Bhatia J.H., J.
1. This Appeal is preferred by the original defendant against the judgment and Decree passed by the learned Judge, City Civil Court, Mumbai, in Summary Suit No. 944 of 1992 in favour of the plaintiff/respondent.
2. To state in brief, it is case of the plaintiff that on 25.1.1988, he had advanced an amount of Rs. 37,000/- to the defendant, had agreed to repay the amount with interest at the rate of 21% per annum. Accordingly, the defendant had executed a promissory note in favour of the plaintiff. However, the defendant failed to make repayment of the amount, but he paid an amount of Rs. 5,000/- on 15.5.1989 and thereafter he issued two cheques of Rs. 3,000/- and Rs. 6,000/- on 3.3.1990 and 21.5.1990 respectively. Both these cheques were dishonoured and in respect of the same the plaintiff has taken action against him under Section 138 of the Negotiable Instruments Act. After adjustment of the said amount of Rs. 14,000/ -, the defendant was liable to pay balance amount of Rs. 23,000/-.
3. According to the plaintiff, the interest on the amount till the date of filing the suit would be Rs. 18,000/-. Therefore, he claimed total amount of Rs. 41,000/-. Summary Suit was filed on 19.12.1991 for recovery of the amount.
4. The defendant was granted leave to defend the suit. According to him, he had taken loan of Rs. 20,000/- on 18.5.1985 from the plaintiff and at that time he had executed a promissory note. Besides obtaining his signature on the promissory note, the plaintiff had also obtained signatures of the defendant on the revenue stamps affixed on blank papers and he has misused the said signature for the purpose of creating the promissory note dated 25.1.1988 against him.
5. He contends that he had repaid the amount of Rs. 15,000/- on 21.7.1986 and thereafter he had paid Rs. 3,000/- on 8.3.1990 and Rs. 6,000/- on 15.5.1989. According to him, towards the balance amount and interest, he had issued a cheque of Rs. 6,000/- on 21.5.1990 and that cheque was dishonoured. He denied that he had taken loan of Rs. 37,000/- from the plaintiff on 25.1.1988 and that he had executed the fresh promissory note in respect of that loan. He further contended that the suit is barred by limitation. According to him, the plaintiff is a money lender carrying on business of money lending without licence and therefore the suit is liable to be dismissed.
6. Several issues were framed by the learned trial Court. The plaintiff examined himself as P.W.-1 and one Mohanlal Pandya as P.W-2. After hearing the evidence of both the parties, the learned trial Court held that the plaintiff has proved that the defendant had obtained loan of Rs. 37,000/- on 25.1.1988 and had executed a promissory note in respect of that loan. The plaintiff has also proved part-payments in respect of the loan. The contention of the defendant that the repayments made by him were in respect of the earlier loan of 1985 came to be rejected. The trial Court also held that the suit is within limitation.
7. According to the trial Court, this was the loan advanced by the plaintiff to the defendant, who is a businessman and therefore the suit is not hit by Section 10 of the Bombay Money Lenders Act. With this finding, the learned trial Court passed a decree against the defendant for repayment of Rs. 41,000/-. The defendant was further directed to pay future interest from the date of filing the suit till realization of the amount at the rate of 6% per annum on the principal amount of Rs. 23,000/-. Being aggrieved by the said judgment and Decree, the defendant has preferred the present Appeal.
8. Heard Mr. Kalambukadam, the learned Counsel for the appellant-defendant and the plaintiff/respondent, who is a party in person. Perused the record and proceedings of the trial Court.
9. Following points arise for my determination and I record my findings against them for the reasons given below:
POINTS FINDING(i) Does the plaintiff prove Yes that the defendant had obtained loan of Rs. 37,000/- from him on 25.1.1988 and had executed a promissory note (ii) Whether the suit is Yeswithin limitation ?(iii) Whether the plaintiff is Yesa money lender and the suit is hitby Section 10 of the Bombay Money Lenders Act?
10. The plaintiff deposed about the transaction in dispute in detail. He also clarified that in 1985, the defendant had also obtained loan of Rs. 20,000/- from him and out of that he had repaid amount of Rs. 15,000/-. Thus, there was balance amount of Rs. 5,000/- to be paid out of that loan. As the defendant was in need of money, he requested for further loan. According to him, he gave him fresh loan of Rs. 37,000/- after deducting the balance amount of the previous loan and accordingly, the defendant had executed the promissory note Exhibit 'C' on 25.1.1988.
11. From the defence taken by the defendant and the oral evidence of both the parties it becomes clear that the first loan transaction had taken place in 1985 and that time the defendant had taken loan of Rs. 20,000/--. According to him, he had paid Rs. 23,000/-- to the plaintiff towards repayment of that loan amount and about the same, the plaintiff had also got certain endorsement on the promissory note which was executed by the defendant in favour of the plaintiff in 1985. According to him, a cheque of Rs. 6,000/- was issued by him on 21.5.1990 towards payment of balance amount of that loan. That cheque was dishonoured. He denies to have taken loan in 1988. According to the plaintiff, out of that amount, an amount of Rs. 15,000/- was paid. An amount of Rs. 5,000/- was remaining which was deducted and adjusted from the loan of Rs. 37,000/- given by him to the defendant in 1988.
12. Exhibit 'C' is the promissory note dated 25.1.1988 which is in the handwriting of the plaintiff himself. Admittedly, it bears the signature of the defendant. Not only this, even address of the defendant on this document is also in his own handwriting. The defendant also produced a promissory note which was allegedly executed by him in 1985 and on the reverse of which certain endorsement about repayment appear to have been made.
13. The plaintiff denied the genuineness of that promissory note. He also denied that the endorsements made on the reverse of the promissory note are in his handwriting. There is no independent reliable evidence that the endorsements on the reverse of that promissory note are in the hand-writing of the plaintiff. It is difficult to believe that the original promissory note of 1985 would be in the custody of the defendant unless he had cleared that loan. The promissory note was expected to be in possession of the plaintiff and it is difficult to believe that he would return the promissory note to the defendant without repayment of that loan fully. From the plea taken by the defendant, it is clear that he had not cleared that loan fully and the amount of Rs. 6,000/- was remaining to be paid. If it was so, the plaintiff could not have returned that promissory note to the defendant without receiving that amount.
14. In these circumstances, I find it difficult to believe the plea of the defendant that the cheques of 1990 and particularly the cheque dated 21.5.1990 were issued towards repayment of the loan taken in 1985. The trial Court also did not believe in this story of the defendant. I do not see any reason to disagree with the trial Court. The plea and evidence of the plaintiff appears to be reliable that out of the previous loan of 1985, some amount was yet to be repaid and that amount was adjusted by deducting same from the fresh loan of Rs. 37,000/- which was advanced on 25.1.1988. As the promissory note Exhibit 'C' bears signature of the defendant and also his address in his own handwriting, it is not possible to believe that his signature was obtained on some blank paper and promissory note was created.
15. On this count also I am unable to differ from the trial Court. Therefore, I find that the plaintiff has proved that on 25.1.1988 he had advanced the loan of Rs. 37,000/- against the promissory note Exhibit 'C, of course, after deduction of the balance amount of the previous loan.
16. The next question is about limitation. It was contended by the defendant that even though the promissory note was allegedly executed on 25.1.1988, the suit was filed on 19.12.1991 i.e. more than 3 years after the date of the promissory note and, therefore, it is barred by limitation. However, according to the plaintiff, after the said loan was advanced, the defendant had made 3 payments to him. The first was of Rs. 5,000/- on 15.5.1989 and then two payments were made by cheques dated 3.3.1990 and 21.5.1990. Admittedly, the cheque of Rs. 6,000/- dated 21.5.1990 was dishonoured and in respect of that the plaintiff had also taken an action against the defendant under Section 138 of the Negotiable Instruments Act. That action is not material for the decision of this Appeal. The fact remains that on 21.5.1990 i.e. within the period of limitation, the defendant had issued a cheque towards repayment of a part of that loan amount. Section 18 of the Limitation Act provides that where before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right has been claimed a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. Section 19 provides that where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt, or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made provided the acknowledgment is in the hand-writing of or is in the writing signed by the person making the payment.
17. In the present case, as late as 21.5.1990, the defendant issued a cheque of Rs. 6,000/- towards the payment. Thus, it was an acknowledgment in writing as well as payment accompanied by acknowledgment. Therefore, under Section 19 fresh period of limitation will begin. Even if for a moment it is contended that the payment was not actually made because the cheque was dishonoured still one can go back to another payment of Rs. 3,000/- by cheque dated 3.3.1990. Therefore, fresh period of limitation would begin to commence from 3.3.1990. As the suit was filed on 19.12.1991, it was well within limitation. Therefore, I find that the trial Court was right in holding that the suit is within limitation.
18. The learned Counsel for the defendant-appellant vehemently contended that the plaintiff is a money lender and the plaintiff also admits that he was not holding money lending licence. According to the learned Counsel, in view of the provisions of Section 10 of the Money Lenders Act, the suit is liable to be dismissed. The plaintiff-respondent, who is party in person, admits that he does not have money lending licence, but he denied that he was a professional money lender or was carrying on business of money lending.
19. To appreciate the rival contentions, it will be necessary to go through the evidence as also the relevant provisions of the Bombay Money Lending Act. As per the definition given in Section 2(2) of the Bombay Money-Lenders Act, the 'business of money-lending' means the business of advancing loans whether in cash or kind and whether or not in connection with or in addition to any other business. As per Section 2(9) 'loan' means an advance at interest whether of money or in kind but does not include certain loans specified therein. Under Sub-section (10), 'money-lender' means (i) an individual or (ii) an undivided Hindu family; or (iii) a company, or (iv) an unincorporated body of individuals, who or which (a) carries on the business of money-lending in the State; or (b) has his or its principal place of such business in the State;' Section 5 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 conditions of such licence.
20. Section 10 provides that no Court shall pass a decree in favour of a money-lender in any suit 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 relates was advanced, the money-lender held a valid licence, and if the Court is satisfied that the money-lender did not hold a valid licence, it shall dismiss the suit. It is clear that a person, who carries on business of money-lending, has to obtain necessary licence. It means he cannot carry on the business of money lending without obtaining a licence issued for that purpose and if any suit is filed by such money-lender for recovery of the loan amount, the Court shall not pass a decree in his favour unless he was holding a valid licence at the time when the loan or any part thereof was advanced and if the Court is satisfied that he did not hold a valid licence, it shall dismiss the suit.
21. In the present case, it is pleaded by the plaintiff and it is proved that the plaintiff had advanced loan with interest at the rate of 21% per annum. He also admits that he was not holding any money- lending licence for this purpose. The question is whether he was carrying on business of money lending or not and whether the disputed transaction is exempted from the definition of 'loan' under Section 2(9). It has been consistently held by several High Courts as well as the Supreme Court that business of money lending always imports a notion of system, repetition and continuity. Merely because of a stray transaction of advancing loan to one or two persons, the person cannot be said to be carrying on money lending business. This view has been taken in (Mrs. K. Sudersanam v. S. Venkatarao) : AIR1963AP442 . Nichabni and Anr. v. State of Madras) A.I.R. 1964 Mad. 30, (Gajanan and Ors. v. Seth Brindaban) : [1971]1SCR657 , (Nandram Kaniram and Ors. v. N.B. Rahatekar) : 1994(1)BomCR28 and (Arjuna Vishram Raut and Anr. v. Balkrishna Chaturbhuj Charkha) 2003(Supp.) Bom.C.R. 361. The last two authorities are from the Bombay High Court. Thus, there is a consistent view taken by different High Courts that to hold that a person is carrying on business of money-lending, it must be proved that the person carries on business of money-lending by profession. In the light of this legal position, the evidence in the present case will have to be examined.
22. The evidence of the plaintiff himself and his witness Mohanlal Pandya clearly shows that the defendant was not known to the plaintiff prior to this loan transaction. According to P.W-2 Mohanlal Pandya, the defendant is his relative. About 15-16 years before, the defendant was in need of money. Mohanlal Pandya had taken the defendant to the plaintiff for obtaining loan. Mohanlal Pandya introduced the defendant to the plaintiff for the first time and the plaintiff agreed to advance a loan to him. From the evidence of the plaintiff and Mohanlal Pandya, it is evident that for the first transaction of the loan, the defendant was introduced to the plaintiff by Mohanlal Pandya. Till that time they were not known to each other.
23. As far as the second loan is concerned, it is possible that Mohanlal Pandya was not involved because the parties were already known to each other by that time. In the cross-examination, Mohanlal Pandya admitted that the plaintiff used to give loan to needy persons. In view of this admission, the learned Counsel for the defendant vehemently contended that the plaintiff was doing business of advancing loan and that is why he used to advance loan to the needy persons. From the evidence on record, it is clear that the plaintiff advanced a loan to the defendant for the first time in 1985 when they were not known to each other and that he was introduced to the plaintiff by Mohanlal Pandya for the first time. Not only this, he advanced second loan of Rs. 37,000/- to him in 1988.
24. Besides this, he has filed another 2 suit, being Summary Suit No. 1001 of 1995 against another party for recovery of the loan amount with interest @ 21% per annum and that suit is pending in this Court and PW-2 Mohanlal Pandya admitted that the plaintiff used to advance loans to needy persons. It is a matter of common knowledge and common sense that unless a person is in need, he will not go to a money-lender to take a loan. Only a needy person approaches the money-lender for taking loan. From the evidence of Mohanlal Pandya, it appears that the plaintiff used to advance loans to needy persons. It indicates that the plaintiff used to advance loans and therefore, it can be held that he was carrying on business of money lending. 25. The learned trial Court did not give much importance to the admission of P.W-2 Mohanlal Pandya that the plaintiff used to give loan to needy persons and the learned trial Court observed that the defendant had not adduced any evidence to show that the plaintiff is doing money lending business. The trial Court observed that the admission given by P.W-2 Mohanlal Pandya cannot be treated as a good piece of evidence to substantiate the claim of the defendant. 26. The learned trial Court further observed that on the contrary, it is an admitted fact that defendant is a businessman and the plaintiff had advanced loan to the defendant by business consideration. Now the question is whether loan advanced to a businessman is exempted from the definition of loan under Section 2(9) of the Bombay Money Lenders Act or not. It will be useful to quote the definition of 'loan' incorporated in Section 2(9) of the Bombay Money Lenders Act.
(9) 'loan' means an advance at interest whether of money or in kind but does not include -
(a) 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 Cooperative Society;
(b) a loan to, or by, or a deposit with any society or association registered under the Societies Registration Act, 1860, or any other enactment relating to a public, religious or charitable object;
(c) a loan advanced by Government or by any local authority authorised by Government;
(cc) a loan advanced by a Government servant from a fund, established for the welfare or Assistance of Government servants, and which is sanctioned by the State Government;
(d) a loan advanced by a Co-operative society;
(d1) an advance made to a subscriber to, or a depositor, in, a Provident fund from the amount standing to his credit in the fund in accordance with the rules of the fund;
(d2) a loan to or by an insurance company as defined in the Insurance Act, 1938;
(e) a loan to, or by bank;
(ee) loan to, or by, or deposit with, any body (being a body not falling under any of the other provisions of this cause), incorporated by any law for the time being in force in the State;
(f) an advance, of any sum exceeding rupees three thousand made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note;
(fl) an advance of any sum exceeding rupees three thousand made on the basis of a hundi (written in English or any Indian language);
(f2) an advance made bona fide by any person carrying on any business, not having for its primary object the lending of money if such advance is made in the regular course of his business;'
(g) except for the purposes of Sections 23 and 25-
(iii) a loan, by a landlord to his tenant for financing of crops or seasonal finance, of not more than Rs. 50 per acre of land held by the tenant;
(iv) a loan advanced to an agricultural labourer by his employer;
Clauses (a) to (fl) have no application to facts of present case. From Clause (f2), it appears that the loan does not include any advance made bona fide by any person carrying on any business, not having for its primary object the lending of money if such advance is made in the regular course of his business. It is not the case of the plaintiff that he was carrying on some other business and in regular course of his business with the defendant, he had advanced certain loan to the defendant. Therefore, Clause (f2) cannot be invoked in favour of the plaintiff.
27. It may be noted that Clause (g) originally consisted of sub-clauses (i), (ii), (iii) and (iv). However, by Amendment of Maharashtra Act, 1976, Items (i) and (ii) were deleted. It will be useful to quote Clause (g) as it was prior to that amendment:
(g) except for the purposes of Sections 23 and 25,-
(i) a loan to a trader;
(ii) a loan to a money-lender who holds a valid licence; or
(iii) a loan, by a landlord to his tenant for financing of crops or seasonal finance, of not more than Rs. 50 per acre of land held by the tenant;
(iv) a loan advanced to an agricultural labourer by his employer;
28. Items (i) and (ii) were deleted in 1975. Prior to that amendment, if a loan was advanced to a trader that was excluded from the definition of term 'loan'. However, by deleting Item (i) from Clause (g), exclusion of loan to trader from the definition 'loan' has been removed and as a result the loan advanced to a trader is also a loan within the definition of the Bombay Money Lenders Act. It appears that the learned trial Court did not notice this amendment which was made in 1975.
29. The trial Court rejected the contention of the defendant that the suit is hit by Section 10 of the Bombay Money Lenders Act merely by saying that the plaintiff had advanced loan to the defendant for business. It indicates that the trial Court gave benefit of Item (i) in Clause (g) to the plaintiff, possibly because the defendant carries on business and was a trader. However, in view of the amendment of 1975 even the loan to a trader is a loan within the definition of term 'loan' in the Bombay Money Lenders Act.
30. From the facts and circumstances of the present case and the legal position discussed above, it is clear that the plaintiff was carrying on business of money-lending and as part of money-lending business, he had advanced loan to the defendant. Admittedly, the plaintiff was not holding money-lending business and therefore, in view of provisions of Section 10, this suit is liable to be dismissed. The trial Court did not consider the legal position while rejecting the contention of the defendant and in my opinion, the trial Court committed an error in passing the decree in favour of the plaintiff.
31. In the result, the appeal is allowed. The impugned judgment and decree passed by the trial Court are hereby set aside. The suit filed by the plaintiff stands dismissed. Parties shall bear their own costs throughout.
32. At this stage, the learned Counsel for the defendant-appellant makes a statement that the defendant has deposited the decretal amount before the trial Court. In view of the dismissal of the suit, the defendant shall be entitled to receive that amount back.