Virender Singh v. Deepak Bhatia

1. Leave granted.

2. The Leave Petitions be registered as Criminal Appeals No. I z

3. These Appeals arise out of 23 separate judgments of even date whereby 23 complaint cases under Section 138 of the Negotiable Instruments Act, 1881(the Act) were dismissed by the learned Metropolitan Magistrate(MM) primarily on the ground that the Petitioner was in the CrI/L.P. Nos.491-513/20II 2013:DHC:8427

4. business ofadvancing loan; he did not possess any money lending licence and thus the complaint was barred under Section 3 of the Punjab Registration of Money-lender's Act, 1938 (theAct of 1938). The learned MM opined that although the cheques were issued in discharge of liability or debt, yet in view of the provisions of the Act of 1938, the debts were legally not recoverable. Thus, the learned M.M. dismissed the complaints and acquitted the Respondent. In the 23 complaint cases, various cheques have been issued which are extracted hereunder: CrI.L.P. No. Cheque No. Date of Cheque Amount(in ?) 491/2011 000048 10.12.2008 14.12.2008 01.09.2008 10,000/- 1,00,000/- 42,000/- 492/2011 000001 09.08.2008 08.09.2008 10.09.2008 30,000/- 18,000/- 18,000/- 493/2011 002423 24.09.2008 24.09.2008 26.11.2008 44,000/- 24,000/- 6,667/- 494/2011 000032 14.11.2008 26.12.2008 7,500/- 10,000/- 495/2011 121334 06.01.2009 10,000/- CrI.L.P. Nos.491-513/2011 Page lOoflS 121335 10.01.2009 10,000/- 121336 14.01.2009 10,000/- 121340 02.01.2009 1,00,000/- 207659 05.10.2008 26,700/- 496/2011 000039 08.11.2008 1,00,000/- 000041 02.12.2008 10,000/- 000049 18.10.2008 10,000/- 497/2011 000033 21.11.2008 7,500/- 000034 28.11.2008 7,500/- 000035 11.11.2008 7,500/- 000036 26.11.2008 7,500/- 498/2011 002419 16.09.2008 12,000/- 499/2011 000044 21.11.2008 1,00,000/- 000045 28.11.2008 1,00,000/- 000046 07.12.2008 1,00,000/- 500/2011 007583 25.09.2008 24,000/- 007584 28.09.2008 48,000/- 007585 27.09.2008 30,000/- 501/2011 002412 04.09.2008 40,000/- 002413 06.09.2008 40,000/- 002411 05.09.2008 40,000/- 502/2011 000007 12.09.2008 48,000/- 000008 13.09.2008 12,000/- 000009 17.09.2008 12,000/- Crl. L.P.Nos.491-513/2011 Page 11oflS 503/2011 207697 15.12.2008 10,000/- 207698 25.12.2008 10,000/- 007581 26.11.2008 36,000/- 504/2011 000004 09.09.2008 48,000/- 000004 10.09.2008 48,000/- 000004 11.09.2008 36,000/- 505/2011 000025 03.10.2008 7,500/- 000042 07.11.2008 1,00,000/- 000043 14.11.2008 1,00,000/- 506/2011 002424 25.09.2008 40,000/- 207677 24.10.2008 16,500/- 207696 28.12.2008 10,000/- 507/2011 000018 28.10.2008 7,500/- 000026 11.10.2008 7,500/- 000027 20.10.2008 7,500/- 000037 20.11.2008 7,500/- 508/2011 000010 18.09.2008 18,000/- 000012 25.10.2008 11,000/- 000014 26.10.2008 14,000/- 509/2011 002418 15.09.2008 12,000/- 002422 23.09.2008 40,000/- 002420 19.09.2008 24,000/- 510/2011 007591 20.09.2008 10,000/- 007593 03.10.2008 40,000/- 007594 02.10.2008 40,500/- CrI.L.P. Nos.491-313/2011 I'age 12 of 15 511/2011 007586 28.09.2008 30,000/- 007587 09.09.2008 42,000/- 007588 01.10.2008 30,000/- 512/2011 000019 30.10.2008 30,000/- 000021 03.11.2008 16,500/- 000023 08.10.2008 1,00,000/- 513/2011 007595 01.10.2008 40,000/- 216765 04.10.2008 21,000/- 216776 11.10.2008 10,500/- 008778 26.09.2008 24,000/-

5. To analyse whether the complaints under Section 138 were barred under the provisions of the Act, it will be apposite to extract the provisions of Section 3 ofthe Act of 1938, which reads as under: "3. Suits and applications by money-lenders barred, unless money-lender is registered and licensed. Nohvithstanding anything contained in any other enactment for the time being inforce, a suit by a money-lenderfor the recoveiy ofa loan, or an application by a money-lenderfor the execution ofa decree relating to a loan, shall after the commencement ofthis act, be dismissed, unless the money-lender- (a) at the time ofthe institution ofthe suit or presentation of the applicationfor execution; or (b) at the time of decreeing the suit or deciding the applicationfor execution-

(i) is registered; and

Crl. L.P. Nos.49l-;il3/201l (a) holds a valid licence, in suchform and manner as may be prescribed; or (Hi) holds a certificate from a Commissioner granted under section 11, specifying the loan in respect ofwhich the suit is instituted, or the decree in respect of which the application for execution ispresented; or

(iv) if he is not a registered and licensed money-lender, satisfies the Court that he has applied to the Collector to be registered and licensed and that such application is pending; provided that in such a case, the suit or application shall not be finally disposed of until the application of the money-lenderfor registration and grant of license pending before the Collector isfinally disposed of "

6. Thus, Section 3 of the Act of 1938 starts with a non-obstante clause and makes the filing of any Suit or any Application for recovery of loan or execution of a decree relating to a loan by a money lender to be not maintainable unless the money lender is registered under the Act and possessed a licence for the same.

7. The loan as defined in Section 2(8) of the Act of 1938 specifically excludes an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note. The instant cases relate to an advance made by the Petitioner to the Respondent on the basis of the cheque which admittedly is a negotiable instrument. Thus, the bar of Section 3 of the Act of 1938 is not attracted to a loan given on the basis of a negotiable instrument, like a cheque. I am supported in this view by a judgment of the Supreme Court in Gajanan & Ors. v. Seth Brindaban, 1971(1) SCR 657. Thus, the learned MM fell into error in dismissing the complaints and acquitting the Crl. L.P. Nos.491-513/2011 Page HoflS Respondent solely on the ground that the complaint was barred under the provisions ofthe Act of 1938.

8. The impugned orders, therefore, cannot be sustained; the same are accordingly set aside.

9. The cases are remanded back to the Court of MM concerned for its decision in accordance with law.

10. Parties are directed to appear before the learned MM concerned on 30.04.2013.

11. Trial Court record be returned immediately.

12. A copy of the order be transmitted to the Trial Court.