PETITIONER: GAJANAN AND ORS. Vs. RESPONDENT: SETH BRINDABAN DATE OF JUDGMENT: 20/07/1970 BENCH: DUA, I.D. BENCH: DUA, I.D. SHELAT, J.M. CITATION: 1970 AIR 2007 1971 SCR (1) 657 1970 SCC (2) 360 ACT: C.P. Money Lenders, Act 13 of 1934, ss. 11F and 11H-Act debarring carrying on of money lending business in any district without valid registration certificate in respect of that district-Certificate held for one district-Isolated transaction in another district whether void for contraven- tion of Act-Stare Decisis-English authorities, value of. HEADNOTE: The plaintiff (,respondent herein) was doing money-lending business in Yeotmal District in former Central Provinces (now Madhya Pradesh) and had obtained the requisite licence under the C. P. Money lenders' Act, 1934 for that district in August, 1947. The licence was regularly renewed thereafter. In 1947 the plaintiff gave a loan to the defendants in Chanda District against the security of property situated in that District. In 1950 he filed a suit for foreclosure. The trial court held that since the transaction in question was in contravention of ss. 1 IF & 11H of the C. P. Money Lenders' Act the suit was not maintainable. The High Court however decided in favour of the plaintiff on the view that an isolated transaction in another district does not come within the mischief of the Act. With certificate appeal was filed in this Court. The appellant relied on the decision of the House of Lords in Cornelius v. Philips. HELD: (i) The case of Cornelius v. Phillips was distinguished by the Nagpur High Court in Pati Ram v. Baliram. The Madhya Pradesh High Court also in Janki Bai's case distinguished Cornelius v. Phillips observing that it would be unsafe to call in aid the decision relating to the interpretation of s. 2 of the English Act For construing s. 1 IF of the C. P. Act. The Bombay High Court in Hajarimal's case took the same view. It was correctly held in these cases that the provisions of the English Act construed in Cornelius and of the C. P. Act were not completely identical. [665 G-H; 666 F] (ii) From the scheme of the Act and the definition in s. 2(v) it is evident that for a person to be a money-lender he must, in the regular course of business, advance a loan. There is a long catena of authorities on the statutes regulating and controlling money-lenders in which the ex- pression money-lender has been so construed as to exclude isolated transaction or transactions of money-lending. [667 F-668 C] (iii) Section 11 F on plain reading only prohibits the carrying on of the business of money-lending in any district without holding a valid registration certificate in respect of that district. It does not prohibit and, therefore, does not invalidate an isolated transaction of lending money. Such an isolated transaction is outside the rigour of the prohibition. The fact that a registered money-lender in one district has entered into an isolated transaction of lending money in another district in which he is not registered would not make any difference in this respect and such iso- lated transaction would not be hit by the prohibitory mandate. 'Section 11-H also operates only against the suits by money-lenders on loans advanced by them and would similarly exclude from its purview a suit on an isolated transaction not entered into by a money-lender in the regular 13 Sup. C 1/70-13 658 course of business. Interference with freedom of contract appears to have been limited under the Act only to the extent necessary for regulating and controlling the business of money-lending. Section 11C which provides for composition of offences also suggests that individual transactions are not considered void. The view of law taken by_the Nagpur and M. P. High Courts in Patiram, Hajarimal and Janki Bai was thus in conformity with the statutory intendment and must be held to be correct. [668 G669 D] (iv) People in arranging their affairs are entitled to rely on decision of the highest court which appears to have prevailed for a considerable length of time and it would require same exceptional reason to justify its reversal when such reversal is likely to create serious embarrassment; for those who have acted on the faith of what seemed to be the settled, law. Where the meaning of the statute is ambiguous and capable of more interpretation than one, and one view accepted by the higher court has stood for a long period during which many transactions such as dealing in property and making of contracts have taken place on the faith' of that interpretation, the court would ordinarily be 'reluctant to put upon it a different interpretation which would materially affect those transactions. Therefore, the established view in the matter of the interpretation of s. 11-F of the C.P. Act on which the High Court relied in the present case could not be departed from, since it is not so patently erroneous that it must be upset. 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 the established view Further the legislature made several amendments in the Act in 1965 but did not amend s. 11-F; it may, therefore, be rightly inferred that the view taken by the Courts in its interpretation was not considered to be contrary to the legislative intendment. [669 E-F; 670 A-F] On the above view of the law the present appeal must be dismissed. Cornelius v. Phillips [1918] A.C. 199 distinguished. Patiram v. Baliram 1953 N.L.J. 517, 522; Hajarimal v. Hari Narayan (1965) 67 Bom. L.R. 816; and Janki Bai v. Ratan Melu A.I.R. 1962 M.P.: 117 (FB) approved and applied. Whiteman v. Sadler 1918 A.C. 199, Wasudeo Bhairulal v. Ramchandra (1958) 60 Bom. L.R. 1247, Sitaram Sharwan v. Bajya Parnay A.I.R. 1941 Nag. 177; Hari Prasad v. Sobhanlal M.F.A. 124 of 1956 dated December 18, 1957-1958 M.P.L.J. Note no. 11 Gurmukh Rai v. Hari Har Singh S.A. No. 39/1961/d/26.3.1964-M.P.L.J. note 102 , Chaith Ram v., Baparimal C.R. 374/1959/ d/1.7.1960 -1960 M.P.L.J. note 198 and Kishanlal v. Laxmibai S.R.P. 109/1962d 20.7.1962-1963 M.P.L.J. 119referred to. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1982 of
196(6.
Appeal from the judgment and decree dated October 21, 22,
1965 of the Bombay High Court, Nagpur Bench in Appeal No. 43
of 1960 from original decree.
V. M. Tarkunde, V. N. Swami and A. G. Ratnaparkhi, for the
appellants.
M. C. Chagla, Rameshwar Nath and Swaranjit Sodhi, for the
respondent.
659
The Judgment of the Court was delivered by
Dua J. This is an appeal with certificate under Art. 133(i)
(a) of the Constitution by Gajanan and his two sons
Janardhan and Nanaji who figured as defendants 1, 4 and 5
respectively in the suit instituted by Seth Brindaban,
respondent in this appeal. It is directed against the
judgment and decree of the Bombay High Court (Nagpur Bench)
dated February 7, 1966 allowing the plaintiff’s appeal in
part against the dismissal of his suit by the trial court,
and granting him a decree for Rs. 1,60,000 against the
appellants. The other two defendants, Rajeshwar and
Narhari, were also the sons of Gajanan; the dismissal of the
suit against them was upheld by the High Court. The suit
for foreclosure of three mortgages was instituted on
December 1, 1950. The plaintiff claimed a decree for
foreclosure of the mortgages : the mortgage amount due was
stated to be Rs. 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 Money-
lenders’ Act. The trial court repelled the plaintiff’s
submission that the case was governed by the Bombay
Moneylenders’ Act. It was contended on his behalf that with
effect from February 1, 1960 the provisions of C.P. & Berar
Moneylenders’ Act had ceased to apply to the territory in
quest-ion and in its place the Bombay Moneylenders’ Act was
made applicable. The Bombay Act was thus claimed to govern
this case. Disagreeing with this submission the trial court
held the Bombay Act to be prospective only and, therefore,
inapplicable to pending cases. The present suit which had
been instituted in 1950 in respect of a transaction of 1947
was accordingly held to be governed by the provisions of the
C.P. & Berar Moneylenders’ Act. The plaitniff was found to
have contravened ss. 11 F and 11 H of the C.P-. Act and,
therefore, disentitled to maintain the suit. He was also
held disentitled to claim interest as he had not sent
statement of accounts as
660
required by that Act. As regards the liability of
defendants 2 and 3, they were held not to be bound by the
mortgages, but it was observed that a simple money decree
could be passed against them provided the claim was
otherwise legally enforceable. In case the plaintiff’s
claim deserved to be decreed then in the trial court’s view
there had to be three decrees because there were three
mortgages covering three separate properties. The share of
defendant No. 5 was also held to be bound by the three
mortgages dated September 12, 1947. The registration of
documents at the instance of the court was found to be
proper and lawful. The decision in the previous suit was
held to operate as res judicata. The suit, as observed
earlier was dismissed on the ground of violations of the
C.P. Act.
On appeal to the High Court the following seven points fell
for determination :
“(1) Was the appellant a moneylender within
the meaning of the C. P. and Berar
Moneylenders’ Act and was he required to
obtain a moneylender’s licence for Chanda
District because the transaction pertains to
property in Chanda district ?
(2) Were the documents duly attested vis-a-vis
respondents 2 and 3 who had appended their
signatures to the documents ? If it is held
that the documents were not attested so far as
defendants 2 and 3 are concerned, what will be
the effect on the liability of defendants 2
and 3 ?
(3) Could a personal decree for payment of
money be passed against defendants 2 and 3 ?
(4) Is the appellant entitled to claim
interest because of his failure to send
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 ?
661
(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 District and had
obtained the requisite licence for that district in August,
1947 which was thereafter regularly renewed. The
transaction in question was held to be an isolated
transaction which did not clothe the plaintiff with the
character of a moneylender carrying on the business of
moneylending in Chanda District. It further observed that
though the transaction in question related to property at
Chanda and payment was also made at Chanda, the amount was
paid from the Wani shop where the accounts were maintained.
This was in Yeotmal District for which the plaintiff held
the necessary certificate. On this view the High Court dis-
agreed with the conclusion of the trial court. The High
Court further added that it was not the defendants’ case
that the plaintiff had been carrying on money lending
business in Chanda District after 1950 or in 1959 or even in
April, 1960 when the suit was decided. The three documents
executed by the court were also held to be duly executed and
duly registered so as to be binding on defendants 1, 4 and
5. In regard to defendants 2 and 3, the High Court felt that
even a money decree could not be passed against them and the
suit against them must fail in its entirety. The conclusion
of the trial court that the decision in the previous suit
operated as res judicata was upheld. In the final result
the plaintiff was held entitled to a decree for the
principal sum of Rs. 80,000 on the basis of the three
mortgages and a further sum of Rs. 80,000 by way of
interest, the total amount being Rs. 1,60,000. This decree
was made against defendants 1, 4 and 5. They were given six
months’ time to pay up the amount with further interest at
6% per annum on the principal amount till realisation. If
the amount was not paid the mortgages were to stand
foreclosed. The suit against defendants 2 and 3 was
dismissed without costs.
On appeal in this Court the principal question raised
centres round the provisions of the C. P. & Berar
Moneylenders’ Act.
This Act which came into force on April 1, 1935 was enacted
with the object of making better provision for the
regulation
662
and control of the transactions of moneylending so as to
secure protection to ignorant debtors against the evil of
fraud and extortion on the part of unscrupulous moneylenders
without unduly interfering with freedom of private contract.
It was framed broadly on 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 -any sub-District of the District or anyone of
the districts’in which he carries on or intends to carry on
such business. The registration certificate does not
entitle the bolder thereof to carry on the business of
moneylending in other districts for which he does not hold
such certificate. Section 11F debars a person from
carrying on the business ofmoneylending in any district
unless he holds a valid registrationcertificate in
respect of that district. Sub-section (2) of this section
makes contravention of this section a penal offence
punishable with fine extending to Rs. 100/- and in case of a
previous conviction the fine may extend to Rs. 200/-.
According to S. 11H 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 be holds a valid
registration certificate or that be is not required to have
such a certificate by reason of the fact that he does not
carry on the business of money lending in any of the
districts of Madhya Pradesh. The question which arises for
consideration in this case is whether the suit out of which
this appeal arises is incompetent and whether the
transaction of money lending is void and, therefore,
unenforceable in courts of law.
On behalf of the appellants strong reliance was placed on
the decision of the House of Lords in Cornelius v.
Phillips(1). In that case, distinguishing and explaining an
earlier decision of the
(1) [1918] A.C. 199,
(2) [1910] A.C. 514,
663
House of Lords in Whiteman v. Sadlor (2) s. 2 (2) of the
Moneylenders’ Act, 1900 (63 & 64 Vic. c. 51) was held to
have the effect of rendering void a transaction of
moneylending carried out at an hotel at some distance from
the moneylender’s registered address in contravention of s.
2(1)(b). The transaction was held to amount to a carrying
on of his business by the moneylender. Relying on the ratio
of this decision it was urged before us on behalf of the
appellants that the transaction in question in the present
case must be held to be void and, therefore, unenforceable
in courts of law. A similar argument on the authority of
this decision was raised before a Bench of the Nagpur High
Court in Patiram v. Baliram(1) but was not accepted. The
case of Cornelius v. Phillips 2 ) was distinguished and it
was observed :
“The learned counsel for the applicant then
relied on the House of Lords decision in
Cornelius v. Phillips(2) 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 transac-
tion. 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 of much help in deciding cases under
the Central Provinces and Berar Moneylenders’
Act. We may here quote the warning given by
their Lordships of the Privy Council in Lasa
Din v. Mt. Gulab Kunwar(3).
‘It is they think, always dangerous to apply
English decisions to the construction of an
Indian Act.’
(1) 1953 N.L.J. 517, 522. (2) [1918] A.C. 199.
(3) A.T.R. 1932 P.C. 207, 211.
664
We, therefore, do not propose to discuss the other cases
under the English Moneylenders Act cited by the learned
counsel for the applicant.
After referring to s. 11B and to Maxwell on Interpretation
of Statutes the court observed :
“This special statute which trenches on the
contractual rights must be construed strictly
against those who seek to avail of it. There
are no reasons to suppose that the Legislature
intended that every transaction of
moneylending made after the amendment came
into force till the lender was able to obtain
a registration certificate was invalid and
unenforceable thereby enriching the debtor at
the cost of the creditor without any fault of
the latter. The learned counsel has not
brought to our notice any compelling reasons
to accept his construction which manifestly
leads to injustice to the moneylenders.” (p.
523)
The final conclusions of the court were expressed in these
words
“It will be clear from all this discussion
that section 11 F applies to the business of
moneylending and not to an individual
transaction of lending money and that the
condition is attached and the penalty is
imposed for the convenience of collection of
the revenue, and the legislature, did not
declare an individual transaction of
moneylending made by the moneylender who had
not obtained a registration certificate
invalid. It is not necessary for the validity
of the contract of loan that the moneylender
must be registered on the date of the
transaction. He, however, cannot obtain a
decree on his loan unless he possesses a valid
registration certificate on the date on which
the decree is to be passed. Though the
transactions of moneylending are not affected
for want of a registration certificate, a
moneylender is exposed to the penalty provided
by -section 1 IF of the Act for carrying on
the business without a valid registration
certificate. We may cite Shanshir Ali v.
Ratnaji(1) in support.”
The appellants’ counsel also tried to distinguish the Full
Bench decision of the Nagpur Bench in Hajarimal v. Hari
Narayan(2) (which overruled Wasudeo Bhairulal v. Ram-
chandra(3) by submitting that the Full Bench had left open
the
(1) A.I.R. 1952 Hyd. 58 (F. B.)
(2) (1965) 67 Bom, L.R. 816.
(3) (1958) 60 Bom. L.R. 1247,
665
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,(1)
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 transaction. The only
obstacle which it has placed in the way of a
plaintiff in such a case is that the suit
shall not proceed until a valid registration
certificate has been produced. The Legisla-
ture has also in sub-s. (2) of s. 11-F
specified the penalty for contravention of the
provisions of sub-s. (1) of s. 11-F, that is,
for carrying on nioncylending business without
a certificate. It has not prescribed any
additional penalty such as that a suit to
recover a loan advanced by an unregistered
moneylenders shall not lie or shall be
dismissed. It is not open to a Court to sub-
ject a person to any penalty other than what
the Legislature has prescribed.”
The decision of the Full Bench of the Madhya Pradesh High
Court in Janki Bai v. Ratan Melu ( 2) was also referred to
with approval. In Janki Bai’s case ( 2 also the decision of
the House of Lords in Cornelius v. Phillips 3 ) was
distinguished and it was expressly observed that it would be
unsafe to call in ‘aid the decision relating to the
interpretation of s. 2 of the English Act for construing s.
11-F of the C. P. Act. In regard to the true meaning of s.
11-F the Full Bench, after an elaborate discussion summed up
its view thus :
“The considerations having a bearing on the
construction of s. 11-F of the Act may now be
summed up.
(1) (1958) 60 Bom. L.R. 1247.
(2) A.I.R. 1962 M. P. 117 (F.B)
(3) [1918] A.C. 199.
666
The registration of a moneylender does not
afford to his debtors any additional
protection not available under the other
provisions of the Act. An unregistered
moneylender can be punished only for the
collective act of carrying on the business of
moneylending and not for every loan advanced
by him without a registration certificate. In
a moneylender’s suit, his failure to obtain a
registration certificate is not regarded as a
vital consideration and is, for that reason,
not required to be tried before considering
the case on merits. On the other hand, S. 11
-H of the Act envisages that a loan -advanced
by an unregistered moneylender can be
recoverable by him if he subsequently obtains
a registration certificate which is in force
at the time of the suit.
These considerations clearly indicate that
section 1 1-F was not enacted for the
protection of persons dealing with
moneylenders. Its only object appears to be
the protection of the revenue. This
conclusion is further supported by the fact
that the annual fee payable for a registration
certificate was subsequently raised from Rs.
4/8/- to Rs. 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. before 1935 when
the C. P. Act was enacted- broadly, as already pointed out,
on the lines of the Punjab Regulation of Accounts Act 1 of
1930 with the addition of the rule of Damdupat and extended
power of courts to fix instalments for execution of
667
decrees. We are also inclined to think, in agreement with
the decisions of the Nagpur High Court in Pati Ram and
Halarimal and of the Madhya Pradesh High Court in Janaki
Bai, that the provisions of the English Act construed in
Cornelius and of the C. P. Act, with which we are concerned,
are not completely identical. The statutory_schemes of the
two enactments do seem to us to differ materially. This has
been discussed at some length in the aforesaid decisions of
the Nagpur and Madhya Pradesh High Courts and we do not
consider it necessary to enter on an exhaustive discussion
and cover the same ground again as we are inclined to agree
with the final conclusions arrived at in those cases.
Turning to the scheme of the Act which concerns us let us
see if the transaction of money lending which is the subject
matter of the suit out of which this appeal arises is void
and, therefore, unenforceable in courts of law and if for
that reason the suit is incompetent. We have already
referred to the broad outlines of the Act. We may now
examine its scheme more closely to see if the impugned
transaction is hit by its prohibitory provisions and the
progress of the present suit barred. Before considering its
statutory scheme it may be pointed out that though this Act
having been initially enacted in what was then known as the
Central Provinces and was named “The Central Provinces
Moneylenders’ Act, 1934” it was later extended to what is
now known as the State of Madhya Pradesh with,slight formal
modifications not affecting the substance of the statutory
scheme. 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 regular course of business advances a 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 “moneylending” is also to .be construed
accordingly. ‘By virtue of s. 2 (ix) “Sub-Registrars”
appointed under the Indian Registration Act are to function
under the present Act. Section 11-A enjoins -every
Sub.Registrar 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,
668
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
not carry on the business of moneylending. From the scheme
of these provisions it is evident that for a person to be a
moneylender he must, in the regular course of business,
advance a loan. There is a long catena of authorities on
the statutes regulating and controlling money-lenders in
which the expression “moneylender” has been so construed as
to exclude isolated transaction or transactions of
moneylending. Vivian Bose, J., while dealing with the Act,
which concerns us, in Sitaram Sharwan v. Bajya Parnav(1)
said :
“The word ‘regular’ shows that the plaintiff
must have been in the habit of advancing loans
to persons as a matter of regular business.
If only an isolated act of moneylending is
shown to the court it is impossible to state
that that constitutes a regular course of
business. It is an act of business, but not
necessarily an act done in the regular course
of business.”
This decision was followed by T. C. Shrivastava J., of the
Madhya Pradesh High Court in Hari Prasad v. Sobhanlal(2) and
by Shiv Dayal J., of the same High Court in Gurmukh Rai v.
Hari Har Singh(3). The same view was taken by K. L. Pandey
J., of the same High Court in Chaith Ram v. Baparimal(1).
In this case both s. 2 (v) and s. I I -H of the Act came up
for construction. In Sitaram Sharwan(5) it was also held
that the person seeking advantage of the Moneylenders’ Act
his to prove that the plaintiff is a moneylender. To the
same effect is the decision by ‘T. C. Shrivastava J., in
Kishanlal v. Laxmibai(6).
Section 11-F on its plain reading only prohibits the
carrying on of the business of moneylending in any district
without holding a valid registration certificate in respect
of that district. It does not prohibit and, therefore, does
not invalidate an isolated transaction of lending money.
Such an isolated transaction seems to us to be outside the
rigour of the prohibition. The fact that a registered money
lender in one district has entered into an isolated
(1) A.I.R. 1941 Nag. 177.
(2) M.F.A. 124 of 1956 decided on December 18, 1957-1958
M.P.L.J. Note no. 11.
(3)S.A.No. 39/1961 d 26.3.1964-M, P.L.J. note 102.
(4)C.R. 374/1959 d/1 .7 .1960-1960 M.P.L.J. note 198.
(5) A.I.R. 1941 Nag. 177.
(6)C.P. 109/1962 d/20.7.1962-1963 M.P.L.J. 119,
669
transaction of lending money in another district in which he
is not registered would not make any difference in this
respect and such isolated transaction would not be hit by
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 con-
trolled 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 in-
tendment and is, therefore, correct.
There is also another aspect which may legitimately be kept
in view. People in arranging their affairs are entitled to
rely on a decision of the highest court which appears to
have prevailed for considerable length of time and it would
require some exceptional reason to justify its reversal when
such reversal is likely to create serious embarrassment for’
those who had acted on the-faith of what seemed to be the
settled law. Where the meaning of a statute is ambiguous
and capable of more interpretations than one, and one view
accepted by the highest court has stood for a long period
during which many transactions such as dealings in property
and making of contracts have taken place on the faith of
that interpretation the court would ordinarily be reluctant
to put upon it a different interpretation which would
materially affect those transactions.
In the case before us the construction placed by the Nagpur
and Madhya Pradesh High Courts on the relevant provision of
the C. P. Act seems to have been accepted all these years
beginning with Sita Ram Sharwan in 1941 (except for a short
period between 1958 and 1962) and rights to property and
under contracts seem to have been founded on the faith of
-that construction. A Division Bench of the Bombay High
Court sitting at Nagpur in Wasudeo, of course, dissented in
1958 from the view of the Division Bench of the Nagpur High
Court in Pati Ram without referring the point of dissent to
a larger Bench. But a Full Bench of the Madhya Pradesh High
Court disagreed with the
670
Wasudeo case, vide Janaki Bai.. It, therefore, seems obvious
that titles and transactions must have been founded on the
view of law which, by and large, stood almost uniformly as
enunciated in Sitaram Sharwan in 1941 and later in Pati Ram
and it would, in our opinion, be unjust to disturb them by
adopting the interpretation suggested on behalf of the
appellant on the authority of the English decisions. Now,
assuming that two views on the statutory scheme of the Act
are possible and assuming the interpretation canvassed on
behalf of the’ appellant to be preferable *to that accepted
in the impugned judgment we are unable to say that the
construction adopted in the judgment under appeal is so
clearly and patently erroneous that it should, in the larger
intrests of justice, be upset notwithstanding the fact that
it is likely to disturb rights to property and under
contracts founded upon this construction. 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 moneylending in Chanda District, the single
transaction in dispute in that district was not covered by
the Act and the suit could proceed in the normal way without
a registration certificate.
On the view we have taken the only question which remains to
be noticed relates to the argument that there should be
three mortgage decrees instead of one. This matter is one
of procedure and form and it does not materially. affect the
substantive rights of the parties. We are, therefore,
disinclined on this ground to direct modification of the
impugned decree. The appeal accordingly fails and is
dismissed but without costs.
G.C.
Appeal dismissed.
671