The Delhi HC has held that if the Metropolitan Magistrate takes cognizance of an offense under Section 138 of the Negotiable Instrument Act, 1881, a decree against the respondent/defendant will not follow automatically.
The major issue before the court was to whether leave to defend was rightly granted to the respondents. The Court observed that there were loan transactions involved through bank transfers between the parties. The respondent, before being defaulted, had paid interest for some time. This fact showed the existence of business transactions.
Thus the Court noted, that although the petitioner has claimed of those loan transactions being different, was a matter to be seen at the trial. The fact that the respondent claimed the petitioner of acting as a legal advisor and therefore the invoice raised for a fee has to be proved too. The respondent averred that the petitioner had claimed to have been providing legal assistance to the respondent since 2000, yet the invoice was raised in December 2018, and therefore, the amounts raised in the invoice would also be time-barred.
The trial court’s decision was upheld, the HC reiterated that the defense disclosed triable issues that required inquiry. Therefore, leave to defend had to be granted in the light of these varying stands taken by the petitioner in different proceedings. Thus the High Court, on taking cognizance of an offence by the learned Metropolitan Magistrate under Section 138 of the N.I. Act, 1881, said that a decree against the respondent should not automatically follow, since it cannot be accepted, as cognizance leads to trial, and the accused can also get acquitted.
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