MURGOD, J. ( 1 ) THIS Appeal comes before the Division Bench on a Reference under Section 6 of the Karnataka High Court Act, 1961 by order dated 5-8-1991 passed by Learned Brother Murlidher Rao, J. ( 2 ) THE circumstances leading to the Reference are as under:- The appellant, a money-lender, advanced a loan under a promissory Note to the defendants on 22-7-1974. He obtained a money-lenders licence from the Registrar of Money Lenders, on 22-10-1975 with an endorsement that "the licence shall be valid from 1-1-1974 upto 31st December, 1975". He filed Original Suit No. 83 of 1977 in the Court of Principal Munsiff, Tumkur on 14-4-1977 with licence Ex. P. 5 with the above endorsement. The learned Munsiff decreed the suit, but the Lower Appellate Court in Regular Appeal No. 85 of 1979 reversed the judgment and decree of the learned Munsiff and dismissed the suit holding that under Section 10 of the Karnataka money Lenders Act, 1961 (herein after referred to as the Act") there was no power in the Authority to grant a Money Lenders Licence with retrospective effect and since the appellant did not have a licence on the date of advancing the loan on 22-7-1974 he was not entitled to maintain the suit. Prior to filling of the suit, Section 11 of the Act came to be amended by Karnataka Ordinance No. 32 of 1976 which came into force on 27- 10-1976 and subsequently the Ordinance became act No. 77/76 which was brought into force retrospectively from 27-10-1976. By this amendment sub-sections (2) (3) and (4) of section 11 of the Act were deleted and sub-section (1) was amended by insertion of the words "and on the date such suit was filed". ( 3 ) IN BASAPPA AND OTHERS vs GAREMANE KAMANNA1 the learned Single Judge of this Court (Murlidher Rao, J. ,) interpreting sections 6 and 10 of the Act held that the Licensing Authority had no power to grant licence retrospectively and a licence granted would be valid right from the date on which it was granted upto 31st December of that year. ( 4 ) BEFORE the learned Single Judge, the observations of Brother DP. ( 4 ) BEFORE the learned Single Judge, the observations of Brother DP. Hiremath, J. , in S. SANNAPPA vs BADA KENCHAPPAV to the following effect were cited:"even a casual reading of Section 11 (2) makes it amply clear that the money-lender was bound to pay the arrears of licence fees as stated therein and then obtain a licence. This obviously means that the Registrar was competent to issue licence and also issue licence for the previous period even though it amounted to granting of licence with retrospective effect. In a way, this is almost in. the nature of compounding clause. "the learned Single Judge thought that the observations referred to in s. Sannappa's case were contrary to the Judgment rendered in basappa's case and therefore referred the matter for Decision by a division Bench. ( 5 ) SRI D. L. N. Rao, the learned Counsel for the appellant and Sri C. Chagashetty the learned Counsel for the respondents have been heard at length. In view of their submissions, the following Points arise for Consideration:- (1) Whether there is power in the Licensing Authority to grant money Lenders Licence under Section 11 (2) of the money Lenders Act without the intervention of the Court after filing of the suit ? (2) Whether the licence Ex. P. 5 granted in the case on hand is valid and legal ? (3) To what relief the appellant is entitled ? ( 6 ) THE facts admitted and proved in the case are as under:- Appellant advanced the loan on 22-7-1974 under the pronote ex. P. 1. Appellant applied for the first time for the grant of a Money lenders Licence on 11-12-1974 as per Ex. D. 1 for the year 1974 and as per Ex. D. 3 for the year 1975 on 11-12-1974 itself and he was issued licence Ex. P. 5 on 22-10-1975 with endorsement thereon that it was valid from 1 -1 -1974 to 31 -12-1975. The suit came to be instituted on 14-4-1977 after Act No. 77 of 1976 deleting sub-sections (2) (3) and (4) of Section 11 of the Act had come into force with effect from 27-10-1976. ( 7 ) SECTION 11 of the Act as it stood before the amendment by Act No. 77 of 1976 read as under:"11. The suit came to be instituted on 14-4-1977 after Act No. 77 of 1976 deleting sub-sections (2) (3) and (4) of Section 11 of the Act had come into force with effect from 27-10-1976. ( 7 ) SECTION 11 of the Act as it stood before the amendment by Act No. 77 of 1976 read as under:"11. Suits by money lenders not holding licence:- (1) After the expiry of six months from the date on which this act comes into force, no Court shall pass a decree in favour of money lender in any suit to which this Act applies, filed by a money lender, unless the Court is satisfied that at the time when the loan or any part thereof to which the suit relates was advanced the money lender held a valid licence. (2) If during the trial of any such suit, the Court finds that the money lender had not held such licence, the Court may, on the application of the money lender, stay the hearing of the suit and require him to produce within a period of three months a licence on payment to the Registrar of all the arrears of the licence fees payable by him under the act for the period commencing from the date on which he started the business of money lending or the expiry of six months from the date on which this Act comes into force whichever is later, together with such penalty, not exceeding five hundred rupees as the Court may direct: provided that when the Court is satisfied that the failure of the money lender to obtain a licence was due to any reasonable cause, the Court may direct that no penalty as aforesaid or part of such penalty shall be paid by the money lender. (3) The Court may, on sufficient cause being shown, from time to time extend the period during which the money lender shall be required to produce a licence. (4) If the money lender fails to produce the licence required under sub-section (2) within the period specified therein or within such period as may be extended under sub-section (3), the Court shall dismiss the suit. If the money lender produces such licence within the aforesaid period, the Court shall proceed to hear the suit. "5. (4) If the money lender fails to produce the licence required under sub-section (2) within the period specified therein or within such period as may be extended under sub-section (3), the Court shall dismiss the suit. If the money lender produces such licence within the aforesaid period, the Court shall proceed to hear the suit. "5. Nothing in this section shall affect- (a) suits in respect of loans advanced by a money lender before the date on which this Act comes into force; (b)xxx7. In S. Sannappa vs Bada Kenchappa, a suit for recovery of money lent on a pronote on 3-2-1972 with interest accrued thereon was instituted on 3-2-1975, well before the sub-sections (2) (3) and (4) came to be deleted by Amendment Act No. 77 of 1976. In that suit after the closure of the evidence the plaintiff-appellant made an application under Section 11 (2) of the Act for staying the suit to enable him to obtain a licence and the trial Court as well as the appellate Court held that application was not maintainable and had rejected the request for staying the suit to enable him to obtain the licence, In that background this Court held that the rejection of that application was incorrect and it was the duty of the Court to stay the hearing of the suit after it found that the plaintiff was a money-lender on an application filed by him to enable him to obtain a licence and produce it within a period of three months from the date of that order or within such period as may be extended by the Court and in view of rule 5 (2) of the Rules framed under the Act of 1961 an application for grant of a licence for the first time could be made on any date and therefore the Registrar was empowered to issue licence for the previous period even though it amounted to granting of licence with a retrospective effect. The Court observed that it was. almost in the nature of compounding clause. The Court observed that it was. almost in the nature of compounding clause. It is to be seen from the facts of s. Sannappa's case that the appeal arose out of a suit filed earlier to amendment Act 77 of 1976 came into force and that'the observations made in paragraph 14 of the Judgment came to be made in the context of the rejection of an application filed for enabling the appellant-plaintiff to obtain a licence with retrospective effect under section 11 (2) of the Act where the suit had been filed on 3-2-1975 and an application had been made by the plaintiff to stay the suit to enable him to obtain Money Lenders Licence as provided in Section 11 (2) of the Act. 7. 1. Section 6 of the Money Lenders Act requires every money lender to apply in prescribed form for the grant of a licence every year before such date as may be prescribed. Rule 5 (2) of the Mysore money Lenders Rules, 1965 (as it stood before amendment i. e. , before 13-9-1985 by Notification No. CMW 1 CML 85 dated 12/13th september 1985) lays down that an application for grant of a licence for the first time may be made on any date and an application for renewal of licence may be made on any date within two months prior to the expiry of the licence. Section 6 (4) of the Act provided for making an application after the expiry of the period prescribed by rules with a licence fee at double the rates specified in that sub-section. Section 10 of the Act has laid down that a licence shall be valid from the date on which it was granted till 31 st of December following. The Proviso to Section 10 lays down that where a money-lender holding a licence has made an application for a fresh licence before the date prescribed under sub-section (1) of Section 6, for the succeeding year, such a money-lender shall, notwithstanding the expiry of the term of his licence, be deemed to have a valid licence until orders are received by him on his application for the fresh licence. Interpreting these provisions in Basappa and Others vs qaremane Kamanna1 it was held that under the amended Section 11 of the Act, it was necessary for the money-lender to have a valid licence not only on the date on which the loan was advanced but also on the date on which the suit was filed and that there was no provision in the Act to grant a licence retrospectively and any licence granted under the Act could only be prospective and effective from the date of its issue till the end of that year. 7. 2. Sub-section (2) of Section 11 as it stood before the amendment provided for stay of the hearing of the suit on the application of the plaintiff who had not held necessary Money Lenders licence and Court was empowered to require him to produce within a period of three months a licence on payment to the Registrar of all the arrears of licence fe. es payable by him under the Act for the period commencing from the date on which he started the business of money lending or the expiry of six months from the date on which the act comes into force which-evens later together with-such penalty not exceeding Rs. 500/- as the Court may direct. Except the above provision contained in Section 11 (2) before its deletion there is no other provision in the Act that enabled the Registrar to issue Money lenders Licence with retrospective effect. Such power is given to the registrar where the money lender in a pending suit is found without a valid licence and is required, to produce a licence on payment of arrears of licence fees to the Registrar together with such penalty not exceeding Rs. 500/- as the Court may direct. The wording of the section indicates that it is only the Court that can require a money lender without valid licence in a pending suit to produce a licence by approaching the Registrar by paying the arrears of fees together with penalty not exceeding Rs. 500/- as directed by it. The money-lender is not entitled under any of the provisions of the Act except section 11 (2) to approach the Registrar for issuing a licence with retrospective effect if no suit filed by him is pending in any Court for want of a money Lenders Licence. 500/- as directed by it. The money-lender is not entitled under any of the provisions of the Act except section 11 (2) to approach the Registrar for issuing a licence with retrospective effect if no suit filed by him is pending in any Court for want of a money Lenders Licence. On the money lender approaching for a licence as required by Court under Section 11 (2) of the Act, the registrar is duty-bound to issue a licence by collecting arrears of fees together with penalty as ordered by the Court with retrospective effect. This is so because a duty is cast on the Registrar to issue a licence in terms of Section 11 (2) with retrospective effect to meet the requirement of the Court to enable it to pass a decree in favour of the money lender. Neither in Section 11 (2) nor in any other provision of the Act, power is given to the Registrar for issuing Money Lenders licence without the intervention of the Court with retrospective effect. As rightly held in Basappa and Others vs Garemane Kamanna, the registrar can issue a licence only prospectively and the licence issued is valid from the date of issue to the end of December of that year. Therefore without the intervention of the Court requiring the money lender to produce a licence under Section 11 (2) of the Money lenders Act, there is no provision in the Act under which a money-lender can independently approach the Registrar and obtain a money lenders licence with retrospective effect. Therefore, we are of the opinion that it is open to the Registrar of Money Lenders to issue a licence with retrospective effect only under Section 11 (2) of the Act where the Court requires a licence to be produced by the money lender who was found without a valid licence and who was required to pay arrears of fees payable by him together with penalty as ordered by the Court. The facts of the case in S. Sannappa vs Bada kenchappa2 make it clear that the Court was moved to stay the suit and enable the money lender-plaintiff to obtain a licence as prayed for by him in his application under Section 11 (2) of the Act and in that context the observations made in paragraph 14 of the Judgement referred to above are to be understood. In S. Sannappa's case2 the court was not dealing with a case where Section 11 of the Act in its amended form was applicable. ( 8 ) THE learned Counsel for the appellant relying on Section 6 of the Act and Rule 5 (2) of the Karnataka Money Lenders Rules, 1965 as interpreted in K. SHIUALINGAIAH vs B. V. CHANDRASEKHARA gowda3 has contended that renewal of the licence shall be deemed to take place from the beginning of the year and the Registrar was competent to issue the licence with retrospective period and therefore the view taken by the Lower Appellate Court is incorrect. ( 9 ) IN paragraph-13 of the Judgment in K. Shivalingaiah vs B. V. Chandrasekhara Gowda the Division Bench of this Court has observed as under:-"13, The learned Single Judge of this Court in HUCHAIAH vs state OF KARNATAKA while considering Sections 6 (4) and 7 (1) of the Acts in relation to an application filed for renewal of money lenders licence has held as follows: 2. 1. The contention of the petitioner is that under the Proviso to sub-section (4) of Section 6 of the Karnataka Money Lenders Act,. 1961 (hereinafter referred to as the 'act') an application for renewal can be made even after the expiry of the period prescribed under the Rules and such an application is maintainable provided it is accompanied by a licence fee at double the rate as specified in the said sub-section. 2. 2. It is submitted that accordingly, the petitioner has made an application accompanied by a licence fee at double the rate as provided under Section 6 of the Act. It is further submitted that section 7 which provides for grant of licence and entry in the register applies not only to an application filed for grant of licence but also to an application filed for renewal as provided in the proviso to sub-section (4) of Section 6 of the Act. Therefore, the learned Counsel submits that the authority is not justified in rejecting the application without holding an enquiry as required by Section 7 of the Act. Section 7 (1) of the Act reads as follows:- "on receipt of an application under Section 6 and after making a summary inquiry in accordance with the prescribed procedure, the Assistant Registrar shall forward the application, together with his report to the Registrar. Section 7 (1) of the Act reads as follows:- "on receipt of an application under Section 6 and after making a summary inquiry in accordance with the prescribed procedure, the Assistant Registrar shall forward the application, together with his report to the Registrar. The Registrar may after making such further inquiry, if any, as he deems fit, grant the applicant a licence in such form and subject to such conditions as may be prescribed and direct the Assistant Registrar to enter one name of such applicant in the Register maintained by him under section 4. If the application is in respect of more than one place of business in the area under the jurisdiction of the Registrar a separate licence in respect of each such place shall be granted in the name of the applicant and the person responsible for the management of the business at such place. "3. Thus the aforesaid provision makes it clear that an application filed under Section 6 of the Act, is required to be enquired into and disposed of in accordance with the above provision. That being so, an application filed under sub-section (4) of Section 6 of the Act, even though it is beyond the time, if it is accompanied by a licence fee at double the rate as specified, is an application for the purpose of Section 7 of the Act, and it has to be enquired into and disposed of in accordance with the provisions contained in Section 7 of the Act. It is also not in dispute that the application has been rejected without holding an enquiry. "therefore, in the light of the provisions contained in sub-section (4) of Section 6 of the Act and also sub-rule (2) of Rule 5 of the rules, we are of the view that when once the application for renewal is made by paying the licence fee at double the rate as per the Proviso to sub-section (4) of Section 6 of the Act even though such application is made beyond the period prescribed under sub-rule (2) of Rule 5, the renewal shall be deemed to take place from the beginning of the calendar year as otherwise there is no purpose in seeking renewal. A money lender can very well make a fresh application and seek fresh licence. A money lender can very well make a fresh application and seek fresh licence. The whole object of providing for payment of licence fee at double the rate specified for an application made beyond the time prescribed for renewal of money lenders licence is to enable the money lender who has failed to make an application within the period prescribed under sub-rule (2) of Rule 5 of the Rules, to have the money lenders licence renewed for the entire calendar year. The application made for renewal of licence is not an application for grant of fresh licence. It is an application for grant of fresh licence. It is an application filed by the money lender who held the money lenders licence in the preceding year and wants to have the same licence renewed for the current year. The fact that renewal application has not been filed within the period prescribed by sub-rule (2) of Rule 5 of the Rules will not make that application invalid and it will not disable the applicant to have the money lenders licence renewed if he pays licence fee at double the rate. Therefore, we are in agreement with the decision in Huchaiah's case holding that such an application must be considered to be valid application and it shall have to be considered in accordance with law. We also hold that renewal takes effect from the commencement of the current year for which the renewal is sought, irrespective of the period when it is sought. Money lenders licences produced at Exs. P. 6 and P. 7 read in the light of the view we have taken would go to prove that exs. P6 and P7 are not the fresh money lenders licences but the same are the money lenders licences renewed for the year 1980. It also follows that the same are valid for the entire calendar year 1980. This would be sufficient for the purpose of the case. " ( 10 ) UNDER Section 6 of the Act read with Rule 5 of the Rules, no doubt there is no limitation for making an application for grant of money lenders licence for the first time but the licence to be issued will be effective from the date of its issue to the end of the calendar year. " ( 10 ) UNDER Section 6 of the Act read with Rule 5 of the Rules, no doubt there is no limitation for making an application for grant of money lenders licence for the first time but the licence to be issued will be effective from the date of its issue to the end of the calendar year. Wherever an application is made under Section 6 of the Act for renewal before the date of expiry of the prescribed period or even thereafter with double the fees then the renewal that is granted will be effective from the beginning of the year for which the renewal takes place. As clarified by the Court an application made for renewal of licence; it is an application filed by the money lender who held the money lenders licence for the preceding year and wants to have the same renewed for the current year. In the case on hand, the appellant- plaintiff made an application Ex. D. 1 on 11-12-1974 for the first time as admitted by him for money lenders licence for the year 1974 and he also made another application under Ex. D. 3 on the i same day namely 11-12-1974 for the issue of money lenders licence i for the year 1975. His applications were granted and licence was issued on 22-10-1975 as per Ex. P. 5 with an endorsement that the licence was valid from 1-1-1974 to 31-12-1975. As seen above these applications Exs. D. 1 and D. 3 were not in pursuance of the requirement of the Court under Section 11 (2) of the Act requiring him to produce a money lenders licence on payment of arrears of fees to the Registrar together with penalty as directed by the Court. Therefore the Registrar could not have issued licence Ex. P. 5 restrospectively from 1-1-1974 when the application was made for the first time on 11-12-1974. Therefore the Registrar could not have granted a licence for the period anterior to the date of application namely 11-12-1974. ( 11 ) IN the case on hand the loan transaction has taken place on 22-7-1974 and the application for grant of licence is made subsequently thereto. Therefore prayer for the grant of licence made on 11-12-1974 could not have been granted effective from an earlier date namely 1-1-1974. Since Ex. ( 11 ) IN the case on hand the loan transaction has taken place on 22-7-1974 and the application for grant of licence is made subsequently thereto. Therefore prayer for the grant of licence made on 11-12-1974 could not have been granted effective from an earlier date namely 1-1-1974. Since Ex. D. 1 dated 11-12-1974 was an application for grant of money lenders licence for the first time there is no question of granting it with effect from 1-1- 1974 or renewing the same with effect from 1-1-1974. Application Ex. D. 3 dated t1-12-1974 for grant of licence for the year 1975 could not have been made the basis for issuing Ex. P. 5 to be valid from 1-1-1974. Therefore the decision in K. Shivalingaiah vs B. V. Chandrasekhara Gowda3 does not help the appellant as he had not sought renewal of his licence and his application for grant of licence could not have been granted with retrospective effect without the intervention of the Court under Section 11 (2) of the Act. Therefore the finding of the lower appellate Court that the appellant was not possessed of valid money lenders licence as on the date of the transaction of money lending on 22-7-1974 needs to be affirmed. In the result, the Appeal deserves to be dismissed and it is accordingly dismissed with costs. --- *** --- .