Muralidher Rao, J.
1. This appeal is by the plaintiff, Life Insurance Corporation of India, hereinafter referred to as 'the Corporation', arising out of Long Cause Suit No. 233 of 1961 on the file of the Second Additional Munsiff, Hubli. The Corporation filed a suit for recovery of Rs. 6,046.65 alleging that the said sum is due from defendants Nos. 1 to 3 after adjusting the amounts paid by them. Defendants Nos. 1 to 3 executed a simple mortgage deed on October 30, 1953, in four of the then United Karnataka Insurance Co. Ltd., Dharwar, for a sum of Rs. 8,000. It was agreed that the amount will carry interest at 6% per annum and the loan was repayable by monthly installments of Rs. 150 towards the principal and interest commencing from December 1, 1953 ; in default of payment of any six installments, the principal due on that date along with interest becomes payable. It was stated that after settlement of accounts, it was found that a sum of Rs. 4,882.53 was due to the Corporation calculating the interest from June 30, 1961, at 6% and after including notice charges, etc., the Corporation claimed Rs. 6,046.65. It was also contended that out of Rs. 8,000, the Corporation paid only Rs. 5,000 and the remaining amount of Rs. 3,000 was taken by the Corporation in lieu of the shares, which the first defendant was made to purchase by the then director- secretary, Mr. K. S. Kini. While admitting the loan transaction, he contended that the Corporation is not entitled to claim the suit amount as it did not have the moneylender's licence under the Bombay Money Lenders Act, 1946. Secondly, that the registration granted to the United Karnataka Insurance Co. was canceled in 1952 and during the years 1952 to 1955, there was no revocation of the cancellation with the result that as on the date of the suit transaction, namely, October 13, 1953, the company had ceased to be an insurance company and, therefore, was bound to take a money-lender's licence under the Bombay Money Lenders Act and since this has not been obtained, the plaintiff's suit was not maintainable. It was also contended that the Corporation could not maintain a suit as a successor body. Defendants Nos, 2 and 3, in addition to the contentions urged by the defendant, also contended that the property mortgaged was a joint family property and defendants Nos. 2 and 3 had shares in it. It was further urged that the loan was not taken for any family necessity. Defendant No. 4 was a surety who adopted the written statement filed by defendants Nos. 2 and 3.
2. On those pleadings, the trial court framed several issues. The records reveal a shocking procedure regarding the framing of issues. On December 1, 1962, certain issues were framed by the court ; on October 17, 1963, these issues were recast. On April 27, 1964, additional issues were framed, again on July 16, 1965, some more issues were framed ; thus, between December 1, 1962, and July 16, 1965, no progress could be made in the suit and what was done by the court was only to frame and reframe the issues. This, undoubtedly, has delayed the disposal of the suit. The findings recorded by the trial court are as follows :
(a) That the Corporation has become the successor to the United Karnataka Insurance Company, Dharwar ;
(b) The plaintiff was not required to take a licence under the Bombay Money Lenders Act and, therefore, the suit is not barred on that account;
(c) That notwithstanding the cancellation of registration, the Corporation is entitled to sue for the mortgage money.
Thus holding, the trial court decreed the suit with four percent. interest.
3. The defendants filed R. A. No. 104 of 1971. They reiterated their contentions in their written statement. The learned appellate judge raised the following point for consideration :
'(i) Whether the money lenders licence was necessary to be obtained by UKIC (United Karnataka Insurance Company) under the Bombay Money Lenders Act, 1946
(ii) Whether there was any controlled business of UKIC that could vest in the plaintiff (LIC)?
(iii) If not, whether the plaintiff's suit i maintainable
(iv) Whether there was failure of consideration as pleaded by the defendants?
(v) Whether the plaintiff is entitled to interest at 6% by the defendant
(vi) What order ?'
4. The appellate court held that the company was required to obtain the money lenders licence under the Bombay Money Lenders Act and since admittedly there i no licence, the suit was not maintainable. It was also held that registration of the company was canceled between 1952 and 1955 and had not been renewed till that period and there is no control business which vests in the Life Insurance Corporation. Lastly, it was held that the plaintiffs have failed to establish tat defendants have borrowed Rs. 8,000 for the family necessities as claimed in the plaint. The court recorded a finding that only Rs. 5,000 was paid to the first defendant. Thus holding, the lower appellate court allowed the appeal and dismissed the suit.
5. In this court, Mr. Srinivasa lyengar appearing for the Corporation urged the following contentions :
(i) That the Bombay Money Lenders Act was not applicable since the original company was an insurance company, which wa not required to obtain licence ; (ii) that though the registration was canceled the company till remained an insurance company to do any business other than insurance business ; and (iii) the amount having been paid to the plaintiff, the deposit of Rs. 3,000 in share was an investment by the defendant, which would ensure to the benefit of the family. Therefore, the court below was not justified in holding that the full consideration has not been paid.
6. Mr. Sobha Patil supported the conclusions of the lower appellate court and contended that the company had ceased to be an insurance company. Therefore, it wa bound to take a licence on the date it had lent the money under the mortgage deed. She contended that the suit was not maintainable and that the lower appellate court was justified in dismissing the suit
7. The Bombay Money Lenders Act, 1946, has been in force since May 31, 1947. The word 'business of money-lending' has been defined thus :
'(2) 'business of money-lending' means the business of advancing loans whether or not in connection with or in addition to any other business;'
8. Clause (9) of this section defines the word 'loan'as :
'loan' means an advance at interest whether of money or in kind, but does not include......
(d2) a loan to or by an insurance company as defined in the Insurance Act, 1938.'
9. It wa contended by Mrs. Shobha Patil that section 5 of the Act requires that every money-lender should obtain a licence to carry on the business of money lending. Mrs. Patil, therefore, maintained that on the date of the suit transaction, i.e. October 30, 1953, the plaintiff company had ceased to be an insurance company and, therefore, it got itself excluded from the excepted category. There is no dispute that from 1952 to 1955 the registration had been canceled.
10. Section 3 of the Insurance Act, 1938, which deal with registration prohibits the carrying on of any insurance business unless a certificate of registration is obtained from the Controller. Section 3(5B) of the Act reads thus :
'3(5B) When a registration is canceled, the insurer shall not, after the cancellation has taken effect, enter into any new contracts of insurance but all rights and liabilities in respect of contracts of insurance entered into by him before such cancellation takes effect shall, subject to the provisions of sub-section (5D), continue as if the cancellation had not taken place.'
11. It is clear that after the registration is canceled, the insurer is precluded from entering into any new contracts of insurance. It, however, saves the old rights and liabilities. Admittedly, on the date of the mortgage deed, October 30, 1953, the company had ceased to be an insurer. The word 'insurer' has been defined in clause (9) of section 2. According to the said definition, the said definition, the insurer is one who carries on insurance business in India or has his principal place of business in India or who with the object of obtaining insurance business employs a representative. In other words, there can be no insurer who does not carry on the business of insurance. As the company was prohibited from carrying on insurance business after the cancellation of the registration, it is obvious that he cannot be treated as an insurer nor can the company be treated as an insurance company so as to take the benefit of the exemption clause in the Bombay Money Lender Act. It appears to me that the court below was justified in holding that the company was a money lender without obtaining the licence nor could the successor institute a suit for the recovery of the said amount. In Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross, Chartered Accountants, : AIR1959Mad336 , P. V. Rajamannar, C. J. as he then was, observed thus (at page 338) :
'When the definition of `insurer' in section 2(9)(b) refers to any body corporate carrying on the business of insurance, the implication is that the body corporate is effecting contracts of insurance. Admittedly, once there has been a cancellation of registration, the company cannot effect any new contracts of insurance. We cannot, therefore, agree with the learned Government Pleader that a company can be deemed to be carrying on business within the meaning of that expression in section 2(9) of the Act even after there has been a cancellation of registration.'
12. This being the correct legal position, the finding of the lower appellate court that the transaction was hit by the provisions of the Bombay Money Lender Act has to be upheld. Since the transaction wa effected without the licence, the suit was not maintainable and, therefore, the court below was justified in allowing the appeal and dismissing the suit on that score.
13. It was alleged by the first defendant that from 1952 to 1955, the business of the company had completely collapsed and, therefore, the registration was canceled by the concerned authority. P. W- 2, Anant Govind Bhat, ha admitted this position. Exhibit 84 is the letter of cancellation. It appears that there was a renewed registration on July 9, 1955. On the strength of the renewed registration, it was contended by Mr. Srinivasa lyengar that the renewal dates back to March 1, 1952, and, therefore, it cannot be said that between May 1, 1952, and July 8, 1955, the company had ceased to be an insurance company. It is difficult to accept this contention. There is no provision in the Act which states that the renewal will have retrospective effect. In the absence of such a provision, it must be taken it is prospective.
14. Section 3(5C) provides for revival of the registration within six months if the insurer fulfills the requirement which has resulted in the cancellation of the registration. Admittedly, there is no order of revival of registration within six months from the date of cancellation. Therefore, the plaintiff cannot take advantage of this sub-section. Section 3A of the Insurance Act provides for renewal of registration. But the said sub-section does not state that the renewal dates back to the date of cancellation. Hence, this contention has to be rejected. Since I have come to the conclusion that the suit is hit by the provisions of the Bombay Money-Lenders Act, and the renewal is not retrospective so as to take away the effect of the cancellation, I am of the view that the suit of the plaintiff deserves to be d tmissed. In this view of the matter, it is not necessary to go into the question whether the Life Insurance Corporation is a successor to the company and the question whether the loan was taken for family necessity.
15. For the aforesaid reasons, while agreeing with the view of the lower appellate court that the suit is not maintainable. I dismiss this appeal. No costs.