legally enforceable debt

legally enforceable debt

accused did not dispute the fact that he had issued the 3 cheque under his signature and had received notice (Exh.22) from the complainant; but outrightly denied the complaint and any liability on the ground that the complainant was doing business of money lending without any requisite licence for money lending and that the complainant has failed to prove legallyenforceable or recoverable debt or legal liability as against accused, in view of the provisions of the Bombay Money Lenders Act, 1946. The accused opposed the complaint stoutly on the ground that under section 139 of the N.I. Act, there can not be presumption of pre-existing liability and complainant had failed to prove that the cheque was issued towards legally enforceable debt or liability. 4. The trial Court, after considering the evidence led and submissions at the Bar, recorded finding of "not guilty" and acquitted the accused of the offence punishable under section 138 of the N.I. Act. 5. Learned Advocate for the appellant, in support of the appeal, submitted that the accused ought to have been convicted by the trial Court for offence punishable under section 138 of the N.I. Act, since the accused

appellant, mere non-production of money lending license in the trial Court, was cited as the prime reason for acquitting the accused and, therefore, judgment and 4 order impugned, be set aside. 6. None appeared for the respondent at the time of hearing of this Appeal. 7. In Krishna Janardhan Bhat vs. Dattatraya G. Hegde : AIR 2008 SC 1325, the Apex Court in Para No.20 observed that sec.138 of the N.I. Act has three ingredients, viz: (I) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debtor other liability which presupposes legally enforceable debt ; and, (iii) that the cheque so issued had been returned due to insufficiency of funds. It is further observed in Para No. 21 while considering presumption u/s 139 of the N.I. Act; "Existence of legally recoverable debt is not a matter of presumption in favour of the holder of the cheque that the same has been issued for discharge of any debt or other liability" In order to prove offence punishable under sec. 138 of the said Act, five ingredients are required

cheque within 30 days of the receipt of such notice." Under section 139 of the N.I. Act, there is presumption in favour of holder that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole in part of any debt or other liability. The explanation to section 138 makes it clear that "debt or other liability" means legally enforceabledebt or other liability. Under section 118 of the N.I. Act it can legally be inferred that the cheque was made or drawn for 6 consideration on the date which the cheque bears. 8. Thus, bearing in mind the relevant provisions of the N.I. Act, it must be emphasized that only legally enforceabledebt or liability can be enforced in the proceedings under section 138 of the said Act, because the explanation to the penal provision is abundantly clear that the dishonoured cheque must have been received by the complainant against a legally enforceable debt or liability. 9. The complainant in the present case, is a money lender who had advanced loan to the accused on the basis of the two promissory notes dated

found with the trial Court as it was duty bound to dismiss the complaint by the complainant a money lender who was engaged in business of money lending without a valid money lending license at the time of transaction in view of clear provisions of Sec. 10 of the Bombay Lenders Act, 1946 as the learned Court could not have assisted the complainant to facilitate or further the illegal claim or claim prohibited by law in the complaint. Since explanation to Sec. 138 of the N.I. Act clearly stipulated that the debt or liability means legally enforceable debt or other liability the claim by money lender against her borrower without production of valid and operative money lending license covering period of transaction was unenforceable claim under section 138 of the N.I. Act was bound to be dismissed. The complainant money-lender despite availing of sufficient opportunity in the trial Court could not produce valid and operative money lending license at the time of transaction of loan, hence dismissal of complaint can not be faulted as the complainant failed to establish legally enforceable debt or liability of the accused. Sec. 5 of the Bombay Money Lenders Act prohibits business