Judgment:
Kingaonkar V.R., J.
1. By this appeal, appellant impugns judgment rendered by learned Additional District Judge, Aurangabad, in an appeal (RCA No. 279/1989) reversing money decree rendered by learned Civil Judge (Senior Division) in Special Civil Suit No. 4/1978.
2. The appellant, who is original plaintiff, and respondent are inhabitants of same town. The appellant's case before the trial Court was that, out of friendship with the respondent, he advanced amounts of Rs. 10,000/- each on 5th July 1975 and 12th July 1975 to him. The respondent executed separate demand promissory notes each at the time of advancement of the amounts, on both the occasions. Though he made repeated demands, yet the respondent did not pay the amounts. He, therefore, issued demand notice dated 9th July 1977, which was duly served upon the respondent on 11th July 1977. The demand notice drew blank. Neither it was replied nor was complied with. Consequently, he filed suit for recovery of the advanced amounts along with interest @ 1.5 % p.m. and notice charges, totalling to Rs. 28,450/-.
3. By filing written statement (Exhibit-23) the respondent denied the suit claim and averments made by the appellant. He asserted that the appellant was dealing in money lending business. He asserted that earlier he had borrowed money from the appellant, on several occasions, at exorbitant rate of interest. According to him, though he executed the promissory notes in question, on two occasions, yet he repaid the amounts. He asserted that he was arrested during emergency period, during which the appellant exploited the situation, exerted influence on his son and got antedated promissory notes under duress from him and also a promissory note for Rs. 3000/-. He contended that the promissory notes are without consideration. He denied liability to pay the amounts. He further disputed the claim of interest on the ground that it is highly excessive. He submitted that appellant was engaged in money lending business without license and as such the suit was liable to be dismissed.
4. The parties went to trial over certain issues struck below Exhibit-24. They adduced oral and documentary evidence in support of rival contentions. The trial Court held that the promissory notes (Exhibit-43 and Exhibit-44) were duly proved by the appellant. The trial Court came to the conclusion that the transaction was not of money lending. The trial Court further held that since the promissory notes did not show agreement of interest, the transactions are not covered under the Bombay Money Lenders Act, 1946. The suit was, therefore, decreed. The first Appellate Court held that the transactions indicated money lending. The first Appellate Court relied upon provisions of the Bombay Money Lenders Act, 1946 as well as view taken by this Court in Dharamdas Motibhai Wani v. Shidya Jatrya Bhil 1971 Mh.L.J. 608. Hence, the appeal was allowed and the suit was dismissed.
5. The second appeal was admitted by the then Hon'ble Judge, treating grounds No. 10, 13 and 14 of the appeal memo as substantial questions of law. I deem it proper to redraft the substantial questions of law instead of reproducing the grounds of appeal memo. The substantial questions of law may be stated as follows-
1. Whether the first Appellate Court committed patent error while interpreting the provisions of Section 2(9)(f) of the Bombay Money Lenders Act, 1946?
2. Whether in the facts and circumstances of the present case, in absence of agreement to charge interest on the advanced amounts, the transactions could be treated as loans and particularly when there is omission in the promissory notes (Exhibit-43 and Exhibit-44) as regards rate of interest and that in view of admissions of the respondent regarding execution of the promissory notes, the money decree ought to have been confirmed by the learned Additional District Judge?
6. Mr. Gangapurwala would submit that the view taken by Single Bench in Dharamdas Motibhai Wani v. Shidya Jatrya Bhil 1971 Mh.L.J. 608 is not in keeping with proper interpretation of the provisions of the Bombay Money Lenders Act, 1946 and Section 80 of the Negotiable Instruments Act, 1881. He would submit that if exclusion of the negotiable instruments, as contemplated under Sub-clause 'f' of Section 2(9) is to be considered, then even other negotiable instruments like cheque, demand draft etc. may fall within the purview of Section 2(2) and will have to be treated as instances of money lending business. He also invited my attention to Section 2(6), which defines the expression 'interest'. He would submit that since execution of the promissory notes (Exhibit-4.3 and Exhibit-44) was duly proved, the money decree ought not to have been disturbed by the first Appellate Court. As against this, Mr. D.L. Agrawal supports the impugned judgment.
7. Before I proceed to consider relevant legal provisions of the Bombay Money Lenders Act, it is worthy to be noted that several documents were placed on record by the respondent/defendant in support of his contention that the plaintiff/appellant was dealing in money lending business. The first Appellate Court did not consider those documents. As a matter of fact, it was necessary for the first Appellate Court to consider the import of such documents, which are placed on record. The respondent produced on record certified copies of judgments (Exhibit-36 and Exhibit-37) in Small Causes Suit No. 7/1971 and Small Causes Suit No. 13/1971. He also placed on record copies of plaints and other suits filed by the appellant. It appears that the appellant had filed a suit against son of the respondent for recovery of Rs. 3,000/-. There are several other transactions, which are apparent on face of record. The appellant admitted that he had advanced amount to one Topanlal and also advanced certain amount to one Bandu, as per documents (Exhibitr38 and Exhibit-39). These are the attending circumstances. The trial Court seems to have considered these transactions. However, it was held that out of the said transactions four were advanced without interest and, therefore, they could not be said to have been done in regular course of business of money lending.
8. The demand notice (Exhibit-46) shows that the appellant demanded interest of Rs. 7200/- up to end of June 1977 from the date of the relevant transactions @ 1.5% p.m. fie did not explain in the demand notice that the interest was sought by way of damages. In his pleadings, for the first time, he asserted that the amount of Rs. 8400/- was sought towards interest by way of damages. The oral evidence of the parties comprise of their own statements and version of D.W.-2 Shankarlal. The appellant stated that he gave hand loan on both the occasions under the promissory notes (Exhibit-43 and Exhibit-44). He stated further that there was no agreement to charge interest. He denied loan transactions with other persons against whom he had filed similar suits. His version reveals that in proceedings initiated by one Fakirchand s/o Dhannalal at Tehsil office, he was required to return utensils of said Fakirchand. The version of the appellant shows that he did not maintain any record about the other transactions made with the respondent. Though he maintained regular account registers of his business, yet the same were not produced before the trial Court.
9. A Single Bench of this Court in Dharamdas Motibhai Wani v. Shidya Jatrya Bhil 1971 Mh.L.J. 608 held:
In my opinion, whether interest is or is not claimed in the suits is totally irrelevant to the determination of the question whether these were or were not advances at interest. The plaintiff cannot by giving up interest in the suit take the transaction out of the provisions of the Money-lenders Act.
10. The learned Judge proceeded to consider definition of the expression 'loan' as used in Section 2, Sub-section (9) of the Act. It is held that since Sub-clause (f) excludes other negotiable instruments, except promissory note. The advance made on basis of the promissory note, therefore, would not stand excluded from the relevant provisions of the Bombay Money Lenders Act, 1946. The learned Single Judge held that in view of Section 80 of the Negotiable Instruments Act, the interest could be charged whether it was agreed or not between the parties. And, therefore, the loan advanced on basis of promissory note would be an advance at interest. With the result, it falls within the mischief of the provisions of Bombay Money Lenders Act, 1946 and hence Section 10 thereof is attracted.
11. It appears, no doubt, that the other negotiable instruments may also be used while advancing loans and interest could be charged notwithstanding absence of any agreement between the parties. However, such instruments, expect (sic except) the category of promissory notes, may not come within the ambit of the definition of the word 'loan' as used in Section 2(9) of the Bombay Money Lenders Act, 1946. The definition of the word 'loan' used in Sub-section (9) will have to be interpreted having regard to intention of the legislature. Various kinds of advances made have been excluded under Sub-clauses (a) to (f2). For example, under Sub-clause (f2) an advance made bona fide by any person carrying on any business, not having for its primary object the lending of money is excluded from the purview of the definition of expression 'loan'. The advance made in such a case need not be specifically without execution of any negotiable instrument. Though it is not so provided under Sub-clause (f2) yet having regard to the other provisions like Sub-clauses (ee) and (f) it will have to be said that such advances in respect of sum exceeding Rs. 3,000/- shall not be on basis of a promissory note, if they are to be kept outside the purview of the Bombay Money Lenders Act.
12. The definition of expression 'business of money lending' as stated in Section 2(2), covers business of advancing loans. It is argued by learned Advocate Mr. Gangapurwala that isolated transactions cannot fall within the ambit of the Bombay Money Lenders Act, 1946, unless it is shown that the person deals in series of transactions of advancing loans, as a part of his business. He would invite my attention to the Sub-section (6) of Section 2. He would submit that the expression 'interest' does not include any sum charged in accordance with the provisions of any other law. He would submit that the amount claimed by the plaintiff was recoverable towards damages or under the provisions of the Section 80 of the Negotiable Instruments Act. Hence, it could not be regarded as 'interest' charged under Sub-section (6) of Section 2 of the Act. According to Mr. Gangapurwala, if the provisions of Sub-section (2), Sub-section (6) and Sub-section (9) are read together, then the transactions in question would not come within the ambit of the Bombay Money lenders Act.
13. Mr. Gangapurwala seeks to rely on Sohel Janmuhammed Memon and Ors. v. State of Maharashtra 2006 (2) Bom.C.R.(Cri.) 542 : 2006 All.M.R.(Cri.) 2703. It was a case in which the transaction of advancement of loan on strength of bills of exchange was subject matter of the criminal charge. A Single Bench of this Court held that it was excluded in view of Section 2(9)(f) of the said Act. He also seeks to rely on Sureschandra Nandlal v. Lala Gopikrishna Gokuldas Agencies 1996 (4) All.M.R. 325. It was a case in which the suit was founded on a cheque issued by the defendant. A Single Bench of this Court held that where the money was advanced without charging any interest, the transaction could not be that of a lending and, therefore, provisions of BML Act were not attracted to such transactions. There is no difficulty in holding that loan advanced on basis of a cheque would not come within the mischief of Section 2(2)(9), in view of the specific exclusion made in Sub-section (9)(f). Mr. Gangapurwala further seeks to rely on Bhanushankar Jatashankar Bhatt v. Kamal Tara Builders Pvt. Ltd. and Anr. : AIR1990Bom140 . In the given case it was held that Section 2(9)(f) and (fl) are constitutionally valid. He also relied on Ganesh Madhavrao Hawaldar v. Mithalal Kishaolal Dave : AIR1999Bom120 .
14. The definition of word 'loan', as used in Section 2(9) does not exclude an advance of amount at interest whether it would be agreed or would be provided under Statute. It is further clarified by the expression 'whether of money or in kind' before stating the exclusion clauses, shown in Sub-clause (a) to (f2). Therefore, it is not necessary that the advance of amount must be accompanied by an agreement of interest between the parties. It may be that under the provisions of law, may be like Section 80 of the Negotiable Instruments Act, it is recoverable. It need not be reiterated that exclusion available under Sub-clause (f) of Sub-section (9) is limited to the extent of other negotiable instruments, except that of a promissory note. The transactions incorporated in both the promissory notes (Exhibit-43 and Exhibit-44) will have to be, therefore, treated as money lending transactions. Whether the interest was claimed by way of damages or not, is not the significant aspect. The fact remains that whatever was the label attached to it, the plaintiff claimed amount of interest under the demand notice as well in the plaint.
15. The evidence on record shows that appellant (plaintiff) was dealing in money lending transactions. There were several other instances of his trading in money lending. Considered together, and having regard to the provisions of Section 2(2) and Sub-section (9)(f) of the BML Act, it will have to be said that the suit filed by him was for recovery of loan advanced in the course of money lending transaction. The provisions of Section 10 of the BML Act before it was amended w.e.f. 19.7.1975 required the Court to stay the suit on application of the money lender after granting him time to produce money lending license. It also provided under Sub-section (5) of Section 10 that the suits in respect of loans advanced by a money lender before commencement of the date of the Act could be saved. The trial Court wrongly interpreted this provision so as to mean that the transactions before amendment of the BML Act w.e.f. 19.7.1975 were saved. The saving Clause referred to the transactions which were before commencement of the original Act of 1946 and has no reference to saving of such transactions done before date of implementation of the amended Act.
16. Section 10 of the BML Act would make it manifest that unless the Court is satisfied that the money lender held a valid license, no decree can be rendered in his favour. If the Court is satisfied that the money lender did not hold a valid license to deal in money lending business, it is mandatory to dismiss the suit. In the present case, the appellant did not hold a valid license for the purpose of money lending. Obviously, dismissal of the suit by the first Appellate Court is justified. I find it difficult to deviate from the view taken by the learned Single Judge in Dharamdas Motibhai Wani v. Sdhidya Jatrya Bhil 1971 Mh.L.J. 608. Considering the totality of the circumstances and the forgoing discussion, I do not find any substance in the appeal.
17. In the result, the appeal is dismissed with costs.