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A B c D E F G H GAJANAN AND ORS. v. SETH BRINDABAN July 20, 1970 [J. M. SHELAT AND I. D. DUA, JJ.J 651 C. P. MoneyLenders, Act 13 of 1934, ss. llF and llH-Act debarring carryingon o.f money lendingbusinessin anydistrictwithoutvalid regis· tration certificatein respect of that dis1rict--Certificare heldfor one dis trict-Isolated transaction in anotherdistrict whethervoid for contraven tion of Act-Stare Decisis-Englishauthorities, value of. The plaintiff(respondentherein) was doing money-lending businessin Yeotmal District in 'former CentralProvinces(now MadhyaPradesh)and hadobtainedthe requisitelicence under the C. P. Moneylenders'Act, 1934 for thatdistrictin August, 1947. Thelicence was regularly .re newedthereafter. In 1947 the plaintiij gave a loanto thedefendant' in ChandaDistrict against the security of propertysituated in that District. In 1950 hefileda suitfor foreclosure.The trialcourtheld that sincethe transactionin question was in contravention of ss. llF & llH oftheC. P. MoneyLenders'Act the suit was notmaintainable.The HighCourt howeverdecided in favour of theplaintiffon theviewthat an isolated transactionin anotherdistrict does· not come witl!in the mischief of the Act.With certificateappeal was filed in this Court.The appellant relied on thedecisionof theHouse of Lords in Cornelius v. Philip.r. HELD: (i) Thecaseof Cornelius v. Phillips was distinguishedby the NagpurHigh Court in Pa ti Ram v. Baliram. The MadhyaPradesh High Court also in Janki Bai's case distinguished Cornelius v. Phillips observing that it wouldbe unsafe to call in aidthe decisionrelating to the interpreta· tion of s. 2 oftheEnglishAct 'for construing s. llF of the C. P.Act.The BombayHigh Courtin Hajarimal's case tookthe sameview. It was correctlyheld in thesecasesthat the provisions of theEnglishAct cons trued in Cornelius and of the C. P. Actwerenot completelyidentical. [ 665 G-ll; 666 Fl (ii) Fromthe scheme of theActand thedefinition in s. 2(v)it is evidentthat for a personto be a money-lenderhe must, in the regular course of business, advance a loan. There is a long catena of attthorities onthestatutesregulatingand controllingmoney-lendersin whichthe ex pressionmoney-lenderhas beenso construedas to excludeisolated tran saction or transactionsof money-lending.[667 F-668 CJ (iii) Section 11 F onplainreadingonly prohibitsthe carryingon of the business of money-lendingin anydistrictwithoutholding a valid re gistrationcertificatein respect of thatdistrict. It doesnot prohibitand, therefore,does not invalidatean isolatedtransactionof lendingmoney. Suchar. isolatedtransactionis outsidethe rigourof theprohibition. The, factthata registeredmoney-lenderin onedistrict has enteredinto an isolatedtransaction of lending money in anotherdistrict in which he is not registeredwould not makeany differencein thisrespectand such iso latedtransactionwould not be hit by theprohibitorymandate. Seotion 11 ·H ·also operates only againstthe suits by money-lenderson Joans ad vancedby themand wouldsimilarlyexclude from its purviewa suiton anisolatedtransactionnot enteredinto by a money-lender in theregular 13 Sllj!. C 1/70-13 658' SUPRLlfE COURT REPORTS [1971] 1 S.C.R. course of business.Interferencewith freedom of contractappears to have beenlimitedunder the Act only to the eXtcnt necessaryfor regulatingand controllingthe business of moncy·lcnJing.Section 11 C which provides for composition of offences also suggests that inUividual transactions are not considered void.The view of law taken by the Nagpur and M. P. HighCourts in Patira111, llajari11ud and Jank/Bai was thus in conformity with the statutoryintenREM.ll COURT REPORTS (1971) 1 S.C.R .. required by that Act. As regardsthe liability of defendants2 A and 3, theywerehekl not to be boundby themortgages,but it wasobserved.that a simple moneydecree couid be passedagainst themprovidedthe claim was otherwiselegally enforceable.In casetheplaintiff'sclaim deservedto be decreed then in thetrial court's view therehad to bethreedecreesbecausethere were three mortgagescovering three separateproperties.The shareof B defendantNo. 5 wasalsoheldto bebound by thethree.mortgages datedSeptember12, 194 7. Theregistrationof documentsat the instanceof thecourt was foundto beproperand lawful.The decisionin theprevioussuit was held to operate as res judicata. The suit, as observedearlier was dismissedon thegroundof viola- tiorsof the C.P. Act. c On appealto theHighCourtthe followingseven pointsfell fordetermination: "(l) Was f the present suit barred. Before considering its statutory 5cheme it may be pointed out that though this Act having been initially e:iacted in what was then known as the Central Provinces and was named "TheCentral Provin~ts Moneylenders' Act, 1934" it was later extended to what is now known as the State of Madhya Pradesh with slieht formal modifi cations not affecting the substance of the statuto1y sch~me. Now, it is described as the "M. P. Moneylenders' Act, 1934.' Moneylender as defined in s. 2 ( v) of the Act means a person who, in the regularcourse of business advances o loan as defined in this Act and it includes,subject to the provisions of s. 3, the legal representatives and successors-in-interest of the person who advanced the loan; and the expression "moneylendmg" 1s also 10 be construed accordingly. By virtue of s. 2(ix) "Sub-Registrars" appointedunder the Indian Registration Act are to funclionunder the present Act. Section 11-A enjoins every Sub·Registrar to maintaina register of moneylenders in the µrescribed form. Section 11-B renders it obligatory for every oerson who carries on or intends to carry on the business of moneylending to get himself registered by an application to the Sub-Rci,istrar of the sub-district in which he carries on orintends to ~arry on such business. Theapplication is required inter a/ia to specify thr districtor districts in which theapolkant carries on or intends" to carry on business of moneylendinj!'. Section 11 -D provides · that the registrationcertificate granted under s. 11-B ~hall not entitle the holder theFeof to carry on the business of money lending in other districts. Section 11-F which bars per1cns from carrying on business of moneylending without rc,51.itration certifi cate also provides a penalty for thecontravention of this provision. 6G8 SUPREME COURT REPORTS [1971] l S.C.R Sectionl l-Gprovidesfor compositionof offences covered by s. l l-F(i). Accordingto s. 11-H no suitfor the recoveryof a loanadvancedby a moneylender is toproceedin a civil court untilthe court is satisfiedthat he holdsa ·valid registration certifi cate or that he is not requiredto have such certificate by reason ofthefactthat he doesnot carryon thebusinessof moneylending. Fromthe schemeof theseprovisionsit is evident that for a person tobea moneylenderhe must,in the regularcourse. of business, advancea loan. There is a longcatenaof aufhodties on the statutesregulatingand controllingmoneylenders in which the expression "moneylender" hasbeen so construed as to exclude i~olated t rnnsaction or transactionsof moneylending.Vivian Bose, - J., while dealingwith the Act,whichconcerns u~. in Sitaram Sharwan v. Bajya Parnav (1) said : "The word'regular'shows that the plaiatilf must have bee.~ in the habit ofadvancing loans to persons as a matter of regularbusiness. If only an isolated &ct of moneylending is shownto thecourt it is impossible tostatethat that constitutesa regularcourse of busi· ness. Ids an actof business,but not necessarilyan act done in theregularcourse of business." This decision was followedby T. C. Shrivastava J., of the MadhyaPradesh High Court in Hari Prasad v. Sobhanlal(') and by Shiv Dayal J., ofthesameHigh Courtin Gurmukh Rai v. Hari Har Singh('). Thesameview was.takenby K. L. Pandey J., of thesameHigh Court in Chai th Ram v. Baparimal ('). In this caseboth s. 2(vl and s. 11-Hof theActcame up for construc tion.In Sitaram Sharwan(') it was also heldthat the perso'.I seekingadvantageof the Moneylenders'Act h:is to provethat the plaintiff is amoneylender. _ To thesameeffect is the decisionby T. C Shrivastava J., in Kishanla/ v. Laxmibai("). Section11-F on its plainreading only prohibilsthe carrying onof thebusiness of money!endingin anydistrictwithoutholding avalidregistrationcertificate in respect of ~hat district.It does notprohibitand, thei;efore, does not invalidatean isolated tran sactionof lendingmoney. Such an isolated tranrnction seems to us to beoutsidethe rigourof theprohibition.The fact thata registeredmoney lender in one districthas enteredinto an isolated (I) A.LR. 1941 Nag. 177. (2) M.F.A. 124 of 1956 decidedon December 18, 1957-1958M.P.L.J. Note no. 11. (J) S.A.No. 39/1961 d 26.3.1964-M,P.L.J. note 102. (4) C.R. 374/1959 d/l ·7·1960--1960 M:P.L.J. note 198. (5J A.J.R. 1941 Nag. 177. (6J C.P. 10911962 d/20·7·1962-1963 M.P.L.J. 119. A B c D E F G H A 8 c D E F G H 'GAJANAN v. BRINDABAN (Dua, I.) 669 transaction of lendingmoney in anotherdistrict in whichhe is not regisceredwould not makeany difference in this respectand such isolatedtransactio,1would not be hit by theprohibitorymandate. Section11-H also operatesonly against the suits by moneylenders on loansadvanced by them and wouldsimilarlyeJ(clude trom its purviewa suit on anisolatedtransactionnot enteredinto by a moneylenderin theregularcourse of the busine;s of money lending.Tlie statutoryscheme thus clearly seems to indicatethat it is onlythe businessof moneylendingwhich is soughtto becon trolledand individualtrans.actionsof lendingmoney do notfall withinthe mischiefwhich was sought to be remediedby theAct. An individualtransactionof lendingmoney has not beendeclared tobevoidand as we construethe Act as a whole,interference withfreedomof contractappears to havebeeniimitedonly to the extentnecessary for regulatingand controllingthe businessof moneylending.Section 11-G whichprovides for compositionof offencesalso suggeststhat individualtransactionsare not con sideredvoid. We are,therefore,of theopinionthat the viewof lawtaken by the N agBJ!r andM. P. HighCourtsin Pali Ram and Hajarimal and Janaki Bai is in conformity with thestatutory in tendmentand is, therefore,correct. There is alsoanotheraspect which may legitimatelybe kept in view.Peoplein arrangingtheir affairsarc entitledto relyon (_! decisionof thehighestcourt whichappearsto haveprevailed for considerablelength of timeand it w~mld requiresome exceptional reasonto justifyits reversalwhen such rev.ersal is likelyto create seriousembarrassmentfor thosewho had acted on the faithof whatseemedto bethesettledlaw. Wherethe meaningof a statuteis ambiguousand capableof moreimcrpretationsthan one,and . one viewacceptedby thehighest c::iurt hasstoodfor a longperiodduringwhich many transactionssuch as dealings in propertyand makingof contractshave takenplace on thefaith .ofthatinterpretationthe courtwouldordinanlybe reluctant to put upon it a differentinterpretationwhich wouldmaterially affectthose transactions. In the casebefore us the construction piaced bv the Nagpur &nd Madhya Pradesh HighCourtson the relevantprovi,ion of theC. P. Actseemsto havebeen acceptedall these )'earsbegin ning with Sita Ram Sharwan in 1941(exceptfor a shortperiod between1958 and 1962)and rightsto propaty and under.con tractsseem to havebeenfoundedon the faith of thatconstruc tion.A DivisionBench of theBombayHigh Court sitting at Nagpurin W asudeo, of course,dissented 1n l 958 fromthe vie"' of theDivisionBench of theNagpurHigh Courtin l'ati Ram withoutreferringthe oointof dissentto a larger Bench. Buta FullBenchofthe Madhya Pradesh HighCourtdisagreedwith the 670 SUPREME COURT REPORTS ( 1971]1 S.C.R. Wasudeo case, vide JanakiBai .. It, therefore,seems obviousthat titles and transactionsmust have beenfounded on the viewof lawwhich, J>y and large,stood almostuniformlyas enunciatedin Sitaram Sharwan in 1941 and laterin Pati Ram and it would,in our opinion,be unjustto di.sturb them by adoplingthe interpreta tion suggested on behalfof theappellant on theauthorityof the Englishdecisions.Now, assumingthat two views .• on the statu toryschemeof theActare possibleand a~uming the interpreta tion canvassed ·on behalfof theappellantto be preferable to that acceptedin theimpugnedjudgment we areunableto saythatthe construction adgpted inthejudgmentunder appeal is so clearly andpatentlyerroneousthat it should,in thelargerintrests of justice,be upsetnotwithstandingthe fact lha1 it)s likely to dis turbrights to propertyand undercontractsfounded upon this construction..The fact that contraventionof s. l 1-F( i l of the Act is madea penaloffence is an additionalfactor against the proprietyof over-rulingand upsettingthe es:ablished view unless wefeel cominced thatthe establishedview is clearly erroneous.· As alreadydiscussed, we are not so convincedbut are on the otherhand inclinedto agreewith the establishedview. There is stillanothercircumstance which m2,y appropriately be noticed.Sections 11-C, 11-F(i) and 11-G(i) .:if the Actwere amendedby M. P. Act 40 of 1965. Had the cJnstruction placed bythecourtson s. 11-F and otherprovisionsof theActbeen con sideredby theLegislature to be contraryto thelegislative intend ment,one wouldhave ordinarilyexpected an amendment clarify ingits intention because theLegislaturemusr be fixed with the knowledgeof theconstructionplaced on th~ Act by thecourts. Nosuchactionwas takenby theLegislature.This circumstance • is, of course,not conclusive but it is not whollyirrelevant and certainlydeserves to benoticed as carryingsome presumptive weight. As theappellantwas not carryingon tlie buiness of moneylendingin ChandaDistrict,the single transaction in dispute inthatdistrictwas not coveredby tlieActand the suitcould proceedin thenormalway withouta registrationcertificate. On the viewwe havetakenthe onlyquestionwhich remains tobenoticedrelates to theargumentthat thereshouldbe three mortgagedecrees instead of one. This matter is one of procedure andformand it does not materially. affect the substantiverights oftheparties. We are,therefore,disinclinedon thisground tc ~irect modificationof theimpugneddecree. The appeal accord mglyfails and is dismissedbut withoutcosts. G.C. Appeal dismissed. A B c D E F G |
