Delhi District Court
M/S. Vivek Agencies vs M/S. Ram Avtar Kamal Kumar on 2 November, 2022
IN THE COURT OF MS VANDANA: ADDITIONAL
DISTRICT JUDGE-8 (CENTRAL), TIS HAZARI, DELHI
Suit No. 151/19
Unique ID No.: DLCT01-001266-2019
In the matter of:
M/s. Vivek Agencies,
through its Proprietor,
Sh. Dinesh Kumar Malani,
having office at:
4656-58, Mahavir Bazar,
Cloth Market,
Delhi-110006 ............Plaintiff
VERSUS
M/s. Ram Avtar Kamal Kumar
Through its Proprietor,
Sh. Ram Avtar Goel,
4037, 2nd Floor,
Naya Bazar,
Delhi-110006 ...........Defendant
Date of institution : 28.01.2019
Date of Reserving judgment : 02.11.2022
Date of pronouncement : 02.11.2022
Suit No. 151/19 Page No. 1 of 16
JUDGMENT
The suit is for recovery of 48,79,958/- filed by the plaintiff against the defendant.
1. THE CASE OF THE PLAINTIFF 1.1 The case of the plaintiff is that the defendant had borrowed a sum of Rs. 10,00,000/- twice and returned the same on 17.08.2015. Thereafter, the defendant again borrowed a sum of Rs. 50,00,000/- and agreed to pay with interest 1.25% per month which was still unpaid at the end of 31.03.2017. It is further averred that the defendant only paid a sum of Rs. 12,50,000/- on 29.08.2017 leaving a sum of Rs. 37,50,000/-. Now, a sum of Rs. 48,79,958/- alongwith pendente lite and future interest at the agreed rate of 1.25% per month, is outstanding.
1.2 The plaintiff served legal notice dated 25.11.2018 whereby the defendant called upon to pay a remaining loan amount of Rs. 37,50,000/- towards principal amount alongwith accrued interest agreed rate of interest 1.25% per month w.e.f. 01.04.2017. It is further stated that despite service of aforesaid legal notice, the defendant did not pay the outstanding amount to the plaintiff, hence, the present suit.
Suit No. 151/19 Page No. 2 of 162. WRITTEN STATEMENT OF THE DEFENDANT 2.1 Vide detailed written statement, the preliminary objection was taken regarding no cause of action and suit is barred by Punjab Registration of Money Lenders Act, 1938. On merits, it was stated that the plaintiff was in business of illegal money lending without obtaining the Legal License Money Lender as required as per the Provision of the Punjab Registration of Money Lenders Act, 1938. It was further stated that the alleged transaction was not a friendly loan as alleged by the plaintiff. It was further stated that all the transactions alleged by the plaintiff were illegal and the defendant had already cleared the dues amount, if any, and now, there is no outstanding amount payable to the plaintiff. Rest, all the allegations made in the plaint were denied by the defendant.
3. REPLICATION 3.1 Vide replication, all the averments made in the plaint were reiterated and the submissions made in WS were denied.
4. FRAMING OF ISSUES 4.1 On 23.09.2019, on the pleadings of the parties following issues were framed:-
(1) Whether the plaintiff is engaged in the business of money lending without licence, if so, its effect ? OPD.Suit No. 151/19 Page No. 3 of 16
(2) Whether the plaintiff is entitled to decree of recovery of money against the defendant, if so, for what amount? OPP. (3) Whether the plaintiff is entitled to any interest, if so, on what amount, at what rate and for which period? OPP.
(4) Relief. 5. PLAINTIFF'S EVIDENCE 5.1 In support of its claim the plaintiff examined only one
witness i.e. Sh. Dinesh Kumar Malani as PW1 and tendered his affidavit as Ex.PW1/A. He also relied upon following documents in support of the plaint:-
(i) Ex. PW1/1 is the photocopy of computer generated account confirmation for the period from 01.04.2014 to 31.03.2015.
(ii) Ex. PW1/2 is the photocopy of computer generated account confirmation for the period from 01.04.2015 to 31.03.2016.
(iii) Ex. PW1/3 is the computer generated copy of ledger account for the period 2016-2017.
(iv) Ex. PW1/4 is the computer generated copy of ledger account for the period 2017-2018.
(v) Ex. PW1/5 is the computer generated statement of bank account for the period 01.01.2017 to 31.01.2017
(vi) Ex. PW1/6 is the Certificate Under Section 65 B of the Indian Evidence Act (objected by Ld. Counsel for the defendant as to the mode of proof and format).Suit No. 151/19 Page No. 4 of 16
(vii) Ex. PW1/7 is the office copy of legal notice dated 25.11.2018.
5.2 PW-1 was cross-examined at length by Ld. Counsel for the defendant. No other PW was examined. Thereafter, vide separate statement of Sh. Dinesh Kumar Malani, proprietor of plaintiff concern , the plaintiff's evidence was closed on 06.04.2022.
6. DEFEDANT'S EVIDENCE 6.1 On the other hand, defendant examined himself as DW-1. He tendered his evidence by way of an affidavit Ex. DW-1/A. He relied upon the document i.e. reply of legal notice dated 30.11.2018 i.e. Ex. DW1/1.
6.2 DW-1 was cross-examined at length by Ld. Counsel for the plaintiff. No other DW was examined. Thereafter, vide separate statement of Sh. Ram Avtar Goel, Proprietor of defendant concern, the Defendant's Evidence was closed on 10.10.2022.
7. I have heard counsel for the plaintiff as well as Ld. Counsel for the defendant and gone through the material on record carefully.
8. My issue wise findings are as follows:
Suit No. 151/19 Page No. 5 of 169 Findings on Issue No. 1: Whether the plaintiff is engaged in the business of money lending without license, if so, its effect ?
OPD.
9.1 The onus to prove the above said issue was upon the defendant. Regarding the issue of suit being barred because plaintiff does not have licence under the Punjab Registration of Money Lenders' Act, is concerned, it was argued by Ld. Counsel for the defendant that the suit for recovery of the money filed by the plaintiff is barred because of section 3 of Punjab Registration of Money Lenders' Act, 1938, (herein after referred to as "The Act"). As per the said Section 3 of the Act if the plaintiff has given a loan as his business of giving the loans then recovery of the loan given is prohibited by the Act unless the person who does money lending business is registered under the Act. For easy understanding, Section 3 of the Act is as follows:-
"3. Suits and Applications by money-lenders barred, unless money-lender is registered and licensed.
Notwithstanding anything contained in any other enactment for the time being in force, a suit by a money-lender for the recovery of a loan, or an application by a money-lender for the execution of a decree relating to a loan, shall after the commencement of this act, be dismissed, unless the money-lender-Suit No. 151/19 Page No. 6 of 16
(a) at the time of the institution of the suit or presentation of the application for execution ; or
(b) at the time of decreeing the suit or deciding the application for execution-
(i) is registered ; and
(ii) holds a valid licence, in such form and manner as may be prescribed ; or
(iii) holds a certificate from a Commissioner granted under section 11, specifying the loan in respect of which the suit is instituted, or the decree in respect of which the application for execution is presented ; or
(iv) if he is not a registered and licenced money-
lender, satisfies the Court that he has applied to the Collector to be registered and licenced and that such application is pending; provided that in such a case, the suit or application shall not be finally disposed of until the application of money- lender for registration and grant of licence pending before the Collector is finally disposed of."
9.2 Let us now consider whether this enactment applies to the transactions between the plaintiff and the defendant. The Act has been enacted to regular the business of money lender and was effectuated in order to register money lenders for this purpose. The expression 'money lender' is statutorily defined under Section 2 Sub-section (9) thus:
"Money lender" means a person, or a firm carrying on the business of advancing loans as defined in this Act, and shall include the legal representatives and the successors-in-interest Suit No. 151/19 Page No. 7 of 16 whether by inheritance; assignment or otherwise, of such person or firm; provided that nothing in this definition shall apply to __
(a)a person who is the legal representative or is by inheritance the successors-in-interest of the estate of a deceased money lender together with all his rights and liabilities; provided that such person only___
(i) winds up the estate of such money lender ;
(ii)realize outstanding loans;
(iii)does not renew any existing loan, nor advance any fresh loan;
(b)a bona fide assignment by a money lender of a single loan to anyone other than the wife or husband of such assignor, as the case may be, or any."
9.3 It is therefore apparent that this statute would have applicability only in respect of and against persons or of firms who are engaged in the business in or advancing loans as defined under the Act. The expression 'loan' is defined under sub-section (8) of section
2. 'Loan' has been defined to mean an advance, whether secured or unsecured, of money or in kind at interest and shall include any transaction which the Court finds to be in substance a loan. Certain exceptions to this definition have been carved out and under Sub- clause (vi) of Sub-section (8) of Section 2 it is specifically stipulated that a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage shall not be covered under the definition of the loan. The loan as defined in Section 2(8) of the Act of 1938 specifically excludes an advance made on the basis of a Suit No. 151/19 Page No. 8 of 16 negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note as enumerated in sub-clause (vii) of sub section 8 of Section 2 of the said Act. For easy reference, Clause VII of Sub-section 8 of Section 2 is reproduced as under:-
(8) "Loan" means....but it shall not include-(vii) an advance made on this basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note."
9.4 It is clear from the above that for the purposes of the Act, definition of "Loan" does not include a loan given on the basis of cheque. In the case in hand, the defendant during his cross- examination, has duly admitted taking the amount of Rs. 50 lacs from the plaintiff by way of cheque, hence, the Act is not applicable.
9.5 Further, with respect to the contention of the defendant that the plaintiff is running money lending bushiness, the defendant has failed to lead any evidence to show that the plaintiff was engaged in the business of money lending. Merely because there is business transaction of loan given, does not make the plaintiff as money lender within the meaning of above said Act. The counsel for the defendant has rightly relied upon the judgment Suman Goel & Anr. Vs. Sanjeev Kumar Jain, 2018 Legal Eagle (DEL) 132. Further in Atul Anand v. Nanak Food Industries IA No. 991/04 in CS/OS no. 1710/01 decided on 02.08.2006, Mukesh Gupta.....Plaintiff; v. P.K Bajaj & Anr...Defendants. 1615/03 decided 20.11.06, Laxmi Builders v.
Suit No. 151/19 Page No. 9 of 16Devender Lakra, CS/OS no. 1366/15 decided on 3.3.2016, in all these cases, it has been held that when defendant has not led any evidence to show that plaintiff was engaged in business of money lending, merely because there is business transaction of loan given, does not make the plaintiff as money lender within the meaning of above said Act.
9.6 In addition to the reasoning given above, it is also relevant to note that it is settled law that friendly loans are not covered under the Punjab Registration of Money Lenders' Act.
9.7 Thus from the authoritative judgments referred above, it is very much clear that in the fact of above mentioned case that merely because a loan was given to the defendant and interest was charged thereon, that by itself is not sufficient to conclude that plaintiff was running a business of money lending.
9.8 In the present case also, the defendant has simply taken the plea that there is no license with the plaintiff under the above said Act. This plea in itself was not sufficient to attract bar of Section 3 of the Act more specifically when defendant has not led any evidence in this regard. I am not in agreement with the arguments urged on behalf of the defendant that since the defendant was not directly known to the plaintiff then how he can give the loan of such huge amount to the defendant and it is the interest income which is source of the income Suit No. 151/19 Page No. 10 of 16 of the plaintiff, therefore, it can be concluded that the plaintiff was engaged in the business of the money lending. Here I deem it appropriate to refer the observation made in Amar Singh v. Kuldeep Singh AIR 1952 Punj. 207, wherein it has been held by the Court that "a man does not become a money lender merely because he may, upon one or several occasions, lend money to a stranger. There must be a business of money lending and the 'business' imports the notion of system, repetition and continuity to be covered under the definition of money lender under this statute."
9.9 It is therefore, settled law that giving of a few loans is not the same as bushiness of money lending and the suit is barred only when it is filed by the plaintiff who is engaged in the business of money lending and not a plaintiff who has given few loans to relations, friends or even outsider or strangers for that matter. Accordingly, it is held that suit is not barred by the Act. Hence, in view of the above reasoning, the above said issue is decided against the defendant and in favour of the plaintiff.
10. Findings on Issue No. 2: Whether the plaintiff is entitled to decree of recovery of money against the defendant, if so, for what amount? OPP.
10.1 The plaintiff has claimed that the defendant took a loan of Rs. 50,00,000/- from him by way of cheque bearing no. 33382284.
Suit No. 151/19 Page No. 11 of 16This fact was proved by him with Ex. PW1/5. Though, the defendant has denied receiving of any friendly loan from the plaintiff in paragraph no. 5 of reply on merits of his written statement, but in paragraph no. 1 of reply on merits, it was stated by the defendant that the alleged transaction was not a friendly loan as alleged by the plaintiff which means an admission regarding receiving of the amount of Rs. 50 lacs from the plaintiff. This fact gets confirmed and proved from the cross-examination of DW-1, whereby, he admitted the receiving of Rs. 50,00,000/- from the plaintiff. The relevant portion of the cross-examination is reproduced as under:-
"It is correct that I have received Rs. 50,00,000/- through bank transaction through plaintiff on 05.01.2017."
10.2 After admitting the above, the defendant voluntarily testified that since he was to receive gambling money from the plaintiff, the plaintiff paid the money of Rs. 50,00,000/- through cheque. It was also argued by the Ld. Counsel for the defendant that this entire transaction was qua gambling money (satta), hence, he is not liable to pay any single penny to the plaintiff, however, the defendant did not lead any single evidence either oral or documentary with respect to his contention.
10.3 The plea was also taken by the defendant that the plaintiff owes money towards him. But admittedly, he has not filed any case against the plaintiff to recover any money from him. The abovesaid Suit No. 151/19 Page No. 12 of 16 plea also falls flat as the defendant has himself admitted that he had returned the amount of Rs. 12,50,000/- to the plaintiff on 29.08.2017. He further admitted that he also paid Rs. 1,65,000/- to the plaintiff. The defendant could not explain as to when, the plaintiff owed money towards him as alleged, then why he was returning money to the plaintiff. Otherwise also, the defendant has admittedly neither filed any suit for recovery nor any counter-claim against the plaintiff.
10.4 It was further contended by the defendant that the plaintiff has alleged that the defendant has paid back an amount of Rs. 1,65,000/- as the interest amount from 05.01.2017 till 31.03.2017 at the rate of 1.25% per month, though, it was Rs. 1,83,333/- but the defendant paid back an amount Rs. 1,65,000/- after deduction TDS of Rs. 18333/-. However, this calculation of the plaintiff was wrongly calculated as the interest amount for the said mentioned amount should be Rs. 1,87,500/- and hence, it is evident that the transactions were not related to any loan but were for the gambling / satta. The above said plea of the defendant stands nowhere as it has been mentioned by the counsel for the defendant himself that the interest amount was wrongly calculated by the plaintiff, hence, merely wrong calculation does not mean the above said transaction was not related to any loan but it was for gambling, more specifically, in the absence of any evidence led by the defendant in this regard.
Suit No. 151/19 Page No. 13 of 1610.5 The defendant has duly admitted the receiving of Rs. 50,00,000/- from the plaintiff, admittedly he returned the amount of Rs. 12,50,000/- to the plaintiff on 29.08.2017, but, he did not return the remaining amount. Therefore, the defendant is held liable to pay the remaining amount of Rs. 37,50,000/- to the plaintiff. Accordingly, the above said issue is decided in favour of the plaintiff and against the defendant.
11. Findings on Issue No. 3: Whether the plaintiff is entitled to any interest, if so, on what amount, at what rate and for which period?
OPP.
11.1 The plaintiff has claimed interest @ 1.25 % per month for a period from 01.04.2017 to 29.08.2017 on Rs. 50,00,000/- i.e. Rs. 3,14,583/- along with interest on Rs. 37,50,000/- from 30.08.2017 till the date of filing of the suit i.e. Rs. 8,15,375/-.
11.2 The plaintiff has claimed interest @ 1.25% per month i.e. @ 15% per annum, starting from 01.04.2017 till the date of filing of the suit, however, he did not lead any documentary evidence in this regard. The Hon'ble Division Bench of Hon'ble High Court of Delhi in the case of Pt. Munshi Ram & Associates (P) Ltd. v. DDA, 2010 SCC Online Del 2444 has held that "higher rates of interest, which are going against public policy, can be struck down by the Court by Suit No. 151/19 Page No. 14 of 16 finding such rates of interest to be against the public policy. Any Contract, which is against the public policy is void under Section 23 of the Indian Contract Act, 1872." The said Judgment was also relied upon by the Hon'ble Single Bench of the Hon'ble High Court in the case bearing R.F.A. No. 823 of 2004 titled as Shri Sanjay Mittal Versus Sunil Jain decided on 07.12.2018.
11.3 The interest of 1.25 % per month i.e. @ 15% per annum, is not only unreasonable, but the same is also excessive and in terms of the aforesaid dictums of Hon'ble High Court, the same is against the public policy. In my considered view, the interest of justice would be served if the plaintiff is granted simple interest @ 9% per annum from 01.04.2017 till the filing of the case.
11.4 Section 34 CPC postulates and envisages the pendent- elite interest at any rate, not exceeding 6% and future interest at any rate, not exceeding the rate, at which nationalized banks advance loan. Keeping in mind the mandate of the said proposition, the interest of justice would be served if plaintiff is granted pendent-elite simple rate of interest @ 6% per annum and future rate of interest @ 9% per annum till its realization. In view of the above, the above said issue is decided in favour of plaintiff and against the defendant.
Suit No. 151/19 Page No. 15 of 1612. Relief 12.1 In view of my aforesaid findings, the suit of the plaintiff is hereby stands decreed. The plaintiff is found entitled to recover the sum of Rs. 37,50,000/- from the defendant alongwith simple interest @ 9% per annum from 01.04.2017 to 29.08.2017 on Rs. 50,00,000/- and simple interest @ 9% per annum on Rs. 37,50,000/- from 30.08.2017 till the date of filing of the suit. The plaintiff is also granted pendent-elite simple rate of interest @ 6% per annum and future simple rate of interest @ 9% per annum till its realization and the same is also payable by the defendant. The plaintiff is also awarded the costs of the suit.
13. Decree sheet be prepared accordingly.
14. File be consigned to record room after due Digitally compliance. signed by VANDANA VANDANA Date:
2022.11.02 16:22:20 +0530 Pronounced in the open court (VANDANA) on 2nd November, 2022. Additional District Judge-8 Central:Tis Hazari Courts: Delhi.Suit No. 151/19 Page No. 16 of 16