20 July 1970
Supreme Court


Case number: Appeal (civil) 1982 of 1966






DATE OF JUDGMENT: 20/07/1970


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