2010 (12) TMI 1351 - HC - Indian Laws

Summary

Issues involved:
The issues involved in the judgment are the maintainability of a civil suit for recovery of interest/damages under the Bombay Money Lenders Act, 1946 and the applicability of Section 2(g) of the Money Lenders Act in a suit for interest.

Issue 1: Maintainability of Civil Suit under Bombay Money Lenders Act, 1946

The Respondent filed a suit for recovery of interest/damages under the Bombay Money Lenders Act, 1946, claiming that the Appellant failed to pay interest despite receiving the principal amount. The Appellant raised a preliminary objection to the suit's maintainability under Section 10 of the Act, arguing that the suit was not valid due to the lack of a money lending license held by the Respondent. The Civil Judge rejected the Appellant's objection, leading to the Revision Application.

The Appellant's Counsel cited a Supreme Court judgment regarding the power of the trial court to decide on objections under Order 7, Rule 11 of the Civil Procedure Code. The Counsel argued that the plaint averments were crucial in determining the nature of the transaction, which in this case was a friendly loan with a specified interest rate. It was emphasized that there was no evidence to suggest that the Respondent was a habitual money lender, as he was a bank employee investing his retirement benefit.

Issue 2: Applicability of Section 2(g) of Money Lenders Act in a Suit for Interest

The Appellant's Counsel referred to judgments where plaintiffs were found to be engaged in money lending activities, leading to the dismissal of their suits. However, in the present case, the plaint indicated a friendly transaction between the parties without any indication of regular money lending by the Respondent. The Counsel argued that a suit for interest, as damages, should not be subject to the Money Lenders Act as the transaction did not involve promissory notes or regular money lending business.

The Counsel further cited a Supreme Court ruling stating that isolated transactions would not fall under the Money Lenders Act. It was highlighted that the Respondent's actions did not violate public policy or the law, as he was not a licensed money lender. The Court noted that the findings rejecting the Appellant's objection did not exhibit any illegality or irregularities warranting interference.

In conclusion, the Civil Revision Application was dismissed, affirming the findings regarding the suit's maintainability and the applicability of the Money Lenders Act in the case. The judgment emphasized the importance of plaint averments in determining the nature of transactions and clarified that isolated transactions for interest did not necessarily invoke the Money Lenders Act.