In a recent ruling the Bombay High Court observed that the borrower receiving loan in cash liable for dishonour of cheque even if loan amount beyond limit for cash transactions under the Income Tax Act, 1961.
The Appellant and respondent No.1 were friends and neighbours. In the month of January, 2007, the appellant had advanced a friendly loan of Rs.3,00,000/- to respondent No.1, pursuant to respondent No.1’s request as she was in financial need due to the ailment of her husband who was suffering from blood cancer as well as daughter of respondent No.1 was also in need of financial help as she was undergoing a training as an Air Hostess.
The appellant had initially deposited two cheques of Rs.1,25,000/- each in the Axis Bank on 3rd October, 2007 at it’s Mulund Branch. On 5th October, 2007, she received a memo from the Axis Bank informing her that cheques deposited by her were dishonoured for insufficiency of funds.
The Counsel for the appellant contended that the trial Court has committed grave error in both law and facts in acquitting respondent No.1 since findings returned by the Magistrate are sans considering the vital admissions given by respondent No.1 in her cross-examination as well as certain aspects which were surfaced even during the cross-examination of the appellant substantiating the appellant’s case.
The counsel for respondent No.1 vehemently argued the appellant has failed in making out any case under section 138 of the N.I Act as the evidence on record is quite insufficient to hold respondent No.1 guilty for the said offence. The counsel also argued that the cheques in question were stolen by the appellant and even signatures over the same are forged and that there was no transaction of any kind between the appellant and respondent No.1, in the sense, no amount as contended by the appellant was lent to respondent No.1 by her.
A Single Bench of Justice Prithviraj K Chavan observed that “The statutory notice, complaint and evidence of the respective parties, if juxtaposed, would unerringly point out the fact that the respondent No.1 did borrow an amount of Rs.3,00,000/- from the appellant and issued cheques in question in discharge of a debt. Defences as raised by respondent No.1 are unacceptable and unbelievable. Respondent No.1 had failed to discharge the said onus.”
“It is thus clear that no person should accept any loan or deposit of a sum of Rs.20,000/- or more otherwise than by an account payee cheque or account payee bank draft. The provision does not say that a person cannot advance more than Rs.20,000/- in cash to another person. Restriction on cash advances was, in fact,on the taker and not on the person who makes an advance. The penalty for taking such advance or deposit in contravention of provisions of Section 269-SS was to be suffered by the taker who accepts the advance” the Court concluded.
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