Bombay High Court
Nandram Kaniram And Ors. vs N.B.Rahatekr on 23 July, 1993
Equivalent citations: 1994(1)BOMCR28
JUDGMENT V.A. Mohta, J.
1. Dr. N. B. Rahateker, M.B.B.S., D.O.R.S., carrying on medical profession in the city of Pune (the plaintiff) entered into the following transaction with a trading firm Messrs. Nandram Kaniram, through its proprietor Vithaldas Kaniram Bajaj, carrying on business in the city of Pune (the defendant).
Plaintiff paid a sum of Rs. 15,000/- to the defendant through a cheque dated 24th June 1976 through a Hundi Dalal. On that day the defendant gave a post-dated cheque for Rs. 15.000 dated 22nd September 1976, and a cheque for Rs. 562/- representing interest on Rs. 15,000 for a period of 90 days.
2. It is common ground that this is not the only transaction of this nature between the parties. During last seven years, such transactions were entered into by plaintiff with some others traders. Total of these transactions was 6 or 7. Basic question that arises in this second appeal is whether the plaintiff could be said to carry on "the business of money-lending" so as to bring him within the definition of the term "Money-lender" as per section 2(10) of the Bombay Money-Lenders Act ('the Act'), and whether the transaction amounted to "loan" as defined under section 2(9).
3. Few more facts, before I go to the question. The cheque for interest was encashed and the cheque for Rs. 15,000/- bounced. This fact was brought to the notice of the defendant. As suggested by him, it was presented in the Bank again on 26th October 1976. It bounced again. Plaintiff filed a suit for recovery of the principal sum as well as futher interest by way of damages. The defendant did not dispute the transaction as well as the non-payment, but, contended that the suit was not maintainable since the plaintiff was carrying on business of money -lending without holding a licence for money-lending as mandated by the Act. The trial Court upheld this defence and dismissed the suit. The Appellate Court reversed the judgment and decree, and ordered the defendant to pay a sum of Rs. 19,325/- inclusive of interest, costs, and future interst at 6% per annum on Rs.15,000/- from the date of suit till realisation. The first Appellate Court took the view that.
(i) When the amount was paid to the defendant, "loan to trader" was excluded from the definition of the term "loan" as per section 2(9)(g) of the Act;
(ii) amount was advanced on the basis of a cheque which is a negotiable instrument other than a promissory note and hence the transaction was not a "loan" as per section 2(9)(f);
(iii) the defendant had failed to prove that the plaintiff was a money-lender as defined under section 2(10).
Aggrieved by the judgement and decree passed by the First Appellate Court,the defendant has filed this Second Appeal.
4. Smt. Agarwal, learmed Counsel for the Appellants has raised before me three points:
(i) Though "loan to trader" was excluded from the definition of the term "loan" on the date of advances the said provision stood deleted by Maharashtra Act. No. 76 of 1975 (which was brought into force from 25th July 1976), when the suit was filed, and legal position as it stood on the date of the suit should decide the issue;
(ii) Section 2(9)(f) could not be pressed in the service because the transaction could not be said to be an advance on the basis of a negotiable instrument;
(iii) The finding that the plantiff was not a 'money-lender' as contemplated under section 2(10) of the Act, was preserved.
5. Now, there can be no manner of doubt that when the transaction took place, it did not amount to a 'loan' as contemplated under the Act. Section 10 states that no Court shall pass decree in favour of a money-lender in any suit to which this Act applies, unless the Court is statisfied that at the time when the loan or any part thereof to which the suit relates was advanced, the money-lender held a valid license. What is therefore material is the date of transaction and not the uncertain date of filing of the suit which may be filed on any day within the prescribed limiltation. The point No. 1, therefore, has no substance.
6. I failed to appreciate as to how, the transaction would not be an advance made on the basis of a "negotiable instrument" as defined by section 13(1) by the Negotiable Instruments Act. The term 'negotiable instrument' is defined as meaning a promissory note,bill of exchange or cheque payable either to order or to bearer. Under section 6 of the Negotiaable Instruments Act, a cheque is a bill of exchange drawn on specified and not expressed to be payable otherwise than on demand. The advance was clearly on the basis of a cheque. Only because the cheque was not intended to be - encashed forthwith but was intended to be encashed after a period of ninety days, its character as cheque is not altered. See(Sitaram Laxminarayan Rathi v. Sitaram Kashiram Koli and others),. The point No. 2 is thus meritless.
7. This takes me to the last point over which there was considerable debate before me. Now, whether or not, an individual is carrying on business of money-lending is essentially a question of fact. The final Court of fact has recorded a finding of fact in favour of the plaintiff. I see no reason to interfere with the same in second appeal. Here is a professional carrying on profession in a city like Pune. He must have had savings from the professional income. It would be natural for him to invest the same in a manner by which he can derive maximum return. If he has chosen to advance his savings on interest to reputed and known traders through a Hundi Dalal on few occsions, it cannot be said that he was a professional money-lender. l business always imports a notion of system, repetition, and continuity. These elements have been held to be absent in the instant case and I see no perversity in reaching that conclusion. Neither law, nor equity is in favour of the - defendent who is trying to delay and defeat the just claim and avoiding his solemn liability to honour his commitment. The last point is also therefore without any substance.
8. To conclude, this Second Appeal is dismissed. There will be no order as to costs.
9. Needless to mention that the respondent will be free to apply for the discharge of the security given to Court as an interim arrangement.