1. This is a plaintiff's appeal from the dismissal of his claim for Rs. 40,000 and interest on foot of a mortgage executed in his favour by Mahadeorao, who was respondent No. 1 to this appeal and who died during the pendency of the appeal, and by respondents Nos. 2 and 3. Respondent No. 2 had executed the mortgage also in his capacity as guardian of his son, respondent No. 4, who was then a minor.
2. According to the appellant, these respondents executed a mortgage deed in his favour for a consideration of Rs. 40,000 on February 27, 1946, that out of this a sum of Rs. 10,000 was paid by him to the respondents prior to the execution of the mortgage deed, that the balance of the amount was paid by a cheque to the respondents at the time of the registration of the mortgage deed, that the amount due under the deed was payable to him within eight months and that as it was not paid within that time he was entitled to recover the mortgage money together with interest at 6 per cent, per annum thereon. In the mortgage deed there is a condition that after selling the mortgaged property if there is any deficit the mortgagee reserves the right to realise that deficit from the other property of the mortgagor.
3. The deceased respondent No. 1 Mahadeorao admitted the execution of the mortgage deed, but said that there is no consideration for this document, that it is only a bogus document and was not intended to be acted upon. According to him, the relationship between the parties to the suit was that of partners. A business of supplying fruit, vegetables etc. to the Armed Forces was alleged by him to have been started in partnership with the appellant. This business was carried on in the name of Mahankal & Co. Though the appellant was a partner in this business, for some reason he did not want his name to appear as a partner in the business, and so, at his instance, one Khetalal was shown as a partner of respondent No. 1. According to Mahadeorao, though an amount of Rs. 10,000 is stated in the mortgage deed to have been paid earlier for the improvement of the gardens and other lands of the respondents, in point of fact, this amount was not received by him. Further, though a cheque for Rs. 10,000 was made out in the name of respondent No. 1, it was actually taken back by the appellant who had credited it in the Punjab National Bank in the account of Mahankal & Co. and that though a cheque for Rs. 30,000 was also given to Mahadeorao at the time of registration of the mortgage deed, it was taken back by the appellant and credited by him with the Punjab National Bank in the account of Mahankal & Co. This account, it is said, was operated upon by the appellant and that the responsibility for explaining the account was of the appellant.
4. The main contentions raised by the respondent Mahadeorao in the trial Court were, firstly, that the appellant being a partner and the money representing the consideration of the mortgage deed having been advanced to the partnership, the suit for the recovery of the amount did not lie and that the proper remedy for the appellant was to sue for dissolution of partnership and rendition of accounts; secondly, that the transaction was bogus and was never intended to be acted upon; and, thirdly, that the amount of Rs. 40,000 was advanced by the appellant to Mahankal & Co., and, therefore, the respondents were not liable in respect of that transaction.
5. On behalf of respondent No. 4 a further plea was taken that the business, which was carried on by respondents Nos. 1, 2 and 3, was not a family business, that the amount of Rs. 40,000 taken by them was not required for carrying on the family business, that there was no necessity for borrowing and that, consequently, he was not bound by the transaction.
6. The trial Court held that the transaction in question was not binding on respondent No. 4 and absolved his interest in the family property on that ground. It also held that the appellant was a partner in Mahankal & Co., that the suit in question was for the recovery of an item advanced to the partnership firm by a partner and that, consequently, such a suit was not maintainable. It, however, negatived the contentious raised, by some respondents to the effect that there was no consideration for the mortgage deed and that the transaction was induced by fraud, undue influence etc.
7. When this matter came up for hearing before us last year, we made an order remitting two issues to the trial Court for giving findings. One of those issues, which had been raised by the trial Court as such but on which no finding was given, was issue No. 10, and it reads thus.
Whether the defendants are not liable because the loan was advanced to Mahankal & Co.?
Another issue which was remitted was raised by us, and it is as follows:
Whether the real agreement between the parties was as set out in paragraph 11(e) of the written statements of defendants 1-3?
After recording evidence the lower Court submitted its findings on these issues. The finding given by the lower Court on issue No. 10 is that the respondents are liable for the debt of Rs. 10,000 and interest thereon. On the issue raised by us the lower Court has given some finding which appears to be contradictory and which is not very clear to, us. We, however, reproduce that finding:
I therefore hold that out of the mortgage debt of Rs. 40,000, Rs. 30,000 were advanced for purposes of Mahankal & Co. and that Rs. 10,000 were advanced for private cultivation of defendant No. 1, Mahadeo (deceased). I also hold that the said mortgage debt of Rs. 40,000 was agreed to be recoverable from Mahankal & Co. Even then, it would be clear from Exhs. P-1 and P-2 that the Mahankal family of defendant No. 1 was liable for the payment of at least Rs. 10,000 which were borrowed for their cultivation and which had no connection with the business of Mahankal & Co. I therefore hold that the parties did not agree that the whole amount of Rs. 50,000 would be realised only from the business done. I also hold that the Mahankal family of defendant No. 1 was personally liable for the part of the mortgage debt i.e. for Rs. 10,000 out of the mortgage debt of Rs, 40,000.
It is not necessary for us, however, to say anything about this finding in view of the arguments now advanced before us.
8. We would briefly summarise the arguments advanced before us by the learned Counsel for the appellant. He stated that here was a transaction between a creditor and a debtor and that having proved the execution of the mortgage, the appellant was entitled to a decree against all the executants of the mortgage deed. He also stated that the mortgage was binding even on the minor members of the family to the extent of Rs. 10,000 on the ground that this amount was, as stated in the deed itself, required for the benefit of the family. Further, according to him, the view of the lower Court that the appellant was a partner in the firm Mahankal & Co. is not correct and that the documents to which a reference has been made by the learned Judge in his judgment clearly show the contrary. Thus he states that even if it is assumed that the appellant was a partner in the firm Mahankal & Co. there is nothing to show that the loan was advanced by him to the partnership. It was clear beyond doubt that the loan was advanced to one of the partners of the firm who, as well as the members of whose family, agreed to repay it and in respect of which they had furnished security of the joint family property. Finally, he stated that even assuming that the loan was advanced to the partnership the appellant was not precluded from instituting a suit on that loan. A large number of authorities were cited on this point by both the sides. It seems to us that it will not serve any useful purpose to go into all those authorities or to decide questions of fact such as whether the appellant was a partner in the firm Mahankal & Co. and whether the appellant advanced a loan to the partnership or to one of the partners because, in our opinion, the decision of the lower Court dismissing the suit has to be upheld on another ground.
9. After the matter was argued before us on the 1st instant and yesterday, Shri Masodkar, who we would like to mention had said all that could possibly be said on the various points raised before us, stressed with great emphasis one of the contentions which was raised by the respondents in the Court below and contended that that contention was sufficient to non-suit the appellant.
10. It was contended by the respondents in the Court below that the appellant is a money-lender, that he is not registered as such, and that, therefore, the suit should be dismissed. The appellant has admitted that he is not a registered money lender. The Court below has found that the transaction in question is a money lending transaction and the provisions of the Money Lenders Act apply to it. The learned Counsel points out that the appellant has not challenged this finding and contends that since the appellant was not a registered money lender and is not so even at this date, the present suit is not maintainable.
11. The relevant provisions in this regard are Sections 11-B, 11-D, 11-F and 11-H of the Central Provinces and Berar Moneylenders Act, 1934 (XIII of 1934), and they run as follows:
11-B. (1) Every person who carries on or intends to carry on the business of money-lending shall get himself registered by an application made to the Sub-Registrar of any sub-district of the district or any one of the districts in which he carries on or intends to carry on such business and, on such registration, the Sub-Registrar shall grant a registration certificate to him in such form as may be prescribed.
(2) The application made under Sub-section (1) shall be in writing and shall specify the district or districts in which the applicant carries on or intends to carry on the business of money-lending and such other particulars as may be prescribed.
11-D. The registration certificate granted under Section 11-B shall not entitle the holder thereof to carry on the business of money-lending in any district other than the district or districts for which such certificate has been granted.
11-F. (1) No person shall carry on the business of money-lending in any district unless he holds a valid registration certificate in respect of that district.
(2) Whoever contravenes the provisions of Sub-section (1) shall be punishable with fine which may extend to one hundred rupees, or, if he has previously been convicted of an offence under that sub-section, with fine which may extend to two hundred rupees.
11-H. No suit for the recovery of a loan advanced by a money-lender shall proceed in a civil Court until the Court is satisfied that he holds a valid registration certificate or that he is not required to have a registration certificate by reason of the fact that he does not carry on the business of money-lending in any of the districts of the Central Provinces and Berar:
Provided that this section shall not apply to a suit instituted before the 1st October 1940.
12. Now, the cumulative effect of these provisions is to restrict the activity of moneylending to persons who have registered themselves as moneylenders under the Act. Where a moneylender carries on moneylending without registering, himself under the Act he is liable to pay a penalty under Sub-section (2) of Section 11-F. If such a person brings a suit for the enforcement of the loan advanced by him, Section 11-H will stand in his way. Now, under this provision a Court is precluded from proceeding with the suit unless (a) it is satisfied that the moneylender holds a valid registration certificate or (b) that he is not required to have a registration certificate by reason of the fact that he does not carry on the business of moneylending. A bare reading of this section would make it clear that the jurisdiction of a Court to proceed with a suit is conditioned by the fact that the moneylender holds a valid registration certificate or that he does not need a certificate. This provision does not say that where a moneylender does not hold a registration certificate he is to be permitted to apply for one and file that certificate in the Court so that the suit could be proceeded with. Reading Section 11-H along with Section 11-F it will be clear that the Court must be satisfied that the moneylender held a valid registration certificate on the date on which he advanced the loan. Now, if that is the true meaning to be deduced from these two provisions then it follows logically that there can be no question of a moneylender applying for and obtaining a registration certificate, after he instituted a suit.
13. Now, if we compare the provisions of Section 11-H with those of Section 10 of the Bombay Money-lenders Act it will be seen that where the Legislature intended to give an opportunity to a moneylender to obtain during the pendency of the suit a certificate of registration it made clear and comprehensive provisions in this regard. The difference in the language of Sub-section (i) of Section 10 of the Bombay Money-lenders Act from that of Section 11-F of the Central Provinces & Berar Moneylenders Act is significant.
14. In order to appreciate the point we would reproduce the relevant provisions of Section 10(1) to 10(4) which run thus:
10. (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 a money-lender in any suit filed by a money-lender 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 moneylender 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 this 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 Rs. 500, 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.
We may also point out that in the Punjab Act, somewhat similar provisions have been enacted in Section 3, but that is not the position here.
15. Therefore, considering Sections 11-F and 11-H together we are clear that a suit to recover the money advanced by a moneylender who does not hold a registration certificate on the date of the transaction, cannot even be instituted unless of course the person who institutes a suit is not a moneylender as defined in the Act, that is to say, he is not a person carrying on moneylending in the former territory of the Central Provinces and Berar.
16. Shri Sheode, however, brings to our notice a decision of the Nagpur High Court which is directly in point. That is a decision of a Division Bench of Mangalmurti and Deo JJ, in Patiram v. Baliram  Nag. 997. In that case the learned Judges held that the provisions of Section 11 of the Central Provinces and Berar Moneylenders Act, 1934, are expressed in words which apply directly to moneylenders rather than to the transaction and there is no express prohibition of the transaction, which contravenes any of the provisions of that section. They also held that Section 11-F of the Act applies to the business of moneylending and not to an individual transaction of lending money, that the individual transaction of moneylending made by a moneylender who has not obtained a registration certificate is not made invalid, and that the only obstacle created in his way is that he cannot obtain a decree on his loan unless he possesses a valid registration certificate on the date on which a decree is to be passed. In coming to this conclusion the learned Judges relied in the first instance upon a decision of the Full Bench of the Hyderabad High Court in Shamshir Ali v. Ratnaji AIR  Hyd. 58. That decision, however, has been overruled by a larger Full Bench of the same High Court in Mohd. Salam v. Umaji AIR  Hyd. 113 . In the latter decision the majority of the Judges held that a moneylender's suit is liable to be dismissed under the Hyderabad Act if he does not possess a license at the time of the suit transaction. The learned Judges also observed that the object of the enactment was to serve a public purpose and the mischief it sought to secure was to protect borrowers from unscrupulous and usurious moneylenders by prohibiting them from lending monies without obtaining licences on pain of imprisonment as well as by empowering Courts to dismiss suits of such moneylenders. In view of the fact that the first Full Bench decision was overruled by a subsequent full bench, the authority of the Nagpur decision has been considerably shaken. Reliance was also placed by the Division Bench of the Nagpur High Court on an unreported decision of Bose J., Laxman v. Yograj (1942) Civil Revision No. 770 of 1941. It is a very brief judgment, and we may, with respect, add that it does not even contain any discussion of the relevant provisions of the law. According to Bose J. Section 11-H of the Act-
states that no suit shall proceed for the recovery of a loan advanced by a moneylender until the Court is satisfied that he holds a valid registration certificate etc....
And then observed-
The section affects procedural law and not substantive law. The suit cannot be dismissed.
Now, with due respect to the learned Judge, we would like to point out that there is no provision in Section 11-H or any of the provisions for staying a suit, or for the matter of that for giving an opportunity to the plaintiff to apply for registration during the pendency of the suit. All that Section 11-H says is that an opportunity will be given to the moneylender to show either that he held...a valid registration certificate at the time of the transaction or that lie was not required by law to hold such a certificate. In these circumstances we regret we cannot follow the view taken by Bose J. or that taken by the Division Bench of Mangalmurti and Deo JJ. following the one taken by Bose J.
17. In this connection we would like to make one thing clear and it is that the decision relied on is one of the Nagpur High Court and is not binding on us under the Letters Patent or under the rules made by the Bombay High Court. While we must respect the decision of the Nagpur High Court it is not binding upon us. We, therefore, feel that we are unfettered by any binding authority in this matter.
18. As regards our own High Court we would make a mention of a decision of Chagla C.J. in Parashuram Laljishet v. The State  Bom. 914 : 54 Bom. L.R. 160 in which he has made certain observations which are pertinent here and which we reproduce here (p. 916):.Turning to Section 5 it provides that no money-lender shall carry on the business of money-lending except in the area for which he has been granted a licence and according to the terms and conditions of such license.... Therefore reading Sections 5 and 34 it seems to me clear that he having failed to comply with and having acted in contravention of the provisions of Section 5, the penal provisions of Section 34 would apply as no specific penalty is provided in Section 5 itself.
19. Now, it may be mentioned that Section 5 of the Bombay Act is more or less in the same terms as Section 11-F(1) of the Central Provinces and Berar Moneylenders Act. Whereas the penal provisions are contained in Section 11-F(2) of the Central Provinces and Berar Moneylenders Act, in the Bombay Act there is the general Section 34 which deals with specific penalties for contravention of the provisions of the Act.
20. It was argued before the learned Chief Justice on the basis of Section 10 of the Act that if the Legislature contemplated issuing of a licence to moneylenders, who did moneylending business without a licence, surely it would not be that Ms doing moneylending business without a licence would constitute an offence within the meaning of Section 34, Adverting to this argument the learned Chief Justice observed (p. 916):.If this argument were to be accepted, it would lead to the startling result that a money-lender may do money-lending business without a licence and he would come to no grief at all unless he files a suit for recovery of his loan under Section 10. So long as he finds obliging customers who will return the loans to him, he could flagrantly defy the provisions of the Bombay Money-lenders Act and carry on his business and no ill can happen to him. It is obvious that the Bombay Money-lenders Act is an Act which was intended to put down a very serious evil in our society. It was intended to keep control over money-lending transactions and to see that excessive rate of interest was not charged by money-lenders, and the only way that such control can be maintained is by providing penalties for doing money-lending business without a proper licence from the State. Therefore, in my opinion, Section 10 has nothing whatever to do with Section 5. Section 10 refers only to those cases where the money-lender comes to Court for obtaining a decree and the Court, instead of summarily dismissing his suit if he has no licence, gives him an opportunity to obtain a licence. Section 5 is a bar against doing any money-lending business at all without a license and if that provision is contravened Section 34 becomes applicable and the person doing money-lending business without a licence commits an offence for which he can be punished.
21. Now, we have already quoted Section 10 of the Bombay Money-lenders Act and shown how the provisions thereof are different from the provisions of Section 11-F of the Central Provinces and Berar Moneylenders Act. We have quoted the above passage from the learned Chief Justice's judgment to support our conclusion that the provisions of Section 11-F are a bar against doing any moneylending business at all without obtaining a certificate of registration.
22. On the question of fact as to whether the appellant is a moneylender or not there is, as already stated, his own admission in his evidence. The findings of the trial Court that the appellant was a moneylender at the relevant time and that he had not obtained a certificate of registration have not been challenged by the appellant in the memorandum of appeal and must, therefore, be deemed to have been acquiesced in and accepted. An application has, however, been made on the appellant's behalf for giving him time to obtain a certificate of registration. But as already stated there is no provision for permitting this to be done. In these circumstances, we dismiss the application. The appeal, therefore, fails and is dismissed. As regards costs, we direct that since we are dismissing the appeal on rather a technical ground those incurred in this Court will be borne as incurred but direct that those incurred in the Court below will be borne as ordered by the lower Court.