Calcutta High Court (Appellete Side)
Tanay Agarwal vs Giriraj Daga on 7 October, 2024
IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
Appellate Side
Present:
The Hon'ble Justice Ajay Kumar Gupta
C.R.R. 1897 of 2021
Tanay Agarwal
Versus
Giriraj Daga
For the Petitioner : Mr. Samrat Chowdhury, Adv.
For the Opposite Party : Mr. Satadru Lahiri, Adv.
Mr. Safdar Azam, Adv.
Heard on : 20.09.2024
Judgment on : 07.10.2024
2
Ajay Kumar Gupta, J:
1. This Criminal Revisional application has been filed by the
Petitioner under Section 482 read with Section 401 of the Code of
Criminal Procedure, 1973, seeking quashing of proceedings arising
out of a Complaint Case being No. CS-55985 of 2019 (Giriraj Daga
Vs. Tanay Agarwal) filed under Section 138 of the Negotiable
Instruments Act, 1881 and as amendment thereto, pending before
the Court of the Learned Metropolitan Magistrate, 11th Court at
Calcutta.
2. Brief facts of the case, leading to filing of the instant
Criminal Revisional application, are as follows:
2a. It is the specific allegation of the complainant that in
pursuant to the request made by the present petitioner, the
complainant had lent an advance a sum of Rs. 10,00,000/- (Rupees
Ten Lakhs) only to the petitioner/accused by way of short-term
unsecured loan for business. It was agreed by the petitioner/accused
that he will pay the said loan amount along with interest @ 14% per
annum.
3
2b. To discharge his liability, the petitioner had issued a Cheque
bearing No. 000063 dated 01.08.2019 for a sum of Rs. 46,795/-
(Rupees Forty-Six Thousand Seven Hundred Ninety-Five) only drawn
on Kotak Mahindra Bank Limited, Middleton Street Branch, Kolkata -
700 071 towards payment of its outstanding amount as accrued on
account of interest dues. After receiving the said Cheque, the
complainant deposited the said cheque with his banker, State Bank
of India, Dalhousie Square Branch, Kolkata - 700 001 on
06.09.2019. But, the said cheque was dishonoured for non-payment
by the bankers of the accused with remark 'Insufficient Funds'. The
intimation was received by the complainant from his banker through
CTS Return Memo Report dated 07.09.2019.
2c. The complainant through his learned advocate issued a
demand notice dated 24.09.2019 under Section 138 of the Negotiable
Instruments Act, 1881 and as amendment thereto (hereinafter
referred to as 'N.I. Act') to the petitioner/accused intimating about the
dishonour of the cheque and further demanded to pay the said
amount within 15 days from the date of receipt of the demand notice.
The said notice was received by the petitioner/accused on
27.09.2019.
4
2d. After receiving the said notice, the petitioner/accused sent a
reply dated 03.10.2019 to the said demand notice through his
learned advocate but he did not pay the said amount of Rs. 46,795/-
(Rupees Forty-Six Thousand Seven Hundred Ninety-Five) only within
the stipulated period of time mentioned in the demand notice.
Accordingly, the complainant has compelled to file a complaint under
Section 138 of the Negotiable Instruments Act, 1881 against the
petitioner and same was registered as Complaint Case being No. CS-
55985 of 2019. The Learned Judge issued summons upon the
petitioner/accused after taking cognizance of the offence punishable
under Section 138 of the Negotiable Instruments Act, 1881 after
being satisfied with the affidavits and documents filed by the
Complainant.
2e. After receiving summon from the Court, the petitioner duly
entered his appearance before the Learned Trial Court and was
granted bail and also pleaded not guilty and claimed to be tried.
2f. According to the petitioner, no specific overt act has been
alleged or attributed against the petitioner for the commission of
alleged offence. Furthermore, the complainant had actually invested
the amount which was given to him into the business as a partner of
5
the business. As such, it does not create any debt or liability either in
whole or in part to the petitioner. Hence, continuation of this instant
criminal proceeding is an abuse of process of law for which the
petitioner is seriously prejudiced. There is no sufficient ingredient for
an offence punishable under Section 138 of the Negotiable
Instruments Act, 1881 in the complaint. Hence, the Petitioner filed
this case before this Court by way of Criminal Revisional application
praying for quashing the proceedings. Hence, the same has come up
before this Bench for its disposal.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. Learned counsel appearing on behalf of the
petitioner/accused submitted that whatever complaint made by the
complainant/opposite party under Section 138 of the Negotiable
Instruments Act, 1881 is not at all attracted in the instant criminal
proceeding. It is not at all maintainable in the eye of law because
there was no such transaction or grant of loan or advance to the
petitioner arise. He has no authority to lend and advance of Rs. 10
Lakhs as short-term unsecured loan for business charging abnormal
interest thereupon @ 14% per annum. The complainant is not a
money lender. He does not possess the money lending licence under
the Bengal Money-Lenders Act, 1940. Therefore, question of granting
6
loan on interest does not arise at all. Actually, the amount was
invested by the complainant in the business as a partner. So, it does
not constitute any prima facie offence punishable under Section 138
of the Negotiable Instruments Act, 1881. The proceeding before the
Learned Magistrate is not at all maintainable in the eye of law for
which ultimate chances of conviction is remote and bleak. Hence,
there is no useful purpose to proceed with the instant proceeding. It
would be an abuse of process of law and in expedient interest of
justice, the above criminal proceeding deserves to the quashed and
all orders passed thereof are also liable to be set aside.
3a. Learned counsel for the petitioner/accused has placed a
reliance of a judgment passed in the case of Mrs. Monica Sunit
Ujjain Vs. Sanchu M. Menon and Ors.1 to support his aforesaid
contention. Wherein the Hon'ble Bombay High Court has held that in
cases of money lending business conducted without licence,
proceedings could not be maintainable. Therefore, proceedings under
Section 138 of Negotiable Instruments Act, 1881 are also not
attracted as the money lending business was conducted without a
licence and the contract which is forbidden by law is void contract.
1
2023 (1) BC 573
7
SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY:
4. Per contra, learned counsel appearing on behalf of the
opposite party vehemently raised objection of such prayer for
quashing of the proceedings and further submitted that the judgment
referred by the petitioner is not at all applicable in the instant case
because the provisions of Bombay Money-Lenders Act, 1946 and
Bengal Money-Lenders Act, 1940 are completely distinct. In the
Bengal Money Lenders Act, 1940, there is no strict provision applies
that without licence, proceeding is not maintainable. Money lending
without licence is not completely barred or prohibited by the Bengal
Money Lenders Act, 1940. The Bengal Money-Lenders Act, 1940 is
basically a regulatory Act and it regulates the business of Money-
Lending. Section 8 of the said Act says after certain date of notified in
the official Gazette no money-lender shall carry on the business of
Money-Lending unless he holds an effective licence. But, the
provision is not mandatory. This provision clarifies by the Section 13
of the Bengal Money Lenders Act.
4a. It is further submitted that while filing a case under Section
138 of the N.I. Act, no condition precedent to file money lending
licence. Issuance of cheque without sufficient balance in the account
8
and bouncing of the cheque is a criminal offence. A person cannot be
debarred from filing and prosecuting complaint under Section 138 of
the N.I. Act even if he is doing business of money lending without
holding a valid licence. Every statute is enacted for specific purpose
and intent and should be read as a whole. The legislature enacts
statutes and legislation and takes appropriate precautions at time of
drafting and enacting different legal provisions but sometimes
conflicts appear in interpretation of different statutory provisions. In
this eventuality, Doctrine of Harmonious Construction needs to be
adopted. The legal provisions contained in one particular statute
cannot be read to defeat legal provisions contained in another statute
and both legal provisions contained in different statute should be
given maximum effect in their operation and applicability.
Proceedings initiated under Section 138 of the N.I. Act cannot be
quashed only on primarily on ground that the complainant has
violated the provisions of the Bengal Money Lenders Act, 1940 as he
was engaged in business of money lending without licence.
Therefore, provisions of the Bengal Money Lenders Act or Contract
Act has no manner of application so far as the proceedings under
Section 138 of the Negotiable Instruments Act, 1881 is concerned, as
such, the revisional application is liable to be dismissed. Learned
9
counsel has placed reliance of judgments to buttress his aforesaid
submissions as follows:
i. Samarendra Nath Das vs. Supriya Maitra2;
ii. Jupiter Brokerage Services Ltd. Vs. Ektara Exports
Pvt. Ltd.3;
iii. Sanjoy Agarwala Vs. Ajoy Sarkar4;
iv. Hansraj Bansal Vs. State and Another5;
v. Dhanjit Singh Nanda Vs. State and Another6;
vi. Meenu Bhist Vs. Vijay Kumar Gupta & Another7;
vii. Ravinder Paul Vs. Ashwani Kumar8.
4b. It is further submitted that the question of charging
abnormal interest, lending loan and issuance of cheque in discharge
of liability are disputed question of facts and it cannot be considered
while quashing of the proceedings without full-fledged trial. He
further placed reliance of judgments to bolster his submissions are as
follows: -
i. HMT Watches Limited Vs. M.A. Abida and Another9;
ii. Rangappa Vs. Sri Mohan10;
2
(2006) 3 CHN 518;
3
(2016) 2 E Cr N 469;
4
2023 SCC OnLine Cal 5364;
5
2023 SCC OnLine Del 5678;
6
2009 (109) DRJ 62;
7
ILR (2007) 1 Delhi 1327;
8
2020 SCC OnLine P & H 4606.
9
(2015) 11 SCC 776;
10
(2010) 11 SCC 441;
10
iii. Avneet Bedi Vs. State of West Bengal and
Another11;
iv. Sri Sujies Benefit Funds Limited Vs. M.
Jaganathuan12.
DISCUSSION AND FINDINGS OF THIS COURT:
5. In the light of the submissions and arguments presented by
the learned counsels appearing for the parties and upon perusal of
the contents of the complaint as well as judgments referred by the
learned counsels for the parties, this Court would like to refer some
relevant provisions for ready reference and for proper assessment
before entering into the merits of this case. Those Sections read as
under:
6. Section 138 of the Act reads as under: --
138. Dishonour of cheque for insufficiency, etc., of funds in the
account. --Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any amount of money
to another person from out of that account for the discharge, in whole
11
2022 SCC OnLine Cal 3985;
12
2024 SCC OnLine SC 1942.
11
or in part, of any debt or other liability, is returned by the bank unpaid,
either because of the amount of money standing to the credit of that
account is insufficient to honour the cheque or that it exceeds the
amount arranged to be paid from that account by an agreement made
with that bank, such person shall be deemed to have committed an
offence and shall, without prejudice to any other provisions of this Act,
be punished with imprisonment for a term which may be extended to
two years, or with fine which may extend to twice the amount of the
cheque, or with both :
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six
months from the date on which it is drawn or within the period of its
validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case
may be, makes a demand for the payment of the said amount of
money by giving a notice in writing, to the drawer of the cheque,
[within thirty days] of the receipt of information by him from the bank
regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said
amount of money to the payee or, as the case may be, to the holder in
12
due course of the cheque, within fifteen days of the receipt of the said
notice.
Explanation. -- For the purposes of this section, "debt or other liability"
means a legally enforceable debt or other liability.
7. Sections 8 and 13 of the Bengal Money Lenders Act, 1940
and definitions of Interest as per section 2(8), 'Lender' as per
Section 2(9), 'Loan' as per Section 2(12), 'Money Lender' as per
Section 2(13) and 'money lending business' and 'business of
Money Lending' as per section 2(14) which reads as under: --
Section 8. Money-lending business not to be carried on except
under licence. - After such date not less than six months after the
commencement of this Act as the [State] Government shall, by
notification in the Official Gazette, appoint in this behalf, no money-
lender shall carry on the business of money-lending unless he holds
an effective licence.
Explanation.- An effective licence for the purposes of this Act
comprises a licence issued to a person who is not disqualified for
holding a licence.
13
13. Stay of suit when money-lender does not hold licence. -
(1) No Court shall pass a decree or order in favour of a money-lender
in any suit instituted by a money-lender for the recovery of a loan
advanced after the date notified under section 8, or in any suit
instituted by a money-lender for the enforcement of an agreement
entered into or security taken, or for the recovery of any security
given, in respect of such loan, unless the Court is satisfied that, at
the time or times when the loan or any part thereof was advanced,
the money-lender held an effective licence.
(2) If during the trial of a suit to which sub-section (1) applies, the
Court finds that the money-lender did not hold such licence, the
Court shall, before proceeding with the suit, require the money-lender
to pay in the prescribed manner and within the period to be fixed by
the Court such penalty as the Court thinks fit, not exceeding three
times the amount of the licence fee specified in section 10.
(3) If the money-lender fails to pay the penalty within the period fixed
under sub-section (2) or within such further time as the Court may
allow, the Court shall dismiss the suit: if the money-lender pays the
penalty within such period, the Court shall proceed with the suit.
14
(4) The provisions of this section shall apply to a claim for a set-off by
or on behalf of a money-lender.
(5) In this section, the expression "money-lender" includes an
assignee of a money-lender, if the Court is satisfied that the
assignment was made for the purposes of avoiding the payment of
licence fee and penalty which may be ordered to be paid under this
section.
2 (8) "interest" includes any sum by whatsoever name called, in
excess of the principal paid or payable to a lender in consideration of,
or otherwise in respect of, a loan whether the same is charged or
sought to be recovered specifically by way of interest or otherwise,
but does not include any sum lawfully charged by a lender in
accordance with the provisions of this Act or any other law for the
time being in force for or on account of costs, charges or expenses;
2 (9) "lender" means a person who advances a loan and includes a
money lender;
2(12) "loan" means an advance, whether of money or in kind, made
on condition of repayment with interest and includes any transaction
which is in substance a loan but does not include-
[* * * **]
15
[* * * * *]
(c) a loan taken or advanced by [by the Central Government or any
State Government] or by any local authority in [West Bengal];
(d) a loan advanced before or after the commencement of this Act-
(i) by a bank; or
(ii) by a co-operative life insurance society, co-operative society,
insurance company, life assurance company, [Life Insurance
Corporation of India,] mutual insurance company, provident
insurance society or provident society or from a provident fund;
(e) an advance made on the basis of a negotiable instrument as
defined in the Negotiable Instruments Act, 1881, other than a
promissory note;
[* * * * *.]
[* * * * *.]
(h) a loan made to or by the Administrator-General and Official
Trustee of [West Bengal] or the Commissioner of Wakfs or the Official
Assignee or the Official Receiver of the High Court in Calcutta;
(i) a loan or debenture in respect of which dealings are listed on any
Stock Exchange;
16
2 (13) "money-lender" means a person who carries on the business
of money-lending in [West Bengal] or who has a place of such
business in [West Bengal], and includes a Pawnee as defined in
section 172 of the Indian Contract Act, 1872;
2 (14) "money-lending business" and "business of money-lending"
mean the business of advancing loans either solely or in conjunction
with any other business;
8. In view of the arguments made by the learned counsel for the
Petitioner and considering the aforesaid provisions of the Bengal
Money Lenders Act, 1940, I may refer to the provisions of the Bombay
Money Lenders Act, 1946. Section 5 of the said Act lays down that no
money lender shall carry on business of money lending except in the
area for which he has been granted a licence and except in
accordance with the terms and conditions of such licence. Section 10
of the Act lays down that no court shall pass a decree in favour of a
money-lender in any suit to which said Act applies unless the court is
satisfied that at the time when the loan or any part thereof, to which
the suit relates was advanced, the money-lender held a valid licence,
and if the court is satisfied that the money lender did not hold a valid
licence, the Court shall dismiss the suit. In other words, carrying on
17
money lending business without licence debars a person from doing
money lending and recovering the amount through court. As per
explanation to Section 138 of the Negotiable Instruments Act "debt or
other liability" means a legally enforceable debt or other liability. So,
a loan advanced by a money lender who is doing business of money
lending without licence is not a debt or other liability and provisions
of Section 138 of the Act will not apply to such transaction. In the
light of above, the legal position is only applicable to the case, which
falls under the provision of Bombay Money Lenders Act, 1946. But,
the present case falls under the provision of Bengal Money Lenders
Act, 1940 and those cases' circumstances are totally different.
9. The Bombay High Court in the Tinki Nagpur v. Unknown
observed as under: --
The words "No court" and "in any suit" used in the
Section are wider in scope to embrace any suit or
proceeding initiated by a money lender who is required
to hold and prove valid license for money lending for the
relevant period of the loan transaction or transactions.
The trial Court was, therefore, entitled to insist upon the
complainant for production of valid license for money
lending and also to infer in view of Section 114(g) of the
Evidence Act that the document withheld was
18
unfavourable to the complainant who withheld it. Thus,
the legal position cannot be disputed that Courts are
bound to dismiss the suit by money lender for recovery
of loans when such money lender was found carrying
on business of money lending on the date or dates of the
transaction without having valid money lending license.
10. Similarly, the Bombay High Court in Mrs. Monica Sunit Ujjain
Vs. Sanchu M. Menon and Ors. observed therein
that in cases of money lending business without licence,
proceedings could not be maintainable. Therefore,
proceedings under Section 138 of Negotiable
Instruments Act, 1881 are also not attracted since the
money lending business was without license and the
contract which is forbidden by law is void contract.
11. However, such provisions of the Bombay Money Lenders Act,
1946 is not applicable in the present facts and circumstances of this
case because the present case falls within the jurisdiction of the State
of West Bengal. Therefore, money lending business and proceedings
thereof, if any, comes under the provisions of Bengal Money Lenders
Act, 1940.
19
12. The Negotiable Instruments Act, 1881 was enacted to define
and amend the law relating to Promissory Notes, Bills of Exchange
and Cheques. The Banking, Public Financial Institutions and
Negotiable Instruments Laws (Amendment) Act, 1988 has inserted
new Chapter XVII comprising sections 138 to 142 with effect from
01.04.1989 in the Act. Section 138 of the Act provides the penalties
in case of dishonour of cheques due to insufficiency of funds etc. in
the account of the drawer of the cheque. However, sections 138 to
142 of the Act were found deficient in dealing with dishonour of
cheques. The Negotiable Instruments (Amendment and Miscellaneous
Provisions) Act, 2002 amended sections 138, 141 and 142 and
inserted new sections 143 to 147 in the Act aimed at speedy disposal
of cases relating to dishonour of cheque through their summary trial
as well as making them compoundable.
13. The Hon'ble Supreme Court in the case Electronics Trade &
Technology Development Corporation Ltd., Secunderabad v.
Indian Technologists & Engineers (Electronics) (P) Ltd.13,
observed that the object of bringing section 138 on statute appears to
inculcate the faith in the efficacy of banking operations and
credibility in transacting business on negotiable instruments and
13
(1996) 2 SCC 739
20
section 138 intended to prevent dishonesty on the part of the drawer
of negotiable instrument to draw a cheque without sufficient funds in
his account maintained by him in a book and induce the payee or
holder in due course to act upon it.
14. The Hon'ble Supreme Court again in the case Goa Plast (P)
Ltd. v. Chico Ursula D'Souza14 while dealing with the objects and
ingredients of Sections 138 and 139 of the Act observed as under: --
"The object and the ingredients under the provisions, in
particular, Sections 138 and 139 of the Act cannot be
ignored. Proper and smooth functioning of all business
transactions, particularly, of cheques as instruments,
primarily depends upon the integrity and honesty of the
parties. In our country, in a large number of commercial
transactions, it was noted that the cheques were issued
even merely as a device not only to stall but even to
defraud the creditors. The sanctity and credibility of
issuance of cheques in commercial transactions was
eroded to a large extent. Undoubtedly, dishonour of a
cheque by the bank causes incalculable loss, injury and
14
(2004) 2 SCC 235
21
inconvenience to the payee and the entire credibility of
the business transactions within and outside the
country suffers a serious setback. Parliament, in order
to restore the credibility of cheques as a trustworthy
substitute for cash payment enacted the aforesaid
provisions. The remedy available in a civil court is a
long-drawn matter and an unscrupulous drawer
normally takes various pleas to defeat the genuine claim
of the payee."
15. The Hon'ble Supreme Court in the case Indian Bank
Association v. Union of India (UOI), Writ Petition (Civil) No. 18 of
2013 decided on 21.04.2014 also observed that
"Sections 138 to 142 of the Act were found to be
deficient in dealing with the dishonoured cheques. The
legislature inserted new Sections 143 to 147 by the
Negotiable Instruments (Amendment and Miscellaneous
Provisions) Act, 2002 and earlier to this the Negotiable
Instruments Act, 1881 was amended by the Banking,
Public Financial Institutions and Negotiable Instruments
Laws (Amendment) Act, 1988 whereby a new Chapter
XVII was incorporated for penalties in case of dishonour
of cheques due to insufficiency of funds in the account of
the drawer of the cheque to encourage the culture of use
22
of cheques and enhancing the credibility of the
instrument."
16. The Hon'ble Supreme Court further in the case Kusum Ingots
& Alloys Ltd. v. Pennar Peterson Securities Ltd.15, laid down the
following ingredients for taking cognizance under section 138 of the
Act: --
"(i) A person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain
amount of money to another person from out of that account
for the discharge of any debt or other liability
(ii) That cheque has been presented to the bank within a
period of six months from the date on which it is drawn of
within the period of its validity, whichever is earlier
(iii) That cheque is returned by the bank unpaid, either
because of the amount of money standing to the credit of the
account is insufficient to honour the cheque or that it exceeds
the amount arranged to be paid from that account by an
agreement made with the bank
15
(2000) 2 SCC 745
23
(iv) The payee or the holder in due course of the cheque
makes a demand for the payment of the said amount of
money by giving a notice in writing, to the drawer of the
cheque, within 15 days of the receipt of information by him
from the bank regarding the return of the cheque as unpaid
(v) The drawer of such cheque fails to make payment of the
said amount of money to the payee or the holder in due
course within 15 days of the receipt of the said notice
(vi) The complaint is to be filed within one month from the
date of expiry of the 15 days from the receipt of the notice."
17. In the light of above discussion, it emerges before this Court
that the issue which requires a judicial consideration in the context
of present application and argument advanced by the parties as
under:
(i) Whether a person can be debarred from filing and
prosecuting complaint under section 138 of the Act even if
he is doing business of money lending without holding a
valid licence and whether there is apparent conflict between
provisions of the Bengal Money Lenders Act, 1940 and
section 138 of the Act ?
24
18. Every statute is enacted for specific purpose and intent and
should be read as a whole. The legislature enacts statutes and
legislation and takes appropriate precautions at time of drafting and
enacting different legal provisions but sometimes conflicts appear in
interpretation of different statutory provisions. In this eventuality,
Doctrine of Harmonious Construction needs to be adopted. The legal
provisions contained in one particular statute cannot be read to
defeat legal provisions contained in another statute and both legal
provisions contained in different statute should be given maximum
effect in their operation and applicability.
19. The Bengal Money Lenders Act, 1940 and Chapter XVII of
the Negotiable Instruments Act, 1881 which was incorporated by the
Banking, Public Financial Institutions and Negotiable Instruments
Laws (Amendment) Act, 1988 for providing penalties in case of
dishonour of cheques with an objective to encourage the culture of
use of cheques and enhancing the credibility of the instrument. Both
statutory provisions were enacted with different objectives and intent
and are operational in independent and separate legal spheres.
25
20. There is no apparent conflict between provisions of the
Bengal Money Lenders Act, 1940 which is not apparently bars civil
remedy for a money lender who is not having valid licence or
certificate for doing business of money lending and Chapter XVII of
the Act which provides criminal remedies and penalties in case of
dishonour of a cheque due to reasons as mentioned in section 138 of
the Act.
21. The legal issue that if a complainant who is not having valid
licence or certificate for money lending can institute and prosecute
complaint under Section 138 of the Act came for consideration before
different High Courts besides other related issues.
22. The Hon'ble Delhi High Court in Dhanjit Singh Nanda v.
State, Crl.M.C.209/2009 decided on 09.02.2009 rejected the
argument that the complainant is debarred from recovering loan
amount as he is not a registered money lender. It was observed as
under: --
"The next argument addressed by the petitioner that the
respondent was debarred from recovering the loan
amount being not a registered money lender does not lie
in the mouth of the petitioner for two reasons: The
petitioner took the loan from the respondent voluntarily
and even executed an agreement in this regard whereby
he agreed to repay the same after ninety days with
interest. At the same time, he also issued the cheque in
question for the repayment of the loan but became
dishonest when the cheque was presented for
encashment. The second reason to reject the argument
of the petitioner is that the proceedings under Section
138 of NI Act are not recovery proceeding but are
proceedings to punish a person who after issuing a
cheque fails to honour the same and also commits a
default in paying the said amount on receipt of the
notice."
23. The Hon'ble Delhi High Court in the case Virender Singh v.
Deepak Bhatia, Crl.L.P. 491/2011 decided on 08.04.2011
observed that the instant cases relate to an advance made by the
petitioner to the respondents on the basis of the cheques which
admittedly are negotiable instrument and as such any bar in the
provisions of the Bengal Money Lenders Act, 1940 is not attracted to
a loan given on the basis of a negotiable instrument and/ or request
of the borrower.
24. The Hon'ble Delhi High Court in the case Kajal v. Vikas
Marwah, Crl. A. 870/2013 decided on 27.03.2014 considered
issue whether if the complainant is not holder of money lending
licence can he be debarred from filing complaint under section 138 of
the Act. It was observed as under: --
"In my view, even if the appellant/complainant was
engaged in lending money, that would not debar her
from filing a complaint under Section 138 of the
Negotiable Instruments Act, if a cheque issued to her
towards repayment of the loan advanced by her is
dishonoured by the bank for want of funds and the
drawer of the cheques fails to make payment within the
prescribed time, after receipt of legal notice from the
lender. Section 3 of the Punjab Registration of Money
Lenders' Act, 1938, which applies to Delhi, to the extent
it is relevant provides that notwithstanding anything
contained in any other enactment for the time being in
force, a suit by a money lender for the recovery of a loan
shall, after the commencement of the Act, be dismissed
unless the money lender at the time of institution of the
suit is registered and holds a valid license or holds a
certificate from the Commissioner granted under Section
11 of the Act, specifying the loan in respect of which the
suit is instituted or if he is not already a registered or
licensed money lender, he satisfies the court that he has
applied for such registration or license but the
application is pending. The aforesaid provision does not
debar a money lender from instituting a complaint under
Section 138 of the Negotiable Instruments Act, 1881,
which is a remedy enforceable before a criminal court,
and totally independent of a civil suit. The criminal
liability is incurred only in case a cheque is issued in
discharge of a debt or other liability, the said cheque is
dishonoured for want of funds and the borrower fails to
make payment of the amount of the cheque even after
receipt of a notice from the lender."
25. The complainant in the complaint alleges that amounts were
advanced as financial assistance to the petitioner in pursuant to his
request, the complainant had lent an advance a sum of Rs.
10,00,000/- (Rupees Ten Lakhs) only to the petitioner/accused by
way of short-term unsecured loan for the purpose of business. It was
agreed that the Petitioner/accused shall pay the said loan amount
along with interest @ 14% per annum. The Petitioner had issued a
cheque in discharge of his liability. Accordingly, amount advanced to
the petitioner is covered within the term of 'loan'.
26. The learned counsel for the opposite party argued that the
proceedings should not be quashed at a pre-trial stage without
leading evidence by the parties. With regard to issue that can be
decided without evidence being led to show that the petitioner was a
money lender or he does not have licence or the Bengal Money
Lenders Act, 1940 is barred for initiating the complaint under Section
138 of the N.I. Act. The learned counsel appearing on behalf of the
opposite party cited the judgments Samarendra Nath Das v.
Supriyo Maitra, 2005 SCC OnLine Cal 628 and Jupiter
Brokerage Services Ltd. v. Ektara Exports Pvt. Ltd., 2015 SCC
OnLine Cal 10514 decided by the Hon'ble Calcutta High Court,
Dhanjit Singh Nanda v. State, 2009 SCC OnLine Del 261 decided
by the Hon'ble Delhi High Court, and Ravinder Paul v. Ashwani
Kumar, 2020 SCC OnLine P&H 4606 decided by the Hon'ble
Punjab & Haryana High Court.
27. The learned counsel argued that the provisions of the Bengal
Money Lenders Act, 1940 do not bar for a complaint case filed under
the Negotiable Instruments Act, 1881. To ascertain the view on this
issue, this Court would like to look into the proposition as laid down
by the Hon'ble High Courts in the aforesaid judgements.
28. The Punjab & Haryana High Court in Ravinder Paul v.
Ashwani Kumar, CRA-S-2319-SB-2012 (O&M) decided on
04.02.2020 observed as under: --
"The trial Court had dismissed the complaint mainly for
the reason that the complainant was a money lender,
lending money without licence. The Magistrate had not
gone into the merits of the case as to whether the
necessary ingredients of Section 138 of the Act were
established or not. Therefore, the impugned judgment
dismissing the complaint for the reason of complainant
having been found to be a professional money lender
practicing money lending without licence is not
sustainable".
29. The High Court of Judicature at Calcutta in Samarendra Nath
Das v. Supriyo Maitra, C.R.R. No. 175/05 and application being
C.R.A.N. No. 598/05 decided on 16.12.2005 observed that alleged
violation of provisions of Money Lenders Act does not bar
continuation of proceedings under Section 138 of the Act. It was held
as under: --
"11. The submissions made by Mr. Ukil not at all
applicable in the present matter. Had it been a money
suit instituted by the money lender for the recovery of
the loan advanced by him together with interest and for
accounting all these submissions would have been
relevant. In a criminal proceeding u/s 138 of the NI Act
these are not relevant at all. In the instant matter a
Magistrate is to consider whether the offence as alleged
was committed or not and whether evidence is sufficient
to prove complainant's case. Legality or illegality of the
contract and existence and non-existence of money
lending business by the complainant is not a ground to
throw the complainant's case out of Court. If it was a
money suit for recovery of the money the accused
petitioner would have been definitely in a better position
and was entitled to the advantage of violation of
Sections 23 and 24 of the Contract Act as well as non-
existence of money lending business of the money
lender. The accused petitioner has only remedy in the
trial to rebut the presumption u/s 139 of the NI Act, and
to establish his case by leading evidence when he
would be asked to enter into defence after his
examination u/s 313 of the Code would be over. When
all the prima facie materials of offence u/s 138 of the NI
Act is present sufficient to issue process this, Court
would not interfere into the order of the learned
Magistrate and would not quash the criminal proceeding
or set aside the order of the learned Magistrate. The
accused petitioner has remedy only to lead evidence by
examining witnesses and producing documents to prove
that there was no transaction with complainant or that
he did not issue any cheque in favour of the complainant
and that there was no existing debt or liability at the
time of his entering into defence and leading his
evidence.
12. The point for consideration before the learned
Magistrate would be whether act or omission of the
accused petitioner completed offence u/s 138 of the NI
Act. It would not be a matter for consideration before the
learned Magistrate whether the complainant had money
lending licence or not. This is not a suit or proceeding
under Money Lenders Act and accordingly provisions of
Money Lenders Act are not at all relevant for
consideration in the trial before the learned Magistrate".
30. The High Court of Judicature at Calcutta in Jupiter
Brokerage Services Ltd. v. Ektara Exports Pvt. Ltd., C.R.A. No.
936 of 2013 (Appellate Side) decided on 13.10.2015, considered
defence of the respondents/accused that the transactions in question
were simple lending of money for which the appellant/complainant
had no valid licence and hence the provisions of Section 138 or 139
of the Act are not attracted in the case and this argument was
accepted by the trial court and the trial court dismissed the
appellant/complainant's case on such ground only. It was observed
that money lending without licence is not totally barred or prohibited
by the Bengal Money-Lender's Act, 1940 which is basically a
Regulatory Act and regulates the business of money lending. It was
held as under: --
There cannot be any dispute to the fact that the
presumptions both in Sections 138 and 139 of the N.I.
Act are rebuttable presumptions. In the present case the
only point for rebuttable of such presumptions for the
respondents/accused is that the transactions in
question are illegal transactions as the
appellant/complainant has no money-lending licence.
As held earlier, lending money without having a money-
lending licence itself is not prohibited under the Bengal
Money-Lender's Act, 1940. So, the presumptions in
favour of the appellant/complainant stand unrebutted.
The respondents/accused cannot, therefore, escape
from the liability under Section 138 of the N.I. Act,
especially when there is no denial of the fact that the
respondents/accused issued the cheques in question
which were dishonoured due to insufficient fund in the
account of the respondents/accused.
31. It is acceptable proposition of law that provisions of the
Bengal Money Lenders Act, 1940 does not limit operation of section
138 of the Act and both are independent and mutually exclusive to
each other. If a person advances a loan even without having a valid
money lending licence or certificate, he can institute and prosecute
complaint under section 138 of the Act on basis of cheques and he
has to satisfy only the mandatory requirements of section 138 of the
Act.
32. It is reflecting that the opposite party being complainant filed
complaint under section 138 of the Act against the Petitioner as
detailed herein above primarily on allegations that he had given
money to the Petitioner. The complainant led pre-summoning
evidence and thereafter cognizance for offence punishable under
section 138 of the Act was taken against the petitioner/accused. The
Petitioner was ordered to be summoned for offence under section 138
of the Act. Notice under section 251 Cr. P.C. was given to the
Petitioner to which he pleaded not guilty and claimed trial.
33. The learned counsel for the petitioner placed reliance on
decision delivered by the Bombay High Court was misplaced under
given facts and circumstances of present case. There are no merits in
arguments advanced by the counsel for the petitioner that without
money lending license a complaint cannot be filed under the N.I. Act
and the complaint can be decided without evidence being led to show
that petitioner was a Money Lender. The arguments advanced by the
counsel for the Petitioner on aforesaid issues are without any legal
basis and are legally unsustainable. Therefore, there is insufficient
reason placed before this Court that no proceedings can be initiated
or continued and it would be gross abuse of process of law. The
Criminal Revisional application filed by the petitioner has devoid of
merits.
34. Accordingly, C.R.R. 1897 of 2021 is, thus, dismissed.
Connected applications, if any, are also, thus, disposed of.
35. Case Diary, if any, is to be returned to the learned Counsel
for the State.
36. Interim order, if any, stands vacated.
37. Registry shall send the copy of this judgment to the Learned
Trial Court for information.
38. Urgent photostat certified copy of this judgment, if applied
for, is to be given as expeditiously to the parties on compliance of all
legal formalities.
(Ajay Kumar Gupta, J)
P. Adak (P.A.)
