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Basappa and ors. Vs. Garemane Kamanna - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Case NumberM.s.A. No. 36 of 1980
Judge
Reported inILR1985KAR912; 1985(1)KarLJ207
ActsKarnataka Money-Lenders Act, 1961 - Sections 5, 10, 11, 11(1) and 11(2); Karnataka Money-Lenders (Amendment) Act, 1976
AppellantBasappa and ors.
RespondentGaremane Kamanna
Appellant AdvocateN.Y. Hanumanthappa, Adv.
Respondent AdvocateM.S. Gopal, Adv.
DispositionAppeal allowed
Excerpt:
.....11 -- money-lender should have a valid licence on the date he advances the money as also on the date suit is filed; plaintiff filed the suit based on a pronote dated 26-3-1974 on 12-6-1977 having secured a money-lenders licence on 8-10-1976 covering the period 1-1-j972 to 31-7-76.trial court dismissed the suit on the ground,plaintiff was not a licensed money-lender. in appeal, the finding was set aside as being erroneous, relying on unamended section 11 of the act in second, appeal:;sub-sections 2, 3 and 4 of section 11 were omitted by karnataka act no. 77 of 1976. further, in sub-section (1) of. section 11, the following words were added :;'and on that date such suit was filed.';the addition of these words, in sub-section (1) of section 11 clearly spell out the intention of the..........that the time when the loan or any part thereof to which the suit relates was advance and on the date suit was filed 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 this act for the period commencing from the date on which he started the business of money-leading or the expiry of six months from the date (sic) which this act comes into force, whichever is later, together with such penalty., not exceeding five hundred rupees as the court may.....
Judgment:

Murlidher Rao, J.

1. This appeal is directed against an order of remand dated 30-1-1980 passed by the Civil Judge, Madhugiri in R.A. No. 67/79. The said appeal was filed against the order of the Additional Munsiff and J.M.F.C, Madhugiri on issues 1 and 2 in O.S. No. 21/1977. By the said order, which is dated 28th June 1979, the Learned Munsiff, dismissed the suit.

2. The admitted facts are, that the defendant executed a pronote on 26th March 1974 for a sum of Rs. 6,000/-. The plaintiff filed the suit on 12th June 1977. In the said suit, the following issues were raised;

1. Whether the plaintiff proves that he has complied with the pro-visions of the Money-Lenders Act and the suit is tenable?

2. Whether the defendants are 'Agriculturists' within the meaning of the term as defind in the (Mysore) Karnataka Agriculturists Relief Act ?

3. Whether the defendants prove that the said promissory note is not supported by consideration ?

4. Whether the defendant prove that they are not liable to pay the suit claim ?

5. Whether the plaintiff proves that the defendants 2 to 4 are liable to pay the suit claim, under pious obligation ?

Issue Nos. 1 and 2 were tried as preliminary issues. In support of issue No. 1 plaintiff examined himself as P.W. 1 and got marked Exs. P1 and P2.

3. On appreciating the evidence, the Trial Court came to the conclusion that the plaintiff is a money-lender, as defined in the Karnataka Money Lenders Act, 1961 (for short the Act') and that he did not have a valid licence on the date of the suit transaction. It has to be noted that the plaintiff obtained a licence dated 8-10-1976 prior to the institution of the suit, which covered the period with effect from 1-1-1972 to 31-7-1976. The Trial Court having found that the plaintiff was not a licensed money-lender, dismissed the suit. Against the said decree, the plaintiff filed an appeal in R.A. No. 67/79 before the Civil Judge, Madhugiri. The Learned Civil Judge, after interpreting Section 11 of the Act, came to theconclusion that as per the unamended provision of Section 11 of the Act, the finding recorded by the Trial Court was erroneous and therefore he set aside the said finding and remanded the matter to the the Trial-Court, to dispose of the suit-in accordance with law. It is the validity of this order that is challenged in this appeal.

4. Sri M.S. Gopal, who appeared for the plaintiff in this appeal supported the finding recorded by the Civil Judge. He contended that though the suit was filed on 12-1-1977, since the pronote was executed on 26th March 1974, it is the unamended provisions of the Money-Lenders Act that are applicable. He drew my attention to Section 11 of the Act, as it stood before the amendment. The said Section reads :

'Suits by money-lenders not holding licence-(1) After the expiry of six months from the date on which this Act came into force, no Court shall pass a decree in favour of a money-lender in any suit to which this Act applied, filed by a money-lender, unless the Court is satisfied that the time when the loan or any part thereof to which the suit relates was advance AND ON THE DATE SUIT WAS FILED 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 this Act for the period commencing from the date on which he started the business of money-leading or the expiry of six months from the date (sic) 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 shallproceed 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) The powers of an Official Receiver, an Administrator or a Court under the provisions of the Mysore Insolvency Act, 1925, or other corresponding law inforce in any area of the State or of aLiquidator under the Companies Act, 1956, to realise the property of a money-lender.'

Sub-sections 2, 3 and 4 of Section 11 were omitted by Karnataka Act No. 77 of 1976. Further, in sub-section (I) of Section 11 of the following words were added, 'and on that date such suit was filed'. The addition of these words in sub-section (1) of Section 11, clearly spell out the intention of the legislature viz., that the money-lender should have a valid licence on the date when he advanced the money, as also, on the date, the suit was filed. Sub-section (2) of Section 11 as it stood prior to the amendment, cannot be applied to the instant case, because the suit, as aforesaid, was filed on 5-11-1977, by which date sub-section(2) had been omitted. Sub-section (2) of Section 11 as it stood before it's deletion prescribes the procedure which had to be followed by the Court, during the trial of the suit. Since the present suit is filed on 12-1-1977, the procedure indicated in sub-section (2) of Section 11,which had by then been deleted, cannot be applied. In view of the. foregoing, it becomes necessary for a money lender to have a valid licence not only on the date on which he. advances the money, but also, on the date on which he files the suit. In the instant case, though the plaintiff produced the licence dated 8-10-1976, which was prior to the date of the institution of the suit, nevertheless on the date he advanced the money, i.e. on 26-3-1974, he did not have the licence, There is no provision in the Act to grant a retrospective licence. Section 10 of the Act clearly states that the licence shall be valid from the date on which it is granted upto 31st December following. Therefore, any licence granted under the Act can only be prospective and will be effective till the end of that year from the date of its issue. As such, there is no provision by which a licence could be issued for the past period. Even if such a licence is issued, as is done in this case, it cannot validate the invalid transaction. Section 5 of the Act creates an absolute, bar regarding the carrying on of the money lender's business without a licence. The legal effect of transactions, forbidden by law are stated thus, by Pollock on Contract :

'When conditions are prescribed by statute for the conduct of any particular business or profession; and such conditions arenot. observed, agreements made in course of such business or profession (e) are void, if it appears by the context that the object of the legislature in imposing the condition was the maintenance of public order or safety or theprotection of the person dealing with those on whom the condition is imposed ; (f) are valid if no specific penalty is attached to the specificadministrative purpose ; e.g. the collection of the revenue.'

A detailed examination of the provisions of the Act leads to the conclusion that the object of the Act was to serve a public purpose and the mischief it sought to secure was to protect borrowers from unscrupulous and usurious money lenders by prohibiting them from lending monies withoutobtaining licence, on pain of imprisonment (vide Section 5) as well as by empowering Courts to dismiss such suits, As the plaintiff did not have a valid licence on 26th March, 1974, the suit cannot be decreed. It was a void transaction.

5. In this view of the matter, the Trial Court was right in holding that the plaintiff, who it is established was a money lender, did not have the licence. Therefore, he had to be non-suited in terms of the Money Lenders Act, 1961. In this view of the matter, this appeal is allowed, the order ofremand passed by the lower appellate Court is set aside. The order of dismissal of suit passed by the Trial Court is restored. No costs.


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