Jugal Prasad Misser v. Bhadai Das — 1952 DIGILAW 108 (PAT)

Judgment Reuben, J. 1. This appeal by the plaintiff is directed against a decision of the Subordinate Judge of Darbhanga, dismissing a suit for therecovery of Rs. 6,630/5/6, principal and interest, on account of loans on handnotes given by defendant 9, Janardan Frasad Singh to the defendants 1 to 8, as members of a joint Hindu family governed by the Mitakshara school of Hindu law. There are three handnotes, Ex. 4(b) dated 31-12-1943, for a sum of Rs. 3.000, Ex. 4, dated 8-1-1944, for a sum of Rs. 2,000 and Ex, 4(a) dated 26-1-1944, for a sum of Rs. 800, all executed by Bhadai Das, defendant 1 in favour of Janardan Frasad Singh, stipulating to pay interest at the rate of 1 per cent per month. The handnotes were assigned to the plaintiff Jugar Prasad Misra on 15-1-1945, by defendant 9. Defendants 1 to 8 denied the allegation that they are a joint family. According to them defendant 1 is separate from the other defendants. They further denied the factum of the alleged loans and asserted that the handnotes were forgod. Finally, they challenged the maintainability of the suit on the ground that at the time the advances are alleged to have been made defendant 9 was not registered under the provisions of the Bihar Money Lenders Act, 1938 . The learned Subordinate Judge decided these questions of fact in favour of the plaintiff. He held that the defendants I to 8 constitute a joint family of which defendant 1 is the karta, that the hand-notes are genuine and represent advances as mentioned therein and that the loans were taken for the benefit of the joint family. He dismissed the suit on the ground that it cannot be entertained under the provisions of Sec. 4, Bihar Money Lenders (Regulation of Transactions) Act, 1939, because on the dates when the advances were made defendant 9 was not a registered money lender. It was urged on behalf of the plaintiff, firstly, that these were casual loans and that defendant 9, not being a money lender by profession, was not required to register himself under the Money-lenders Act of 1938; and secondly, that at the relevant period the plaintiff was a registered money lender under the Act of 1938. It was urged on behalf of the plaintiff, firstly, that these were casual loans and that defendant 9, not being a money lender by profession, was not required to register himself under the Money-lenders Act of 1938; and secondly, that at the relevant period the plaintiff was a registered money lender under the Act of 1938. The Subordinate Judge rejected the story about these being casual loans and held that the fact of the plaintiff having been a registered money-lender at the relevant period did not exclude the application of Sec. 4, Bihar Money Lenders (Regulation of Transactions) Act, 1939. 2. Before us the only finding of fact which has been challenged is the question whether defendant 9 was a professional money-lender required to register himself as such under the Money Lenders Act of 1938. This challenge was somewhat half-hearted in view of the clear evidence on the record. The case was attempted to be made out that defendant 1, who was working as a contractor under the District Board, is a tenant of defendant 9, and that because of this relationship defendant 9 occasionally gave him financial help when he was in need of funds. Defendant 9 was examined as witness No. 4 for the plaintiff and deposed that he has no regular money-lending business and does not maintain any account. It appears from his cross-examination, however, that during the four or five years preceding his deposition he had advanced money under handnote to other persons besides defendant 1. In particular, he mentions one Medni Singh to whom in 1940 he advanced the sum of Rs. 500. Witness No. 3 for the plaintiff Jainarain Labh is the scribe of the three handnotes in suit. He tells us that he has scribed a number of handnotes in favour of defendant 9. Rameshwar Prasad Singh (P. W. 5), who is a witness to the handnote Ex. 4 (b) deposes: "Defendant 9 advances money to people. His money lending business would be Rs. 5,000 to Rs. 10,000 per year". He also mentions a specific loan of Ri. 5,000 given by defendant 9 to Mangal Mahto. It would not be out of place in this connection to notice that the plaintiff himself in the cause title of the plaint describes defendant 9 as "zamindar and mahajan". His money lending business would be Rs. 5,000 to Rs. 10,000 per year". He also mentions a specific loan of Ri. 5,000 given by defendant 9 to Mangal Mahto. It would not be out of place in this connection to notice that the plaintiff himself in the cause title of the plaint describes defendant 9 as "zamindar and mahajan". In these circumstances, the Subordinate Judge rightly rejected the plea that defendant 9 was not liable to register himself as a money lender under the Bihar Money-Lenders Act, 1938. 3. The only question which arises on this finding is whether in these circumstances, the plaintiff, having been duly registered under the Act at the relevant time, the suit is barred by Sec. 4, Money Lenders (Regulation of Transactions) Act, 1939. The point is concluded by the decision in -- Noor Mohammad Khan Kabuli V/s. Haridas Banerjee, AIR 1953 Pat 140 (A). In that case the plaintiff, a registered money lender, sued to recover an advance of Rs. 230.00 with interest at the rate of 10 per cent per month given on a handnote by a firm of money lenders at a time when the firm was not registered under the Act of 1938. It was held by Rai and Sinha, JJ. that the fact that the plaintiff, the assignee from the money lending firm of the handnote in question, was a registered money lender at the relevant period did not exclude the application of Sec. 4, Money Lenders (Regulation of Transactions) Act, 1939. It has been contended very strenously before us, however, that the decision of their Lordships is not supported by the reasons given by them, and the point should be referred to a large Bench for further consideration. 4. It is urged by leamed counsel that the decision of their Lordships is based on two grounds: firstly, that the plaintiff, being an assignee of the money-lending firm, could not have a higher right than that of his assignor; and secondly, that if the interpretation sought to be put on Sec. 4 by the plaintiff is accepted, the provisions of the section would be frustrated. Regarding the first of these grounds it is contended that it is based on a misconception that Sec. 4 deals with rights whereas it merely bars a remedy. Regarding the first of these grounds it is contended that it is based on a misconception that Sec. 4 deals with rights whereas it merely bars a remedy. Section 4 provides that no Court shall entertain a suit by a money-lender for the recovery of a loan advanced by him after the commencement of the Act unless such money lender was registered under the Bihar Money-lenders Act, 1938, at the time when such loan was advanced. It does not declare unlawful the transaction between the moneylender on one side and the borrower on the other, and there is no doubt that if the borrower repays to a money-lender a loan which was advanced at a time when the money-lender was not duly registered as such he would not be entitled on that ground to sue the money-lender to recover the amount. The section, therefore, does not extinguish the right of the money-lender under the transaction but, by forbidding the Court to entertain a suit for the recovery of the money lent, makes the right what Salmond calls an imperfect right. An analogous provision is contained in Sec. 66, Civil P. C. which prevents a person claiming title under a purchase certified by the Court from maintaining a suit on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims. In the words of Srinivasa Aiyangar J. in -- Chidambaram Chettiar V/s. Subramania Aiyar, AIR 1917 Mad 324 (B): "That section does not purport to take away or affect any right which the real owner had but similar to the Limitation Acts prevents a particular person from bringing a suit against the certified purchaser on certain grounds. I am inclined to hold that it is merely a regulation or procedure, and that to this suit, the new Sec. 66 must be applied." This distinction is expressed by Dicey in the following words: "Any rule of law which solely affects, not the enforcement of a right, but the nature of the right itself, does not come under the head of procedure. Thus, if the law which governs, e.g., the making of a contract, renders the contract absolutely void, this is not a matter of procedure, for it affects the rights of the parties to the contract, and not the remedy for the enforcement of such rights. Thus, if the law which governs, e.g., the making of a contract, renders the contract absolutely void, this is not a matter of procedure, for it affects the rights of the parties to the contract, and not the remedy for the enforcement of such rights. Hence any rule limiting the time within which an action may be brought, any limitation in the strict sense of that word, is a matter of procedure governed wholly by the lex fori. But a rule which after the lapse of a certain time extinguishes a right of action -- a rule of prescription in the strict sense of that word -- is not a matter of procedure, but a matter which touches a persons substantive rights, and is therefore governed, not by the lex fori, but by the law, whatever it may be, which governs the right in question." (Dicey on Conflict of Laws, Fifth Edition, page 851). It is needless to cite further authorities for a proposition which finds expression in Sec.25, Contract Act, and is known to the Hindu Law, which authorizes a Hindu widow to alienate property forming part of her husbands estate to satisfy his barred debts. There is no reason to think that their Lordships were unaware of this distinction. The fact is that, when Sinha J., who delivered the leading judgment observed that an assignee cannot have a higher right than that of his assignor he was thinking not of the right to recover the money due on the loan but of the right to maintain a suit for this purpose. He was stating it as a general proposition that an owner of a right cannot avoid a disability attaching to that right by transferring that right to someone else. 5. It is true, as pointed out by learned counsel, that the general rule that an assignee cannot get a larger right than the assignor 13 open to exceptions. An instance in point is Sec. 41, T. P. Act relating to the transfer of an interest in immovable property by an ostensible owner. 5. It is true, as pointed out by learned counsel, that the general rule that an assignee cannot get a larger right than the assignor 13 open to exceptions. An instance in point is Sec. 41, T. P. Act relating to the transfer of an interest in immovable property by an ostensible owner. An interesting instance of a converse case is given by Paton in his text book on Jurisprudence, namely, that under the English Law of limitation before 1929 a person who had converted to his own use the chattel of another might be protected against action by the owner owing to the period of limitation for such action having expired and yet, if the wrong-doer sold the chattel to an innocent purchaser, the innocent purchaser could be sued in conversion as the fresh conversion created a fresh remedy. With special reference to the fact before us it is pointed out that if the hand-note had been assigned outside the limits of the State of Bihar the bar of Sec. 4 of the 1939 Act being in the nature of procedural law would not have applied to a suit instituted on these handnotes in a Court outside these limits. 6. With reference to the other line of reasoning in the decision in -- Noor Mohammad Khan Kabuli V/s. Haridas Banerjee (A), our attention has been drawn to several decisions in which it has been observed that the duty of the Courts is to interpret and to administer the law as it is and not to consider what the consequences of a particular interpretation may be to society or whether it is in the interest of the public: -- Leach V/s. Rex, (1912) AC 305 at p. 310 (B); -- Emperor V/s. Banoari Lall Sarma, AIR 1943 FC 36 at p. 58 (D); and -- Emperor V/s. Benoarilal Sarma, AIR l6l5 PC 48 at p. 53 (E). Vide also the observations at pages 10 to 11 in -- Fender V/s. St. John Mild-may, (1938) AC 1 (F). This is a principle for which authority is hardly necessary. Where the words of the law are clear the meaning must be followed whatever the consequences. Vide also the observations at pages 10 to 11 in -- Fender V/s. St. John Mild-may, (1938) AC 1 (F). This is a principle for which authority is hardly necessary. Where the words of the law are clear the meaning must be followed whatever the consequences. But it is an equally well-established canon of interpretation that where there is an ambiguity the Courts are entitled to consider the purpose of the legislation in determining what is the correct interpretation to put upon the statute. I am not prepared to agree with learned counsel that their Lordships lost sight of the principle first enunciated and have based their interpretation on what they assumed to be the intention of the Legislature in enacting the statute. If I may say so with all respect, their Lordships proceeded on a consideration of the words of the section itself which are: "No Court shall entertain a suit by a money-lender for the recovery of a loan advanced by him after the commencement of this Act unless such money lender was registered under the Bihar Money-lenders Act, 1938, at the time when such loan was advanced". As the words stand the section has no application to the plaintiff in this case, who is not suing for a loan "advanced by him". But the section has to be read with Section 2, which says: "Unless there is anything repugnant in the subject or context..... (g) Money lender means a person who advances a loan and shall include a Hindu undivided family and the legal representatives and the successors-in-interest whether by inheritance, assignment or otherwise, "of a person who advanced the loan". Therefore, unless there is something in Sec. 4 inconsistent with the definition we must take the word "money-lender" in that section to include an assignee. Let us re-read the section in the light of this observation. The section begins: "No Court shall entertain a suit by a money-lender". The moneylender is here spoken of with reference to the institution of the suit. It refers to the person who comes within the definition at the time when the suit is instituted. This might be the original money-lender, or his assignee. The section goes on: "for the recovery of a loan advanced by him after the commencement of this Act". The word "him" relates to the moneylender at the time when the loan was given. This might be the original money-lender, or his assignee. The section goes on: "for the recovery of a loan advanced by him after the commencement of this Act". The word "him" relates to the moneylender at the time when the loan was given. It, therefore, relates to the original money-lender. The section goes on: "unless such money-lender was registered under the Bihar Money-lenders Act, 1938, at the time when such loan was advanced". Here the money-lender is expressly referred to with reference to the time when the loan was advanced, that is to say, it refers to the original money-lender, and it is he that is required to be duly registered under the Act at that particular time. On this reading the section is clearly applicable to a suit for the recovery of such a loan instituted by a subsequent assignee. The expression "money-lender" is used throughout the section with reference to the loan which it is sought to recover. The bar created by the section applies to a suit instituted by a money-lender for the recovery of a loan advanced "by him" -- it is only by reason of the extended definition given in Sec.2 that the section becomes applicable to a suit instituted by his assignee -- and it is "such money-lender", that is to say, the money-lender who advanced the loan, who is required by the section to have been registered at the time when, the loan was advanced. It is true that under Sec.2 the word "money-lender" includes also the assignee, but in this latter portion of the section the "money-lender" is used with reference to a particular point of time and at that time there can be no assignee. The fact that the person who subsequently became the assignee was registered at the relevant time, therefore, does not bring the assignee within the saving clause. 7. It is urged that this mode of interpretation involves the reading of the word "money-lender" in different senses in different parts of the section, which is contrary to the canons of interpretation. I do not see how this canon is contravened. Throughout the section I have accepted the meaning of the word "money-lender" as defined in Sec.2. 7. It is urged that this mode of interpretation involves the reading of the word "money-lender" in different senses in different parts of the section, which is contrary to the canons of interpretation. I do not see how this canon is contravened. Throughout the section I have accepted the meaning of the word "money-lender" as defined in Sec.2. From the terms of the Section, however, it is clear that this word in different places refers to the money-lender at different points of time, and applying the definition in its widest sense to the facts at the particular point of time, it happens that the word in different places points to a different individual. This is not using the word in a different sense in different places, any more than it would be to interpret the word "proprietor" relating to one point of time to refer to a person A and at another point of lime to his son and heir B. This feature, namely, that the direct connotation of the word was affected by the different points of time with reference to which it was used did not appear in the cases which have been cited in support of this contention. In -- Superintendent of Insurance V/s. Navabharat Insurance Co. Ltd., AIR 1943 Bom 81 (G), the question arose with reference to the word, "the sum" occurring in the first portion of Sec.27 (1), Insurance Act, 1938, and the words "the said sum" occurring in the latter portion of the sub-section. Obviously these words could not be interpreted to refer to different amounts. -- Mahomed Manjural Haque V/s. Sebait of Sri Sri Iswar Lakshmi Narayan Jew Thakur1, AIR 1943 Cal 361 (H), related to the interpretation of the word "estate" occurring in different portions of Sec. 58, Bengal Land Revenue Sales Act, 1859. According to the definition clause contained in Act 7 of 1868 the word means any land or share in land subject to the payment of Government of an annual sum in respect of which the name of a proprietor is entered on the general register of revenue paying estates or in respect of which a separate account may have been opened under the Act of 1859. Their Lordships pointed out that the Jatter portion of Sec. 58 would be inconsistent with Sec.14 of the Act if the word "estate" was interpreted as including a share of an estate. . It was in these circumstances that their Lordships held that in the early portion of the section it must also be held not to include a share of an estate. In -- Gampat Kimushet V/s. Vithal Bhikan, AIR 1942 Bom 57 (I), their Lordships were concerned with the , interpretation of Order 23 Rule 1, Clause (3) which provides that "where the plaintiff withdraws from a suit, or abandons part of a claim, without the permission referred to in Sub-rule (2), he shall be liable for such costs as the Court may award and shall be precluded from instituting any fresh suit in respect of such subject-matter or such part of the claim". The facts were that the plaintiff having made an application under para. 20 of Schedule 2, Civil P. C. on 14-6-1935, to file an award made on a private reference to arbitration withdrew the application, informing the Court that he intended to enforce the award by filing a suit for the purpose. It was contended before their Lordships of the Bombay High Court that the suit to enforce the award was barred by reason that at the time of the withdrawal the plaintiff had not obtained the permission of the Court to institute a suit to enforce the award. Their Lordships pointed out that, conceding that Order 23 Rule 1 was applicable, the word "suit" occurring in the first part of Sub-rule (3) must be read in the same sense as in the latter part of Sub-rule (3). If, therefore, the words in the first portion were taken to cover the withdrawal of the application the words in the latter part must be taken to cover the institution of a fresh application. What the plaintiff in the case had done was that he had instituted not a fresh application but a separate suit. Hence, the maintainability of the suit was not affected by the provision. In that case it is true that the meaning of the word was being considered with reference to different points of time, but the facts were not such that the connotation of the word could be held to be affected. 8. On the terms of the section, therefore. Hence, the maintainability of the suit was not affected by the provision. In that case it is true that the meaning of the word was being considered with reference to different points of time, but the facts were not such that the connotation of the word could be held to be affected. 8. On the terms of the section, therefore. I consider that the suit was clearly bafred, and it is hardly necessary to refer to the intention of the Legislature. It is true, as contended before us, that the intention was not to affect the negotiability of a handnote and that the giving of loans by a professional money-lender, who is not registered under the 1938 Act, has not been made illegal. What the Legislature clearly wanted, however, was to discourage transactions of this kind by refusing the help of the State Courts for the recovery of loans given in such circumstances. If the interpretation for which learned counsel contends is accepted, it would be easy to defeat this intention by assigning the debt to another person, whether that person was or was not registered at the time of the loan, for such a person suing to recover the money would not be suing for the recovery of a loan "advanced by him". This danger was foreseen and was provided against by defining the term "money-lender" to include an assignee. We would not be giving the full force of this definition to the word "money-lender" if we hold that in Sec. 4 it does not include an assignee. 9. Next it is argued that the recovery of the loan being barred, the plaintiff should be permitted to recover at least the actual amount of the loan given to defendant as being money justly due to him. The cases cited in support of the contention have no application. In --London and Midland Bank Ltd. V/s. Mitchell, (1899) 2 Ch 161 (J), a bank having an equitable charge on shares of a limited company to secure a simple contract debt brought an action to enforce its security by foreclosure or sale after the expiry of the period of limitation for a suit to recover the debt itself. It was held that the barring of the personal remedy did not have the effect of depriving the bank of its remedy against the property. It was held that the barring of the personal remedy did not have the effect of depriving the bank of its remedy against the property. The reason was explained by Stirling, J.: "The Statute of Limitations only destroys the remedy of the creditor. The creditor could not sue the mortgagor upon the covenant because he would be met by the Statute of Limitations which bars the action. The mortgagee says, "I do not want to sue anybody; all I want is to have this mortgaged property, which is mine, handed over to me". How it can be kept from him, I cannot conceive." Coming now to -- Ex parte Shell; In re: Lonergan, (1876) 4 Ch D 789 (K), it is necessary first of all to mention some of the provisions of the Partnership Law Amendment Act, 1865. Sec.1 relates to an advance of money by way of a loan to a person engaged or about to engage in any trade or undertaking, upon a contract in writing with such person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of profits arising from carrying on such trade or undertaking, and Sec. 5 provides that in the event of any such trader being adjudged bankrupt, the lender of any such loan as aforesaid shall not be entitled to recover any portion of the principal or of the profits or interest payable in respect of such loan until the claims of the other creditors of the said trader for valuable consideration in money or moneys worth have been satisfied. Sheil having made such a loan to a trader, the amount of the loan and the interest being secured by a mortgage to Sheil of the lease of the house where the business was carried on and of the good will of the business, the question arose whether the rights of Shiel as a mortgagee were affected by Sec. 5 of the Act. The question was answered in the negative, Jessel, M. Rule pointing out that there are several instances in which a mortgage debt may be irrecoverable and in which nevertheless the mortgagor cannot redeem the mortgaged property without paying the amount secured by the mortgage deed. The question was answered in the negative, Jessel, M. Rule pointing out that there are several instances in which a mortgage debt may be irrecoverable and in which nevertheless the mortgagor cannot redeem the mortgaged property without paying the amount secured by the mortgage deed. Sec. 65, Contract Act, the principle underlying which is that a right to restitution may arise out of the failure for contract though the right be not itself a matter of contractual obligation, has no application to the present case because the contract in this case has not failed; it is merely the right to sue for recovery of the loan that is barred, as explained in -- Mohan Manucha V/s. Manzoor Ahmad Khan, AIR 1943 PC 29 (L): The right to recover money under Sec. 65 arises "not under any contract but as a matter of restitution by reason that no contract subsists". 10 Finally, it is urged that Sec. 4, Money-lenders (Regulation of Transactions) Act, 1939, is void under Article 13 Clause (1) read with Articles 14, 15 and 19 of the Constitution of India. I have mentioned above the possibility that an assignee to whom the handnotes were assigned outside the limits of the State might have instituted a suit outside those limits to recover the dues on the handnotes. This is not a reason for holding that the money-lender who gave the loan has been discriminated against within the meaning of either Article 14 or Article 15. The bar under Sec. 4 applies to all money-lenders equally whoever they may be if they gave a loan within the limits of the State without being registered under the Money-lenders Act of 1938. With reference to the contention under Article 19 it is urged that the bar of Section 4 imposes an unreasonable restriction on the right under Clause (1) Sub-clause (f) of the Article to acquire, hold and dispose of property. It is pointed out in this connection that whereas under the. Bihar Act of 1939 a suit for the recovery of a loan granted under such circumstances is completely barred, the Bengal Money-lenders Act, 1940, provides by Sec.13 that the money-lender may be permitted to proceed with the suit on paying the prescribed penalty. I do not think that Sub-clause (f) of Clause (1) of Article 19 covers the right to sue for the recovery of money. I do not think that Sub-clause (f) of Clause (1) of Article 19 covers the right to sue for the recovery of money. Be that as it may, the jurisdiction of the Bihar Legislature to regulate the transactions of money-lenders is conceded and it was within the province of the Legislature to decide what would be the proper penalty for a failure to comply with the requirements of the law. The penalty cannot be regarded as imposing an unreasonable restriction merely because it is more drastic than that prescribed by another Legislature. 11. For the reasons I have given the appeal fails and I would dismiss it. In the special circumstances, there will be no order for costs. Sarjoo Prosad, J. 12 I agree.