138 sec of N.i act
koustubh bhide
(Querist) 19 November 2014
This query is : Resolved
If a person has advance a loan of Rs. 1 lacs by cash againstt promisorry note without interest, to repay the said amount cheque is issued which is dishonoured. Complaint is filed under sec 138 of NI act. Complainant is not having money lenyding licence. Whether the transaction is hit by provisions of bombay money lenders act?
T. Kalaiselvan, Advocate
(Expert) 19 November 2014
This may not be covered under the said act.As per section 2(9)(f2) of the said act :an advance made bonafide by any person carrying on any business, not having for its primary object the lending of money if such advance is made in the regular course of his business will not included as loan for the purpose of money lender definition under this act.
Dr J C Vashista
(Expert) 20 November 2014
Although it is an academic query yet the transaction attracts the provisions of Section 138 NI Act. The complainant has to prove that the cheque was not for security purpose (as observed by me).
However, single transaction of advancing loan, without charging any interest, on a promissory note as well as cheque, do not attract the provisions of Money Landing Act.
Devajyoti Barman
(Expert) 20 November 2014
Yes, Money lending Act is not attracted here.
ajay sethi
(Expert) 20 November 2014
it does not attract provisions of money lending act
Rajendra K Goyal
(Expert) 20 November 2014
Money lending act not attracted. Agree with the expert.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 20 November 2014
Law for cheque bounce cases has been extensively developed and it does not work on text book interpretation.
First of all it can not be treated as real since the complainant has to give history otherwise why such huge money without interest was given.
Again IT records has to be shown if not it will be treated as black money.
See what HIGH COURT in such cases has observed.
Now turning back to the facts of the present case, assuming that the presumption under section 139 of the
said Act regarding existence of debt or liability is not rebutted, in order to attract section 138, the debt or
liability has to be a "legally recoverable" debt or liability. As held by the Apex Court in the case of Krishna
Bhat (supra) there is no presumption under section 139 of the said Act that the debt is a legally recoverable debt. In the case of Goa Plast (P) Ltd. (14)
Vs. Chico Ursula D'Souza the Apex Court reiterated that a debt or liability subject matter of section 138 means a legally enforceable debt or liability.
13. In the present case, there is a categorical admission that the amount allegedly advanced by the applicant
was entirely a cash amount and that the amount was "unaccounted".
By no stretch of imagination it can be stated that liability to repay unaccounted cash amount is a legally enforceable liability within the meaning of explanation to section 138 of the said Act.
The alleged debt cannot be said to be a legally recoverable debt.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 20 November 2014
And the main query is whether it will attract MONEY LENDING ACT.
Yes it will.
If the accused makes a complaint than it has to be registered first and only after detailed conducting the case the concerned authority will give verdict not before that.
V R SHROFF
(Expert) 20 November 2014
stray cases of Hand Loans cannot be considered Money Lending business.
It is desirable to pay cash above 20k by cheque. I Tax act is very clear. Pro note is without witness and can be challenge.
