Money lending
pashi
(Querist) 05 August 2013
This query is : Resolved
hello,
an un luscenced money lender can sue the accused for recovery of money by filing petition u/s 138 of n.i act ?
Advocate Bhartesh goyal
(Expert) 06 August 2013
No,a money lender who has no money lending license neither can sue for recovery of lending money nor can initiate proceedings u/sec 138 of N.I.Act.Lending money without license is not legal debt.
Dr J C Vashista
(Expert) 06 August 2013
Licence to lend money is mandatory. Only licensed person/company/bank can proceed in the Court for recovery.
Guest
(Expert) 06 August 2013
Mr. Pashi,
Had you narrated specific problem instead of making an academic query, you could have got specific solution.
However, sorry to inform, I totally diagree with the opinion of experts above.
Where is the ban that an un licenced money lender cannot sue the accused for recovery of his money by filing petition u/s 138 of n.i act? Section 138 pertains to cheque dishonour, irrespective of whether the drawer owes to a money lender or some other person for some other liability.
Offence of the money lender doing business without license can be dealt with separately under the provisions of relevant law. Liability of the borrower cannot be extinguished for the reason that he has taken loan from an unlicensed lender.
Dr. Jyothi Vishwanath
(Expert) 06 August 2013
Civil suit or a criminal proceedings for cheque can be initiated by the creditor for recovering his money. Agreed to Dhingra jii
Advocate Bhartesh goyal
(Expert) 06 August 2013
Dhingra Sahib
My opinion is based on the judgment passed by Bombay High Court in criminal application no 630 of 2009 in criminal Appeal[stamp] no 139 of 2009 decided on 21- 11-2009 in the case Anil s/o Baburao vs Purshottam s/o Prabhakar,Hon'ble Court held that, As per sec 138 of N.I.Act "debt or other liabilty" means a legally enforceable bdebt or other liability-so loan advanced by a money lender who is doing business of money lending without license is not a debt or liability and provision of sec 138 N.I.Act will not apply to such transaction.
Guest
(Expert) 06 August 2013
Respected Goyal ji,
I hope you would like to appreciate that without the querist making mention of the background of the loan, other facts about the lender, and circumstances of his taking loan, his intentions to repay or not to repay the loan, etc., any reply linked to any court judgment would not have been appropriate merely on the basis of an academic type of query of the querist.
I further hope, as per your opinion, you would not mind giving some clarification on the following terms:
1) What type of a loan can be treated as a legally enforceable debt and what not?
2) Whether money actually received as loan by the querist cannot be recovered by the lender and has necessarily to be trated as legally not enforceable debt? If so, under which section of any Act?
3) Without mention by the querist, was it fair on our part to presume that the facts and background of his case were quite similar to the facts and circumstances of case of the Bombay High Court judgment in criminal application no 630 of 2009/ criminal Appeal[stamp] no 139 of 2009 decided on 21- 11-2009 to attract the implications of the said judgment?
4) Whether the said judgment can be enforced automatically on all the cases u/s 138 without specific order of the competent court without filing a case in the court of law by the querist and justifying his stand that the money loaned by the lender was legally not enforceable debt, irrespective of the fact, the debtor might have reaped maximum benefit and profit by investing that money in his business, as the querist is a proprietor of some firm?
5) Which section of any act prohibits any specific type of a lender not to recover his money, if he has actually lent the money to some person?
6) If the lender has failed to comply with the law meant for money lending business, which section of any Act prohibis to enforce application of sec. 138 for recovery of debt, actually provided to a person?.
Naturally, for his offence, the lender, if he is doing a profession (not a casual lender) can be punished under the relevant law separately, but the law of negotiable instruments act cannot be croppled to become operative when someone gets his cheque bounced intentionally with the false notion that he can swindle away money of the lender on the false plea of nom-applicability of the provisions of sec.138.
I shall feel enlightened to help me enhance my knowledge if necessary clarifications are provided on the above points.
V R SHROFF
(Expert) 06 August 2013
I support views of Shri Dhingra Sahib.
Hand loan/ friendly loan can always be allowed.
If your friend meet with road accident and need 5L on the spot, will u not help him paying CASH ?? can't he recover it under 138 n.i. ??
FEW HANDLOANS A YEAR DO NOT STAMP HIM AS PROFESSIONAL MONEY LENDER, AND shd hv license
80% OF CASES of 138 are OF FRIENDLY LOAN BY PERSONS OTHER THAN MONEY LENDERS.
Guest
(Expert) 07 August 2013
Dear Shroff ji,
I am quite thankful for supporting my views, as I believe that the activities of the lender can be termed as illegal, but not the debt money exchanged between the lender and the borrower.
