{"id":2119,"date":"1970-07-20T00:00:00","date_gmt":"1970-07-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/gajanan-and-ors-vs-seth-brindaban-on-20-july-1970"},"modified":"2017-04-16T15:34:17","modified_gmt":"2017-04-16T10:04:17","slug":"gajanan-and-ors-vs-seth-brindaban-on-20-july-1970","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/gajanan-and-ors-vs-seth-brindaban-on-20-july-1970","title":{"rendered":"Gajanan And Ors vs Seth Brindaban on 20 July, 1970"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Gajanan And Ors vs Seth Brindaban on 20 July, 1970<\/div>\n
Equivalent citations: 1970 AIR 2007, \t\t 1971 SCR (1) 657<\/div>\n
Author: I Dua<\/div>\n
Bench: Dua, I.D.<\/div>\n
           PETITIONER:\nGAJANAN AND ORS.\n\n\tVs.\n\nRESPONDENT:\nSETH BRINDABAN\n\nDATE OF JUDGMENT:\n20\/07\/1970\n\nBENCH:\nDUA, I.D.\nBENCH:\nDUA, I.D.\nSHELAT, J.M.\n\nCITATION:\n 1970 AIR 2007\t\t  1971 SCR  (1) 657\n 1970 SCC  (2) 360\n\n\nACT:\nC.P.  Money  Lenders, Act 13 of 1934, ss.  11F\tand  11H-Act\ndebarring  carrying  on\t of money lending  business  in\t any\ndistrict  without valid registration certificate in  respect\nof that district-Certificate held for one  district-Isolated\ntransaction in another district whether void for  contraven-\ntion of Act-Stare Decisis-English authorities, value of.\n\n\n\nHEADNOTE:\nThe  plaintiff (,respondent herein) was doing  money-lending\nbusiness  in  Yeotmal District in former  Central  Provinces\n(now Madhya Pradesh) and had obtained the requisite  licence\nunder  the C. P. Money lenders' Act, 1934 for that  district\nin   August,  1947.   The  licence  was\t regularly   renewed\nthereafter.   In  1947\tthe plaintiff gave  a  loan  to\t the\ndefendants  in\tChanda\tDistrict  against  the\tsecurity  of\nproperty situated in that District.  In 1950 he filed a suit\nfor  foreclosure.   The\t trial court  held  that  since\t the\ntransaction  in question was in contravention of ss. 1 IF  &\n11H  of\t the  C.  P. Money Lenders' Act\t the  suit  was\t not\nmaintainable.\tThe High Court however decided in favour  of\nthe  plaintiff on the view that an isolated  transaction  in\nanother\t district does not come within the mischief  of\t the\nAct.  With certificate appeal was filed in this Court.\t The\nappellant  relied on the decision of the House of  Lords  in\nCornelius v. Philips.\nHELD:\t(i)   The  case\t of  Cornelius\t v.   Phillips\t was\ndistinguished  by  the\tNagpur High Court  in  Pati  Ram  v.\nBaliram.  The Madhya Pradesh High Court also in Janki  Bai's\ncase  distinguished Cornelius v. Phillips observing that  it\nwould be unsafe to call in aid the decision relating to\t the\ninterpretation of s. 2 of the English Act For construing  s.\n1 IF of the C. P. Act.\tThe Bombay High Court in Hajarimal's\ncase  took  the same view.  It was correctly held  in  these\ncases  that the provisions of the English Act  construed  in\nCornelius  and\tof  the\t C.  P.\t Act  were  not\t  completely\nidentical. [665 G-H; 666 F]\n(ii)  From  the scheme of the Act and the definition  in  s.\n2(v) it is evident that for a person to be a money-lender he\nmust,  in  the regular course of business, advance  a  loan.\nThere  is  a  long catena of  authorities  on  the  statutes\nregulating  and controlling money-lenders in which  the\t ex-\npression  money-lender has been so construed as\t to  exclude\nisolated transaction or transactions of money-lending.\t[667\nF-668 C]\n(iii)  Section\t11  F on plain reading\tonly  prohibits\t the\ncarrying on of the business of money-lending in any district\nwithout holding a valid registration certificate in  respect\nof that district.  It does not prohibit and, therefore, does\nnot  invalidate\t an isolated transaction of  lending  money.\nSuch  an isolated transaction is outside the rigour  of\t the\nprohibition.  The fact that a registered money-lender in one\ndistrict has entered into an isolated transaction of lending\nmoney  in  another district in which he\t is  not  registered\nwould not make any difference in this respect and such\tiso-\nlated  transaction  would  not be  hit\tby  the\t prohibitory\nmandate.  'Section 11-H also operates only against the suits\nby  money-lenders  on  loans  advanced\tby  them  and  would\nsimilarly  exclude  from its purview a suit on\tan  isolated\ntransaction  not  entered  into by  a  money-lender  in\t the\nregular\n13 Sup.\t C 1\/70-13\n658\ncourse\tof business.  Interference with freedom of  contract\nappears\t to  have  been limited under the Act  only  to\t the\nextent necessary for regulating and controlling the business\nof   money-lending.    Section\t11C   which   provides\t for\ncomposition  of\t offences  also\t suggests  that\t  individual\ntransactions are not considered void.  The view of law taken\nby_the\tNagpur and M. P. High Courts in\t Patiram,  Hajarimal\nand  Janki  Bai was thus in conformity\twith  the  statutory\nintendment and must be held to be correct. [668 G669 D]\n(iv) People in arranging their affairs are entitled to\trely\non  decision  of  the highest court which  appears  to\thave\nprevailed  for\ta considerable length of time and  it  would\nrequire same exceptional reason to justify its reversal when\nsuch reversal is likely to create serious embarrassment; for\nthose  who have acted on the faith of what seemed to be\t the\nsettled, law.  Where the meaning of the statute is ambiguous\nand  capable of more interpretation than one, and  one\tview\naccepted  by  the higher court has stood for a\tlong  period\nduring\twhich many transactions such as dealing in  property\nand  making of contracts have taken place on the  faith'  of\nthat   interpretation,\t the  court  would   ordinarily\t  be\n'reluctant  to put upon it a different interpretation  which\nwould materially affect those transactions.  Therefore,\t the\nestablished  view in the matter of the interpretation of  s.\n11-F  of the C.P. Act on which the High Court relied in\t the\npresent case could not be departed from, since it is not  so\npatently  erroneous  that it must be upset.  The  fact\tthat\ncontravention  of  s.  11-F(i) of the Act is  made  a  penal\noffence\t is  an additional factor against the  propriety  of\nover-ruling  the  established view Further  the\t legislature\nmade several amendments in the Act in 1965 but did not amend\ns.  11-F;  it may, therefore, be rightly inferred  that\t the\nview  taken  by\t the Courts in its  interpretation  was\t not\nconsidered  to\tbe contrary to the  legislative\t intendment.\n[669 E-F; 670 A-F]\nOn  the\t above view of the law the present  appeal  must  be\ndismissed.\nCornelius v. Phillips [1918] A.C. 199  distinguished.\nPatiram\t v. Baliram 1953 N.L.J. 517, 522; Hajarimal v.\tHari\nNarayan\t (1965)\t 67 Bom.  L.R. 816; and Janki Bai  v.  Ratan\nMelu A.I.R. 1962 M.P.: 117 (FB) approved and applied.\nWhiteman  v.  Sadler  1918 A.C. 199,  Wasudeo  Bhairulal  v.\nRamchandra  (1958)  60 Bom.  L.R. 1247, Sitaram\t Sharwan  v.\nBajya Parnay A.I.R. 1941 Nag. 177; Hari Prasad v.  Sobhanlal\nM.F.A.\t124  of 1956 dated December 18,\t 1957-1958  M.P.L.J.\nNote  no.  11  Gurmukh\tRai  v.\t Hari  Har  Singh  S.A.\t No.\n39\/1961\/d\/26.3.1964-M.P.L.J.  note  102\t ,  Chaith  Ram\t v.,\nBaparimal C.R. 374\/1959\/ d\/1.7.1960 -1960 M.P.L.J. note\t 198\nand  Kishanlal v. Laxmibai S.R.P.  109\/1962d  20.7.1962-1963\nM.P.L.J. 119referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1982  of
\n196(6.\n<\/p>\n
Appeal\tfrom the judgment and decree dated October  21,\t 22,
\n1965 of the Bombay High Court, Nagpur Bench in Appeal No. 43
\nof 1960 from original decree.\n<\/p>\n
V.  M. Tarkunde, V. N. Swami and A. G. Ratnaparkhi, for\t the
\nappellants.\n<\/p>\n
M.  C. Chagla, Rameshwar Nath and Swaranjit Sodhi,  for\t the
\nrespondent.\n<\/p>\n
659<\/span><\/p>\n
The Judgment of the Court was delivered by
\nDua J. This is an appeal with certificate under Art.  133(i)\n<\/p>\n
(a)  of\t the  Constitution  by\tGajanan\t and  his  two\tsons
\nJanardhan  and Nanaji who figured as defendants 1, 4  and  5
\nrespectively  in  the  suit instituted\tby  Seth  Brindaban,
\nrespondent  in\tthis  appeal.  It is  directed\tagainst\t the
\njudgment and decree of the Bombay High Court (Nagpur  Bench)
\ndated  February 7, 1966 allowing the plaintiff’s  appeal  in
\npart  against the dismissal of his suit by the trial  court,
\nand  granting  him  a decree for Rs.  1,60,000\tagainst\t the
\nappellants.    The  other  two\tdefendants,  Rajeshwar\t and
\nNarhari, were also the sons of Gajanan; the dismissal of the
\nsuit  against them was upheld by the High Court.   The\tsuit
\nfor  foreclosure  of  three  mortgages\twas  instituted\t  on
\nDecember  1,  1950.   The plaintiff  claimed  a\t decree\t for
\nforeclosure  of the mortgages : the mortgage amount due\t was
\nstated\tto  be Rs. 1,07,269\/2\/- with future  interest.\t The
\nsuit  was  contested on various grounds but the\t main  point
\nwith which we are concerned in this appeal was raised in the
\namended\t written statement allowed by the court on  December
\n15,  1959,  nine years after the institution  of  the  suit.
\nAccording  to the amended plea : (i) the plaintiff  being  a
\nmoney lender within the meaning of C. P. Money Lenders’ Act,
\n(XIII of 1934) and no certificate under s. 1 IF of that\t Act
\nhaving\tbeen secured by him the transaction in\tdispute\t was
\nvoid   and  the\t suit  was,  therefore,\t incompetent,\t(ii)
\nproduction  in court of moneylender’s licence was  necessary
\nfor the maintenance of the suit; and (iii) the plaintiff had
\nnot maintained proper accounts of the moneylending  business
\nand had not given Diwali notices to the defendant in respect
\nof  this  debt and this omission disentitled  him  to  claim
\ninterest.\n<\/p>\n
Seven  additional issues were framed on the  amended  pleas.
\nThey are mainly concerned with the provisions of the  Money-
\nlenders’  Act.\t The trial court  repelled  the\t plaintiff’s
\nsubmission  that  the  case  was  governed  by\tthe   Bombay
\nMoneylenders’ Act.  It was contended on his behalf that with
\neffect from February 1, 1960 the provisions of C.P. &  Berar
\nMoneylenders’  Act had ceased to apply to the  territory  in
\nquest-ion and in its place the Bombay Moneylenders’ Act\t was
\nmade applicable.  The Bombay Act was thus claimed to  govern
\nthis case.  Disagreeing with this submission the trial court
\nheld  the Bombay Act to be prospective only and,  therefore,
\ninapplicable  to pending cases.\t The present suit which\t had
\nbeen instituted in 1950 in respect of a transaction of\t1947
\nwas accordingly held to be governed by the provisions of the
\nC.P. & Berar Moneylenders’ Act.\t The plaitniff was found  to
\nhave  contravened  ss. 11 F and 11 H of the C.P-.  Act\tand,
\ntherefore,  disentitled to maintain the suit.  He  was\talso
\nheld  disentitled  to  claim interest as  he  had  not\tsent
\nstatement of accounts as
\n660<\/span>
\nrequired   by  that  Act.   As\tregards\t the  liability\t  of
\ndefendants  2 and 3, they were held not to be bound  by\t the
\nmortgages,  but it was observed that a simple  money  decree
\ncould  be  passed  against  them  provided  the\t claim\t was
\notherwise  legally  enforceable.  In  case  the\t plaintiff’s
\nclaim deserved to be decreed then in the trial court’s\tview
\nthere  had  to\tbe three decrees because  there\t were  three
\nmortgages covering three separate properties.  The share  of
\ndefendant  No.\t5  was also held to be bound  by  the  three
\nmortgages  dated  September 12, 1947.  The  registration  of
\ndocuments  at  the  instance of the court was  found  to  be
\nproper\tand lawful.  The decision in the previous  suit\t was
\nheld  to  operate as res judicata.  The\t suit,\tas  observed
\nearlier\t was  dismissed on the ground of violations  of\t the
\nC.P. Act.\n<\/p>\n
On appeal to the High Court the following seven points\tfell
\nfor determination :\n<\/p>\n
\t      “(1)  Was the appellant a\t moneylender  within
\n\t      the   meaning   of  the  C.   P.\t and   Berar
\n\t      Moneylenders’  Act  and  was  he\trequired  to
\n\t      obtain  a\t moneylender’s\tlicence\t for  Chanda
\n\t      District\tbecause the transaction pertains  to
\n\t      property in Chanda district ?\n<\/p><\/blockquote>\n
\t      (2) Were the documents duly attested vis-a-vis
\n\t      respondents  2  and 3 who had  appended  their
\n\t      signatures  to the documents ? If it  is\theld
\n\t      that the documents were not attested so far as
\n\t      defendants 2 and 3 are concerned, what will be
\n\t      the  effect on the liability of  defendants  2
\n\t      and 3 ?\n<\/p><\/blockquote>\n
\t      (3)  Could  a personal decree for\t payment  of
\n\t      money be passed against defendants 2 and 3 ?
\n\t      (4)   Is\tthe  appellant\tentitled  to   claim
\n\t      interest\tbecause\t of  his  failure  to\tsend
\n\t      statements of account as required by section 3\n<\/p><\/blockquote>\n
\t      (b) of the C. P. and Berar Moneylenders Act ?
\n\t      Was the appellant liable to maintain  accounts
\n\t      as   provided   by  section  3  (a)   of\t the
\n\t      Moneylenders Act ?\n<\/p><\/blockquote>\n
\t      (5)   Are\t  the  three   instruments   validly
\n\t      registered or the registration void ?
\n\t      (6)  Are the findings on issues 1 to 6 in\t the
\n\t      present  suit barred on the principle  of\t res
\n\t      judicata\tbecause the subject matter of  these
\n\t      issues   was  also  the  subject\t matter\t  of
\n\t      identical\t issues in the\tprevious  litigation
\n\t      finally decided between the, parties ?\n<\/p><\/blockquote>\n
661<\/span><\/p>\n
\t      (7)Could\t a  decree  be\t passed\t  against
\n\t      respondent  No. 5 after he attained  majority,
\n\t      respondent  No. 5 not having himself  executed
\n\t      the instruments sued upon?”\n<\/p><\/blockquote>\n
On behalf of the plaintiff (appellant in the High Court)  it
\nwas  stated  that  he  had  made  an  application  for\t the
\ncertificate  but  had not yet obtained the same.   The\tHigh
\nCourt held that s. 11H of the C.P. & Berar Moneylenders’ Act
\ndid  not apply to the case.  It, however. observed that\t the
\ncourt  would have normally granted time to the plaintiff  to
\nproduce\t the necessary certificate if the Act had been\theld
\napplicable.  In the opinion -of the High Court the plaintiff
\nwas doing moneylending business in Yeotmal District and\t had
\nobtained the requisite licence for that district in  August,
\n1947   which   was  thereafter\t regularly   renewed.\t The
\ntransaction   in  question  was\t held  to  be  an   isolated
\ntransaction  which  did not clothe the\tplaintiff  with\t the
\ncharacter  of  a  moneylender carrying on  the\tbusiness  of
\nmoneylending  in Chanda District.  It further observed\tthat
\nthough\tthe transaction in question related to\tproperty  at
\nChanda\tand payment was also made at Chanda, the amount\t was
\npaid from the Wani shop where the accounts were\t maintained.
\nThis  was in Yeotmal District for which the  plaintiff\theld
\nthe necessary certificate.  On this view the High Court dis-
\nagreed\twith  the conclusion of the trial court.   The\tHigh
\nCourt  further\tadded that it was not the  defendants’\tcase
\nthat  the  plaintiff  had been\tcarrying  on  money  lending
\nbusiness in Chanda District after 1950 or in 1959 or even in
\nApril, 1960 when the suit was decided.\tThe three  documents
\nexecuted by the court were also held to be duly executed and
\nduly  registered so as to be binding on defendants 1, 4\t and\n<\/p>\n
5. In regard to defendants 2 and 3, the High Court felt that
\neven a money decree could not be passed against them and the
\nsuit against them must fail in its entirety.  The conclusion
\nof  the trial court that the decision in the  previous\tsuit
\noperated  as res judicata was upheld.  In the  final  result
\nthe  plaintiff\twas  held  entitled  to\t a  decree  for\t the
\nprincipal  sum\tof  Rs. 80,000 on the  basis  of  the  three
\nmortgages  and\ta  further  sum of  Rs.\t 80,000\t by  way  of
\ninterest, the total amount being Rs. 1,60,000.\tThis  decree
\nwas made against defendants 1, 4 and 5. They were given\t six
\nmonths’\t time to pay up the amount with further interest  at
\n6%  per annum on the principal amount till realisation.\t  If
\nthe  amount  was  not  paid  the  mortgages  were  to  stand
\nforeclosed.   The  suit\t against  defendants  2\t and  3\t was
\ndismissed without costs.\n<\/p>\n
On  appeal  in\tthis Court  the\t principal  question  raised
\ncentres\t  round\t the  provisions  of  the  C.  P.  &   Berar
\nMoneylenders’ Act.\n<\/p>\n
This Act which came into force on April 1, 1935 was  enacted
\nwith   the  object  of\tmaking\tbetter\tprovision  for\t the
\nregulation
\n662<\/span>
\nand  control  of the transactions of moneylending so  as  to
\nsecure\tprotection to ignorant debtors against the  evil  of
\nfraud and extortion on the part of unscrupulous moneylenders
\nwithout unduly interfering with freedom of private contract.
\nIt was framed broadly on the lines of the Punjab  Regulation
\nof  Accounts  Act  (No.\t 1 of  1939)  but  it  embodied,  in
\naddition,  the principle of Damdupet so that  the  creditors
\nwere  not encouraged to postpone unconscionable\t enforcement
\nof  their  claims.  The courts were also. empowered  to\t fix
\ninstalments  for  execution of\tdecrees.   “Moneylender”  as
\ndefined in cl. (v) of s. 2 means a person who in the regular
\ncourse\tof business advances a loan as defined in  this\t Act
\nand it includes his legal representatives and successors  in
\ninterest.   “Loan” as defined in cl. (vii) means  an  actual
\nadvance\t whether  of  money or in kind at  interest  and  it
\nincludes  any  transaction which the Court finds  to  be  in
\nsubstance a loan.  It does not include inter alia an advance
\nmade  on the basis of a negotiable instrument other  than  a
\npromissory  note.   In 1940 this Act was amended by  C.P.  &
\nBerar Act XIV of 1940 and ss. 1 1 -A to 11-J were added.  In
\nthe definition of “moneylender” also it was added in the end
\n:   “and  moneylending\tshall  be  construed   accordingly”.
\nAccording  to s. 11-B every person carrying on or  intending
\nto carry on the business of moneylending is required to\t get
\nhimself\t registered  by\t an application\t made  to  the\tSub-
\nRegistrar of -any sub-District of the District or anyone  of
\nthe districts’in which he carries on or intends to carry  on
\nsuch  business.\t  The  registration  certificate  does\t not
\nentitle\t the  bolder  thereof to carry on  the\tbusiness  of
\nmoneylending  in other districts for which he does not\thold
\nsuch certificate. Section   11F\t debars\t a   person   from
\ncarrying on the business ofmoneylending\t in any\t district
\nunless he holds a valid registrationcertificate\t      in
\nrespect\t of that district.  Sub-section (2) of this  section
\nmakes\tcontravention  of  this\t section  a  penal   offence
\npunishable with fine extending to Rs. 100\/- and in case of a
\nprevious  conviction  the  fine may  extend  to\t Rs.  200\/-.
\nAccording  to  S.  11H no suit for the recovery\t of  a\tloan
\nadvanced  by  a moneylender is to proceed in a\tcivil  court
\nuntil  the  court  is  satisfied  that\tbe  holds  a   valid
\nregistration certificate or that be is not required to\thave
\nsuch  a certificate by reason of the fact that he  does\t not
\ncarry  on  the\tbusiness  of money lending  in\tany  of\t the
\ndistricts of Madhya Pradesh.  The question which arises\t for
\nconsideration in this case is whether the suit out of  which
\nthis   appeal\tarises\tis  incompetent\t and   whether\t the
\ntransaction  of\t money\tlending\t is  void  and,\t  therefore,
\nunenforceable in courts of law.\n<\/p>\n
On  behalf of the appellants strong reliance was  placed  on
\nthe  decision  of  the\tHouse  of  Lords  in  Cornelius\t  v.
\nPhillips(1).  In that case, distinguishing and explaining an
\nearlier decision of the
\n(1) [1918] A.C. 199,
\n(2) [1910] A.C. 514,
\n663<\/span>
\nHouse  of  Lords in Whiteman v. Sadlor (2) s. 2 (2)  of\t the
\nMoneylenders’  Act,  1900 (63 & 64 Vic. c. 51) was  held  to
\nhave   the  effect  of\trendering  void\t a  transaction\t  of
\nmoneylending  carried out at an hotel at some distance\tfrom
\nthe moneylender’s registered address in contravention of  s.
\n2(1)(b).   The transaction was held to amount to a  carrying
\non of his business by the moneylender.\tRelying on the ratio
\nof  this  decision it was urged before us on behalf  of\t the
\nappellants  that the transaction in question in the  present
\ncase  must be held to be void and, therefore,  unenforceable
\nin  courts of law.  A similar argument on the  authority  of
\nthis  decision was raised before a Bench of the Nagpur\tHigh
\nCourt  in Patiram v. Baliram(1) but was not  accepted.\t The
\ncase  of Cornelius v. Phillips 2 ) was distinguished and  it
\nwas observed :\n<\/p>\n
\t      “The  learned counsel for the  applicant\tthen
\n\t      relied  on  the  House of\t Lords\tdecision  in
\n\t      Cornelius\t v.  Phillips(2) which\twas  a\tcase
\n\t      under  the  English  Moneylenders’  Act.\t The
\n\t      question which had arisen in that case was the
\n\t      same  as\tthe question in\t this  case,  namely
\n\t      whether  the transaction was void or  it\tonly
\n\t      exposed  the  moneylender\t to  liability\t for
\n\t      criminal\tproceedings  without  rendering\t the
\n\t      transaction void.\t It was decided in that case
\n\t      that  the transaction amounted to a  -carrying
\n\t      on  of his business by the moneylender  at  an
\n\t      address  other than his registered address  in
\n\t      contravention of section 2 sub-section (1)  b)
\n\t      of  the Moneylenders’ Act, 1900 and  that\t the
\n\t      effect  of the Act was to avoid  the  transac-\n<\/p><\/blockquote>\n
\t      tion.\tA   comparison\t of   the    English
\n\t      Moneylenders   Act,  1900\t and   the   Central
\n\t      Provinces\t ,and Berar Moneylenders  Act,\t1934
\n\t      will  clearly  show  that the  two  differ  on
\n\t      several  important points.  The definition  of
\n\t      “moneylender” in the two Acts is not the same.
\n\t      The   former  contains  provisions   regarding
\n\t      “registered  name” and ”\tregistered  address”
\n\t      which  are  not  to be found  in\tthe  letter.
\n\t      Section  2  (1 ) (c) of the  former  expressly
\n\t      prohibits\t individual agreements which is\t not
\n\t      the  case\t with  the  latter.   So  the  cases
\n\t      decided  under  the English  Moneylenders\t Act
\n\t      cannot be of much help in deciding cases under
\n\t      the Central Provinces and Berar  Moneylenders’
\n\t      Act.   We may here quote the warning given  by
\n\t      their  Lordships of the Privy Council in\tLasa
\n\t      Din v. Mt.  Gulab Kunwar(3).<\/p><\/blockquote>\n
\t      ‘It  is they think, always dangerous to  apply
\n\t      English  decisions to the construction  of  an
\n\t      Indian Act.’
\n(1) 1953 N.L.J. 517, 522.\t   (2) [1918] A.C. 199.
\n(3) A.T.R. 1932 P.C. 207, 211.\n<\/p>\n
664<\/span><\/p>\n
We,  therefore,\t do not propose to discuss the\tother  cases
\nunder  the  English Moneylenders Act cited  by\tthe  learned
\ncounsel for the applicant.\n<\/p>\n
After  referring to s. 11B and to Maxwell on  Interpretation
\nof Statutes the court observed :\n<\/p>\n
\t      “This  special statute which trenches  on\t the
\n\t      contractual rights must be construed  strictly
\n\t      against those who seek to avail of it.   There
\n\t      are no reasons to suppose that the Legislature
\n\t      intended\t  that\t  every\t   transaction\t  of
\n\t      moneylending  made  after the  amendment\tcame
\n\t      into force till the lender was able to  obtain
\n\t      a\t registration  certificate was\tinvalid\t and
\n\t      unenforceable thereby enriching the debtor  at
\n\t      the cost of the creditor without any fault  of
\n\t      the  latter.   The  learned  counsel  has\t not
\n\t      brought  to our notice any compelling  reasons
\n\t      to  accept his construction  which  manifestly
\n\t      leads  to injustice to the moneylenders.”\t (p.<\/p><\/blockquote>\n
\t      523)
\nThe  final conclusions of the court were expressed in  these
\nwords
\n\t      “It  will\t be clear from all  this  discussion
\n\t      that  section 11 F applies to the business  of
\n\t      moneylending   and   not\tto   an\t  individual
\n\t      transaction  of  lending money  and  that\t the
\n\t      condition\t is  attached  and  the\t penalty  is
\n\t      imposed  for the convenience of collection  of
\n\t      the  revenue,  and the  legislature,  did\t not
\n\t      declare\t an   individual   transaction\t  of
\n\t      moneylending  made by the moneylender who\t had
\n\t      not   obtained  a\t  registration\t certificate
\n\t      invalid.\tIt is not necessary for the validity
\n\t      of  the contract of loan that the\t moneylender
\n\t      must   be\t registered  on\t the  date  of\t the
\n\t      transaction.   He,  however, cannot  obtain  a
\n\t      decree on his loan unless he possesses a valid
\n\t      registration certificate on the date on  which
\n\t      the  decree  is  to  be  passed.\t Though\t the
\n\t      transactions of moneylending are not  affected
\n\t      for  want\t of a  registration  certificate,  a
\n\t      moneylender is exposed to the penalty provided
\n\t      by  -section 1 IF of the Act for\tcarrying  on
\n\t      the  business  without  a\t valid\tregistration
\n\t      certificate.   We\t may cite  Shanshir  Ali  v.
\n\t      Ratnaji(1) in support.”\n<\/p>\n
The  appellants’ counsel also tried to distinguish the\tFull
\nBench  decision\t of the Nagpur Bench in\t Hajarimal  v.\tHari
\nNarayan(2)  (which  overruled  Wasudeo\tBhairulal  v.\tRam-
\nchandra(3)  by submitting that the Full Bench had left\topen
\nthe
\n(1) A.I.R. 1952 Hyd. 58 (F. B.)
\n(2) (1965) 67 Bom, L.R. 816.\n<\/p>\n
(3) (1958) 60 Bom.  L.R. 1247,
\n665<\/span>
\nquestion of the transaction entered into by a moneylender in
\ncontravention  of s. 1 IF being void and opposed  to  public
\npolicy.\t  It  is  true that this precise  question  was\t not
\nconsidered  by the Full Bench to be necessary to  decide  in
\nthat case but the court added :-\n<\/p>\n
\t      “Assuming\t that the transaction is  void,\t the
\n\t      plaintiff\t may be able to obtain relief  under
\n\t      s. 65 of the Contract Act.”\n<\/p><\/blockquote>\n
Earlier\t in  the course of -the judgment the  learned  Chief
\nJustice speaking for the Full Bench had also observed
\n\t      “The  principal reason for the  contrary\tview
\n\t      taken  in Wasudeo Bhairulal v.  Ramchandra,(1)
\n\t      is  that\tas s. 11-F prohibits  a\t moneylender
\n\t      from carrying, on the business of moneylending
\n\t      without  a valid registration certificate\t and
\n\t      also provides a penalty for the  contravention
\n\t      of  this provision, a suit on  a\tmoneylending
\n\t      transaction  entered into by  an\tunregistered
\n\t      moneylender   cannot  be\t maintained.\tWith
\n\t      respect,\tit  may\t be  pointed  out  that\t the
\n\t      Legislature itself has not barred a civil suit
\n\t      in  respect of such a transaction.   The\tonly
\n\t      obstacle\twhich it has placed in the way of  a
\n\t      plaintiff\t in  such a case is  that  the\tsuit
\n\t      shall  not proceed until a valid\tregistration
\n\t      certificate  has been produced.  The  Legisla-
\n\t      ture  has\t also  in  sub-s.  (2)\tof  s.\t11-F
\n\t      specified the penalty for contravention of the
\n\t      provisions of sub-s. (1) of s. 11-F, that\t is,
\n\t      for carrying on nioncylending business without
\n\t      a\t certificate.\tIt has\tnot  prescribed\t any
\n\t      additional  penalty  such as that\t a  suit  to
\n\t      recover  a  loan advanced by  an\tunregistered
\n\t      moneylenders   shall  not\t lie  or  shall\t  be
\n\t      dismissed.  It is not open to a Court to\tsub-
\n\t      ject  a person to any penalty other than\twhat
\n\t      the Legislature has prescribed.”\n<\/p>\n
The  decision of the Full Bench of the Madhya  Pradesh\tHigh
\nCourt  in Janki Bai v. Ratan Melu ( 2) was also referred  to
\nwith approval.\tIn Janki Bai’s case ( 2 also the decision of
\nthe  House  of\tLords  in Cornelius  v.\t Phillips  3  )\t was
\ndistinguished and it was expressly observed that it would be
\nunsafe\tto  call  in  ‘aid  the\t decision  relating  to\t the
\ninterpretation of s. 2 of the English Act for construing  s.
\n11-F of the C. P. Act.\tIn regard to the true meaning of  s.
\n11-F the Full Bench, after an elaborate discussion summed up
\nits view thus :\n<\/p>\n
\t      “The  considerations having a bearing  on\t the
\n\t      construction of s. 11-F of the Act may now  be
\n\t      summed up.\n<\/p><\/blockquote>\n
(1) (1958) 60 Bom.  L.R. 1247.\n<\/p>\n
(2) A.I.R. 1962 M. P. 117 (F.B)
\n(3) [1918] A.C. 199.\n<\/p>\n
666<\/span><\/p>\n
\t      The  registration\t of a moneylender  does\t not
\n\t      afford   to   his\t  debtors   any\t  additional
\n\t      protection  not  available  under\t the   other
\n\t      provisions   of  the  Act.   An\tunregistered
\n\t      moneylender  can\tbe  punished  only  for\t the
\n\t      collective act of carrying on the business  of
\n\t      moneylending  and not for every loan  advanced
\n\t      by him without a registration certificate.  In
\n\t      a moneylender’s suit, his failure to obtain  a
\n\t      registration certificate is not regarded as  a
\n\t      vital  consideration and is, for that  reason,
\n\t      not  required to be tried\t before\t considering
\n\t      the case on merits.  On the other hand, S.  11\n<\/p>\n
\t      -H of the Act envisages that a loan  -advanced
\n\t      by   an\tunregistered  moneylender   can\t  be
\n\t      recoverable by him if he subsequently  obtains
\n\t      a\t registration certificate which is in  force
\n\t      at the time of the suit.\n<\/p>\n
\t      These  considerations  clearly  indicate\tthat
\n\t      section\t1  1-F\twas  not  enacted  for\t the
\n\t      protection    of\t  persons    dealing\twith
\n\t      moneylenders.   Its only object appears to  be
\n\t      the   protection\t of   the   revenue.\tThis
\n\t      conclusion  is further supported by  the\tfact
\n\t      that the annual fee payable for a registration
\n\t      certificate  was subsequently raised from\t Rs.
\n\t      4\/8\/- to Rs. 12\/-.  Therefore, on the basis of
\n\t      the principles already stated, a loan advanced
\n\t      by  an  unregistered  moneylender\t cannot\t  be
\n\t      regarded as impliedly prohibited by s. 11 -F.”
\nSection\t 11-F  was  also held in this decision\tnot  to\t bar
\nindividual advances.\n<\/p>\n
The  principal question which arises is whether the view  of
\nlaw  as taken by the Nagpur High Court in the Pati Ram\tcase
\nin 1953, by a Full Bench of the Madhya Pradesh High Court in
\nthe  Janaki  Bai case in 1961 and by the Full Bench  of\t the
\nBombay High Court sitting at Nagpur in the Hajarimal case in
\n1965  is so clearly erroneous that this Court  should  upset
\ntheir interpretation of the C. P. Act.\n<\/p>\n
In  considering\t this  question we must\t keep  in  view\t the
\nwarning\t given\tby the Privy Council in\t Isadas\t that  while
\nconstruing Indian statutes it is dangerous to apply  English
\ndecisions  to the construction of Indian  enactments.\tNow,
\nthe  C.-  P.  Act  as originally enacted  in  1935  was\t not
\nmodelled  on the English Act of 1900.  Indeed,\tthe  English
\nAct  which was construed by the House of Lords in  Cornelius
\nin 1917 was amended in 1927 when ss. 2 and 3-interpreted  in
\nCornelius-were\trepealed.  This was long. before  1935\twhen
\nthe C. P. Act was enacted- broadly, as already pointed\tout,
\non  the lines of the Punjab Regulation of Accounts Act 1  of
\n1930 with the addition of the rule of Damdupat and  extended
\npower of courts to fix instalments for execution of
\n667<\/span>
\ndecrees.   We are also inclined to think, in agreement\twith
\nthe  decisions\tof  the Nagpur High Court in  Pati  Ram\t and
\nHalarimal  and\tof the Madhya Pradesh High Court  in  Janaki
\nBai,  that  the provisions of the English Act  construed  in
\nCornelius and of the C. P. Act, with which we are concerned,
\nare not completely identical.  The statutory_schemes of\t the
\ntwo enactments do seem to us to differ materially.  This has
\nbeen discussed at some length in the aforesaid decisions  of
\nthe  Nagpur  and Madhya Pradesh High Courts and\t we  do\t not
\nconsider  it necessary to enter on an exhaustive  discussion
\nand cover the same ground again as we are inclined to  agree
\nwith  the  final  conclusions arrived  at  in  those  cases.
\nTurning\t to the scheme of the Act which concerns us  let  us
\nsee if the transaction of money lending which is the subject
\nmatter\tof the suit out of which this appeal arises is\tvoid
\nand,  therefore, unenforceable in courts of law and  if\t for
\nthat  reason  the  suit is  incompetent.   We  have  already
\nreferred  to  the  broad outlines of the Act.\tWe  may\t now
\nexamine\t its  scheme  more closely to see  if  the  impugned
\ntransaction  is\t hit by its prohibitory provisions  and\t the
\nprogress of the present suit barred.  Before considering its
\nstatutory scheme it may be pointed out that though this\t Act
\nhaving been initially enacted in what was then known as\t the
\nCentral\t Provinces  and\t was named  “The  Central  Provinces
\nMoneylenders’  Act, 1934” it was later extended to  what  is
\nnow known as the State of Madhya Pradesh with,slight  formal
\nmodifications  not affecting the substance of the  statutory
\nscheme.\t  Now it is described as the “M.   P.  Moneylenders’
\nAct, 1934
\nMoneylender as defined in s. 2 (v) of the Act means a person
\nwho,  in the regular course of business advances a  loan  as
\ndefined\t in  this  Act\tand  it\t includes,  subject  to\t the
\nprovisions   of\t  s.  3,  the  legal   representatives\t and
\nsuccessors-in-interest of the person who advanced the  loan;
\nand  the expression “moneylending” is also to .be  construed
\naccordingly.   ‘By  virtue  of s.  2  (ix)  “Sub-Registrars”
\nappointed under the Indian Registration Act are to  function
\nunder\tthe  present  Act.   Section  11-A  enjoins   -every
\nSub.Registrar to maintain a register of moneylenders in\t the
\nprescribed  form.   Section 11-B renders it  obligatory\t for
\nevery  person  who  carries on or intends to  carry  on\t the
\nbusiness  of  moneylending to get himself registered  by  an
\napplication  to\t the Sub-Registrar of  the  sub-district  in
\nwhich  he carries on or intends to carry on  such  business.
\nThe  application  is  required inter  alia  to\tspecify\t the
\ndistrict  or districts in which the applicant carries on  or
\nintend,-, to carry on business of moneylending.\t Section 11-
\nD  provides that the registration certificate granted  under
\ns. 11-B shall not entitle the holder thereof to carry on the
\nbusiness  of moneylending in other districts.  Section\t11-F
\nwhich bars persons from carrying on business of moneylending
\nwithout registration certificate also provides a penalty for
\nthe, contravention of this provision,
\n668<\/span>
\nSection 11-G provides for composition of offences covered by
\ns.  11\t-F  (i).   According to s. 11 -H  no  suit  for\t the
\nrecovery  of a loan advanced by a moneylender is to  proceed
\nin a civil court until the court is satisfied that he  holds
\na -valid registration certificate or that he is not required
\nto have such certificate by reason of the fact that he\tdoes
\nnot carry on the business of moneylending.  From the  scheme
\nof these provisions it is evident that for a person to be  a
\nmoneylender  he\t must, in the regular  course  of  business,
\nadvance\t a loan.  There is a long catena of  authorities  on
\nthe  statutes  regulating and controlling  money-lenders  in
\nwhich the expression “moneylender” has been so construed  as
\nto   exclude   isolated\t transaction  or   transactions\t  of
\nmoneylending.  Vivian Bose, J., while dealing with the\tAct,
\nwhich  concerns\t us, in Sitaram Sharwan v.  Bajya  Parnav(1)
\nsaid :\n<\/p>\n
\t      “The  word ‘regular’ shows that the  plaintiff
\n\t      must have been in the habit of advancing loans
\n\t      to  persons as a matter of  regular  business.
\n\t      If  only\tan isolated act of  moneylending  is
\n\t      shown  to the court it is impossible to  state
\n\t      that  that  constitutes a\t regular  course  of
\n\t      business.\t  It is an act of business, but\t not
\n\t      necessarily an act done in the regular  course
\n\t      of business.”\n<\/p><\/blockquote>\n
This  decision was followed by T. C. Shrivastava J., of\t the
\nMadhya Pradesh High Court in Hari Prasad v. Sobhanlal(2) and
\nby  Shiv Dayal J., of the same High Court in Gurmukh Rai  v.
\nHari Har Singh(3).  The same view was taken by K. L.  Pandey
\nJ.,  of the same High Court in Chaith Ram  v.  Baparimal(1).
\nIn this case both s. 2 (v) and s. I I -H of the Act came  up
\nfor  construction.  In Sitaram Sharwan(5) it was  also\theld
\nthat  the person seeking advantage of the Moneylenders’\t Act
\nhis  to prove that the plaintiff is a moneylender.   To\t the
\nsame  effect is the decision by ‘T.  C. Shrivastava  J.,  in
\nKishanlal v. Laxmibai(6).\n<\/p>\n
Section\t 11-F  on  its\tplain  reading\tonly  prohibits\t the
\ncarrying on of the business of moneylending in any  district
\nwithout holding a valid registration certificate in  respect
\nof that district.  It does not prohibit and, therefore, does
\nnot  invalidate\t an isolated transaction of  lending  money.
\nSuch  an isolated transaction seems to us to be outside\t the
\nrigour of the prohibition.  The fact that a registered money
\nlender in one district has entered into an isolated
\n(1)    A.I.R. 1941 Nag. 177.\n<\/p>\n
(2)  M.F.A. 124 of 1956 decided on December 18,\t 1957-1958
\nM.P.L.J. Note no.  11.\n<\/p>\n
(3)S.A.No. 39\/1961 d 26.3.1964-M, P.L.J. note 102.
\n(4)C.R. 374\/1959 d\/1 .7 .1960-1960 M.P.L.J. note 198.
\n(5)   A.I.R. 1941 Nag. 177.\n<\/p>\n
(6)C.P. 109\/1962 d\/20.7.1962-1963 M.P.L.J. 119,
\n669<\/span>
\ntransaction of lending money in another district in which he
\nis  not\t registered would not make any\tdifference  in\tthis
\nrespect\t and such isolated transaction would not be  hit  by
\nthe prohibitory mandate.  Section 1 1 -H also operates\tonly
\nagainst the suits by moneylenders on loans advanced by\tthem
\nand  would similarly exclude from its purview a suit  on  an
\nisolated  transaction not entered into by a  moneylender  in
\nthe  regular course of the business of money  lending.\t The
\nstatutory  scheme thus clearly seems to indicate that it  is
\nonly the business of moneylending which is sought to be con-
\ntrolled and individual transactions of lending money do\t not
\nfall within the mischief which was sought to be remedied  by
\nthe  Act.  An individual transaction of lending\t money’\t has
\nnot been declared to be void and as we construe the Act as a
\nwhole, interference with freedom of contract appears to have
\nbeen limited only to the extent necessary for regulating and
\ncontrolling,  the  business of moneylending.   Section\t11-G
\nwhich  provides\t for composition of offences  also  suggests
\nthat  individual transactions are not considered  void.\t  We
\nare, therefore, of the opinion that the view of law taken by
\nthe  Nagpur and M. P. High Courts in Pati Ram and  Hajarimal
\nand  Janaki  Bai  is in conformity with\t the  statutory\t in-
\ntendment and is, therefore, correct.\n<\/p>\n
There is also another aspect which may legitimately be\tkept
\nin view.  People in arranging their affairs are entitled  to
\nrely  on  a decision of the highest court which\t appears  to
\nhave prevailed for considerable length of time and it  would
\nrequire some exceptional reason to justify its reversal when
\nsuch reversal is likely to create serious embarrassment for’
\nthose  who had acted on the-faith of what seemed to  be\t the
\nsettled\t law.  Where the meaning of a statute  is  ambiguous
\nand  capable of more interpretations than one, and one\tview
\naccepted  by the highest court has stood for a\tlong  period
\nduring which many transactions such as dealings in  property
\nand  making  of contracts have taken place on the  faith  of
\nthat interpretation the court would ordinarily be  reluctant
\nto  put\t upon  it a  different\tinterpretation\twhich  would
\nmaterially affect those transactions.
\nIn the case before us the construction placed by the  Nagpur
\nand Madhya Pradesh High Courts on the relevant provision  of
\nthe  C. P. Act seems to have been accepted all\tthese  years
\nbeginning with Sita Ram Sharwan in 1941 (except for a  short
\nperiod\tbetween\t 1958 and 1962) and rights to  property\t and
\nunder  contracts seem to have been founded on the  faith  of\n<\/p>\n
-that  construction.   A Division Bench of the\tBombay\tHigh
\nCourt sitting at Nagpur in Wasudeo, of course, dissented  in
\n1958 from the view of the Division Bench of the Nagpur\tHigh
\nCourt in Pati Ram without referring the point of dissent  to
\na larger Bench.\t But a Full Bench of the Madhya Pradesh High
\nCourt disagreed with the
\n670<\/span>
\nWasudeo case, vide Janaki Bai.. It, therefore, seems obvious
\nthat  titles and transactions must have been founded on\t the
\nview  of law which, by and large, stood almost uniformly  as
\nenunciated in Sitaram Sharwan in 1941 and later in Pati\t Ram
\nand  it would, in our opinion, be unjust to disturb them  by
\nadopting  the  interpretation  suggested on  behalf  of\t the
\nappellant  on the authority of the English decisions.\tNow,
\nassuming  that two views on the statutory scheme of the\t Act
\nare  possible and assuming the interpretation  canvassed  on
\nbehalf of the’ appellant to be preferable *to that  accepted
\nin  the\t impugned  judgment we are unable to  say  that\t the
\nconstruction  adopted  in the judgment under  appeal  is  so
\nclearly and patently erroneous that it should, in the larger
\nintrests of justice, be upset notwithstanding the fact\tthat
\nit  is\tlikely\tto  disturb rights  to\tproperty  and  under
\ncontracts  founded  upon this construction.  The  fact\tthat
\ncontravention  of  s.  11-F(i) of the Act is  made  a  penal
\noffence\t is  an additional factor against the  propriety  of
\nover-ruling  and  upsetting the established view  unless  we
\nfeel  convinced\t that  the  established’  view\tis   clearly
\nerroneous.   As already discussed, we are not  so  convinced
\nbut  are  on  the  other hand inclined\tto  agree  with\t the
\nestablished view.\n<\/p>\n
There is still another circumstance which may  appropriately
\nbe  noticed.  Sections 1 1 -C I I -F (i) and 1 1 -G (i I  of
\nthe  Act  were\tamended by M. P. Act 40 of  1965.   Had\t the
\nconstruction  placed  by  the courts on s.  11-F  and  other
\nprovisions of the Act been considered by the Legislature  to
\nbe  contrary to the legislative intendment, one\t would\thave
\nordinarily  expected an amendment clarifying  its  intention
\nbecause the Legislature must be fixed with the knowledge  of
\nthe  construction placed on the Act by the courts.  No\tsuch
\naction was taken by the Legislature.  This circumstance\t is,
\nof  course, not conclusive but it is not  wholly  irrelevant
\nand  certainly\tdeserves  to be\t noticed  as  carrying\tsome
\npresumptive  weight.  As the appellant was not\tcarrying  on
\nthe bussiness of moneylending in Chanda District, the single
\ntransaction  in dispute in that district was not covered  by
\nthe Act and the suit could proceed in the normal way without
\na registration certificate.\n<\/p>\n
On the view we have taken the only question which remains to
\nbe  noticed  relates to the argument that  there  should  be
\nthree  mortgage decrees instead of one.\t This matter is\t one
\nof procedure and form and it does not materially. affect the
\nsubstantive  rights  of\t the parties.\tWe  are,  therefore,
\ndisinclined  on\t this ground to direct modification  of\t the
\nimpugned  decree.   The\t appeal\t accordingly  fails  and  is
\ndismissed but without costs.\n<\/p>\n
G.C.\n<\/p>\n
\t    Appeal dismissed.\n<\/p>\n
671<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Gajanan And Ors vs Seth Brindaban on 20 July, 1970 Equivalent citations: 1970 AIR 2007, 1971 SCR (1) 657 Author: I Dua Bench: Dua, I.D. 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-2119","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nGajanan And Ors vs Seth Brindaban on 20 July, 1970 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/gajanan-and-ors-vs-seth-brindaban-on-20-july-1970\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gajanan And Ors vs Seth Brindaban on 20 July, 1970 - 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