Thane: The Judicial Magistrate First Class (JMFC) court , Bandra has acquitted a 44-year-old man of the charges of Negotiable Instruments Act,1881, after the defence was successfully proved that the occurred transactions was an illegal money lending activity.
The court held that for proving the guilt of the accused under section 138 of the Negotiable Instrument Act, first of all the complainant must prove of legal liability or debt, issuing of cheques in discharge of a legal debt or legally enforceable liability.
Rajkumar Krishnani was charged under Section 138 of the Negotiable Instruments Act, 1881, in a case filed against him by Sarika Bedi. As per the order copy, the loan was a friendly loan of Rs 20 lakhs.
Sarika had accused Krishnani, of dishonoring two cheques totaling Rs 20 lakhs. Bedi claimed she had lent Krishnani Rs 20 lakhs in January 2017, with an agreement for repayment at an interest rate of 18 per cent per annum. The loan was disbursed through two cheques: Rs 5 lakhs on March 6, 2017, and Rs 15 lakhs on April 10, 2017.
Krishnani issued two cheques, one for Rs 5 lakhs and another for Rs 15 lakhs, both dated January 14, 2019, for repayment. These cheques were dishonored on January 15, 2019, due to "Insufficient Funds". Bedi then issued a demand notice on January 28, 2019, but Krishnani failed to make the payment within the stipulated 15 days.
Krishnani, in his defense, denied the liability, the money lending transaction, and claimed the cheques were issued as security.
The court, presided over by M.P. Saraf, observed that the transaction, which involved advancing a loan at an 18% interest rate, falls under the definition of "business of money lending" as per Section 2(3) of The Maharashtra Money Lending (Regulation) Act, 2014.
The court noted that the complainant did not possess a valid money lending license, making the transaction illegal and unenforceable under Section 13 of the said Act.
Advocate Adnan Mookhtiar, counsel for the accused, “Money lending without a license is illegal. One requires a license as per Maharashtra Money-Lending Act to give a loan to any person. 95% of cheque bounce cases lead to conviction of the Accused. However, in this case we managed to secure acquittal for the Accused due to effective cross examination which led the Court to come to a just and true conclusion.”
While acknowledging the presumption under Section 139 of the Negotiable Instruments Act regarding the issuance of a cheque in discharge of a debt or liability, the court emphasized that the initial burden remains on the complainant to prove the existence of a legal debt or legally enforceable liability. The judgment stated that an illegal money lending transaction does not confer the debt the status of a legal debt within the ambit of Section 138 of the Negotiable Instruments Act.
The court found that the accused successfully rebutted the presumption by raising doubts about the legality of the transaction, citing instances of the complainant allegedly lending money to several other individuals on interest, suggesting involvement in illegal money lending activities.
Ultimately, the court concluded that while the dishonor of the cheques and the receipt of the demand notice were proven, the foundational requirement of a "legal debt or legally enforceable liability" was not met due to the illegal nature of the money lending transaction.
