Raghubar Dayal, J.
1. The sole point urged in this appeal under certificate from High Court iswhether a money-lender registered under the Bihar Money- Lenders Act, 1938(Bihar Act III of 1938), hereinafter called the Act, can sue his debtor for aloan in excess of the amount mentioned as the maximum amount up to which hecould transact business under the registration certificate issued to him.
2. The facts of the case may be briefly stated. Sant Saranlal andBhanuprakash Lal, plaintiffs Nos. 1 and 2 respectively, sued defendants Nos. 1to 4 for the recovery of Rs. 15,370 said to have been advanced to them whoconstituted a partnership business under the name and style of BanwarilalKishanlal in 1947. Out of this amount, Rs. 3,500 had been lent prior to January17, 1950 and the balance of Rs. 11,870 was lent between January 21, 1950 andMay 14, 1951. The suit was contested on various grounds.
3. The trial court found that the various amounts were advanced for thepurposes of the firm. It found that plaintiff No. 2, Bhanuprakash Lal, was aregistered money-lender under the Act and the registration certificate datedJanuary 17, 1950 stated that he had been registered as a money-lender on that dayto transact money-lending business up to a maximum of Rs. 4,999 only. Itfurther held that the fixing of this limit to the money-lending business didnot debar plaintiff No. 2 from suing for amounts in excess of Rs. 4,999 in casehe had really advanced that amount. The trial Court accordingly decreed thesuit for Rs. 11,870 plus interest pendente lite at 6% per annum.
4. Defendant No. 1 alone filed an appeal against this decree. The High Courtdisagreed with the finding of the trial Court that the loans had been taken forthe firm Banwarilal Kishanlal and held that they were taken by defendants Nos.3 and 5 from plaintiff No. 2. It further held that out of the amount of Rs.11,870 only Rs. 6,000 had been taken on loan by defendant No. 3 and the balancewas taken on loan by defendant No. 5 against whom the plaintiffs had not soughta decree. It further held that in view of the various provisions of the Act andthe rules framed thereunder, the plaintiff could not get a decree for any sumover Rs. 4,999. The High Court accordingly allowed the appeal of defendant No.1 and set aside the decree passed by the trial Court against defendants Nos. 1,2 and 4 and passed a decree in favour of plaintiff No. 2 for Rs. 4,999 againstdefendant No. 3 alone. It also decreed simple interest at 6% per annum from thedate of the institution of the suit until realisation. It is against thisdecree of the High Court that the present appeal has been filed after obtainingcertificate from the High Court.
5. The only point urged by Mr. Chatterjee, for the appellants, is that theHigh Court erred in holding that a registered money-lender could not recover bysuit loans advanced in excess of the maximum amount mentioned in theregistration certificate.
6. To appreciate the contention, it will be helpful to refer to the variousprovisions of the Bihar Acts affecting the question under determination.
7. The Act of 1938 was enacted to regulate money-lending transactions and togrant relief to debtors in the Province of Bihar. 'Loan', according to Clause (f)of s. 2 means, inter alia, an advance whether of money or in kind on interestmade by a money-lender. 'Money-lender', according to Clause (g) means a person whoadvances a loan. 'Registered money-lender' according to Clause (j) means, inter alia,a person to whom a registration certificate has been granted under s. 5.Section 3 empowers the State Government to exempt any money-lender or class ofmoney-lenders or any class of loans from the provisions of the Act- Section 4provides that every Sub-Registrar shall maintain a register of money-lenders insuch form and containing such particulars as may be prescribed, and suchregister would be deemed to be a public document Within the meaning of theIndian Evidence Act. Section 5 deals with the registration of money-lenders apdregistration fee. An application for being registered as a 'money-lenderis to be made by a person and is to contain the particulars mentioned in sub-s.ft). Clause (e) of sub-s. (1) of s. 5 mentions 'such other particulars as maybe prescribed'. The application is to be accompanied by the prescribedregistration fee and an application which does not contain the particularsspecified in sub-s, (1) is to be rejected summarily. Sub-s. (3) provides thatthe State Government may, by rules, prescribe for different classes ofmoney-lenders and for different areas a registration fee not exceedingtwenty-five rupees to be paid by an applicant for registration. Sub-s. (4)makes it incumbent on the Sub-Registrar to whom an application is presented, togrant the registration certificate in the prescribed form to the applicant. TheSub-Registrar is to refuse grant of a certificate only where a certificatepreviously granted to the applicant had been cancelled under s. 19 and theorder of cancellation is in force. A registration certificate granted under s.5 remains in force for five years from the date on which it is granted unlesscancelled earlier under s. 19.
8. Section 7 lays down the duties of the registered money-lenders tomaintain accounts and to give receipts. Section 19 provides for thecancellation of the registration certificate in certain circumstances. Section20 provides for penalty for the contravention of the provisions of s. 7.Section 27 empowers the State Government to make rules prescribing the form ofthe registration certificate mentioned in sub-s. (4) of s. 5 and theparticulars to be contained in an application made under sub-s. (1) of s. 5.
9. The Bihar Money-Lenders Rules, 1938, hereinafter referred to as the rules,defines in Clause (c) of r. 1 'maximum amount of loans' to mean the highest totalamount of loans which may remain outstanding on any day during the period ofthe validity of the registration certificate. Rule 2 prescribes the form inwhich the register of money-lenders is to be kept. Rule 3 prescribes thefurther particulars to be mentioned in the application for registration and oneof these particulars is the amount of loans for which certificate is wanted.Rule 4 lays down the registration fee payable. It is according to the maximumamount of loans in respect of which an application for certificate is made.Rule 6 provides that the registration certificate would be in Form II. Therelevant portion of Form II for the purposes of this appeal is :
'I hereby certify that. . . . . has been registeredas a money-lender under sub-section (1) of section 5.. . . . . to transactmoney-lending business up to the maximum amount of rupees. . . . on this. . . .day of. . .'
10. In 1939, the Bihar Money-Lenders (Regulation of Transactions) Act, 1939(Bihar Act VII of 1939), hereinafter called the 1939 Act, was enacted toprovide for the regulation of money-lending transactions in the province ofBihar and to remove doubts which had arisen regarding the validity of certainprovisions of the 1938 Act. Section 4 of the 1939 Act is as follows :
'Suit for recovery of loanonly maintainable by registered money- lenders :- No Court shall entertain asuit by a money-lender for the recovery of a loan advanced by him after the commencementof this Act unless such money- lender was registered under the BiharMoney-Lenders Act, 1938, at the time when such loan was advanced :
Provided that such a suit shallbe entertainable if the loan to which the suit relates was advanced by the money-lenderat any time before the expiration of six months after the date of commencementof this Act and if he is granted a certificate of registration under section 5of the Bihar Money-Lenders Act, 1938, at any time before the expiration of thesaid six months.'
11. Of the two plaintiffs, Bhanuprakash Lal, plaintiff No. 2, who is held tohave lent the money, obtained registration certificate under s. 5(4) and r. 5on January 17, 1950. The certificate said that he had been registered as amoney-lender under sub-s. (1) of s. 5 of the 1938 Act on that day to transactmoney-lending business up to a maximum of Rs. 4,999 only. The High Courtaccepted the contention for the respondent that in view of the terms of theregistration certificate and r. 3(3) of the rules, Bhanuprakash must beconsidered to have been registered as a moneylender under the Act for advancingloans whose total amounts outstanding on any day during the period of thevalidity of the registration certificate was not to exceed Rs. 4,999, that incase the amount of any loan on the date it was advanced exceeded the total ofthe loans outstanding that day, the money-lender would not be considered to bea registered money-lender for the amount lent in excess of Rs. 4,999 andtherefore, in view of s. 4 of the 1939 Act1, could not sue for such excessamount. The High Court accordingly granted a decree to plaintiff No. 2 for Rs.4,999 only and did not decree his suit for the difference between Rs. 6,000,the amount actually lent, and the limit of the loan mentioned in theregistration certificate. The High Court was o* this view as it thought thatallowing the money-lender to sue for the excess amount would defeat the purposeand object of the Act.
12. The correctness of this view of the High Court is questioned for theappellant on the ground that there is no provision in the 1938 Act or even inthe 1939 Act which provides that a money-lender who has been registered unders. 5 of the Act can lend money up to the limit mentioned in the registrationcertificate. In fact it is urged that the Act nowhere provides that an over-alllimit to the loan advanced by a registered money-lender can be fixed by theGovernment. When the Act does not provide so, the Government cannot, by rule,fix such a limit. Rule 3 requiring the money- lender to mention in hisapplication the maximum amount of loan, i.e., the total amount of loans whichmay remain outstanding on any day during the period of the validity of theregistration certificate and r. 3(3) providing for an application for theregistration certificate to mention the amount of loans for which thecertificate is wanted, cannot, therefore, be said to be rules made for carryingout the purposes of the Act but were rules made for fiscal purposes. Theregistration fee payable under r. 4 is graded according to the maximum amountof loans for which the certificate was wanted. We consider the contention forthe appellant sound.
13. The mere ground that a certain construction of a rule or considerationof its effect will defeat the purpose or object of the Act is not a good groundfor taking away the right of the moneylender to sue for the recovery of a debtdue to him when the Act itself contains no provision authorising any limit tothe loan which a money-lender may lend at a time or may not exceed by lendingfurther loan if the amounts outstanding at the particular point of tune hadexceeded the limit laid down. Further, the preamble of the Act would notjustify the inference that if the contention for the appellant is accepted, theobject of the Act> would be defeated. The preamble is :
'Whereas it is expedient to regulate money-lendingtransactions and to grant relief to debtors in the Province of Bihar.....'
14. The money-lending transactions are to be regulated in order to grantrelief to debtors. What reliefs were to be granted to debtors is apparent fromthe contents of the Act itself. The debtor is not granted relief by anyprovision with respect to the amount of loan he can borrow. He is to borrow anamount he actually requires. He is not given relief by statutorily curtailinghis requirement for a loan but by enacting provisions which tend to protect himfrom being charged exorbitant interest from any malpractice at the time ofadvancing money, from not accounting payments made by him and from othermatters against his interests. Several sections of the Act indicate themeasures for the relief of the judgment debtor which the legislature thoughtproper to enact. Section 7 lays down the duties of registered money-lenders tomaintain accounts and give receipts. None of the duties mentioned in thissection points to the registered moneylender not lending money in excess of anyamount fixed for him as the maximum total amount of the loans he could advanceat any time. The duties do not even require him to maintain any such registerof account as would indicate to him at any point of tune what the totaloutstanding amount of the loans is. Surely he cannot be expected to check uphis accounts, find out the total amount of loans outstanding at any point oftime and then to advance or not to advance a loan to a borrower.
15. Chapter deals with penalty and procedure and consists of. 19 to 21.Section 19 provides for cancellation of registration certificate on the reportof the court trying a suit to the Collector when the court is of opinion thatthe registered money-lender has been guilty of fraud or of any contravention ofthe provisions of the Act or is otherwise unfit to carry on the business ofmoney-lending. Section 20 provides penalty for the contravention of theprovisions of s. 7, and s. 21 provides penalty for the money - or his agent'staking from a debtor at the time of advancing a loan or deducting out of theprincipal of such loan any salami, batta, gadiana or other exactions of asimilar nature by whatever name called or known.
16. Section 23 makes any contract for the payment of the amount due on aloan at any place outside the State of Bihar void, and s. 24 provides for thedeposit of money due on a loan in court if the money-lender refuses to receiveit or refuses to issue a receipt for the same.
17. These various provisions of the Act amply indicate the kinds of reliefwhich the legislature considered necessary to provide for the good of debtorsand to achieve which the money-lending transactions were to be regulated.
18. Sub-s. (4) of s. 5 of the Act provides that on receipt of an applicationfor registration as a money-lender, the Sub-Registrar must grant a registrationcertificate in the prescribed form to the applicant except when a certificatewhich had been previously granted to the applicant had been cancelled under s.19 and the order of cancellation be in force at the time he applied forregistration again. The absence of any discretion in the Sub-Registrar who hasauthority to register persons as money-lenders to refuse registration in viewof the applicant's mentioning any fancy figure for the amount of loans forwhich he wants the certificate well indicates that the limit of the loans to beadvanced do not figure as a factor of any significance in either regulating themoney-lending transaction or in giving relief to a debtor.
19. We are therefore of opinion that the High Court was in error in thinkingthat the object of the Act would be defeated if the registered money-lendercould be held competent to lend money in excess of the maximum amount mentionedin the registration certificate.
20. We have referred to the fact that the Act does not anywhere provide forthe fixing of the upper limit for the loans remaining outstanding at anyparticular time. The rule-making power of the Government does not extend to thefixing of such a limit. Section 27 empowers the State Government to prescribeinter alia the form of the registration certificate and the particulars to becontained in an application made for the purpose of being registered as amoney-lender. It is significant to note that the rule- making power given tothe State Government is not expressed in the usual form, i.e., is not to theeffect that the State Government may make rules for the purposes of the Act.The rule-making power is limited to what is stated in clauses (a) to (e) of s.27 and these clauses do not empower the State Government to prescribe the limitup to which the loans advanced by a money lender are to remain outstanding atany particular moment of time.
21. It is contended for the respondents that s. 5(1) (e) provides that everyapplication for being registered as a money-lender is to state such otherparticulars as may be prescribed and that therefore an application had tomention the amount of the loan for which the certificate is wanted. The powerto prescribe certain particulars for the purpose of an application cannot bedeemed to include the power to fix the maximum amount of loans which amoney-lender can have outstanding on any day. Rule 3(iii) requires theapplication to mention the amount of loan for which the certificate is wanted.Strictly speaking, there is nothing in this expression to suggest to theapplicant money-lender that he has to mention the maximum amount of loans whichis to remain outstanding on any particular day. The rules do not even say thatthe registration of a money-lender for advancing loans up to a maximum amountmentioned in the certificate would make him a registered money-lender for loansup to that amount only.
The facts that the rules require the amount of loans for which thecertificate is wanted and that the form of the registration certificateprovides for mentioning the limit of the money-lending business up to which themoney-lender can transact business, do not necessarily amount to a provisionthat the money-lender would be deemed to be a non-registered money-lender forthe purposes of the amount of loan outstanding in excess of that limit. The money-lenderwhen he advanced money in excess of the maximum limit may contravene the ruleframed under the Act and if the Act provides any penalty for suchcontravention, may be liable for that penalty. In fact, Sections 19 to 21 do notprovide for penalty for contravening any rule.
22. It is urged for the respondents that the State Government was competentto fix the maximum amount of loans to be advanced by a registered money-lenderin view of sub-s. (3) of s. 5 which provides that the State Government may, by rules,prescribe for different classes of money-lenders and for different areas aregistration fee not exceeding Rs. 25 to be paid by an applicant forregistration. It is said that the State Government could create differentclasses of money-lenders according to the amount of money they want to advancein loans.
23. This provision does not empower the State Government to limit themaximum amount of loans to be given by money-lenders of any class. It could,however, as it actually did, prescribe different registration fees fordifferent classes of money-lenders according to the amount of money up to whichthey wanted to lend. The classification of money- lenders for the purposes ofregistration fee can be no justification for placing any limit on the maximumamount of loans they could have outstanding on a certain day, on penalty ofbeing deprived of a right to sue for an amount lent in excess of such amaximum.
24. We therefore hold that the State Government is not competent to make arule fixing a maximum amount of outstanding loans on any day and that the rulesframed do not provide that a money-lender properly registered as such under theAct will cease to be a money-lender so registered if he advances a loan inexcess of the limit mentioned in the registration certificate.
25. It has been urged for the respondent that the expression in s. 4 of the1939 Act to the effect 'unless such money-lender was registered under the BiharMoney-Lenders Act, 1938' means 'unless such money- lender was properly registeredunder the Bihar Money-Lenders Act, 1938'. There is nothing wrong in this view,but there is no impropriety in the registration of Bhanuprakash Lal as amoney-lender. His application must have been in accordance with therequirements of the Act and the rules. The registration certificate was issuedto him in the ordinary course. Nothing has been shown why his registration as amoney-lender be considered to be not proper registration or why it be held thathe was not properly registered under the Act. The mere fact that he contravenedany of the requirements of the licence or of any rule or even any provision ofthe Act does not mean that his registration as a money-lender under s. 5 of theAct was an improper registration.
26. Lastly, it may be said that the view taken by the High Courtnecessitates the adding of the words 'and the loans advanced do not wholly orpartly exceed the maximum amount up to which he was permitted by theregistration certificate to transact money-lending business' in s. 4 of the 1939Act. There is no reason why such an addition be made to s. 4 and make theprovision much more restricted in character.
27. We therefore do not agree with the view expressed by the High Court andhold that a money-lender who has been registered under the Act can sue for therecovery of a loan advanced by him during the period his registrationcertificate is in force, even if at the time of advancing the loan he hadexceeded the limit of the amount mentioned in the registration certificate asthe amount up to which he could transact money-lending business. Under theprovisions of the Act it is the de facto registration of the money- lenderwhich entitles him to sue for the loan and not the contents of the registrationcertificate.
28. We therefore allow the appeal and order that the decree of the Courtbelow be modified to the effect that plaintiff No. 2 alone is entitled to adecree for Rs. 6,000 as against defendant No. 3 alone and that plaintiff No. 2would be entitled to simple interest at 6% per annum from the date ofinstitution of the suit until realisation of the amount. We further order thatplaintiff No. 2 will get his proportionate costs, from defendant No. 3 of thetrial Court and full costs of the High Court and this Court.
29. Appeal allowed.