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PETITIONER: MODHUSUDANO MOLLANA

       Vs.

RESPONDENT: KONTARU NAIKO AND OTHERS

DATE OF JUDGMENT: 06/08/1965

BENCH:

ACT: Orissa  Money-Lenders Act, 1939 (Act 3 of 1939), s.  5(4)  : Orissa   Money  Lenders  Rules,  1939,   r.   5-Registration certificate  under r. 5 providing for maximum capital to  be invested in business-No such provision in Act-Rule providing for maximum capital whether valid.

HEADNOTE: The  appellant filed a suit against the respondents for  the recovery  of Rs. 8216 due on a promissory note  executed  by respondent  No. 1 for a sum of Rs. 6000.  The plea taken  in defence was that the suit was not. maintainable because  the registration of the appellant under s.  5(4) and r. 5 of the Orissa Money Lenders Act 1939 had become void on  account of the money lent being in excess of the maximum amount of   Rs. 2,000  which the appellant was authorised to invest  in  the business  by his registration certificate.   The  contention was  not  accepted by the trial court but  the  High  Court. accepting  it, dismissed the suit.  In appeal,  before  this Court,  by  special  leave, it was urged on  behalf  of  the appellant  that  the  main  Act  did  not  provide  for  any restriction on the amount of capital that could be  invested and  that  the rules went beyond the Act in  making  such  a provision. HELD  : In the absence of any specific provision in the  Act providing  for  the fixing of the maximum  capital  which  a money  lender can invest in money-lending business,  it  was not  open  to the State Government to frame a rule  in  that regard  and the rules framed by it about mentioning, in  the application, the maximum capital for which the registration certificate was wanted and the mention in the certificate of the amount of the maximum capital for which the  certificate is  granted,  do  not  lead  to  the  conclusion  that   the registration  of  the money-lender will become  void  if  be exceeds  the limit of the maximum capital laid down  in  the registration certificate. [348 D] Sant  Saranlal v. Parsuram Sahu [1966] 1 S.C.R. 335,  relied on.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 167 of 1964. Appeal  by special leave from the judgment and decree  dated April 11, 1962 of the Orissa High Court in First Appeal  No. 61 of 1959. A. V. Viswanatha Sastri and T.  V. R.  Tatachari, for the, appellant. A. N.  Sinha and B. P.  Jha, for respondents Nos.  1 and 2.

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The Judgment of the Court was delivered by Raghubar Dayal, J. This appeal, by special leave, is against the decree of the High Court of Orissa reversing the  decree of 346 the Court of the Subordinate Judge, Berhampur and dismissing the  plaintiff’s  suit for recovery of Rs. 8,216  due  on  a promissory  note executed by Kontaru Naiko, defendant No.  1 for Rs. 6,000. The   plaintiff   money-lender   obtained   a   registration certificate  under  s. 5(4) and r. 5, of the  Orissa  Money- Lenders Act, 1939 (Act III of 1939), hereinafter called  the Act,  and  the  rules thereunder, on  March  31,  1952.   He obtained another registration certificate in 1955 which said that  the  maximum  capital for  which  the  certificate  is granted is Rs. 8,000. The  plaintiff advanced the loan to defendant No. 1  on  May 19, 1954 and sued for the recovery of the amount due on this loan.  It was contended for the defendant that the suit  was not  maintainable  as  the maximum  capital  for  which  the plaintiff had required the registration certificate in  1952 was  Rs. 2,000 and under the provisions of the Act. and  the rules framed thereunder, he could not have advanced loan  in excess  of  that  amount  and that his  doing  so  made  the registration  of  the appellant as a money-lender  void  and therefore  the suit for recovery of Rs. 2,000 even  was  not maintainable.   These contentions were not accepted  by  the trial  Court which decreed the suit against  the  defendants with  ’the  direction that defendants Nos. 2 and 3  sons  of defendant No. 1, were not personally liable and were  liable to the extent of the assets of their father in their  hands. The High Court, however, took a different view, accepted the aforesaid  contentions of the defendants and  dismissed  the suit. The sole contention for the appellant is that the High Court was  in  error  in  holding that  the  registration  of  the appellant as a registered money-lender in March 1952  became void when he advanced a loan in suit in excess of Rs.  2,000 in 1954 and that the High Court was also in error in holding that  he could not have advanced the loan in excess  of  the maximum  capital for which the registration certificate  was wanted. The  relevant  provisions  of the Act may now  be  set  out. ’Capital’,  is  defined  in S. 2(c), to mean  that  which  a moneylender invests in the business of money-lending whether in  money or in kind.  ’Registered money-lender’,  according to   S.  2(m),  means  a  person  to  whom  a   registration certificate has been granted under S. S. Section 5  provides for the registration of moneylenders and a registration fee. Sub-s.  (1) thereof requires the applicant for  registration to mention in the application particulars mentioned in’ that sub-section   and   ’such  other  particulars  as   may   be Sub-s. (3) empowers the Provincial Government 3 47 to prescribe by rules for different classes of money-lenders and for different areas a registration fee not exceeding Rs. 25 to be paid by an applicant for registration.  Sub-s.  (4) empowers  the Sub-Registrar to grant a registration  in  the prescribed   form   to  the  applicant  except   where   the certificate previously granted to him has beencancelled under  s.  18  and the order of cancellation  is  in  force. Section  6 enacts that the registration certificate  granted willbe  in force for 5 years from the date on which  it  is granted.  Section 7 provides for the registered money-lender to maintain accounts and to give receipts.

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Section 8 which provides for suits for recovery of loans  by registered money-lenders reads :               "Suit  for  recovery of loan  maintainable  by               registered money-lenders only:-A  money-lender               shall not be entitled to institute a suit  for               the  recovery of a loan advanced by him  after               the  date  on which this  section  comes  into               force unless he was registered under this  Act               at the time when such loan was advanced :               Provided that a money-lender shall be entitled               to institute a suit to recover a loan advanced               by him at any time in the course of two  years               after the date on which the section comes into               force,  if  he  is granted  a  certificate  of               registration  under  section  5  at  any  time               before the expiration of the said years." Section  9 provides for the maximum rates at which  interest may  be  decreed.  Various other sections  deal  with  other matters which the legislature thought fit to provide for  in order  to achieve the object of the Act which, according  to the preamble, is to regulate money-lending transactions  and to grant relief to debtors in the State of Orissa. Rule 1, clause (c), of the Orissa Money-Lenders Rules, 1939, defines  ’maximum capital’ to mean the highest total  amount of  the capital sums which may remain invested in  a  money- lending  business  on  any  day during  the  period  of  the registration certificate.  Rule 3, cl. (iii), requires every application  for  the  registration  of  a  money-lender  to mention  the  maximum capital for which the  certificate  is wanted.  Rule, 4 lays down the registration fees payable and fixes  the fees according to the maximum capital in  respect of which an application for such certificate is made.   Rule 5 provides that registration certificate would be in Form in and  that during the currency of a registration  certificate application may be made for a registration certificate of  a higher 348 denomination and the provisions of rr. 3 to 5 shall, as  far as  may  be,  apply  to  it,  credit  being  given  to   the registration fee already paid by the applicant.     The  question for decision in this case  is  practically the same as came up for decision before this Court  in  Sant Saranlal  v.  Parsuram Sahu(1) judgment. in which  has  been delivered today. The relevant provisions of the Bihar Money- Lenders Act, 1938 and the Bihar Money-Lenders (Regulation of Transactions) Act, Act  mentioned  above.   What  we have  said  in  that  case appropriately  covers the contentions of the panics in  this case.   We do not therefore consider it necessary to  repeat the discussion of the various contentions in this case.     We hold that in the absence of any specific provision in the Act in this case providing for the fixing of the maximum capital  which  a money-lender can invest  in  money-lending business, it was not open to the State Government to frame a rule  in that regard and that the rules framed by  it  about mentioning,  in  the application, the  maximum  capital  for which  the  registration certificate was  wanted   and   the mention  in  the certificate of the amount  of  the  maximum capital for which the certificate is granted, do not lead to the  conclusion  that the registration of  the  money-lender will  become  void if he exceeds the limit  of  the  maximum capital laid down in the registration certificate.     We do not consider it necessary now to decide the  other point raised with respect to the retrospective operation  of the   registration  certificates  of   higher   denomination

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obtained during the currency of a registration certificate.     We accordingly allow the appeal, set aside the decree of the  Court below and restore the decree of the trial  Court. We direct the respondents to pay the costs of the  appellant in the High Court and this Court. Appeal allowed. (1) [1966] S.C.R.335.  ...... 349