9911796707
TMI Blog1970 (7) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... decree for foreclosure of the mortgages : the mortgage amount due was stated to be ₹ 1,07,269/2/- with future interest. The suit was contested on various grounds but the main point with which we are concerned in this appeal was raised in the amended written statement allowed by the court on December 15, 1959, nine years after the institution of the suit. According to the amended plea : (i) the plaintiff being a money lender within the meaning of C. P. Money Lenders Act, (XIII of 1934) and no certificate under s. 1 IF of that Act having been secured by him the transaction in dispute was void and the suit was, therefore, incompetent, (ii) production in court of moneylender s licence was necessary for the maintenance of the suit; and (iii) the plaintiff had not maintained proper accounts of the moneylending business and had not given Diwali notices to the defendant in respect of this debt and this omission disentitled him to claim interest. Seven additional issues were framed on the amended pleas. They are mainly concerned with the provisions of the Moneylenders Act. The trial court repelled the plaintiff s submission that the case was governed by the Bombay Moneylenders A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd statements of account as required by section 3 (b) of the C. P. and Berar Moneylenders Act ? Was the appellant liable to maintain accounts as provided by section 3 (a) of the Moneylenders Act ? (5) Are the three instruments validly registered or the registration void ? (6) Are the findings on issues 1 to 6 in the present suit barred on the principle of res judicata because the subject matter of these issues was also the subject matter of identical issues in the previous litigation finally decided between the, parties ? (7)Could a decree be passed against respondent No. 5 after he attained majority, respondent No. 5 not having himself executed the instruments sued upon? On behalf of the plaintiff (appellant in the High Court) it was stated that he had made an application for the certificate but had not yet obtained the same. The High Court held that s. 11H of the C.P. Berar Moneylenders Act did not apply to the case. It, however. observed that the court would have normally granted time to the plaintiff to produce the necessary certificate if the Act had been held applicable. In the opinion -of the High Court the plaintiff was doing moneylending business in Yeotmal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lines of the Punjab Regulation of Accounts Act (No. 1 of 1939) but it embodied, in addition, the principle of Damdupet so that the creditors were not encouraged to postpone unconscionable enforcement of their claims. The courts were also. empowered to fix instalments for execution of decrees. Moneylender as defined in cl. (v) of s. 2 means a person who in the regular course of business advances a loan as defined in this Act and it includes his legal representatives and successors in interest. Loan as defined in cl. (vii) means an actual advance whether of money or in kind at interest and it includes any transaction which the Court finds to be in substance a loan. It does not include inter alia an advance made on the basis of a negotiable instrument other than a promissory note. In 1940 this Act was amended by C.P. Berar Act XIV of 1940 and ss. 1 1 -A to 11-J were added. In the definition of moneylender also it was added in the end : and moneylending shall be construed accordingly . According to s. 11-B every person carrying on or intending to carry on the business of moneylending is required to get himself registered by an application made to the Sub- Registrar of -an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lords decision in Cornelius v. Phillips([1918] A.C. 199) which was a case under the English Moneylenders Act. The question which had arisen in that case was the same as the question in this case, namely whether the transaction was void or it only exposed the moneylender to liability for criminal proceedings without rendering the transaction void. It was decided in that case that the transaction amounted to a -carrying on of his business by the moneylender at an address other than his registered address in contravention of section 2 sub-section (1) b) of the Moneylenders Act, 1900 and that the effect of the Act was to avoid the transachtion. A comparison of the English Moneylenders Act, 1900 and the Central Provinces ,and Berar Moneylenders Act, 1934 will clearly show that the two differ on several important points. The definition of moneylender in the two Acts is not the same. The former contains provisions regarding registered name and registered address which are not to be found in the letter. Section 2 (1 ) (c) of the former expressly prohibits individual agreements which is not the case with the latter. So the cases decided under the English Moneylenders Act cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hari Narayan(1965) 67 Bom, L.R. 816) which overruled Wasudeo Bhairulal v. Ramchandra (1958) 60 Bom. L.R. 1247) by submitting that the Full Bench had left open the question of the transaction entered into by a moneylender in contravention of s. 1 IF being void and opposed to public policy. It is true that this precise question was not considered by the Full Bench to be necessary to decide in that case but the court added :- Assuming that the transaction is void, the plaintiff may be able to obtain relief under s. 65 of the Contract Act. Earlier in the course of -the judgment the learned Chief Justice speaking for the Full Bench had also observed The principal reason for the contrary view taken in Wasudeo Bhairulal v. Ramchandra,(1958) 60 Bom. L.R. 1247) is that as s. 11-F prohibits a moneylender from carrying, on the business of moneylending without a valid registration certificate and also provides a penalty for the contravention of this provision, a suit on a moneylending transaction entered into by an unregistered moneylender cannot be maintained. With respect, it may be pointed out that the Legislature itself has not barred a civil suit in respect of such a transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate was subsequently raised from ₹ 4/8/- to ₹ 12/-. Therefore, on the basis of the principles already stated, a loan advanced by an unregistered moneylender cannot be regarded as impliedly prohibited by s. 11 -F. Section 11-F was also held in this decision not to bar individual advances. The principal question which arises is whether the view of law as taken by the Nagpur High Court in the Pati Ram case in 1953, by a Full Bench of the Madhya Pradesh High Court in the Janaki Bai case in 1961 and by the Full Bench of the Bombay High Court sitting at Nagpur in the Hajarimal case in 1965 is so clearly erroneous that this Court should upset their interpretation of the C. P. Act. In considering this question we must keep in view the warning given by the Privy Council in Isadas that while construing Indian statutes it is dangerous to apply English decisions to the construction of Indian enactments. Now, the C.- P. Act as originally enacted in 1935 was not modelled on the English Act of 1900. Indeed, the English Act which was construed by the House of Lords in Cornelius in 1917 was amended in 1927 when ss. 2 and 3-interpreted in Cornelius-were repealed. This was long. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to maintain a register of moneylenders in the prescribed form. Section 11-B renders it obligatory for every person who carries on or intends to carry on the business of moneylending to get himself registered by an application to the Sub-Registrar of the sub-district in which he carries on or intends to carry on such business. The application is required inter alia to specify the district or districts in which the applicant carries on or intend,-, to carry on business of moneylending. Section 11- D provides that the registration certificate granted under s. 11-B shall not entitle the holder thereof to carry on the business of moneylending in other districts. Section 11-F which bars persons from carrying on business of moneylending without registration certificate also provides a penalty for the, contravention of this provision, Section 11-G provides for composition of offences covered by s. 11 -F (i). According to s. 11 -H no suit for the recovery of a loan advanced by a moneylender is to proceed in a civil court until the court is satisfied that he holds a -valid registration certificate or that he is not required to have such certificate by reason of the fact that he does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prohibitory mandate. Section 1 1 -H also operates only against the suits by moneylenders on loans advanced by them and would similarly exclude from its purview a suit on an isolated transaction not entered into by a moneylender in the regular course of the business of money lending. The statutory scheme thus clearly seems to indicate that it is only the business of moneylending which is sought to be controlled and individual transactions of lending money do not fall within the mischief which was sought to be remedied by the Act. An individual transaction of lending money has not been declared to be void and as we construe the Act as a whole, interference with freedom of contract appears to have been limited only to the extent necessary for regulating and controlling, the business of moneylending. Section 11-G which provides for composition of offences also suggests that individual transactions are not considered void. We are, therefore, of the opinion that the view of law taken by the Nagpur and M. P. High Courts in Pati Ram and Hajarimal and Janaki Bai is in conformity with the statutory intendment and is, therefore, correct. There is also another aspect which may legitima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. The fact that contravention of s. 11-F(i) of the Act is made a penal offence is an additional factor against the propriety of over-ruling and upsetting the established view unless we feel convinced that the established view is clearly erroneous. As already discussed, we are not so convinced but are on the other hand inclined to agree with the established view. There is still another circumstance which may appropriately be noticed. Sections 1 1 -C I I -F (i) and 1 1 -G (i I of the Act were amended by M. P. Act 40 of 1965. Had the construction placed by the courts on s. 11-F and other provisions of the Act been considered by the Legislature to be contrary to the legislative intendment, one would have ordinarily expected an amendment clarifying its intention because the Legislature must be fixed with the knowledge of the construction placed on the Act by the courts. No such action was taken by the Legislature. This circumstance is, of course, not conclusive but it is not wholly irrelevant and certainly deserves to be noticed as carrying some presumptive weight. As the appellant was not carrying on the bussiness of money lending in Chanda District, the single transaction in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
