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Wassiamull Assomull and Co. Vs. Goodluck Pictures - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai High Court
Decided On
Case NumberO.C.J. Suit No. 222 of 1953
Judge
Reported in(1962)64BOMLR549a
AppellantWassiamull Assomull and Co.
RespondentGoodluck Pictures
Excerpt:
bombay money-lenders act (bom. xxxi of 1947), sections 10(1), 2(17), 2(9)(2)(10)(18), 23, 25 -- loans mentioned in section 2(9)(g)--applicability of act to suits to recover such loans--film producer whether a 'manufacturer' within section 2(18).;loans as mentioned in section 2(9)(g) of the bombay money-lenders act, 1947, are outside and are not affected by the act and to a suit to recover such loans provisions of the act (except sections 23 and 25) do not apply.;a film producer is a 'manufacturer' and a 'trader' within the meaning of section 2(18) of the bombay money-lenders act, 1947.;himatinal jasraj v. pratap maganlal (1961) civil revision application no. 1954 of 1960, decided by patel j., on february 1, 1961 (unrep.) referred to.;messrs wassianmll assomull & co. (plaintiffs) filed..........loan to a trader is entirely outside and is not affected by the act and to a suit to recover such loan provisions of the act (except sections 23 and 25) do not apply. the contention of the plaintiffs in this case is that defendant no. 1 firm was a trader as defined in the act. it is obvious on reading of the phrase 'any loan' in section 23 that the provisions of that section were intended to be applicable to all loans whatsoever, whether they were loans to a trader or other parties. similarly, it is important to notice that in sub-section (3) of section 25, with reference to loan to a trader, special mention is made to the lender in the following way: ''or a person advancing a loan specified in sub-clause (g) of clause (9) of sec-han 2 makes an oral or written demand, etc.' in my view,.....
Judgment:

K.K. Desai, J.

1. [His Lordship after dealing with points not material to this report, proceeded.] As regards the. contention, that the plaintiffs are moneylenders and are not entitled to maintain this suit except under a licence obtained under the Bombay Money-lenders Act, it is relevant to notice certain provisions of the Act. The contention is based on Section 10, the relevant part whereof runs as follows:-

10. (1)..., no Court shall pass a decree in favour of a money-lender in any suit... to which this Act applies 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.

The several sub-sections following Sub-section (1) deal with the situations that may arise in a suit filed by a money-lender without a licence. In certain conditions ,'such suit is liable to be dismissed. The substance of the defendants' contention is that 'the plaintiffs are money-lenders'' within the meaning of the Act and this is 'a suit to which this Act applies'. It is obvious that in the event of my finding that the plaintiffs are not money-lenders as defined in the Act or that this is not a suit to which this Act applies, the provisions of Section 10 are not applicable and the plaintiffs would lie entitled to a decree in spite of their not having obtained a licence under the Act.

2. In the above connection, certain provisions of the Act are relevant. The phrase 'the suit to which this Act. applies' is defined in Section 2(77) as follows:-

2. (17) 'suit to which this Act applies' means any suit or proceeding-

(a) for the recovery of a loan...;

(b) for the enforcement of any security taken or any agreement, made...in respect of any loan...;

(c) ...-

Loan is defined in Section 2(9) as follows:-

2. (9) 'loan' means an advance at interest...but does not include-

(a) a deposit of money or other property in a Government Post Office Bank or in any other bank or in a company or with a co-operative society;

(b) a loan to, or by, or a deposit with any society or association registered under the Societies Registration Act, 1860, or any other enactment relating to a public, religious or charitable object;

(c) a loan advanced by Government or by any local authority authorised by Govern-ment;

(cc) a loan advanced to a Government servant from a fund, established for...;

(d) a loan advanced by a co-operative society;

(d1) an advance made to a subscriber to, or a depositor in, a Provident Fund...;

(d2) a loan to or by an insurance company...;

(e) a loan to, or by bank;

(f) an advance made on the basis of a negotiable instrument.,.;

(g) except for the purposes of sections 23 and 25,

(i) a loan to a trader;

(ii) a loan to a money-lender who holds a valid licence; or

(iii) a loan, by a landlord to his tenant for financing of crops or seasonal finance, of not more than Rs. 50 per acre of land...;

(iv) a loan advanced to an agricultural labourer by his employer;

Sub-sections (2), (70) and (78) of Section 2 provide as follows:-

2.(2) ''business of money-lending' means the business of advancing loans...'

2. (10) ' 'money-lender' means-

(i) ...;

(ii)...;

(iii) ...;

(iv) an unincorporated body of individuals, who or which-

(a) carries on the business of money-lending.,.; or

(b) ...;

2.(18) ' 'trader' means a person who in the regular course of business buys and sells goods or other property, whether moveable or immoveable, and includes-.

a wholesale or retail merchant,

a commission agent,

a broker,

a manufacturer,

a contractor,

a factory owner,

but does not include an artisan or a person who sells his agricultural produce or cattle or buys agricultural produce or cattle for his use.

Explanation.-...

Having' regard to Sub-clause (g) in Section 2(9), reference is also necessary to lie made to the provisions of Sections 23 and 25, which run as follows:-

23. Notwithstanding anything contained in any agreement or any law for the time being in force, no Court shall in respect of any loan whether advanced before or after the date on which this Act comes into force, decree, on account of interest, a sum greater than the principal of the loan due on the date of the decree.'

'25. (I) The State Government may from time to time by notification in the Official Gazette fix the maximum rates of interest for any local area or class of business of money-lending in respect of secured and unsecured loans:...

(2) Notwithstanding anything contained in any law for the time being in force, no agreement between a money-lender and a debtor for payment of interest at rates exceeding the maximum rates fixed by the State Government under Sub-section (1) shall be valid and no Court shall in any suit to which this Act applies award interest exceeding the said rates.

(3) If any money-lender or a person advancing a loan specified in sub-clause (g) of clause (9) of section 2 makes an oral or written demand or charges or receives from a debtor interest at a rate exceeding the maximum rate fixed by the State Government under Sub-section (1) he shall, for the purposes of section 34, be deemed to have contravened the provisions of this Act.

3. Reading the provisions in Sections 2(9)(g) and 2(17) together, it is obvious that loan to a trader is entirely outside and is not affected by the Act and to a suit to recover such loan provisions of the Act (except Sections 23 and 25) do not apply. The contention of the plaintiffs in this case is that defendant No. 1 firm was a trader as defined in the Act. It is obvious on reading of the phrase 'any loan' in Section 23 that the provisions of that section were intended to be applicable to all loans whatsoever, whether they were loans to a trader or other parties. Similarly, it is important to notice that in Sub-section (3) of Section 25, with reference to loan to a trader, special mention is made to the lender in the following way: ''or a person advancing a loan specified in sub-clause (g) of clause (9) of sec-Han 2 makes an oral or written demand, etc.' In my view, if 'a person advancing a loan specified in sub-clause (g) of clause (9) of section 2' was intended to be included in the definition of 'money-lender' who carries on 'business of money-lending' within the meaning: of this Act, separate description of that person in Section 25(5) after the words 'If any money-lender or' was redundant and unnecessary. It is also further clear that to the parties who are mentioned in Sub-clauses (a) to (i) of Section 2(9), the Act was never intended to be applicable. It is, therefore, that the loan was defined in the manner appearing in Section 2(9). The scheme of the Act as appearing from the above definition of 'loan' is that to the parties who are mentioned in that sub-section and to the loans as mentioned in that sub-section the provisions of the Act generally were not intended to be applicable. It obviously was the view of the Legislature that commerce and business by method of loans as mentioned in Section 2(9) should is no way be hindered by reason of the provisions of this Act. The only result of the mention of Sections 23 and 25 in Sub-clause (g) of Section 2(9) accordingly is that in respect of loans as .mentioned in Sub-clause (y), other sections of the Act were not intended to be applicable and the only sections which were applicable, were Sections 23 and 25. As that is my view of the construction of the provisions in Section 2(9), it follows that in respect of the loans as mentioned in Section 2(9)(0), Section 10 is not applicable. Again, having regard to the definition of the phrase 'the suit to which this Act applies' as contained in Section 2(17), to a suit to recover loans as mentioned in Section 2(9) [including Section 2(9)(g)], Section 10 does not apply. It', therefore, the contention made on behalf of the plaintiffs that defendant No. 1 firm is a trader is true, the provisions of Section 10 would never be applicable to this suit.

4. The question, therefore, that arises for decision is as to whether defendant No. T firm is a trader within the meaning of Section 2(78). Admittedly, the business of defendants No. 1 was film production. In that connection, it appears from the pleadings that defendants No. 1, apart from many other activities, indulged into activities of selling distribution rights of the film that they were producing to diverse parties. Thus it is stated in the pleadings that the distribution rights of the film were sold to Century Films. They were also sold to Messrs. Forward Films Ltd., Lahore, and Aga Films, Karachi.. It is, however, true that these rights that they were selling were not of goods purchased from the market, but were in respect of the film that they were producing. Apart from the word 'and' as contained in the above definition of 'trader', one could easily, having regard to the above position, hold that because defendants No. 1 in its regular course of business sold this property, it is a trader.

5. It is contended on behalf of the plaintiffs that in any event defendants No. 1 firm is in respect of distribution rights of its films acting as commission agents also and earning agency commission. It is also contended on behalf of the plaintiffs that in respect of the production of its films defendant No. 1 is manufacturer as mentioned in Section 2(18).

6. The obvious purpose of the provisions defining 'loan' i.e. Section 2(9) is, as I have already mentioned, to exclude loans as mentioned in that section altogether from the provisions of this Act except as mentioned in Sub-clause (g) of that section. By reading the provisions in Section 2(9) and particularly Sub-clauses (e) and (f) thereof, it is clear that the intention of the Legislature was that in connection with commerce, and banking transactions and transactions made only for the purposes of commerce the advancement of loans must not be hit by the provisions of the Act. The object of the Act by examination of the scheme, thereof appears to be that unwary agriculturists and non-traders and parties who are not indulging into banking and commercial transactions of the kind mentioned in Section 2(9) should be protected. It appears to me that it is in furtherance of the above object of the Act, that the phrase 'and in divide' has been included in the definition of 'trader' as contained in Section 2(75). That being the true intent and object of the Act, I have to consider as to whether defendant No. 1 firm is a manufacturer or commission agent or broker as contended on behalf of the plaintiffs.

7. Though there is no evidence in this connection, it is permissible to take judicial notice of the fact that in the production of a film, it would be essential for defendant No. 1 to gather together with, intent to complete production of the film certain persons like artistes, cameramen, director and various other assistants who will all assist in photographing and shooting into a film the story intended to be filmed and exhibited. The various persons so gathered together will have to expend labour 011 the, raw stock of the film, so that the dupe negatives and positives which may be ultimately filmed might be, reproduced on cinema screen as a completed article, It is also permissible for me to note that from the film as produced several diverse prints will have to be made and ultimately distributed by defendant No. 1 as producer of the film, so that the film may be sold by defendant No. 1 or distributed by it through diverse distributors at diverse places. 1 have mentioned the above usual activities of a film producer only to show that the ultimate production that is made is not a work of art as such but is the result of cumulative labour of diverse persons gathered together by a producer on the raw stock of a film which again has to be put in the market in the manner mentioned by me above.

8. A 'manufacturer' is referred to in Murray's English Dictionary (Part I, Volume 6) at p. 143, as follows:-

One who employs workmen for manufacturing: the owner of a manufactory.

There are other meanings of the word 'manufacturer' in this dictionary, which 1 deem to be unnecessary to be referred to here. 1 have no doubt, having regard to all that 1 have mentioned above, that defendant No. 1 firm was employer of workmen for manufacturing, the ultimate production being the film that was being produced. It is, therefore, clear to me that defendant No. 1 firm was a 'manufacturer' and, therefore, a 'trader' within the meaning of Section 2(18) of this Act.

9. In this connection, reference may be made to the decision of Patel J. in Himatmal Jasraj v. Pratap Maganlal. On exactly similar questions having been raised in connection with the defendant (film producer) in that matter it was observed as follows:-

Prima facie it also appears that the opponent comes within the definition of the word 'trader' as defined by the Act. On his own showing he is a producer and also a publicity agent; in other words, in slightly less respectable words, he is a broker. The definition of the word 'trader' excludes an artisan or a person who sells his agricultural produce or cattle or buys agricultural produce or cattle for his use. Even if the opponent produces films, there can be no difficulty in holding him to be a manufacturer.... Under these circumstances, it is impossible to hold that the Bombay Money-lenders Act is applicable to this case.

10. As my finding is that this is not a suit to which this Act applies and that defendants No. 1 firm was a trader, the provisions of Section 10 are not applicable 1o this suit. The plaintiffs, therefore, were not bound to produce a licence in this case to obtain a decree.

11. It is necessary to notice, that under Section 25(1) the State Government is entitled to fix the maximum rate of interest that can be charged in the business of money-lending. Under Section 25(2), all agreements between, a money-lender and debtor for payment of interest at rates exceeding the maximum rate fixed by the Government are invalid. In any suit to which the Act applies it is not permissible for the Court to award interest in excess of the rates fixed by the Government. Under Section 25(3), 'a person advancing loan specified in sub-clause (17) of Clause (9) of section 2,' if he makes demand or receives or charges from a debtor interest exceeding the maximum fixed, is liable to be punished for the offence as mentioned, in Section 34 of the Act. In other words, though the case of a loan to a trader is not covered by the provisions of Sections 25(1) and 25(2), by reason of the provisions in Section 25(3) the act of such a person of charging interest in excess of prescribed rate is illegal, and an act penalised. Having regard to that provision, it is obvious that in the event of my finding that the plaintiffs have charged or received interest in excess of the rate prescribed by the State Government, the same excess has been recovered illegally and the plaintiffs are not entitled to retain the same.

[The rest, of the judgment is not material to this report.]

Solicitors for the plaintiffs: Dabholkar & Co.

Solicitors for the defendants: Amarchand & Mangaldas.


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