Patna High Court
Ugrah Dusadh vs Inderdayal Singh on 14 August, 1953
Equivalent citations: AIR1954PAT301, 1953(1)BLJR609, AIR 1954 PATNA 301
JUDGMENT Misra, J.
1. This is a defendant's appeal arising out of a suit by the plaintiff-respondent for recovery of a sum of Rs. 496/- as principal and Rs. 178-8-0 as interest, on the basis of a hand-note dated 27-12-1942.
2. It was alleged that the defendant borrowed the sum under the hand-note with promise to pay the same on demand along with interest at the rate of Rs. 12/- per cent. per annum.
3. Defence case was that the hand-note was forged and fabricated. The plaintiff was a dealer in kerosene oil and was the secretary of the Cane-growers' Co-operative Society, and it was in that, capacity that he obtained a number of blank pieces of paper with the defendant's thumb-mark thereon and he suspected that plaintiff converted on a of these pieces of paper into a regular hand-note on which he based a false and fraudulent claim, further plea taken was that the plaintiff was a regular money-lender, and under Section 4, Bihar Money Lender's (Regulation of Transactions) Act (7 of 1939) he could not recover the amount, if any, advanced by him as he was not a registered money-lender.
4. The learned Munsif held that the hand-note was genuine, but the plaintiff was not a registered money-lender, and as such he could not recover the loan advanced by him to the defendant.
5. On appeal, the learned Subordinate Judge came to the conclusion that the hand-note was genuine and, in fact, the plaintiff was not registered as a money-lender, but still he would succeed because the loan in question was under a promissory note which was not hit by the provisions of the Honey-Lenders' Act. The learned Subordinate Judge relied upon the case of --'Narsinga Prasad v. Ramcharitar Singh', AIR 1945 Pat 297 (A) where their Lordships of this Court took the view that on account of the decision of the Federal Court of India on the Bengal Money-Lenders' Act the loan evidenced under promissory notes was not covered by the prohibitory provisions of the Money-Lenders' Act. But it may be stated that the case considered by the Federal Court of India, to which reference was made in -- 'AIR 1945 Pat 297 (A)', went in appeal before the Judicial Committee, and it was clearly held by their Lordships of the Judicial Committee in that case which came to be reported as --'Prafulla Kumar Mukherjee v. Bank of Commerce Ltd., Khulna', AIR 1947 PC 60 (B), that a loan under a promissory note also was, in substance, money-lending and that the promissory note was an instrument for securing the loan and had no independent significance of its own so as to exempt such transaction from the provisions of the Money-Lenders' Act. It has since been held that all loans howsoever evidenced would come within the provisions of the Money-Lenders' Act unless the plaintiff could prove that ho was not a professional money-lender, or, in certain circumstances, if the loan advanced by him in any particular year did not amount to above Rs. 500/-as required under the notification to which reference has been made in the case of -- 'Rai Shyam Bahadur v. Rameshwar Prasad', AIR 13-12 Pat 441 (C).
6. Mr. Gorakh Nath Singh appearing on behalf of the appellant has drawn my attention in this connection to the Division Bench ruling of this Court in the case of -- 'Meghraj Tibrawala v. Panchu Sahu', AIR 1952 Pat 39 (D), where their Lordships following the decision of their Lordships of the ' Judicial Committee, to which I have referred before, observed, that it must be held that all loans are covered by the Money-Lenders' Act and there is no exemption in favour of a hand-note debt.
7. Mr. Dasu Sinha appearing on behalf of the respondent does not challenge the correctness of this proposition, but he contends, that the plaintiff is still entitled to a decree because he is a, casual money-lender and not a professional moneylender, who alone is contemplated under Section 4, Bihar Money-Lenders' Act. He has drawn my attention in this connection to the case of --'Bhutnath v. Nilkantha', AIR 1949 Pat 400 (E) and to the case of -- 'Mt. Surajbansi Kuer v. Mt. Larho Kuar', AIR 1946 Pat 310 (F) in both of which their Lordships took the view that in a case where plaintiff was only a casual moneylender so that the money was advanced to a friend in distress or as an accommodation loan, Section 4 of the Money-Lenders' Act would not apply.
In AIR 1949 Pat 400 (E) money was advanced by a co-sharer to another co-sharer who was arrested under some liability which he had to pay up, and it was out of sympathy for his miserable plight that the plaintiff had advanced the loan and as such it was held that it was merely a case of casual money lending, and the object of the plaintiff in that transaction was not to advance money for interest.
In -- 'AIR 1946 Pat 310 (F)' also, it was a case of liability incurred by the defendant, because he purchased some timber from a certain timber merchant, and as he was not able to pay up the price, he executed a hand-note as evidence of his liability. It was, therefore, a case of accommodation. Those are some of the instances in which the plaintiff may prove that he was a casual money-lender, and not a regular money-lender as contemplated by Section 4, Bihar Money-Lenders' Act. Mr. Dasu Sinha has also drawn my attention to the case -- 'In the matter of Bhairo Dutt Ehan-dari', AIR 1940 All 1 (SB) (G), where their Lordships referred to certain English decisions and came to the conclusion that the mere fact that money was advanced on interest on more than one occasion would not necessarily import that he was a professional money-lender, because it was possible that although interest was stipulated the advance was made to friends in the special circumstances, and their Lordships of the Allahabad High Court accordingly took the view that the crux of the matter was whether money was being advanced by the plaintiff purely as a money-lender for the purpose of gain having no other consideration before him or, was it mixed up with other consideration than that of pure gain and for interest.
With all respect, the observations made in this decision and the reasoning followed are quite sound and I do not think that there is any difference in principle in the cases decided in this Court and that decided in the Allahabad High Court. The three cases taken together make one thing clear, and that is that, in every individual case, the Court will have to see the gist of the transaction, whether it was for gain or whether it was for some other purpose although it had, the appearance of an ordinary loan with a claim for interest.
8. In the present case, however, I find that the Courts below have come to the conclusion that the plaintiff had advanced more than a sum of Rs. 500/- in the year in question to a number of persons other than the present defendant. In these circumstances, onus lay upon the plaintiff to prove the circumstances in which he could claim exemption from the provisions made in Section 4, Bihar Money-Lenders' Act. Mr. Dasu Sinna has urged that onus lies on the defendant to prove that the plaintiff is a professional moneylender. I am unable to accede to this contention, because what the defendant in this case did was to plead that the plaintiff not being registered as a money-lender could not recover the loan, which is exactly in terms of Section 4, Bihar Money-Lenders' Act. It is only judicial pronouncements which have drawn distinction between a casual, money-lender and a professional money-lender with reference to Sections 4 and 5 of the Act. It is, therefore, necessary for the plaintiff, who claims exemption, to prove the circumstances on which he can rely to escape the penalty provided under the Bihar Money-Lenders' Act. In the present case it is curious that the plaintiff has not alleged in the plaint the circumstances in which he made advance to the defendant, although Mr. Sinha on behalf of the respondent suggests that advance was made by the plaintiff to the defendant, because they were both working in the Cane Department, and the defendant required money for the purchase of bullocks.
As I have said above, however, neither the plaint nor the statement made by the plaintiff in Court, nor the hand-note gives any indication of the other circumstances in which the loan was advanced by him. If anything, the hand-note reads as if it were an ordinary transaction of money lending, although I do not suggest that mere appearance of the transaction of loan would necessarily make it so. Since, however, there is no such circumstance anywhere, I am unable to accept the contention on behalf of the respondent that I should infer from the pleadings of the defendant that he was obliged with the loan on a friendly request. There is no such admission in the written statement as well which contains categorical denial of facts in the plaint, a good part of which was not accepted by the Courts below. For the limited purpose, however, of the applicability or otherwise of the stringency of Section 4, Bihar Money-lenders' Act, I see no circumstance in which I could hold that the plaintiff can claim that he was only a casual money-lender.
9. In these circumstances, I come to the conclusion that the plaintiff has failed to prove that he is a casual money-lender and the view of the learned Subordinate Judge that the Bihar Money-Lenders' Act will not apply to a transaction evidenced by a hand-note is clearly erroneous. Accordingly, the appeal must be allowed, but there-will be no order as to costs.