. 15. It will be relevant to consider material provisions of the said Act. Section 2(2) gives meaning of expression : "business of money lending" means the business of advancing loans (whether in cash or kind and) whether or not in connection with or in addition to any other business". 16. Wheres section 2(9) lays down meaning of the word : "loan" means an advance at interest whether of money or in kind but does not include - (a) .... .... .... (b) .... .... .... (c) .... .... .... (d) .... .... .... (e) .... .... .... There are certain exceptions. The relevant clause is clause (f). It reads ....
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....question was issued towards discharge of existing liability and the transaction is not hit by the provisions of the Bombay Money Lenders Act, 1946. There are compliances about proving reason for dishonour "as not arranged for", issuing notice in time, receipt of notice and failure to make payment. There are two witnesses from the bank, one is Pradeep Vaidya, from Syndicate Bank, who is banker of the complainant and another is Atul Jadhav from Thane Janta Sahakari Bank on whom the cheque was drawn. So the complainant has satisfied all ingredients for the offence punishable under section 138 of the NI Act. He has proved commission of offence by accused. Hence, accused is liable to be dealt with as per law. 18. The trial Court has sentence....