1. These thirteen appeals have been preferred by the State against the orders of acquittal passed by the learned Judicial Magistrate, First Class, 4th Court, Poona, acquitting the respondent in each case of the offence charged under Section 25(3) read with Section 34 of the Bombay Money-lenders Act. It appears that the respondent was charged in these cases with having committed an offence also under Section 18 of the Money-lenders Act and he has been acquitted of the said charge in some of these eases and convicted in others. In the present appeals,however, we are not concerned with the said orders of acquittal passed in favour of the respondent in respect of the said offence under Section 18. The orders of acquittal which are challenged in these appeals are in respect of an offence punishable under Section 25(5) read with Section 34 of the Act and they all raise one common question of law. That question relates to the construction of the material words used in Section 25, Sub-section (3).
2. The material facts leading to the prosecution of the respondent in all these thirteen cases are not in dispute. It is common ground that the respondent in each case has entered into an agreement with his respective debtors at the time when he advanced loans to them that his debtors should pay him for the said loans interest in excess of the rate prescribed in Section 25, Sub-section (1), The learned Magistrate appears to have taken the view that Section 25, Sub-section (3), can be invoked against a money-lender where it is shown, not only that the moneylender has entered into an agreement with the debtor to charge interest at an excessive rate, but that he has actually received interest at the said rate. It is this view that is challenged before us by Mr. Chandrachud on behalf of the State. It may be relevant to mention the facts in one case by way of illustration. In Criminal Appeal No. 190 of 1956 the respondent has advanced three items to the debtor Kaikadin Tulsabai Vyanku on three different dates. The amounts advanced are Rs. 75, Us. 15 and Rs. 5. For the first two amounts the interest agreed to be paid is 20 per cent, per annum and for the last amount the interest agreed to be paid is 80 per cent, per annum. The maximum interest permissible under the notification issued by the Government under Section 25(1) is 9 per cent, per annum in respect of secured debts and 12 per cent. per annum in respect of unsecured debts. It would thus appear that the ihterest which the respondent required the debtor to pay for the small amounts advanced to her is far in excess of the maximum prescribed by law. Incidentally, the conduct of the respondent in charging such excessive interest from needy debtors illustrates and emphasises the necessity for a welfare legislation like this protecting the debtors from the greed of the creditors. Since these facts are not in dispute, the only point which falls to be considered is one of construction of Section 25, Sub-section (3).
3. Section 25, Sub-section (1) provides that 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. Accordingly, a notification has been issued and the maximum interest in respect of secured and unsecured debts has been prescribed at 9 per cent, and 12 per cent, per annum respectively. Section 25, Sub-section (2), provides that, 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. In other words, having prescribed the maximum interest which can be legally charged by a moneylender from his debtors by Sub-section (1), Sub-section (2) of Section 25 renders all agreements which are made in contravention of the rates fixed under Sub-section (1) invalid and unenforceable. When this Act was passed this was the only provision made by the statute in respect of agreements charging excessive interest. Legislature apparently thought that making such offending agreements invalid would not give adequate or sufficient protection to the debtor. That is why by the amending Act No. LVII of 1949 Sub-section (3) has been added to Section 25. This Sub-section provides that, if any money-lender charges or receive 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. Section 34 provides for penalties and there is no doubt that, if anyone contravenes the provisions of Sub-section (3) of Section 25, he renders himself liable to be punished under Section 34 of the Act. The question is: when can a money-lender be said to have contravened the provisions of Section 25, Sub-section (3)? The contravavention can take place in three different forms and at threedifferent stages. If a moneylender advances a loan to a debtor and enters into a contract charging interest at a specified rate which is excessive, is he guilty of contravening the provisions of Section 25, Sub-section (3)? If the money-lender, having entered into a contract for the advance of loans, debits to the debtor in his khata the amount of interest which has accrued due at the agreed rate from the date of the contract up to the date when the entry is made, does he contravene the provisions of Section 25, Sub-section (3) If the money-lender in fact and actually receives interest at an excessive rate, does he contravene the provisions of Section 25, Sub-section (3).It is common ground before us that in the last two cases the money-lender does contravene the provisions Section 25(3). Mr. S.M. Shah for the respondent has fairly conceded that the use of the word ''charge' as distinguished from the use of the word 'receives' in the material Sub-section emphasizes the fact that Legislature wanted to penalise not only the receipt of the excessive interest, but the charging of interest at the rate exceeding the maximum rate fixed by the State Government. He, however, contends that in the context 'charging' excessive interest must mean ''debiting'' a specified amount of interest accrued due at the excessive rate, and Mr. Shah has very Strongly relied on the definition of the word 'interest' in support of this construction. In other words, Mr. Shah's argument is that, though a contract may be concluded and though under the concluded contract a debtor may have been bound to pay interest at an excessive rate, that does not amount to charging interest within the meaning of Section 25(3), Charging interest as contemplated by Section 25(3) must be distinguished from the initial agreement whereby interest is agreed to be charged between the debtor and the creditor, and this can be done only when time has elapsed after the making of the contract, interest has become due from the debtor to the creditor, interest has been calculated at the agreed, but excessive, rate and has been debited to the debtor in the creditor's book of account. It is this argument which needs to be carefully considered in the present appeal.
4. 'Interest' has been defined in the Act by Section 2, Sub-section (6), as including
any sum, by whatsoever name called, in excess of the principal paid or payable to a money-lender in consideration of or otherwise in respect of a loan, but does not include any sum lawfully charged by a money-lender for or on account of costs, charges or expenses in accordance with the provisions of this Act, or any other law for the time being in force.
According to Mr. Shah, interest must in every case represent a sum or an ascertained specified amount and that it does not and cannot in any case include the interest which is referred to when a contract of loan is entered into between the creditor and the debtor. Mr. Shah contends that, when the creditor and the debtor enter into a contract, the debtor no doubt agrees to pay interest at a specified rate; and it is not disputed that the word 'interest' in the contract cannot refer to a specified amount as such, because the amount could not be specified since it could not be calculated by anticipation at the date of the contract. The agreement merely refers to the rate at which the interest would be charged. But Mr. Shah's argument is that, though in such context the word 'interest' may have a different meaning, under the definition of Section 2(6), that meaning cannot be attributed to the word 'interest' in construing the sections of the Act. 'We do not think that this argument is sound. The definition of the word 'interest' is an inclusive defintion. It does not, and is not, intended to, exclude the other denotation of the word 'interest' which it must have in all contracts between creditors and debtors where loans are advanced and an agreement is made as to the payment of interest. If we consider Section 25 itself, this position would be clear. Section 25, Sub-section (1) refers to the maximum rates of interest. Clearly in this expression '' interest'' must have the more general meaning and not the particular meaning mentioned in the inclusive definition of 'interest' in Section 2(6). Similarly, Section 25(2) refers to the agreement between the money-lender and the debtor for payment of interest at rates exceeding the maximum rate fixed. In this Sub-section again, the word 'interest' cannot have the meaning which is given to the word by Section 2(6) in an inclusive way. 'Interest' in both these Sub-section of Section 25 does not mean an ascertained specified amount, but it means an amount which may be ascertained in future and it emphasizes the rate at which the said amount would be calculated at the time when accounts are made. Section 25(3) itself does not support Mr. Shah's contention. Now, if we were to substitute the words 'any sum' in the sense mentioned by Mr. Shah in Sub-section (3) of Section 25, it may not make a consistent and sensible reading. This Sub-section would then read: 'If any money-lender charges or receives from a debtor any sum at a rate exceeding the maximum rate...'. This, in our opinion, would not appear to be a fair and reasonable construction of the section, regard being had to the two words 'charges' and 'receives' in the said section. What is prohibited is not only the receipt of the excessive amount by the creditor from his debtor: what is prohibited is his charging any excessive amount to the debtor and the amount ischarged not only when it is actually ascertained and debited to the debtor's account, but when a contract isconcluded at the time of making the advance to the debtor and the debtor is bound by the agreement to pay the execessive amount. In other words, it appears to us that, on a fair and reasonable construction of Section 25(3) considered in the light of the provisions contained in the two preceding Sub-sections of Section 25, the narrow construction of the word 'charge' and the word 'interest' for which Mr. Shah contends, cannot be accepted. It is because Legislature thought that contracts of this kind, by which creditors charge excessive rates of interest against the debtors, should be rendered effectively void that Legislature added Sub-section (3) to Section 25 and penalised the contravention of the provisions of this Sub-section. It is contended by Mr. Shah that, if the words used in this Sub-section are capable of two constructions, then the construction which is favourable to the accused should be adopted. This principle no doubt is generally applied to the construction of penal statutes. Whether or not this principle in the same unqualified form should be applied in construing welfare legislation like this is a matter on which we do not think it necessary to express any opinion. We are satisfied that in the context the material words used in Section 25(3) do not reasonably yield the sense or meaning which Mr. Shah seeks to attach to them. Section; 18(2)(a), which prescribes the duty of the money-lender to keep accounts and to furnish, copies thereof to the debtor, uses the expression 'the rate of interest charged'. This clearly must mean the more general and common sense of the word 'interest' which it bears in all agreements by which interest is agreed to be paid by the debtor, and in that sense it is charged the creditor to the debtor Section 29 which authorises the Court to re-open transactions, gives the power to the Court under Sub-Clause (c) to reduce the amount charged to the debtor in respect of any excessive interest Here again, the word 'interest' does not bear the meaning for which Mr. Shah contends. Besides, if it is permissible to refer to the preamble the Act, object of the Act appears to have been to make better provision for the regulation and control of transactions of money-lending in the Province of Bombay. Legislature has clearly and unequivocally expressed its disapproval of all money-lending transactions in which the creditor charges the debtor interest in excess of the maximum permissible under the Act. In order to regulate such transactions, Legislature not only made the agreements in question void, but thought it expedient to provide for penalising the making of such agreements. That is why Legislature has deliberately used the two words 'charges' or 'receives' in Section 25(3). The intention of the Legislature obviously was not to confine cases of contravention to cases of receipt, but to extend the provisions of Sub-section (3) to all cases where the creditor is in a position to enforce the payment of excessive amount if the matter had not been governed by the provisions of this Act. In own opinion whether charging is at the initial stage of a concluded contract or has taken place at a subsequent stage where owing to lapse of time the amounts accrued due are debited to the debtor, they are all cases of charging interest to the debtor, and, as such, amount to contraventions of Section 25(3).
5. We must, therefore, hold, that the learned Magistrate was in error in acquitting the respondent of the offence charged under Section 25(3) read with Section 34 of the Bombay Money-lenders Act.
6. In the result, the orders of acquittal passed in favour of the respondent must he set aside and the respondent must be convicted under Section 25(3) read with Section 34 in each one of these thirteen cases. We think the ends of justice would be met if the respondent is ordered to pay Rs. 50 as fine in each of these cases, in default he should suffer simple imprisonment for two weeks in each ease, the sentences in default to run concurrently. A fortnight's time from to-day is allowed to the respondent to pay the fine.