Skip to content


Shamamma and anr. Vs. Ramachander Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAndhra Pradesh High Court
Decided On
Case NumberA.A.O. No. 205 of 1971
Judge
Reported inAIR1974AP150
ActsHyderabad Money Lenders Act, 1349 - Sections 3(4) and 15; Hyderabad Money Lenders Rules, 1349 - Rules 11 and 15
AppellantShamamma and anr.
RespondentRamachander Rao and ors.
Appellant AdvocateJaleel Ahmed and ;Mohd. Mukaramuddin Advs.
Respondent AdvocateB.V. Subbarayudu and ;N. Vasudev Rao, Advs.
Excerpt:
commercial - renewal of license - sections 3 (4) and 15 of hyderabad money lenders act, 1349 and rules 11 and 15 of hyderabad money lenders rules 1349 - whether renewal of license granted to money lender subsequent to date of expiry of license on application made prior to date of expiry dates back to date of application so as to say that renewal is only continuation of license already granted - high court observed that where money lender applied for renewal of license before expiry date new license granted even after expiry of said period is valid and takes effect from date of application or expiry of prior license - whereas if application is made after expiry of license it does takes effect from date of such application and not retrospectively - in such cases license is equivalent to.....v. sastry, j.1. the question that has been referred by the division bench for decision by this full bench is 'whether in the face of sub-sec(4) of section 3 of the hyderabad money lenders act(act no. v of 1349 fasli) and rule 16 of the rules framed under the said act, the renewal of a licence subsequent to the date of expiry of the licence, on an application made prior to the date of expiry dates back to the date of the application, so as to say that the renewal is only a continuation of the licence already granted to the money lender'?2. it is necessary to state a few facts to appreciate the point that arises in this case. the respondents herein filed the suit o. s. 14 of 1968 on the file of the district munsiff's court, narayanpet, on 20-9-1968 for recovery of rs. 2,000/- on the basis.....
Judgment:

V. Sastry, J.

1. The question that has been referred by the Division Bench for decision by this Full Bench is 'Whether in the face of sub-sec(4) of Section 3 of the Hyderabad Money Lenders Act(Act No. V of 1349 Fasli) and Rule 16 of the rules framed under the said Act, the renewal of a licence subsequent to the date of expiry of the licence, on an application made prior to the date of expiry dates back to the date of the application, so as to say that the renewal is only a continuation of the licence already granted to the money lender'?

2. It is necessary to state a few facts to appreciate the point that arises in this case. The respondents herein filed the suit O. S. 14 of 1968 on the file of the District Munsiff's Court, Narayanpet, on 20-9-1968 for recovery of Rs. 2,000/- on the basis of a promissory note executed by the deceased Ushanna in favour of the plaintiff on 1-9-1965. The defendants are the legal representatives of the maker of the promissory note. Besides various pleas taken up by them in the suit they also pleaded that the plaintiff was a money lender coming under the Hyderabad Money Lenders Act, that inasmuch as he had no licence on the date of the promissory note the suit has to be dismissed.

3. The trial court held that the plaintiff was not having a valid licence under the provisions of the Money Lenders Act, that he was therefore prohibited from advancing any money, that the transaction is not valid transaction and that the suit has therefore to be dismissed. It also found that the suit as against defendants 3 to 6 was barred by limitation. Plaintiff, thereupon preferred the appeal A.S. 92 of 1970 on the file of the District Court, Mahboobnagar. In the appeal the plaintiff filed I. A. 323 of 1970 under Order 41, Rule 27, C.P.C. to receive as additional evidence two documents filed along with it. They were certified copies of the application submitted by the plaintiff to the Tahsil Office, Makthal, for registration and grant of money lending licence , on 31-12-1964. It is stated therein that a sum of Rs. 21-44 np. was credited to the Sub-Treasury Office , Makthal and challan No. 167 was enclosed thereto. The other document was the original of the challan evidencing payment into treasury of Rs. 21-44 np. on 2-1-1965 as money lending licence fee for the year 1965. It was also argued for the appellant that the plaintiff as P.W. 1 deposed in the suit that he has started money lending business since 1354 F(1944) and that he has been obtaining licence year after year, that Ex. A-5 filed in the suit was a renewed licence granted on 30-3-1966, on an application filed even before the previous year has expired , after complying with all the formalities, that it was valid upto 31-12-1965, that the provisions of sub-section(5) of Section 3 of the Act were not violated and as such the suit could not be dismissed. The learned appellate Judge considered the arguments as well as the additional documents and the relevant case law and came to the conclusion that the two documents had to be admitted and that they would show that the renewed licence dates back to the date of application and the trial Court was not justified without further investigations in non-suiting the plaintiff had no valid licence on the date of the suit transaction notwithstanding the production of Ex. A-5 and the evidence of the plaintiff. In that view the appeal was allowed and the suit was remanded for fresh disposal after setting at large all the findings of the trial Court and giving an opportunity to both the parties to adduce oral and documentary evidence as they deem fit to adduce.

4. It is this order of remand that has been canvassed in this C. M. A. When the appeal came up before our learned brother Chinnappa Reddy, J., it was urged for the appellant that inasmuch as the plaintiff had no subsisting licence on 1-9-1965 the date of the promissory note , the suit was not maintainable , that it was not open to the authorities to grant a licence with restropective effect and for a period which had already expired by the date of the issue of licence . It was also urged that under the provisions of Section 3 , Sub-section(4) of the Act, the licence shall be valid only for one year from the date of the issue. On the other had it was argued for the plaintiff that it was not his fault, that the licence was not renewed within time though he had made his application and when once the licence had been issued on such an application it should date back from the date of his application. The learned counsel for the appellants-defendants relied upon a decision in Mohammad Maqdoom v. Chunilal, AIR 1952 Hyd 43 while the plaintiff's counsel relied upon the observations of the Division Bench in B. Lachmiah v. K. Lingiah ,(1961) 1 Andh WR 123 and the decision of Gopal Rao Ekbote , J.(as he then was) in Balaiah v. Bhumaiah,(1968) 2 Andh LT 304. Our learned brother Chinnappa Reddy, J., held that the decision in AIR 1952 Hyd 43 was directly in favour of the appellants while the decision of Gopal Rao Ekbote, J. in(1968) 2 Andh LT 304 was directly in favour of the respondents, while the observations of the Division Bench were in the nature of obiter. The learned Judge also expressed the doubt as to how in the face of sub-section(4) of Section 3 of the Act, it can be said that a licence could date back from the date of the application. If there was delay in the grant of the licence it would be open to the applicant to compel the authorities by taking proper proceedings to grant him a licence, according to the learned Judge , and that he cannot proceed on the presumption that the licence would be granted to him. In the opinion of the learned Judge, it was desirable that the case should be decided by a Division Bench.

5. The matter was posted before our learned brothers Obul Reddi and Madhava Rao, JJ. As the question involved is of considerable importance and according to the Division Bench there is a conflict of opinion between the two single Judges of this Court and as the opinion expressed by the Division Bench is in the nature of obiter they preferred to refer the matter to a Full Bench.

6. It is argued on behalf of the appellants on the basis of the decision in AIR 1952 Hyd 43 that since the plaintiff had no licence actually on the date of the contract, it is not enforceable and that even though the licence had been applied for and eventually granted it could not have any restropective effect. He urged that the latter decision in(1968) 2 Andh LT 304 is not correct law. It was argued for the respondent that the view expressed in AIR 1952 Hyd 43 is not correct one and took the view expressed by Gopal Rao Ekbote , J. has to be upheld. We would now consider the validity of the respective contentions on a proper appraisal of the provisions of Money Lenders Act and the Rules and the relevant case law.

7. The Money Lenders Act(Act No. V of 1349F.) published in Gazatte on 30th Shahrewar 1349F. was passed by the Government of Hyderabed to regulate the transactions of money lending and to make better provision for its control. Rules were framed as per gazette notification made on 10th Aban 1350F. Section 2(7) of the Act defines money lender , Section 3 of the Act is as follows :

'Every officer who has been authorised by Government under this Act shall maintain a register of money-lenders in such form and with such particulars as may be prescribed. Such register shall be deemed to be a public document within the meaning of the Hyderabad Evidence Act No. II of 1113 F.(2) Every money lender, in order to get his name registered, shall present an application in writing in the prescribed form to the competent officer and the said officer shall on such application being presented , register the applicants name and grant a licence in the prescribed form and within the prescribed period.

(Provided that the licensing authority may , if he has reasons to believe that a money lender is of undesirable conduct, refuse to grant or renew a licence and shall record the reasons therefor. Where the licensing authority is a Tahsildar an appeal from his order shall lie to the Taluqdar , and to the Subedar where the licensing authority is a Taluqdar. The decision of the appellate authority shall be final)

(3) Every person making an application under sub-section(2) shall pay such licence fee not exceeding (Twenty five rupees) , as has been fixed for the district concerned.

(4) A licence issued under sub-section(2) shall be valid for(one year) from the date of issue.

(5)(a) No money lender shall carry on in any district the business of money lending without obtaining a licence provided for in sub-section(2).

(b) If any person contravenes the provisions of clause(a) he shall be punished with rigorous imprisonment for a term which may extend to six months or with fine or both. The fine imposed shall, in case of default, be recoverable as arrears of land revenue . The Taluqdar shall have power to award punishment under this clause.(An appeal against his order shall lie to the Sessions Judge)'

(c) An offence under this sub-section shall be cognizable and bailable.'

8. Section 9 of the Act provides that in every suit relating to a loan the court shall frame and decide the issue, whether the lender is a money lender as defined in sub-section(7) of Section 2 whether he has complied with the provisions of Section 3 and of clauses(a) and(b) and sub-section(1) of Section 5 and sub-section(1) and(2) of Section 6. If it is proved that he is a money lender and does not hold a licence granted under Section 3, the Court should dismiss the suit, sub-sections(2A) and(3) of Section 9 provide for some other penalties for violation of the provisions of Section 5 and 6, Section 15 gives the power to the Government to make the rules for carrying out the purposes of this Act.

9. According to rules, Rule 3 mentions the licensing authority to register money lenders , Rule 4 prescribes the registers contained in sub-section(1) of Section 3 for the purpose of registering money lenders as per schedule A attached to the rules. Rule 5 provides for the application to be submitted by money lenders for registering themselves and obtaining money lender's licence in the form of schedule C attached to the rules. Rule 8 provides that a money lender's licence granted under sub-section(2) of Section 3 of the Act, shall be in the form of schedule(C) attached to the rules. As per Rule 9, the fee to be charged for every licence is held to be Rs. 25/- , Rule 11 provides the procedure for presentation of application , which reads as follows :

'As soon as an application is made in the prescribed form the competent officer shall enter the date of receipt thereon and if the application is in accordance with the rules shall proceed as follows :

(a) He shall require the applicant to deposit licence fee prescribed under Rule 9 which shall be credited in the concerned treasury under the revenue head.

(b) After the fee is deposited the application shall , so far as is relevant, be entered in the register mentioned in Rule 4 and after duly filling up the licence relevant serial number and the date of the aforesaid register shall be entered therein, and the licence shall within two weeks from the date of depositing the amount be given to the applicant on acknowledgment of receipt by him.'

10. Rule 12 provides that the licence under Rule 11, shall be useful for one District only. It is therefore necessary for a money lender having his business in more than one district to obtain a separate licence for each district. Rule 15 provides for the issue of a duplicate licence when the licence originally issued is lost, destroyed or spoiled . Rule 16 provides as follows :

'Every money lender shall, before the expiry of the period of licences obtain another licence.'

11. From a perusal of the provisions of the Act and the Rules, it is thus clear that a money lender under this Act(Section 2, sub-section 7) should get his name registered by presenting an application in writing in the prescribed form to the competent officer. On such application being made, the said officer should register the application and grant him a licence in the prescribed form within the prescribed period. The period prescribed as per Rule 11 is two weeks from that date of depositing the amount of licence fee by the applicant. The proviso to sub-section(2) of Section 3 gives discretion to the licensing authority to refuse to grant or to renew a licence , where the conduct of the applicant is undesirable and he should record his reasons for such refusal. Against the orders of refusal by a Tahsildar , an appeal lies to the Taluqdar and where the Taluqdar happens to be the licensing authority the appeal lies to the Subedar and it is provided that the decision of the appellate authority is final.

12. The licence issued under Section 3 is valid for one year from the date of the issue. Sub-section(5) of Section 3 clearly provides that no money lender shall carry on in any district the business of money lending without obtaining licence provided for in sub-section(2). A contravention of sub-section(5-a) results in imposition of rigorous imprisonment for a term which may extend to six months or with fine or with both. Under Section 9 the Court is bound to dismiss the suit where it is found that there was no licence held by the money lender.

13. Neither the Act nor the rules provide for the procedure to be followed in the case of renewal of a licence. As a matter of fact they do not directly provide for renewal. On the other hand Rule 16 of the Rules says that the money lender should before the expiry of the period of licence obtain another licence. The fact that the rule is framed in such a way, even though the marginal heading of that rule is 'Renewal of Licence', it has to be taken that for the purpose of renewal , as per rules, the application should be made before the expiry of the period of licence. As per sub-section(2) of Section 3 of the Act, the discretion is given to the licensing authority to refuse renewing the licence also in case the money lender is of an undesirable conduct. Except in these two places we do not find direct reference to the procedure for obtaining a renewal of licence. On the other hand the tenor of the Act and the Rules appear as though that a money lender should obtain a licence by presenting an application in the prescribed from, whenever he wants to do business in money lending. When once the licence granted to him, which was valid for one year from the date of issue, is due to expire, he should make an application before the expiry of the period of that licence to obtain another licence. The form of licence provided in Schedule(c) of the rules also does not indicate that there is any column for renewal of the licence. It appears as though that it was a fresh licence whenever it was granted.

14. It was held by the their Lordships of the Supreme Court interpreting Section 9 of this Act, in Kaloji Talusappa v. Khyanagounda, : AIR1970SC1420 , that where the plaintiff had no licence the court was bound to dismiss the suit. In that case the mortgage transaction was on 20-6-1969 and the promissory note was executed on 22-9-1956. On both the dates the plaintiff had no licence obtained under this Act. The suit was dismissed and the decision was confirmed in appeal. Their Lordships also confirmed the said view upholding the object of the Act as follows:---

'In order to curb malpractices of the money lender in the course of his business and to protect unwary debtors the legislature has imposed stringent restrictions upon him requiring him to obtain a licence, maintain and furnish accounts and carry out other obligations. Practically every State in India has enacted statutes imposing restrictions upon money lenders.'

15. In view of the above clear pronouncement there can be no doubt that if the plaintiff has no licence on the date of transaction it is incumbent upon the court to dismiss the Suit. It was also held by the Full Bench of the Hyderabad High Court in Mohd.Bin Salem v. Umaji, AIR 1955 Hyd (FB) that the object of the enactment was to serve a public purpose and the mischief it sought to secure was to protect the borrowers from unscrupulous and usurious money lenders by prohibiting them from lending moneys without obtaining licence, M. A. Ansari, J. who spoke for the majority observes at p. 118 as follows:

'It therefore follows that by directing dismissal the Legislature implidely invalidated the loan given when the creditor had no licence..........It would follow from the answer to question No. 3, that the absence of a licence as regards loans given after the amendment to Section 9 of the act does not create any relationship of creditor and debtor. The contract is void and subsequent obtaining of a licence cannot resurrect something which had no earlier legal existence.'

16. Jagan Mohan Reddy, J.(As his Lordship then was) who agreed with the majority view also observed that the Act was passed not merely to regulate money lending transaction but also to prohibit money lending without licence. It was held by the learned Judge as follows at page 127 :-----

'A detailed examination of the provisions of the Hyderabad Money lenders Act after the amendment in 1955 F. in the light of the aforesaid test has persuaded me to the conclusion 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 money lenders by prohibiting them from lending monies without obtaining licence on pain of imprisonment as well as by empowering courts to dismiss suits of such money lenders.'

17. In view of these clear authorities, there can be no doubt that if there is no licence possessed by a money lender on the date of the loan transaction, the suit has to end in a dismissal.

18. On a proper interpretation of the Act and the rules it is clear that they do not specifically provide for a renewal of the licence as such. As held by us supra, before the expiry of the period of licence the money lender should apply and obtain another licence. It may also be borne in mind that the licence fee payable for the original licence or for another succeeding licence is the same viz, Rs, 25/-. In such a case can it be said that the succeeding licence is the continuance of the original licence or that it is a fresh licence. In view of the fact that there are no provisions as to the power, to renew, the procedure for renewal etc, it should be held that the Act and the rules contemplate only obtaining of a licence by the money lender. It should also be borne in mind that the renewal is also not automatic nor granted as a matter of course. It is open to the licencing authority to impose a fresh condition or grant the fresh licence for a different period than that for which it has been applied for. It cannot therefore be regarded that the renewal licence is merely a continuance of the licence previously issued. It is therefore a licence for all practical purposes and has to be obtained by following procedure prescribed by Rule 16. Rule 16 is in mandatory terms. It says that the money lender should, before the expiry of the period of licence, obtain another licnece. The rule therefore says that he should obtain a licence following the specific procedure for obtaining a money lender's licence. as the rules provide procedure for obtaining a licnece for the first time, the very same procedure should be deemed to apply to an application for obtaining a licence under Rule 16 as well. It means that he should make an application before the expiry of the period of licence to the proper authority, who would direct him to deposit the licence fee and after it is so deposited, enter the name of the applicant in the register and after duly filling up the licence should grant it within a period of two weeks, from the date of depositing the amount. The licencing authority has also a clear discretion vested in it to refuse the grant of licence either wholly or partly under proviso to sub-section(2) of Section 3 of the Act. If the licencing authority does not refuse licence then it is bound to issue licence within a period of two weeks. On a perusal of the provisions of the Act and the rules, it appears that there is a close analogy between them and the provisions in the Bombay Cinema Rules 1954, under which two separate licences are issued; one for the cinema hall and the other for the sale of cinema tickets. The said rules were interpreted by their Lordships of the Supreme Court in N. S. Shethna v. Vinubhai, : [1967]1SCR174 . On a comparative study of Chapter 7 and 8 therein it was observed by Shelat J. for the Bench as follows:---

'The rules relating to the licence for sale of tickets provide as aforesaid that the maximum period for which such a licence can be issued is one year. Renewal of a licence is provided for but only indirectly and in a sort of an offhand manner by Cl. 4 of form F, It appears therefrom that a licence has to produce his licence, pay the renewal fee and get entries made on its reserve as to the date of renewal, the period upto which it would be valid on such renewal and the fees having been paid therefor. Since the rules do not provide as to how much are the fees for renewal it must be presumed that the fees are the same as for the licence itself. It is clear from the rules that they do not contain anything to show that the renewed licence is a continuation of the licence previously issued except the fact that the authority has to make the said entries on the reverse of the licence. The fact that the Rules do not make any provision for the power to renew, the procedure for renewal and for its fees as is done in Chapter VII in the case of a cinema licence is an indication that the draftsman equated renewal of a licence with the issuance of a licence. It may also be observed that it is not as if renewal is automatic nor is it to be granted as a matter of course. If the licensing authority desires to impose any fresh conditions there is nothing in the rules to prevent him from doing so. That being so a renewal cannot, unless the context requires, otherwise, be regarded as a continuation of the licence previously issued. There is also nothing in Chapter VIII or in Form F indicating that the renewal is such a continuation.' It appears to us that the rules framed under the Money Lenders Act also stand on a par with the rules in the above case and as such whenever a licence is granted, either by way of original grant or by way of renewal, it should be deemed to be a new licence.

19. The next question that arises is what is the effect of the licensing authority taking its own time to grant another licence under Rule 16, even though the application had been made before the expiry of the period of licence by a money lender. The rule prescribes that the application should be made before the expiry of the period of the licence and is a mandatory provision. It is a matter over which the money lender had control and he has to, therefore, act as per that rule. But the other proceedings of the licensing authority are matters over which the money lender has no sort of control. If the licensing authority, for reasons best known to it, had not issued another licence, on such an application preferred, before the expiry of the previous licence, the money lender cannot be penalised, if the carries on the business of money lending under the belief that he would get the licence as applied for, especially when there is nothing to show that he was of any undesirable conduct or there are any circumstances to deny him the grant of another licence. He can bona fide proceed on the assumption that he would get another licence and carry on money lending business. To hold otherwise would be to invalidate all the transactions carried out by such money lender after the expiry of the period of prior licence. It was not the intention of the framers of this Act that a fresh licence should be obtained even during the currency of previous licence. The only requirement, according to the statute, is that the application should be made before the expiry of the prior licence. If the money lender had made such an application and also deposited the licence fee as required by the rules, he cannot be penalised, if the licensing authority takes its won time to grant a licence to him as per the prayer in that application. It should not ordinarily be more than two weeks, as per rules, for the grant of such a licence, for which licensee fee is deposited. But for various other reasons or the exigencies the licensing authority may postpone the grant of licence beyond the period of tow weeks. In such a case a money lender cannot be taken to task or penalised for the inaction or the dereliction of duty on the part of the licensing authority, especially in a case where ultimately the licensing authority, after a long lapse of time, grants the said application. When once another licence is granted on such an application, it will have the effect from the date of application itself or at any rate from the date of the expiry of the previous licence.

20. We will now examine the relevant case law cited for the parties. In AIR 1952 Hyd 43, the plaintiff was a money lender upto 9-4-1957. His licensee was not renewed within time. An application for renewal was filed on 2-3-1358 F. and the loan transaction, in dispute, was on 13-3-1358 F. On that application for renewal a licence was subsequently granted. It was held by the learned Judge Ahmed Mohiuddin Ansari J. in that decision that even thought there is no fault of the officers, since the plaintiff was not in possession of he licence on the date of the loan, he had no authority to lend money to the defendant and the contract was unenforceable. The learned Judge relied for this purpose upon an earlier Bench decision in Govind Singh v. Vali Mohammad, AIR 1951 Hyd 44. The learned Judge has also held that even though the licence was eventually granted on the application for renewal the licence cannot be given retrospective effect. On the facts of the present case it is clear that on the date of the suit transaction there was an application for renewal, which was subsequently granted. On the principle laid down by us as aforesaid, if the licence was granted on such an application, it would be another licence within Rule 16 and the loan transaction would be saved. The view of the learned Judge that the contract is unenforceable cannot therefore be upheld. The learned Judge is also not justified in saying that the licence cannot be given retrospective effect, even though it was granted on an application filed on 2-3-1958 F. Here it was not a case of granting retrospective effect for a period prior to that application. The licence granted in pursuance of such an application would certainly have effect from the date of such an application. If so on the date of the suit transaction the money lender was a person having the licence in his hands for all practical purposes. It should, therefore, be held that the view of the learned Judge cannot be supported on the above reasoning.

21. In AIR 1951 Hyd 44 it was held that a contract made with a money lender who has no licence is illegal, void and therefore he cannot recover the amount due on the basis of such a contract. In that case the promissory note was dated 29-4-1946 and the suit was filed on 5-6-1947. The plaintiff had no licence on that date. The suit was therefore dismissed. Subsequently he obtained a licence. It is not clear from the judgment as to when that licence was obtained. Plaintiff filed a fresh suit on 22-10-1947 on the basis of the same promissory note. The suit was again dismissed. The High Court held that as the contract was made in contravention of the provisions of Money Lenders Act by a money lender, who had failed to register on the date of the suit transaction, it was illegal and void and as such he cannot recover the amount on the basis of the said contract. It was a clear case wherein on the date of he advance of the loan i.e., on 29-4-1946 the plaintiff had no licence at all. This decision would only support the proposition that a contract entered into by a money lender without having a licence in his hands would not be enforceable. The same principle was laid down by the same principle was laid down by the same learned Judge in the Full Bench decision in AIR 1955 Hyd 113(FB).

22. In the Bench decision in (1961) 1 Andh WR 123 the facts were as follows : The loan was advanced on 2-3-1952. Plaintiff had money lending licence from 24-11-1950 to 23-11-1951. There was an application for renewal on 23-1-1951 i.e., even before the expiry of the period of the said licence. A fresh licence was granted only with effect from 1-5-1952 and not from 24-11-1951 as prayed for in the application for renewal. Plaintiff applied again on 6-1-1956 to grant licence for the interregnum i.e. from 24-11-1951 to 30-4-1952. The said application was rejected. By means of another application for review, the Tahsildar reviewed his order once again on 28-6-1956 and granted the licence for the said interregnum period. The suit was filed on 24-7-1953. On those facts it was observed by Manohar Pershad and Sherfuddin Ahmed, JJ, that as the money lender was not possessed of a licence on the date of transaction, 2-3-1952 any licence granted to him subsequently cannot have retrospective effect and as such the suit is liable to be dismissed. While discussing the scope of the provisions of this Act, Manohar Pershad, J. who spoke for the Bench observed at page 126 as follows :

'If the licence granted to the petitioner on 28-6-1956 is a renewal of the licence originally granted to the petitioner on 24-11-1950, it would, in our opinion, date bank and it cannot then be said that the respondent has no licence.'

After observing that the review petition was not against the suspension order, but only with a request that he should be granted licence between those two relevant dates, it was observed again by the learned Judge at page 127 as follows :

'The business contemplated under the licence is procreative as the licence authorises the holder to do business for the period and following the date of the licence. This was issued on 28th November, for the past transaction viz., 24th November, 1951 to 30th April 1952. There is no specific provision in the Act, authorising the Collector to issue a licence for the past transaction. The licence issued by the Collector and relied upon by the learned counsel for the respondent herein cannot therefore be held to be a valid licence issued under any of the provisions of this Act. We may in this connection like to state that had the licence issued on 28th June, 1956, been upon a renewal of the petition and there had been delay for the issue of it, the date of the issue of the licence in such a case would not be the date on which the licensing authority sanctioned it but the date of application for renewal. (Underlying it ours).

23. It is clear from the above decision that on the date of the suit transaction there was no valid licence and therefore the dismissal of the suit was proper. The observation of the learned Judges, that if the licence is issued on the basis of the application for renewal it would date back to the date of application for renewal itself, is in our opinion correct.

24. In(1968) 2 Andh LT 304, the facts are as follows : The original licence expired by 31-3-1959. There was an application for renewal on 2-4-1959. It was not disposed of. There was another application for the same purpose on 27-2-1960. An order was passed, on 29-3-1961 extending the licence upto 31-3-1961 from 1-4-1959 i.e. for two years. The loan transaction in that case was on 30-8-1960. Adverting to the provisions of Rules 11 and 16 the learned Judges observed that both the rules are merely directory and not mandatory. We do not agree with the learned Judge regarding Rule 16. According to our opinion Rule 16 is a mandatory one and requires that every money lender should apply before the expiry of his application to get another licence if he wants to continue his business. If he had made such an application, he would have done his duty and it is for the licensing authority to grant it within the time prescribed by Rule 11. It is no doubt true that Rule 11 is merely directory. The further observation of the learned Judge that it would be a valid licence even though granted beyond the period prescribed under Rule 11, is also unexceptionable, but it should be on an application filed before the period mentioned in the licence has expired. On the facts of that case, since the final order was passed on the application for renewal and a licence from 1-4-59 to 31-3-1961 was granted even though the application was made on 2-4-1959 the licensing authority must have taken the application for renewal as one made within the provisions of Rule 16. It was therefore a case of the grant of another licence on the basis of such an application for renewal, and it would be an valid licence and the decision of the learned Judge cannot therefore be assailed, on the facts of that case. At the same time we cannot agree with the wide observation at page 311 that it would be a valid licence even though it is granted on an application for renewal filed after the period prescribed in the licnece has expired.

25. In the result we are of opinion that if the application for renewal of a licence is made by the money lender before the expiry of the licence held by him, any licence granted on such an application would enure for his benefit and it relates bank to the date of expiry of the prior licence. The time taken by the licensing authority would not be a factor against the money lender, provided he can show that the application for renewal was made before the expiry of the previous licence and he had paid the necessary licence fee for that purpose. His suit cannot be dismissed on the simple ground that the licence was granted long subsequent to the period prescribed in Rule 11.

26. We may also observe in this connection that in matters relating to licence under Motor Vehicles Act also it was held by a catena of decisions that if a person, who had already a licence had applied for renewal of the same before the expiry of the term mentioned therein, and bona fide expects to get it renewed in due course retrospectively from the date of its expiry, he can be said to have driven the vehicle with a licence. Reference may be made in this connection to the decision in Public Prosecutor v. Dhanuskodia Pillai, : AIR1950Mad479 .

27. We answer the question in the following manner :--

Rule 11 is directory while rule 16 is mandatory. An application for the grant of a licence has to be made according to the Act and the rules. When once a licence is granted for a period if the money lender desires to continue the money lending business, he has to apply for another licence before the expiry of the period prescribed under his licence. Any licence granted on the basis of such an application, even though it is beyond the period of two weeks it is beyond the period of two weeks prescribed by rule 11, is a valid licence and takes effect from the date of the application or the expiry of the prior licence. But if the application is made after the period of expiry of the prior licence, it does not take effect retrospectively from the expiry of the prior licence, but only from the date of such application. Any such subsequent licence is also equivalent to a fresh licence. It does not validate transactions carried on prior to its taking effect.

28. Answered accordingly.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //