Patna High Court
Smt. Fula Devi vs Mangtu Maharaj And Ors. on 20 December, 1968
Equivalent citations: AIR1969PAT294, 1969(17)BLJR121, AIR 1969 PATNA 294, ILR 48 PAT 38, 1969 PATLJR 51, 1969 BLJR 121
JUDGMENT U.N. Sinha, J.
1. This appeal, by plaintiff No. 1, had originally been referred to a Division Bench for hearing, and by order dated the 10th July, 1968, a Division Bench of this Court was of the opinion that there was conflict of views taken in two Division Bench decisions of this Court, reported in 1963 BLJR 361 = AIR 1963 Pat 350, Lakhi Narayan Sao v. Smt. Bhagwati Kuer, and 1965 BLJR 774, Dr. Nilkanth Prasad v. Bhola Nath, on the point as to the burden of proof so far as Section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, is concerned, and as such, the difference should be finally resolved by the decision of a Full Bench. In these circumstances, this appeal has been placed for hearing before this Bench.
2. The relevant facts are as follows: The plaintiffs instituted a suit, out of which this appeal arises, for recovery of Rs. 2,000/-, besides interest, said to be due on a mortgage bond, dated the 20th April, 1954, executed by defendant No. 1, Mangtu Maharaj. Defendants second party are the subsequent purchasers of the land covered by the mortgage deed. It was alleged that Mangtu Maharaj had a partnership business with the plaintiffs second party in the name and style of Bhudar Mal Panna Lal and he used to write the Nakal Bahi and the Bilti Bahi of the firm, Mangtu Maharaj was in need of money for payment of petty creditors and for meeting the expenses of fooding, and accordingly, he had approached Ghanshyam Dass, father of plaintiff No. 2 and father-in-law of plaintiff No. 1, for some money. Plaintiff No. 1 had some personal funds of her own and she had wanted to invest the money in some Karbar in consultation with her father-in-law, and the latter agreed to advance Rs. 2,000/- to Mangtu Maharaj by taking the money from plaintiff No. 1. Thus, this money was given to Mangtu Maharaj, who executed the mortgage bond in question in favour of plaintiff No. 1, although ostensibly the name of the mortgagee was Ghanshysam Dass.
It was alleged that the money advanced was a casual loan and, therefore, there was no necessity for plaintiff No. 1 to take any licence under the Money-lenders Act. The rate of interest agreed to be paid was six per cent per annum and the due date for repayment was Baisakh 1366 Fasli. It was alleged by the plaintiffs that this suit had to be instituted because the mortgage money had not been paid in spite of demands. The suit was contested by defendants first and second parties. The main defence of Mangtu Maharaj was that he was a partner in the firm Bhudar Mal Panna Lal, but it was denied that he had taken any loan as alleged. It was contended that Ghanshyam Dass had induced Mangtu Maharaj to execute the mort-
gage bond in question in his favour as security for the partnership business, assuring that Rs. 2,000/- would be paid to Mangtu Maharaj, for investment towards the capital of the partnership business. It was alleged that Ghanshyam Dass had played false and had not paid anything as agreed upon. Thereafter, Mangtu Maharaj gave up the partnership business and the mortgage deed remained inoperative.
It was alleged that Mangtu Maharaj had cancelled the mortgage deed by executing a registered deed of cancellation dated the 14th June, 1955, and thereafter executed a sale deed in favour of defendants second party, as he required money for starting his own shop and business. Certain allegations were made as to how the mortgage bond (Exhibit 1) had come in possession of the plaintiffs. It was alleged by Mangtu Maharaj that the suit was hit by Section 4 of the Bihar Moneylenders Act and it was not maintainable as the plaintiffs were not registered money lenders. The defence of the defendants second party was that they had validly purchased the land mentioned in the mortgage deed and had come in possession over the same. According to these defendants also, the mortgage deed in question had not been acted upon by the parties thereto.
3. The main issues framed by the learned Munsif, who tried the suit, on the questions which have been agitated in this Court, were issues nos. 6 and 7 which were to the following effect:--
"6 Is the suit barred under the provision of Section 4 of the Money Lenders Act?
7. Whether the mortgage bond dated 20-4-54 is genuine, valid and for consideration or the same was executed as a security bond for the partnership business as alleged by the defendant No. 1?"
Under issue No. 7, the learned Munsif came to the conclusion that the plaintiffs' case was true and that the mortgage bond had been executed for consideration. Under issue No. 6, the learned Munsif held that money had been advanced to Mangtu Maharaj out of friendship and affection and by way of casual loan and, therefore, there was no necessity for the lenders to have been registered under the Money-lenders Act. It was held that neither Ghanshyam Dass, nor plaintiff No. 1, had any money-lending business after 1951 till 1957 and hence they were not money lenders by profession when this loan was given to Mangtu Maharaj. Upon the interpretation of Section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939 (Bihar Act VII of 1939), the learned Munsif stated thus:--
"In view of the above evidence as well as pleading of the plaintiffs it was for the defendant to show that the plaintiffs are money-lenders by profession and in the absence of any money-lending licence the suit is barred under Section 4 of the Money-lenders Act. Section 4 of the Act bars the suit of that person only who is professional money lender and if the suit is in respect of loan advanced by professional money lender.
It does not bar the suit of those persons who are not professional money lenders and if their suits are for realisation of money casually advanced. Therefore, the defendants who wanted to defy the suit of a person for realisation has got to plead and prove that the suit is by the person who is a professional money lender and who does not hold a money lender's licence. Unless both, these facts are pleaded and proved, the suit is not hit by Section 4 of the Money Lenders Act. Reliance to support this view may be placed to a recent ruling of our own High Court reported in 1960 BLJR 477. Further, a man does not become a money lender by reason of occasional loans to relations, friends or acquaintances, nor does he become so merely because on one or several isolated occasions he may lend money to strangers. There must be more than occasional and disconnected loans to justify the finding that the plaintiff is a professional money lender and hence Section 4 operates as a bar. On the basis of the principles laid down above it was for the defendants to plead as well as to prove that the plaintiffs are professional money lenders. Onus lay on the defendants to prove this fact."
With respect to the plea in bar raised by the defendants, the learned Munsif also stated that although the two sets of contesting defendants had alleged in their written statements that the suit was not maintainable in view of Section 4 of the Money-lenders Act, neither of these two sets had pleaded, specifically, that the plaintiffs were professional money-lenders and the suit was, therefore, barred. Thereafter, on a consideration of the evidence adduced by the defendants, the learned Munsif held that the defendants had not been able to prove that either Ghanshyam Dass or Nand Lal (plaintiff No. 2 and husband of plaintiff No. 1) was a professional money-lender and this fact had "neither been pleaded nor successfully proved in this case."
The suit was decreed, substantially on the conclusions, that, the plaintiffs were not money-lenders by profession during the period of the loan, which had been advanced by way of a casual loan and hence the suit was not barred under Section 4 of the Money-lenders Act.
4. On appeal by the defendants first party, the learned Subordinate Judge has reversed the decree and dismissed the suit. On the facts of the case, the learned Subordinate Judge has come to the con-
elusion that the plaintiffs had failed to prove passing of consideration under the mortgage bond in question, and that in this respect, Mangtu Maharaj's case was true. Upon the question of law, as to the maintainability of the suit, the learned Subordinate Judge has held that the plaintiffs' suit is hit by Section 4 of the Bihar Money-lenders Act and is not maintainable. According to the learned Judge, the trial court was wrong in throwing the onus on the defendants to prove that the plaintiffs were professional money-lenders. Further, under this aspect of the matter, the learned Subordinate Judge has considered the evidence adduced on behalf of the plaintiffs and has held that the plaintiffs had not been able to discharge the onus to prove that plaintiff No. 1 was not a professional moneylender at the time the amount in question was said to have been advanced to Mangtu Maharaj.
5. So far as the result of this appeal Is concerned, it is clear that it must fail on the finding arrived at by the learned Subordinate Judge to the effect that consideration had not passed under the mortgage bond in question. The learned Advocate-General appearing for the appellant has argued that this finding of fact arrived at by the Court of appeal below is vitiated by non-consideration, of various matters considered by the trial court and especially by non-consideration of the evidence adduced by the defendants. But it is difficult to interfere with this finding of fact on the contentions advanced. Apart from considering the specific evidence of the plaintiffs' witnesses on the question of passing of consideration, the learned Subordinate Judge has dealt with various aspects of the respective cases of the parties, in paragraphs 15 and 16 of his judgment, holding that these factors supported the case of the defendants first party to the effect that, no consideration had passed under the mortgage deed. For instance, the learned Judge has stated thus in paragraph 16:--
"The circumstance that the mortgage bond in question was taken out from the registration office after such a long time after the execution and the fact that defendant No. 1 executed the deed of cancellation and also the sale deed with respect to the lands in question, go to substantiate the case of the defendants first party that the mortgage bond remained inoperative and no consideration passed under the same."
In these circumstances, when the evidence adduced by the plaintiffs regarding passing of consideration has been dealt with in detail and disbelieved, the finding must be conclusive so far as this appeal is concerned.
6. Although the appeal can be disposed of without consideration of the con-
flict of views mentioned by the Division Bench, it seems to be the proper occasion for settling this controversial point, as a large number of decisions of this Court have dealt with this matter, with contrary conclusions. Apart from contradictory decisions given by learned single Judges of this Court, the conflicting views arrived at by two Division Benches have created a situation which necessitates an interpretation of Section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939 (Bihar Act VII of 1939) by this Bench. The section reads thus:--
"4. Suit for recovery of loan only maintainable by registered moneylenders.-
No Court shall entertain a suit by a money-lender for the recovery of a loan advanced by him after the commencement of this Act unless such money-lender was registered under the Bihar Money-lenders Act, 1938, at the time when such loan was advanced :
Provided that such a suit shall be entertainable if the loan to which the suit relates was advanced by the moneylender at any time before the expiration of six months after the date of the commencement of this Act and if he is granted a certificate of registration under Section 5 of the Bihar Money-lenders Act, 1938, at any time before the expiration of the said six months."
In interpreting this section, the first Division Bench held in Lakhi Narayan Sao's case, 1963 BLJR 361 = AIR 1963 Pat 350 thus:--
"On the question of onus, Mr. Lalnarayan Sinha relied on the observation of their Lordships of the Privy Council in Ramayya v. Lakshmi Narayana, AIR 1934 PC 84 to the effect that -
'the terms of Section 9, Civil Procedure Code, lay down a general rule in favour of the Jurisdiction of the Civil Court, and that the burden of proof is on the party who maintains an exception to the general rule.' There can be no doubt that, but for the provisions of the 1939 Act, a moneylender can institute a suit for recovery of any loan, or any interest thereon, in any Civil Court having pecuniary and territorial jurisdiction of the Civil Court to entertain such a suit in certain cases, and, therefore, the burden of proof is on the party who pleads this bar, which is an exception to the general rule contained in Section 9 of the Code of Civil Procedure. In other words, in order to bring the suit of a money-lender within the mischief of the said Section 4, the defendant must prove that he is a professional money-lender. And after the defendant has done so, the plaintiff may rely on the exception contained in any notification issued under Section 3 of the 1938 Act, which empowers the State Government to exempt any money-lender from the provisions of that Act, including the provision contained in Section 5 for registration of money-lenders."
Thereafter, the learned Judges referred to various other decisions of this Court given by learned Single Judges and held, that, a debtor-defendant has to plead and prove that the creditor-plaintiff is a professional money-lender, and if the defendant proves this fact, the plaintiff claiming exemption from registration, has to prove that he is protected by the notification under Section 3 of the 1938 Act, It is not necessary to refer to Section 3, mentioned in this case. In the instant case, the learned Advocate-General has advanced the same argument that he had advanced in Lakhi Narayan Sao's case, 1963 BLJR 361=AIR 1961 Pat 350 on behalf of the creditor, and he has again relied upon P. Ramayya's case, decided by their Lordships of the Privy Council, AIE 1934 PC 184. Dealing with Lakhi Narayan Sao's case, 1963 BLJR 361 =AIR 1963 Pat 350 the contrary view-expressed by the second Division Bench of this Court in Dr. Nilkanth Prasad's case, 19G5 BLJR 774 may be quoted as follows:--
"Learned counsel, before us, wanted to urge, on the basis of those observations, that the onus always lies on a defendant in a suit brought by a money-lender to prove that he is a "money-lender' and, therefore, Section 4 will apply as a bar against him, if he is not registered. Section 4, he contended, on the lines of the contention raised by the appellant in the reported decision, was an exception to Section 9 of the Code of Civil Procedure and, therefore, a person who wants to rely on the provisions of Section 4, will have to, not only plead specifically but also prove it, the initial burden being on him. I am afraid, this contention is not sound. Section 4 does not 'oust' the jurisdiction of the Civil Court but only lays down that the court shall not entertain a suit by a money-lender, if he is not registered under the Act. The dictum laid down by their Lordships of the Judicial Committee in 61 Ind App. 177=AIR 1934 PC 84 was with reference to a case where the question was if the jurisdiction of the Civil Court had been ousted by the Madras Estates Land Act. Their Lordships expressed their opinion that the appellants on whom lay the burden of proof, as they had pleaded such exclusion of jurisdiction of the Civil Court, had failed to prove that the grant was of the malvaram only and, therefore, had failed to prove that the inam was an 'estate' within the definition of the Madras Estates Land Act. That principle of onus cannot be invoked with reference to Section 4 of the Bihar Money-lenders Act vis-a-vis Section 9 of the Code of Civil Procedure. Section 3 of the Money-lenders Act, 1938 provides for notification to be issued by the State Government exempting any money lender or class of money lenders or any class of loans from the operation of the Act. A party who wants to rely upon such exemption, has to plead and prove it because, according to the general rule, one who relies upon an exception has to substantiate it. Notification under Section 3, is an exception to the provi sions under Section 4. If, according to the learned counsel's argument. Section 4 is taken as an exception to Section 9 of the Code, then Section 3 will have to be taken as an exception to an exception, which can never be so. In my view, there fore, the contention of learned counsel that Section 4 by itself, being of the nature of an exception, called for the dis charge of the initial burden of proof in that respect from the defendants cannot be correct."
In my opinion, P. Ramayya's case, 01 Ind App. 177=AIR 1934 PC 84 is really of no assistance in the interpretation of Section 4 of the Act now under consideration and the learned Judges deciding Dr. Nilkanth Prasad's case, 1965 BLJR 774 came to the correct conclusion, that, the principle of onus dealt with by their Lordships of the Privy Council in P. Ramayya's case, 61 Ind App. 177 = AIR 1934 PC 84 cannot be invoked with reference to Section 4 of this Act. In P. Ramayya's case, 61 Ind App. 177 = AIR 1934 PC 84 their Lordships of the Privy Council dealt with Section 189 of the Madras Estates Land Act, 1908 (Madras Act 1 of 1908), the relevant portion of which runs as follows:--
"189. (1) A District Collector or Collector hearing suits or applications of the nature specified in Parts A and B of the Schedule and the Board of Revenue or the District Collector exercising appellate or revisional jurisdiction therefrom shall hear and determine such suits or applications or exercise such jurisdiction as a Revenue Court.
No Civil Court In the exercise of its original jurisdiction shall take cognisance of any dispute or matter in respect of which such suit or application might be brought or made."
Reading this bar on the jurisdiction 01 Civil Courts, with the definition of 'estate' given in the Madras Act, quoted in the decision, the Privy Council stated that in view of the fact that the plaint had complied with the provisions of Order VII Rule 1, Sub-clause (f) of the Code of Civil Procedure, the burden of proof was on the party who maintained an exception to the general rule. Their Lordships of the Privy Council came to this conclusion on their finding that the evidence was incon-
clusive as to whether the grant in question in that case had conveyed Kudivaram right or not and it was, therefore, necessary to consider upon which of the parties the burden of proof lay, on the question of jurisdiction of the Civil Court. In that context, their Lordships had referred to Section 9 of the Code of Civil Procedure and had put the burden of proof on the party who was maintaining an exceotion to the general rule.
So far as the first paragraph of Section 4 of Bihar Act VII of 1939 is concerned, the impediment is on the Courts in entertaining suits by money-lenders for recovery of loans advanced by them, unless such money-lenders are registered under the Bihar Money-lenders Act, 1938, when the loans were advanced. The expressions "money-lender" and "loan" are both defined in Section 2 of the Act, and although these expressions have been given particular connotation by judicial decisions, unless a plaintiff pleads in his plaint facts which would make the suit prima facie entertainable by the Court, it can hardly be said that the plaintiff has discharged the duty put upon him by order VII, Rule 1(f) of the Code of Civil Procedure. The learned Advocate General has referred to Order VI, Rule 6 of the Code and has urged that non-registration under the Bihar Money-lenders Act, 1938, must be pleaded by the defendant and there is no burden on the plaintiff as a matter of pleading. In continuation, the learned Advocate-General has urged, that, thereafter, it is for the defendant to prove the plea in bar envisaged by section 4 before the plaintiff can be defeated.
It is not, however, possible to accept all these contentions in view of the wordings of Section 4, quoted above. It may be that the defendant has to put forward the plea in bar, in his written statement, but the question still remains to be answered as to what will follow thereafter. Their Lordships of the Supreme Court have stated, in the case of K. S. Nanji and Co. v. Jatashankar Doss, reported in AIR 1961 SC 1474, that under the Evidence Act, there is an essential distinction between the phrase, "burden of proof" as a matter of law and 'pleading' as a matter of adducing evidence. Their Lordships have stated that under Section 101 of the Evidence Act the burden, in the former sense, is upon the party who comes to Court to get a decision on the existence of certain facts which he asserts and that burden is constant throughout the trial; but the burden of proof in the sense of adducing evidence shifts from tune to time, having regard to the evidence adduced by one party or the other or the presumption of fact or law raised in favour of one or the other.
On that interpretation of law, the essential onus to prove that a suit is not hit by section 4 of Bihar Act VII of 1939 and is maintainable must be upon the plaintiff. It may be that even some slight evidence adduced by the plaintiff will shift the burden on the defendant to prove that the suit is not entertainable by the Court, but that burden on the defendant is a burden "as a matter of adducing evidence". The second kind of burden has been characterised as "shifting" burden and that is laid down in Section 102 of the Evidence Act, whereas the onus of proof under Section 101 of the Evidence Act is inflexible. Therefore, it must be held that the onus to prove as a matter of law, that the suit is entertainable without registration, is on the plaintiff, in view of the bar under the first paragraph of Section 4.
7. Dealing with the facts of the instant case, learned Counsel for the respondents has drawn our attention to the statements made in paragraph 3 of the plaint and has argued that in this case the plaintiffs had themselves asserted in the plaint that plaintiff No. 1 had wanted to invest some money in business and, therefore, the plaintiffs cannot now turn round and argue that their pleading had fulfilled the requirements of Order VII, Rule 1(f) of the Code of Civil Procedure. On the facts of the instant case, this contention cannot be said to be without force and, therefore, in the instant case, the onus was entirely on the plaintiffs to establish that the suit was entertainable in spite of Section 4 of Bihar Act VII of 1939.
8. It is clear that the appellant has not been able to make out any case for interference and, therefore, the appeal fails and it is dismissed with costs.
Misra, C.J.
9. I agree.
Choudhary, J.
10. I agree.