Saturday, October 8, 2016

Money lender not having Money lending licence can't file case under Sec.138 of NI Act

Whether money lender not having valid money lending license can file dishonour of cheque case - Therefore, the claim by money lender (complainant) against borrower (accused) without a valid and operative money lending license covering period of transaction as unenforceable claim under section 138 of the Negotiable Instruments Act.

Complainant (a Commission Agent) advancing agricultural loan to a farmer (accused) who issued a cheque in repayment -Complainant also lending loan to public at large - Complainant did not hold Money lending licence - Complainant was legally debarred to recover the alleged loan - Dishonour of cheque - Accused not liable under Section 138 of NI Act.

A farmer (accused) took loan of Rs.1.50 lakhs from complainant (Commission Agent) on promise to sell his produce to complaint - Accused issued a cheque to re-pay the loan - Dishonour of Cheque - Accused not liable - Held, it is very common knowledge that commission agents used to obtain such blank/undated cheques from the Farmers as a security in good faith, not in lieu of any legal liability, to which, the court can take judicial notice of it.

NI Act, Ss.118, 138 and Evidence Act, S.34 - Punjab Registration of Money-lender's Act, 1938 (also Applicable to Haryana), Sections 4 and 3 - Complainant (a Commission Agent) advancing agricultural loan to a farmer (accused) who issued a cheque in repayment - Complainant also lending loan to public at large - Complainant did not hold Money lending licence - Complainant was legally debarred to recover the alleged loan - Dishonour of cheque - Accused not liable under Section 138 of NI Act.

A farmer (accused) took loan of Rs.1.50 lakhs from complainant (Commission Agent) on promise to sell his produce to complaint - Accused issued a cheque to re-pay the loan - Dishonour of Cheque - Accused not liable - Held, it is very common knowledge that commission agents used to obtain such blank/undated cheques from the Farmers as a security in good faith, not in lieu of any legal liability, to which, the court can take judicial notice of it.

Dishonour of Cheque of Rs.1.50 lakhs - Complaint under Section 138 of N.I. Act - According to complainant he was running a commission agents shop - Accused who was a farmer took advance of 1.50 lakhs from time to time on promise to sell agricultural produce at his shop - Accused stopped selling the produce at complainant shop and issued a cheque of L 1.50 lakhs in repayment of outstanding amount as per Bahi entries - Dishonour of Cheque - A complaint under Section 138 of N.I. Act filed complaint - Complaint rightly dismissed Court below - Held:

(i) It is a matter of very common knowledge that commission agents used to obtain such blank/undated cheques from the Farmers as a security in good faith, not in lieu of any legal liability, to which, the court can take judicial notice of it.

(ii) Pronote, bonds and Bill of exchange etc., which can legally be enforceable, as contemplated by the NI Act, not alone sufficient to charge any person with liability and such cheques were issued as a security of the loan amount, then, the complainant was debarred from filing the complaint under Section 138 of the NI Act.

(iii) Bahi entries are not negotiable instruments, which can be enforced.

Bahi entries - Evidentiary value - Complainant advancing loan and making Bahi entries - Held:

(i) Bahi entries are not the instruments of advancement of loan like pronote, bonds or Bill of exchange etc., which can legally be enforced, as recognised in the NI Act.

(ii) Bahi entries cannot and indeed should not be taken to be account book regularly kept in the course of business, as provided under Section 34 of The Indian Evidence Act.

(iii) An entry in the Bahi Khata merely is an admission by its maker in his own favour and it is only admissible in evidence if it is accepted by the opposite side (loanee) and not otherwise.

(iv) Such entries shall alone be not sufficient to charge any person with liability. 1952 AIR (Assam) 92, 1958 AIR (Orissa) 4, AIR 1967 Supreme Court 1058, relied.

(Paras 11, 12, 13, 14, 15, 16 and 18) (DOJ: 13-11-2014) (Narsi Dass Vs. Surender) (Mehinder Singh Sullar, J) (2015 (1) CivCC 489 : 2015 (2) BC 249 : 2015 (1) RCR (Civil) 108)

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