While allowing the revision petitions filed against the orders of a Trial Court dismissing cheque dishonor complaints, the Delhi High Court held that a person cannot be debarred from filing and prosecuting a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), if they were conducting a money lending business without a valid license.

As per the brief facts, the petitioner, as the complainant, had filed several criminal complaints against different individuals under Section 138 of the NI Act. The Trial court had dismissed these complaints primarily on the grounds that the petitioner had violated the provisions of the Punjab Registration of Money Lenders Act, 1938, as he was involved in the money lending business without a valid license.

The counsel for the petitioner argued that the Trial court should not have dismissed the complaints at a pre-trial stage without allowing the petitioner to present evidence.

After considering the submission, a Single Judge Bench of Justice Sudhir Kumar Jain observed that “It is acceptable proposition of law that section 3 of Punjab Registration of Money Lenders Act, 1938 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”.

The Bench stated that both statutory provisions were enacted with different objectives and intent and were operational in independent and separate legal spheres. There was no apparent conflict between Section 3 of the Punjab Registration of Money Lenders Act, which apparently bars civil remedy for a money lender who is not having a valid license or certificate for doing business of money lending, and Chapter XVII of the NI Act, which provides criminal remedies and penalties in case of the dishonor of a cheque due to reasons as mentioned in Section 138 of the Act.

Advocate Bharat Gupta appeared for the Petitioner, whereas Advocate Utkarsh appeared for the Respondent.

The Bench observed that the Trial Court, after taking cognizance under Section 138 of the NI Act, abruptly examined the petitioner under Section 165 of the Indian Evidence Act, 1872. During this examination, the petitioner stated that he had filed around 15-20 complaints against 12 persons. He also mentioned that he had given money to second respondent for their chit fund activities and had given money to other respondents due to friendly relations.

However, the Bench pointed that the Trial court chose to issue a show-cause notice to the petitioner during the trial, which was not a standard practice in summon trials according to Chapter XX of the Code of Criminal Procedure, 1973.

The Bench clarified that the trial court assumed, without any legal or factual basis, that the petitioner was a money lender and that the loans advanced by him to the respondents fell within the definition of a loan as per the Punjab Registration of Money Lenders Act.

The Bench therefore highlighted that the impugned orders were the result of a complete lack of application of judicial mind by the Trial court and a total disregard for the procedure laid down in Chapter XX of the Code of Criminal Procedure.

The Bench accordingly pointed that the Trial court should not have dismissed the complaints filed by the petitioners under Section 138 of the NI Act, based solely on the statements recorded under Section 165 of the Indian Evidence Act, and the responses to the show-cause notice.

The Bench also observed that the court of a magistrate does not have the power to discharge the accused upon his appearance in court in a summons trial case, including complaints under Section 138, once cognizance has already been taken and the process is ordered to be issued under section 204 CrPC.

Regarding the maintainability of the revision petition, the High Court stated that the Trial court had not dismissed the complaints and acquitted the respondent after the conclusion of the trial and based on evidence to be presented by the contesting parties. Instead, it had done so on a wrong assumption of legal principles and without resorting to settled legal principles, leading to a miscarriage of justice for the petitioner.

Hence, the present revision petitions were maintainable without the need to file appeals, added the High Court while setting aside the orders of the Trial court.

Cause Title: Hansraj Bansal v. State and Another [Neutral Citation: 2023: DHC: 6680]

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Delhi High CourtJustice Sudhir Kumar Jain

Pankaj Bajpai