K.C. Bhanu, J.
1. The de facto complainant in C.C. No. 546/1998 on the file of XXIII Metropolitan Magistrate, Hyderabad, filed this appeal, aggrieved by the judgment, dated 10.11.1999, of acquittal of 1st respondent-accused.
2. The appellant filed a private complaint under Sections 138, 141 and 142 of the Negotiable Instruments Act (for short, 'the Act') alleging that he got acquaintance with the accused through Mr. Satish Kumar. The accused approached him for a loan of Rs. 1,00,000/- for his business needs with a promise to repay the amount on demand within six months. Accordingly, he paid Rs. 1 lakh on 12.1.1997 with interest at 18% per annum. The accused duly executed a promissory note and issued a cheque bearing No. 204675, dated 25.9.1997 drawn on State Bank of India, Yellareddyguda Branch, Hyderabad, for Rs. 1,00,000/-. When the appellant presented the cheque in the bank, it was returned unpaid with an endorsement 'funds insufficient'. Therefore, he got issued a legal notice, dated 25.10.1997. Though the accused received it he did not pay the amount nor give any reply. Therefore, the complainant filed the complaint. On behalf of the complainant, P.Ws. 1 and 2 were examined and Exs.P1 to P7 were marked. The accused examined D.W. 1 besides examining himself as D.W. 2. The trial Court after hearing both sides and considering the evidence on record came to the conclusion that the complainant did not possess money-lending business and therefore the amount lent by him to the accused was not a legally recoverable debt. The trial Court also held that the promissory notes and cheques, for the dishonour of which two more complaints were filed against the accused, and the promissory note and the cheque in this case were all written by one and the same person and the attesting witnesses in all the three cases were also one and the same, and thus blank cheques and the promissory notes were issued at one time. The trial Court inter alia on this ground acquitted the accused by its judgment, dated 10.11.1999, challenging the legality and correctness whereof the complainant filed the present appeal.
3. Learned counsel for the appellant contended that the accused admitted that he had issued the cheque in question and, therefore, the burden is on him to show that it was not issued for any legally enforceable debt or liability, that the appellant lent the money through Satish Kumar, that the appellant is not doing money lending business and so the Hyderabad Money Lending Act has no application to him, and that D.W. 1 did not say that the cheque and the promissory note were not given to the appellant, and so the trial Court committed a serious illegality in acquitting the accused. On the other hand, learned counsel for the accused contended that the appellant is the employee of Surendra with whom the accused was having 'Badla' transactions in which connection the accused had to pay certain amount to Surendra, that in order to discharge that debt, the accused gave blank promissory notes and cheques to Surendra as security, that the appellant making use of those promissory notes and cheques filed the present complaint though there was no legally enforceable debt or liability insofar as the accused and the appellant is concerned, that the attestors of all the promissory notes were the same, that there is no evidence on record to show that the appellant was capable of lending such huge amount to the accused, and that the alleged transaction amounts to money lending within the meaning of Hyderabad Money Lending Act and the appellant did not possess money lending license, and so the appeal should be dismissed.
4. The complaint is filed under Section 138 of the Act. To constitute an offence incorporated in the main enacting clause of that Section, three conditions have to be satisfied. They are- (1) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier, (2) the payee or the holder in due course of the cheque makes a demand for payment of the amount by giving a notice in writing to the drawer within 15 days from receiving information from the bank regarding the dishonour of the cheque, and (3) the drawer of the cheque fails to make the payment within 15 days from the date of receipt of notice. The explanation of the Section says that the expression 'debt or other liability' occurring in the main Section means a 'legally enforceable debt or other liability'.
5. Once an accused admits his signature on the dishonoured cheque, the presumptions under Section 118 and 139 of the Act can be drawn. Section 139 of the Act incorporates a rule of presumption to the effect that until the contrary is proved the holder of the cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or liability. The relevant portion of the Judgment of the Apex Court in Hiten P. Dalal v. Bratindranath Banerjee, : 2001CriLJ4647 is reproduced below:
'Section 118 provides, inter alia that until the contrary is proved it shall be presumed that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.
The effect of the presumptions under Section 139 is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability.
It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused.'
6. From the above decision of the Apex Court it is clear that the presumptions under Sections 118 and 139 of the Act that the accused issued the cheque and the negotiable instrument for consideration and in the discharge of a legally recoverable debt can be drawn. It is on the accused to rebut these presumptions. The accused examined himself as D.W. 2 and another witness as D.W. 1 in support of his case that the cheque was not issued in the discharge of a legally enforceable debt.
7. D.W. 1 stated that he knew the accused being residents of the same locality. He also knew Surender. He further stated that there were 'Badla' transactions between the accused and Surendra and in connection with those transactions, the accused was to pay about Rs. 7.5 lakhs to Surendra and therefore the accused gave blank cheques and pronotes to Surendra at the house of Satish. But this witness did not say the year and month in which the accused gave the blank cheques and pronotes to Surendra. He also did not give such cheque numbers. He admitted in his cross-examination that he did not know whether there were any transactions between the appellant and the accused. Therefore, his evidence does not lead to a conclusion that the cheque and the promissory note in question were one of the blank cheques and promissory notes the accused allegedly gave Surendra. Satish was the best person to speak about the accused giving blank promissory notes and cheques because it was at his house the accused allegedly gave these cheques and promissory notes to Surendra. But the accused did not choose to examine him. For the above reasons, the evidence of D.W. 1 cannot be relied upon.
8. D.W. 2 is the accused himself. He stated that he obtained a loan of Rs. 8 lakhs from Surendra by pledging shares along with four blank cheques and eight promissory notes towards security. He further stated that Surendra disposed of the shares of the accused for Rs. 6 lakhs and for the balance of Rs. 2 lakhs he filed a suit against him. The present complaint was filed using the blank cheques he gave to Surendra. He also stated that after receipt of notice he offered Rs. 1.50 lakhs to Surendra, but he refused to receive it. He admitted that the cheque and the promissory note in question bear his signature. He also admits to have received Ex.P5-notice issued by the appellant and that he did not give any reply thereto. The wife of the accused signed on Ex.P1-pronote as a surety.
9. According to the accused, he gave blank pronotes and cheques to Surendra towards security and Surendra filed a suit for the balance of Rs. 2 lakhs. The accused did not state the amount for which Surendra filed the suit. This is rather important because according to the accused when he offered to pay Rs. 1.5 lakhs Surendra refused to receive it and he demanded Rs. 4 lakhs excluding interest. When the accused was to pay only Rs. 2 lakhs according to him, why Surendra would demand Rs. 4 lakhs is incomprehensible. Admittedly Surendra filed the suit. He must have filed the suit on the strength of the promissory note the accused gave him. The accused did not specifically state that Surendra filed only one suit against one promissory note and the balance pronotes were with Surendra. Furthermore, when, according to the accused, the accused owed money to Surendra and not to the appellant, why Surendra would handover the blank cheques and promissory notes to the appellant instead of using them for himself is also not understandable. Surendra would not invite the risk of not being paid the amount by the appellant after the latter realized the cheque in question, even assuming that Surendra made use of the cheque and pronote in question through the appellant with a view to recover the amount the accused owed to him. When according to the accused the cheques and the pronotes were blank, Surendra would have filled up the blanks in his name or in the name of his family members instead of taking that risk.
10. The trial Court observed that the promissory notes and the cheques in respect of which two more complaints were filed against the accused was scribed by one and the same person and the attesting witnesses were also the same. The trial Court further observed that since the numbers of the three cheques were 204675, 204677 and 204678 and were dated 25.9.1997, 1.2.1998 and 20.1.1998 respectively and so obviously all the cheques were of the same cheque book, and that a cheque book would not last for four months as the accused was doing shares business. The trial Court further held that the appellant failed to prove that he had income sufficient to lend a huge amount of Rs. 1 lakh to the accused. It maybe that all the three cheques were of the same cheque book and one cheque book would not be enough for a business person like the accused for four months and that those cheques and the promissory notes were scribed and attested by the same persons, but the appellant was not at all cross-examined on these aspects. There is also no evidence on record to come to such conclusions. P.W. 1 stated that he is an employee and was drawing salary of Rs. 3,500/- per month by the date of advancing loan and that he gave the amount of Rs. 1 lakh to the accused out of his salary savings and agricultural income. Though he stated that he was not an income-tax assess, it was not suggested to him that he had no capacity to lend such huge amount. In the absence of any such evidence, the observations of the trial Court are not correct.
11. The other contention of the learned counsel for the accused is that inasmuch as P.W. 1 did not possess money-lending license, the alleged debt is not legally enforceable. Admittedly P.W. 1 was not a moneylender and he did not have money-lending license also. Learned counsel for the accused relied upon a Division Bench decision in Bijja Kotaiah v. Parcha Lakshminarasimha Rao, 1961 (2) An.WR 122 wherein it is held as under:
'It is seen that this is a stringent provision against moneylenders carrying on business without having the requisite license. The section contains an absolute prohibition against moneylenders carrying on the business without license as required by sub-section (2) of section 3 and the penalty for violation of this provision is rigorous imprisonment for a term which may extend to six months or fine or both. It is worthy of note that section 3 has cast a duty on the moneylenders to get their names registered. The object of the statue is to prevent moneylenders conducting business without their names being registered and without possessing the requisite license. Evidently, this was conceived in the interests of borrowers whose helpless position will otherwise be taken advantage of by the professional moneylenders and to have check and control over them. So, a contract entered into by a moneylender, who has infringed section 3(5)(a), is an illegal one and cannot be enforced.'
12. In view of the above decision it is clear that a promissory note does not give a cause of action, which can be enforced in a Court of law if it is obtained by a moneylender without license to carry on money-lending business. There is no dispute about this proposition of law. But the question is whether this decision is applicable to the present case.
13. Learned counsel for the appellant relied upon a decision of a Division Bench of this Court in Komravelli Varalaxmi v. Syed Kasim Hussain, 1962(2) An. WR 137 in which it has been held that four isolated transactions of money lending does not attract the definition of money-lender within the meaning of the Hyderabad Money Lenders Act. The Division Bench has further held that the definition of 'money-lender' envisages not mere money lending on some occasions but there must be a certain degree of system and continuity about the transactions, and only those classes of persons whose regular business is to advance money and not those who advance moneys casually. In this decision, the observations made in Munagala Yadagiri v. Pittala Veeraiah, (1958) I An.WR 413 have been quoted which are as follows:
'Under this Act, a professional money-lender, who has not obtained a license, cannot maintain a suit in a civil Court for recovery of the amount due to him. The Court shall dismiss his suit. But a person who seeks to non-suit the plaintiff should necessarily allege and establish that the plaintiff is a professional money-lender. Indeed sub-section (2) of section 9, in clear terms, says that if it is proved that the plaintiff is a money-lender as defined in sub-section (7) of section 2 but does not hold a license, the Court shall dismiss his suit. Obviously, the plaintiff cannot prove the negative viz., that he is not a professional moneylender. It is for the defendant to allege and prove that the plaintiff is a professional money-lender.'
14. In view of the above decisions, it is clear that it is not enough merely to show that a person has lent money at remunerative rate of interest, but he has continued the transactions and only such person whose regular business is to advance moneys would come within the definition of 'money-lender', and the person who advances moneys casually does not fall within this definition, and the burden to prove that a person is a moneylender within this definition is on the person who asserts it.
15. In the present case, it is not even the case of the accused that the appellant is a moneylender or that he is doing money-lending business or that he is continuing money-lending transaction. It is not suggested to P.W. 1 that he is doing money-lending business. In the absence of such evidence, it cannot be said that the appellant is a moneylender within the meaning of Section 2(7) of the Hyderabad Money-lenders Act. On the basis of an admission by the appellant that he lent money on interest to his friends who were in need of money, the trial Court came to the conclusion that the appellant was lending money to some other persons also and since the appellant did not possess license, the debt in question was not legally recoverable. But, this finding cannot hold good in view of the above decision of the Division Bench of this Court that the definition of 'money-lender' envisages only those persons whose regular business is to advance moneys and not those who advance moneys casually. There is no evidence on record to show that the regular business of P.W. 1 is to advance moneys. He is an employee. His main source of income is his salary and not the interest amount he earns on moneys he advances to his friends who are in need of money. It is the case of P.W. 1 that he lent the amount to the accused through his friend Satish Kumar. It can therefore be said that he lent the amount to the accused only through his friend. So in any view of the matter it cannot be said that the appellant is a moneylender. The appreciation of the evidence as done by the trial Court is not proper. Therefore, this Court has to interfere with the impugned order, as the offence under Section 138 of the Act is established beyond all reasonable doubt.
16. In the result, the accused is found guilty of the offence under Section 138 of the Act and accordingly is convicted under Section 138 of the Act. With regard to the sentence, learned counsel for the accused submitted that the case was instituted about six years back and that the present financial capacity of the accused is not good and prays to take a lenient view by imposing fine. Having regard to the facts and circumstances of the case and considering the above submissions, this Court feels that imposition of fine would meet the ends of justice. The accused is sentenced to pay a fine of Rs. 5,000/- (Rupees Five Thousand Only) and in default of payment of fine to suffer simple imprisonment for six months. The appeal is thus allowed.