Cheque Bounce Case: High Court says Can’t Junk Plaint as Complainant A Moneylender

The Punjab & Haryana HC has made it clear that a complaint in a cheque bounce case can't be dismissed merely on the ground that the complainant was found to be a professional moneylender carrying on the trade without licence. The HC also ruled that the methodology adopted by a trial magistrate, who dismissed the complaint, was misconceived & flawed. 

The ruling by Justice HS Madaan came in a case where a complaint under Section 138 of the Negotiable Instruments Act was instituted on the allegations that Rs 5,40,000 was advanced to the accused. But the cheque of Rs 5 lakh issued by the accused was dishonoured by the bank due to “insufficient funds in his account”.

Referring to the impugned order, Justice Madaan ruled its perusal showed that the trial magistrate admitted most of the complainant’s case, but dismissed the complaint observing that the transaction between the parties was that of a loan rather than general financial help. The magistrate also ruled that a licence under the Money Lender’s Act was necessary for entering into a loan transaction. “Since it wasn't so, the debt/liability wasn't legally enforceable & accused drawer of the cheque cannot be held liable under Section 138 of the Act”.

Taking up the matter, Justice Madaan asserted the court found the approach of the magistrate to be misconceived & erroneous under the circumstances of the case. Pointing at another judgment by the HC, Justice Madaan asserted that it was observed in the case that proof of registration as a moneylender wasn't required where money was advanced as a friendly loan & not in money lending business.

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