S.H. Sheth, J.
1. The plaintiff has filed this appeal against the decree passed by the learned single Judge in Second Appeal 99 of 1970. The learned single Judge granted the certificate of fitness to enable the plaintiff to file this appeal.
2. The facts of the case, briefly stated, are as under:
3. The plaintiff had been advancing to the defendant loans right from 1950. On 13th March 1963 after having taken accounts of what the plaintiff had advanced to the defendant, the defendant executed a mortgage transaction in favour of the plaintiff to secure his debt. The defendant did not pay the amount due under the mortgage transaction and therefore, the plaintiff filed on 5th November 1966 the present suit for recovering the mortgage amount. The defendant, inter alia, contended in defence that the plaintiff was a money-lender governed by the Bombay Money-Lenders Act, 1946 and that he could not file the present suit without producing moneylenders licence.
4. The learned trial Judge raised the necessary issues. One of the issues related to the maintainability of the suit, It appears that on the applications made by the plaintiff the learned trial Judge granted him some time to -produce the money-lender's licence. He produced one for the years 1963-64 to 1967. However, In order to maintain his suit he was required to produce the money lender's licence right from 1950 because the transactions of advancing loans to the defendant, so far as the suit claim is -concerned, had commencing in 1950. The plaintiff could not produce such a licence. The learned trial Judge, therefore, found that in absence of a valid money-lender's licence for the period commencing from 1950 the plaintiff's suit was not maintainable. He, therefore, dismissed the suit.
5. The plaintiff appealed against that decree to the learned District Judge. Before the learned District Judge he made an application for granting him time to produce a money-lender's licence for the aforesaid period, The learned.. District Judge decided that application only --when he wrote hiss Judgment and dismissed the appeal.
6. The plaintiff challenged the appellate decree in Second Appeal No. 99 of 1970. The learned single Judge felt that both the Courts below had exercised their discretion and refused to extend time to enable the -plaintiff to produce the money-lender's licence. In his opinion, therefore, it was not a fit case in which further time should be granted to the Plaintiff to produce the money-lender's licence. He, therefore, dismissed the Second Appeal and confirmed the finding recorded by the Courts below. on an application made by the plaintiff to the learned single Judge he granted certificate of fitness under Clause 15 of the Letters Patent and on the strength of that certificate he has filed this appeal.
7. It may be stated that the suit has not been decided on merits but has been dismissed in limine on account of the failure of the plaintiff to produce the money-lender's licence for the requisite period commencing from 1950. Before the learned trial Judge it was an admitted fact that the plaintiff was a moneylender and had been carrying on money lending transactions at least since 1950.
8. Mr. K. N. Mankad who appears for the plaintiff has firstly contended before us that the plaintiff's duty in the matter of producing the licence for the past period had ended when he paid the arrears of licence fees and inspection fees. He could not have done anything more. According to him, therefore, the plaintiff having paid the arrears of licence fees and inspection fees right from 1950 must be deemed to have obtained a licence and produced it. It is not in dislaute before us that the plaintiff had paid all arrears of licence fees contemplated by sub-s (2) of S. 10 of the Bombay Money Lenders Act, 1946. In support of his contention he S10 of the Bombay Money Lenders Act, 1946.
9. Before we examine S. 10 and the contention raised by Mr. K. N. Mankad on the strength of that section, we may refer to some other sections. The expression 'loan' has been defined by sub-s. (9) of S. 2 so as to mean 'an advance at interest whether of money or kind, but does not include a deposit of money or other property in a Government post office, Bank or in any other bank or in a company or with a co-operative Society Similarly, it does not include certain other loans specified in clauses (b),(c),(cc),(d),(d1),(d2),(e),(f) and (g) ofsub-s. (9). Sub-s. (10) of S. 9 defines money-lender'. According to that definition, a person who 'carries on the business of money-lending in the State or has his principal place of such business in the State' is a money-lender. Sub-s. (171 of S. 2 makes it clear that the Bombay Money-lenders Act, 1946 applies to 'any suit or proceeding for the recovery of a loan made after the date on which this Act comes into force'. It may be stated that the Bombay Money-lenders Act, 1946, came into force on 31st May 1947. It is not in dispute before us that the Bombay Money-lenders Act, 1946 was applied to Kutch in 1950. S. 5 which is the material section 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 except in accordance with the terms and con-s dictions of such licence'. S. 6 requires a money-lender to make an application for licence annually. A person who carries on the business of money-lending without holding a licence in that behalf under the Act subjects himself to criminal liability as provided in S. 34 of the Act. It inter alia provides that 'whoever fails to Comply with or acts in contravention of any provision of the Act shall, if no specific penalty has been provided for in the said Act, be punishable' with the imprisonment specified in that section. It is, therefore, clear from Ss. 5 and 34 of the Bombay Money-lenders Act, 1946 that anyone who carries on money-lending business without obtaining licence under that Act in an area to which the Act applies carries on his business illegally or unlawfully and renders himself liable to conviction in a criminal Court of law. S. 10 upon which Mr. K. N. Mankad has placed reliance mitigates the rigour of Ss. 5 and 34 to a certain extent in so far as the recovery of loans advanced by a money-lending, licence is concerned. subs. (1) of S. 10, inter alia, provides that '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 related was advanced, the money-lender held a valid licence.'' sub-s. (2) of S. 10 provides that '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'. The argument which Mr. K. N. Mankad has raised is based upon sub-s (2) of S. 10. We, therefore, reproduce it below:
'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 and the inspection 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 de 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 moneylender 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. '
Sub-s. (3) of S. 10 empowers the Court to extend time, on sufficient cause being shown, during which the money-lender ,shall be required to produce - a licence?'. Sub-s. (4) of S. 10 provides that 'if the money-lender fails to produce the licence required under sub-s. (2) within the period specified therein or within such period as may be extended under sub-s. (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', S. 11 provides for making an application to the Registrar through the Assistant Registrar for obtaining a money-lender's licence on Payment of the arrears of licence fee.
10. The argument which Mr. K. N. Mankad has raised is that the Registrar is bound to grant a licence for the past period as soon as the arrears of licence fees for the period commencing from the date on which he started the business of money lending have been paid up. He has argued that the expression 'on payment to the Registrar of all the arrears of the licence fees and inspection fees payable by him under this Act for the period commencing from the date on which he started the business of money 'lending ...' lends support to his contention. It is difficult to uphold this argument because to do so is to construe sub-& (2) of S. 10 so as to mean that whenever a money-lender requires a licence for the past period, the Registrar must grant it on payment by him of all the arrears of the licence fees. If we take this view, it would mean that a money-lender who has carried on his money-lending business without holding a valid licence in that behalf is exonerated from all obligations as soon as he pays the arrears of the licence fees and makes an application for obtaining the licence to the Registrar. If thereafter the Registrar does not grant the licence, it is not his fault. That is not the scheme of subs. (2) of S. 10 of the Act. Mr. K. N.Mankad has tried to read it in an un manner. What in our opinion sub-s. (2) provides is that a money-lender must 'produce within a period of three months a licence on payment to the Registrar of all the arrears of the licence fees and inspection 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'. It is open to a money-lender to apply for a licence for a past period on Payment of the arrears of the licence fees, but it does not mean that as soon as the arrears of the licence fees are paid, the Registrar is bound to grant a licence for the past period In other words, whereas Mr. K. N. Mankad has tried to read the expression 'for the period commencing from the date on which he started the business of money-lending' with the expression' 'on payment to the Registrar of all the arrears of the licence fees and the inspection fees'. On a proper construction of sub-s. (2) of S. 10, we find that the expression ,for the period commencing from the date on which he started the business of money-lending.. goes with the expression 'a licence' and qualifies it. That expression does not go with the expression 'all the arrears of the licence fees' nor does it qualify that expression. Therefore, on a true construction of sub-s. (2) of S. 10 we are the opinion that it is open to a money lender to apply for a licence for the past 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 the Act came into force on payment all the arrears of the,licence fees. It confers a right upon a money-lender who has carried on his money-lending business without holding a valid licence to apply for a licence for the past period in order to validate the transactions of money lending which he had entered into with his debtors. Sub-s. (2) does not cast any obligation upon the Registrar to grant a licence for the past period straightway as soon as the arrears of the licence-fees have been paid up. We take this view because of the Provisions of S. 8 of that Act. S. 8 provides for the circumstances under which the grant of a licence can be refused to a money-lender by the Registrar. If a person is disqualified from holding a licence, If a person who has applied for a moneylender's licence has not complied with the provisions of the Act or the Rules made there under or has made willful default in complying with or knowingly acted in contravention of any requirement of the Act or has knowingly participated in or connived at any fraud or dishonesty in the conduct of or in connection with the business of money-lending or has been found guilty of an of-fence under Chapter XVII or S. 465, 477 or 477-A of the I. P. C., the Registrar has the authority to refuse to grant a licence to him. Indeed, the power to refuse a licence conferred upon the Registrar under sub-s. (f) of S. 8 is conditioned by sub-s. (2) which requires him to give to the applicant a reasonable opportunity of being heard before a licence is refused to him. Sub-s. (3), of S. 8 provides for an appeal to the Registrar General against the order of the Registrar refusing a licence. The scheme of S. 8 makes it abundantly clear that a licence Is not granted automatically or mechanically on payment of licence fees or arrears of licence fees. To uphold the argument which Mr. K. N. Mankad has raised is to frustrate and defeat the provisions of S. 8. Where a licence is required by a money-lender for a past period or for a future period the grant or refusal thereof depends upon the circumstances of the case. The Registrar has the power to make an inquiry and if he comes to the conclusion that the case falls within the scheme of S. 8, he has the power to refuse it. Some support is lent to this view of ours by the provisions of S. 6 which require every money-lender to apply for a licence annually. If the grant of a licence on payment of licence fees or arrears of licence fees was an automatic thing to follow there from, every money lender would pay up the licence-fees for a number of years and automatically get a licence for that period. S. 8-A confers upon the Registrar the power to cancel licences under the circumstances specified therein. S 9 fixes the term of validity of a licence. S. 9-A provides for levy of inspection fee. It is clear from the reference made to these sections that the grant of a licence to a moneylender either for the past period or for a future period is not -an automatic consequence which flows from the payment of licence 'fee or arrears of licence fee, as the case may be, but depends, inter alia, upon the clean and straightforward manner in which he has been carrying on ness; of money-lending. This the bus obviously necessitates an inquiry as contemplated by S. 8. At the end of the inquiry the licence may be granted or refused depending upon the circumstances of the case.
11. In this context, we may note the provisions of sub-s. (5) of S. 6 which lay down that the fee which has been paid for obtaining a license ' e under the Act shall not be refunded, even if the grant of the licence has been refused or the application for obtaining the licence has been withdrawn. In this view of the matter the first contention raised by Mr. K. N. Mankad cannot be upheld. We are unable to hold that merely because the plaintiff had paid the arrears of licence-fees from 1950 to 1963 he ought to have been granted a licence for that period by the Registrar or that he should, be deemed to have received the licence for that period. His first contention Is, therefore, rejected.
12. The second contention which Mr. K. N. Mankad has raised is that in the Instant case the Court had not made an order requiring the plaintiff to produce the licence for the period from 1950 to 1963. It may be noted that the plaintiff obtained, from the Registrar and produced in the suit money-lender's licence for the period commencing from 1963-64 and ending in 1967. The suit was instituted on 5th November 1966. In order, therefore, to have a trial on merits of his claim, the only impediment which was required to be removed was to produce a licence from 1950 to 1962-63 during which money-lending transactions had taken place between the plaintiff and the defendant and which had culminated into the mortgage transaction executed on 13th March 1963 in order to secure the -plaintiff's debts. Now, in this connection the plaintiff made an application (Ex. 15) to the Trial Court on 27th September 1967 seeking time to produce the licence. The learned Trial judge granted time unto 20th October 1967. On 6th Oct. 1967 he made an application, Ex. 18, to the learned Trial Judge in which he stated that the Registrar was not granting him licence for the period from 1950 to 1963 because the Court had not made a specific order in that behalf. He, therefore, prayed to the learned Trial Judge to make a specific order in that behalf. It appears that the learned Trial Judge did not make any order below that application. On 30th August 1968 he made another application to the learned Trial Judge in this behalf. It was objected to on behalf of the defendant. The learned Trial Judge rejected that application by a speaking order which the made below it. The ground on which he rejected that application was that the plaintiff had not shown him the law under which time could be extended after it was extended once in compliance with the provisions of law. The plaintiff also examined Ujamshi Valjibhai Jadva whose deposition appears at Ex. 34. He was the Cooperative Officer, money lending at Bhuj. It appears to us from the record of the case that the Registrar did not grant to the plaintiff licence for the period from 1950 to 1963 because the Court had not made a specific order in that behalf. It appears from the judgment of the learned District Judge that during the pendency of the appeal before him he had made an application to the learned District Judge to grant him time to produce a licence for the period from 1950 to 1963. The learned District Judge did not decide it before deciding the appeal. He recorded the decision thereon in his judgment and rejected it. Obviously, therefore, the plaintiff did not have any opportunity during the pendency of the appeal before the learned District Judge to obtain a licence. It appears to us from the record of the case that a number of applications were made by the plaintiff to the Registrar for grant a licence from 1950 to 1963. The Registrar decided all those applications by his order dated Nth Oct. 1965 and refused to grant him the licence because there was no specific order from the Court requiring him to produce a licence for the period from 1950 to 1963. We may note at this stage that the plaintiff was prosecuted in a Criminal Court for having carried on money-lending business without holding a valid licence in that behalf from 1950 onwards. The case was compounded and the plaintiff was required to-pay penalty of RS 500/- it is clear from the record of the case that for having carried on money-lending business without holding a valid licence in that behalf from 1950 onwards the plaintiff was not only subjected to criminal prosecution where he paid quite a heavy amount of penalty but during the pendency of the suit and during the pendancy of the appeal he had made applications after applications praying for the grant of time to him to produce the money-lending licence. It appears to us that the plaintiff as well as the learned Trial Judge were under some misconception as to the manner in which this problem should be handled by them. Subsection (2) of S. 10 inter alia provides that........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 .........This expression used in sub-s. (2) of S. 10 makes it quite clear that a money lender who has instituted the suit to recover the loans advanced by him to his debtor must be required by the Court to produce the licence for the period during which he had carried on money lending business if he had not held a valid licence during that period. S. 11 carries into effect the requirements of sub-s. (2) of S. 10 by providing that any money-lender who is required under sub-s. (2) of S. 10 to produce a licence shall make an application tar through the Assistant the manner specified in clear, therefore, that what to the Registrar in S. 6. It is the Act provides is that a money-lender who has filed a suit to recover his loans must be required to produce a licence for the Period during which 'he had advanced loans to his debtor for the recovery of which he has filed the suit. In the instant case, we find that whereas the plaintiff on one hand went on making applications after applications for getting time to produce the licence, the Court granted him time once and ignored other applications which he subsequently made. It was the duty of the learned Trial Judge as also of the learned District Judge to make a specific order requiring him to produce a licence for the period from 1950 to 1963 No such order was made. The absence of any such order from the Court led the Registrar to take the view that he could not grant a licence for the aforesaid period to the plaintiff. It is true that the plaintiff did not make to the learned Trial Judge and to the learned District Judge appropriate applications in that behalf but it is also equally true that neither the learned Trial Judge nor the learned District Judge knew of what kind of the order was required to be made in order to enable the plaintiff to apply for a money lending licence for the period from 1950 onwards. The omission on the part of the Court to make an appropriate order under sub-s. (2) of S. 10 cannot be allowed to recoil on the plaintiff. It is unfortunate that this aspect of the case was not argued in express terms before the learned single Judge. We are quite sure that if it was argued before him, he would have taken the same view which we are taking now. In our opinion, therefore, since the absence- of a specific and express order from the Court requiring the plaintiff to produce a money-lender's licence period has done him led to the dismissal of his claim in limine without trial on merits, it is our duty to rectify that mistake and to give him an opportunity to produce such a licence so that the claim which he has made in the suit may be tried on merits and proceeded with. In that view of the matter, the decree passed by the Courts below cannot be sustained.
13. Mr. Y. S. Mankad has invited our attention to the decision of the Supreme Court in Shop named Kaloji Talusappa Ganga Vathi v. Khyanagouda, AIR 1970 SC 1420. That is a decision which is based upon the Hyderabad Money Lenders Act. The Supreme Court has taken the view that in absence of a moneylender's licence the suit filed by the plaintiff-money-lender should be dismissed. The decision is based upon S. 9 of the Hyderabad Act. There is nothing in that decision to show whether the Hyderabad Act has a section corresponding to S. 10 of the Bombay Money-lenders Act, 1946. Therefore, the principle laid down in that decision cannot be applied to the facts of the present case.
14. We, therefore, set aside the decree passed by the Courts below and remand the suit to the Trial Court with a direction that the suit, upon remand, shall be stayed during the period during which the proceedings which have been instituted or which may be Instituted by the plaintiff hereafter for obtaining a licence from the Registrar under the Bombay Money-lenders Act, 1946 have come to a final conclusion. If ultimately the plaintiff fails to produce, at the conclusion of any such proceedings, the licence, the learned Trial Judge shall dismiss the suit. If he produces the licence before the learned Trial Judge at the end of any such proceedings in that behalf, the learned Trial Judge shall proceed with the suit and decide it on merits and according to law and pass an appropriate decree in the suit. If the plaintiff wants to institute fresh proceedings before the Registrar to obtain a licence for the period from 1950 to 1963, he shall make an appropriate application in that behalf to the appropriate authority before 31st March 1976. In light of the language used in sub-s. (2) of S. 10 of the Bombay Money-lenders Act, 1946 we direct the plaintiff to produce the money-lender's licence for the period from 1950 to 1963 before the learned Trial Judge as stated above.
15. The appeal is, therefore, allowed and the suit is remanded to the Trial, Court under the aforesaid -terms. There shall be no order as to costs of this appeal.
16. The learned advocates appearing for both the parties request us to direct the Trial Court to invest the monies, deposited in the Trial Court by the defendant, in a fixed deposit account in order that the interest thereon may not be lost. In our opinion, this request deserves to be granted. We therefore, direct the learned Trial Judge to invest in a Scheduled Bank the amount lying in the Court in this suit in the name of the Nazir of the Court in a fixed deposit account in the first instance for a period of three years. If this litigation does not end at the end of the said period of three years, then the learned Trial Judge, after hearing both the parties, shall be at liberty to renew the investment for such further period as is necessary.
17. Appeal allowed.