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CASE NO.: Appeal (civil)  5540 of 2001

PETITIONER: M/s. P. Vaikunta Shenoy & Co

RESPONDENT: P. Hari Sharma

DATE OF JUDGMENT: 31/10/2007

BENCH: A.K. Mathur & Markandey Katju

JUDGMENT: J U D G M E N T

MARKANDEY KATJU, J.

1.      This appeal has been filed against the impugned judgment of the  Karnataka High Court dated 25.03.2000 in R.F.A. No. 531 of 1997.  We  have heard learned counsel for the parties and perused the record.

2.      The plaintiff-appellant has alleged that he was carrying the business of   commission agent.  The defendant was having an areca nut (supari) garden  and he used to supply the areca nuts to the plaintiff.  The defendant used to  receive money from the plaintiff off and on, which the plaintiff used to  advance him to secure regular supply of the areca nuts.  It was alleged by the  plaintiff that defendant had borrowed Rs.72,044.43 paise as per the ledger  account regularly maintained by the plaintiff.  Hence the plaintiff filed a suit  for recovery of this amount with interest at the rate of 18 per cent per  annum.

3.      The defendant denied the plaintiffs\022 case and advanced the plea that  plaintiff was a money-lender and he did not have a licence as required by the  Karnataka Money Lenders Act, 1961.  Consequently, the defendant alleged  that the suit was not maintainable as the plaintiff had not taken a licence  under the aforesaid Act.

4.      The Trial Court decreed the suit of the plaintiff but the said decree  was set aside by the High Court.  Hence this appeal.

5.      Learned counsel for the plaintiff-appellant has submitted that the  plaintiff was not a money-lender as defined in Section 2 (10) of the  Karnataka Money Lenders Act.  The aforesaid Section 2 (10) states that a  money-lender is one who \023carries on the business of money lending in the  State\024.      Section 2 (2) defines the business of money lending as follows:- \021Business of money lending means business of  advancing loan whether or not in connection with or  in addition to any other business\022. 6.      Learned counsel for the respondent submits that in view of the  aforesaid definitions the appellant was clearly a money-lender.  We do not  agree.

7.      It may be mentioned that the purpose of the Act was to prevent the  malpractice of oppression by money-lenders to take advantage of peoples\022  poverty.

8.      In the money lending business the object of the money-lender is to  earn interest on the loan he has advanced.  In the present case the object of  advancing the loan by the appellant was not to earn interest thereon but to  ensure the regular supply of areca nuts.  Though, no doubt, interest at the

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rate of 18 per cent per annum was charged on these loans yet that was not  the principal object of advancing the loan.

9.      In business various methods are adopted by a businessman for  ensuring the smooth running of his business.  Very often, one of the methods  is that the businessman advances money to his supplier of goods to ensure  that the supplies are regular and are made to him rather than being diverted  to other parties.  There is nothing illegal in this practice and it is widespread. 10.     When we construe the provisions of the Karnataka Money Lenders  Act we must see the object for which it was made and we have to adopt the  purposive construction.

11.     As observed by this Court in New India Sugar Mills v.  Commissioner of Sales Tax [AIR 1963 SC 1207, p. 1213 : 1963 Supp (2)  SCR 459] :-      \023It is a recognized rule of interpretation of statutes that  expressions used therein should ordinarily be understood in a  sense in which they best harmonize with the object of the  statute, and which effectuate the object of the legislature\024.  (See  also the decisions mentioned in G.P. Singh\022s \023Principles of  Statutory Interpretation: 9th Edition 2004 at Page 110).       

12.     To give an example, under the U.P. Bhoodan Yagna Act, 1953 the  lands which were donated by large landholders could be allotted to \021landless  persons\022.  It was held by this Court in U.P. Bhoodan Yagna Samiti v. Braj  Kishore [AIR 1988 SC 2239: 1988 (4) SCC 274] that the expression  \021landless persons\022 should be interpreted to mean landless peasants and not  landless businessman.  If a literal meaning was given to the expression  \021landless persons\022 then even a very rich businessman who possessed  hundreds of crores of rupees can claim allotment of a piece of land on the  ground that he was a landless person as he owns no land.  That could not  possibly be the object of the Act.  The object of the Act was to give land to  landless peasants only.   

13.     In view of the above discussion we are of the opinion that a purposive  interpretation has to be given to the definition of money-lenders.  From this  angle the appellant could not be said to be a money-lender as he was not  really doing the business of money lending in the strict sense but was only  advancing loans to secure the regular supply of areca nuts.

14.     In view of the above this appeal is allowed, impugned judgment of the  High Court is set aside and the judgment of the trial court is restored.  No  order as to costs