1. These two revision applications raise a common question of fact and law, and are, therefore, being decided by this common judgment.
2. The plaintiff, petitioner before me is a money-lender having a valid licence issued to him under the Bombay Money Lenders Act, 1946. It was his case that he advanced a loan in the form of foodgrains namely, paddy to the defendant. That he complied with the provisions of the Money Lenders Act, namely, sending statements, maintaining accounts and such other formalities. The grain was to be returned with interest which was agreed. Since, however, the defendant did not repay the loan of grain, either in the form of grain or in cash, the plaintiff brought this suit.
3. The defendant apart from denying the claim of the plaintiff, raised a contention that the claim was not enforceable by reason of the Maharashtra Scheduled Foodgrains (Stocks Declaration and Procurement and Disposal, Acquisition, Transport and Price Control) Order, 1966. The trial Judge accepted the contention and dismissed the plaintiff's suit. It is against this judgment and decree that the present revision applications are filed.
4. Mr. Najbile who appeared for the petitioner, raised before me two contentions. The first contention was that the Money-lenders Act permitted him to advance loans in kind which would include foodgrains. Therefore, he submitted that if one of the laws passed by the legislature permitted certain activity and the other did not, then inasmuch as one of its laws permitted such an activity it cannot be struck down. The second argument of Mr. Najbile was that, in any event, he was entitled to the benefit of Section 65 of the Indian Contract Act, 1872.
5. The first submission made on behalf of the petitioner is without any merit. It is true that the definition of the word 'loan' in the Money-lenders Act to be found in Sub-section (9) of Section 2, does include an advance at interest whether of money or in kind. An advance of grain, therefore, which is a loan in kind is permissible under the Bombay Money-lenders Act, but does not come within the exceptions which are noted thereunder. It is, therefore, clear that lending of grains is permitted under the Bombay Money-lenders Act. However, I am quite clear that it does not mean, therefore, that if dealing in a certain kind of commodity is otherwise prohibited by any other law, Order or Rule having a force of law, then the circumstance that the Bombay Money-lenders Act permits loan in kind cannot be put up as an argument against any such transaction. What the Bombay Money-lenders Act does, is that it permits loans being made in a certain manner. But that does not mean that the Bombay Money-lenders Act is not subject to other laws or any person dealing in money-lending or carrying on business of money-lending would not be governed by other laws dealing with money lending or dealing with other commodities which can become the subject-matter of loan. If a commodity or item of property becomes the subject-matter of any other control or law, then even if it could be a loan by a money-lender if the transaction is in contravention of such rule or law then that transaction, notwithstanding that the Bombay Money-lenders Act otherwise permits it, would not be permitted. It is only if the other laws permit the disposal or dealing with a particular property in kind, the Bombay Money-lenders Act will control a loan of such property or article but not otherwise.
6. As regards Section 65 of the Indian Contract Act, 1872, the contention was that the transaction has been discovered to be void. That neither of the parties knew at the time when it was entered into that this transaction was infringement for the Maharashtra Scheduled Foodgrains Order, 1966. The relevant provision in Clause 10 of that Order are in these terms:
'10. Persons other than recognised dealers not to sell foodgrains without authorisation. No person, other than a recognised dealer, shall sell or otherwise dispose of foodgrains to any person, except under and in accordance with an authorisation granted by the Collector or any officer authorised by him:
Provided that, nothing in this clause shall apply to the sale or disposal of foodgrains.-
(a) to Government or to any officer or agent nominated by the State Government or the Collector in this behalf;
(b) by an agriculturist-
(i) to any other person residing in a village in the same district, for bona fide consumption by that person and members of his family, if the foodgrains so sold or disposed of do not exceed in weight at a time:--
(A) in the case of paddy, 20 kilograms;
(C) in the case of Jowar, 20 kilograms; and
(D) in the case of nagli, 5 kilograms;
(ii) to any village artisan or other person entitled to receive foodgrains as a customary remuneration for services?
(iii) to a labourer or servant employed by him, as wages in kind;
(iv) to such educational philanthropic and charitable institutions as may be approved by the Collector in this behalf, subject to such conditions as he may impose, as donations in kind,'
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It will thus be seen that clause prohibits sale or disposal, otherwise by a person who is not an authorised dealer or recognised dealer in foodgrains.
7. It was sought to be urged that by lending foodgrains, the plaintiff has not sold them. It was also contended that the property in the foodgrains has not passed and that the expression 'otherwise dispose of' is incapable of covering a transaction of this kind. I am unable to agree. The word 'dispose of has been denned as to distribute; to apply to a particular purpose; to bestow or to make disposal thereof. It also covers a sale or gift. The expression 'otherwise dispose of following the word 'or' indicates, in my opinion, all transactions which have the effect of disposing of grain otherwise than by a sale. Lending of grain no doubt would be under the circumstances 'otherwise disposing of' even assuming that it is not a sale. Further, it would not be correct to say that the property in goods had not passed. In this particular case apparently the foodgrain was given to the defendant on loan for the purposes of sowing. It was, therefore, clearly disposed of so far as the plaintiff was concerned. The plaintiff was not bound or entitled necessarily to receive the paddy in specie. It would, therefore, mean the disposal of the foodgrain and would come within the purview of Clause 10 of the Order.
8. That leaves only a question of application of Section 65 of the Indian Contract Act. Similar question had arisen before this Court in Rupam Pictures v. Ramchandra (Civil Revn. Appln. No. 98 of 1974, decided on 20-2-1975). Therein it was held that Section 65 would not be attracted to a transaction where the agreement is in violation of a statutory provision. In Pollock and Mulla's Indian Contract Act at page 463 the observations are:--
'On the one hand it has been said that the words 'agreement discovered to be void' apply to all agreements which are void ab initio, including agreements based upon an unlawful consideration. If this view be correct, it follows that the person who has paid money or transferred property to an other for an illegal purpose can recover it back from the transferee under this section, even if the illegal purpose is carried into execution and both the transferor and transferee are in pari delicto. It is difficult to suppose that such a result was contemplated by the legislature. Moreover, it would not be correct to say that, where a person gives money for an unlawful purpose, the agreement under which the payment is made can be, on his part, discovered to be void. On the other hand, it has been said that the present section does not apply where the object of the agreement was illegal to the knowledge of both the parties at the time it was made. If this view be correct, a person who has paid money or transferred property to another for an unlawful purpose cannot recover it back even if the illegal purpose is not carried into execution and the transferor is not as guilty as the transferee. This is clearly against the provisions of Section 64 of the Indian Trusts Act, 1882.'
9. Mr. Chandurkar drew my attention to a decision reported in Kuju Collieries v. Jharkhand Mines : 1SCR703 . The judgment in that case cites with approval the Full Bench judgment of the Andhra Pradesh High Court in Budhulal v. Deccan Banking Co. Ltd. AIR 1955 Hyd 69. In that judgment, the above observations of Pollock and Mulla's Indian Contract Act were not approved and the Full Bench observed (at p. 75):
'A person who, however, gives money for an unlawful purpose knowing it to be so, or in such circumstances that knowledge of illegality or unlawfulness can as a finding of fact be imputed to him, the agreement under which the payment is made cannot on his part be said to be discovered to be void.'
10. Thus it will be seen from the judgment of the Supreme Court that the Andhra Pradesh High Court's view as expressed in Budhulal v. Deccan Banking Co. Ltd. (supra) was approved. The observations quoted, however, will go to show that where the unlawful purpose of an agreement was known to the parties or the fact of the unlawful purpose could be imputed to them, then the agreement would be outside the ambit of Section 65. Imputation of the knowledge of an illegality where the illegality flows from operation of the law, I think, has to be imputed to a party, because ignorance of a statutory provision cannot be set up as a defence. Besides, as has been pointed out, the Court will not assist a party, who in assisting the other party would be a perpetrator of an illegality or to continue an illegal conduct or fraud of the parties.
11. In the present case since Clause 10 of the Foodgrain Order, in my view, was applicable to the transaction between the parties, the knowledge of its illegality must be imputed to the parties. Consequently, to allow the plaintiff to obtain a return from the defendant either of the paddy or money lent by the plaintiff to the defendant, would be to allow an illegality. As is pointed out no Court would render assistance, even assuming that one of the parties to the transaction did not know that the Foodgrain Control Order affected the transaction in question, to take advantage or benefit of the agreement. Consequently, it will have to be held that the suits were rightly dismissed.
12. Both the revision applications fail and are dismissed with costs.
13. Petitions dismissed.