Modhusudano Mollana v. Kontaru Naiko and Others
Raghubar Dayal, J'. This appeal, by special leave, is against
the decree of the High Court of Orissa reversing the decree of
the Court of the Subordinate Judge, Berhampur and dismissing A
the pla;ntiff's suit for recovery of Rs. 8,216 due on a promissory
note executed by Kontaru Naiko, defendant No. 1 for Rs. 6,000.
The plaintiff money-lender obtained a registration certificate
under s. 5 ( 4) and r. 5, of the Orissa Money-Lenders Act. 1939
(Act III of 1939), hereinafter called the Act, and the rules
thereunder, on March 31, 1952. He obtained another registra
tion certificate in 1955 which said that the maximum capital for
which the certificate is granted is Rs. 8,000.
The plaintiff advanced the loan to defendant No. I on May 19,
1954 and sued for the recovery of the amount due on this loan.
It was contended for the defendant that the suit was not maintain
able as the maximum capital for which the plaintiff had required
the registration certificate in 1952 was Rs. 2,000 and under the
provisions of the Ac~ and the rules framed thereunder, he could
not have advanced loan in excess of that amount and that his
doing so made the registration of the appellant as a money-lender
void and therefore the suit for recovery of Rs. 2,000 even was
not maintainable. These contentions were not accepted by the
trial Court which decreed the suit against the defendants with
the direction that defendants Nos. 2 and 3 sons of defendant No.
I, were not personally liable and were liable to the extent of
the assets of their father in their hands. The High Court, how
ever, took a different view, accepted the aforesaid contentions of
the defendants and dismissed the sui~.
The sole contention for the appellant is that the High Court
was in error in holding that the registration of the appellant as
E.
a registered money-lender in March 1952 became void when he F
advanced a loan in suit in excess of Rs. 2,000 in 1954 and that
the High Court was also in error in holding that be could not
have advanced the loan in excess of the maximum capital for
which the registration certificate was wanted.
The relevant provisions of the Act may now be set out.
'Capital', is defined in s. 2 ( c), to mean tha~ which a money
~nder invests in the business of money-lending whether in money
or in kind. 'Registered money-lender', according to s. 2 ( m).
means a person to whom a registration certificate has been granted
under s. 5. Section 5 provides for the registrntion of money
lenders and a registration fee. Sub-s. (1) thereof requires the 11 applicant for registration to mention in the application particular&
mentioned in. tha~ 1ub-section and 'such other particulars as may
be pra1Cribed'. Sllb-1. (3) empowcn the Provincial Government
MOLLANA V. NA!KO (Dayal, J.) 347
A to prescribe by rules for different classes of money-lenders and
for different areas a registration fee not exceeding Rs. 25 to be
paid by an applicant for registration. Sub-s. ( 4) empowers the
Sub-Registrar to grant a registration in the prescribed form to
the applicant except where the certificate previously granted to
him has been cancelled under s. 18 and the order of cancellation
B is in force. Section 6 enacts that the registtation certificate
granted will be in force for 5 years from the date on which it is
granted. Section 7 provides for the registered money-lender to
maintain accounts and to give receipts.
Section 8 which provides for suits for recovery of loans by
c registered money-lenders reads :
"Suit for recovery of loan maintainable by registered
money-lenders only :-A money-lender shall not be
entitled to institute a suit for the recovery of a loan
advanced by him after the date on which this section
comes into force unless he was registered under this
Act at the time when such loan was advanced :
Provided that a money-lender shall be entitled to
institute a suit to recover a loan advanced by him at
any time in the course of two years after the date on
which the section comes into force, if he is granted a
certificate of registration under section 5 at any time
before the expiration of the said years."
Section 9 provides for the maximum rates at which interest may
he decreed. Various other sections deal with other matters which
the legislature thought fit to provide for in order to achieve the
F object of the Act which, according to the preamble, is to regulate
money-lending transactions and to grant relief to debtors in the
State of Orissa.
Rule 1, clause ( c), of the Orissa Money-Lenders Rules, 1939,
defines 'maximum capital' to mean the highest total amount of
the capital sums which may remain invested in a money-lending
G business on any day during the period of the registration certifi
cate. Rule 3, cl. (iii), requires every application for the regis
tration of a money-lender to mention the maximum capital for
which the certificate is wanted. Rule 4 lays down the registration
fees payable and fixes the fees according to the maximum capital
in respect of which an application for such certificate is made.
H Rule 5 provides that registration certificate would be in Fonn m
and that during the currency of a registration certificate applica
tion may be made for a registration certificate of a higher
SUPREME COUllT REPORTS [1966] l S.C.R.
denomination and the provisions of rr. 3 to 5 shall, as far as may A
h~. apply to it. credit being given to the registration fee already
paid by the applicant.
The question for decision in this case is practically the same
as came up for decision before this Court in Sant Saran/a/ v.
Pars11ram Sahu(') judgment in which has been dcliYered today. 8
The relevant provisions of the Bihar Money-Lenders Act, 1938
and the flihar Money-Lemkr; (Regulation of Transactions) Act.
1938 arc practically similar to the relevant provisions of the Orissa
Act mentioned above. What we have said in that cas~ appro
priately cowrs the conteo.tions of the parties in this case. We do
not therefore consider it nec~ssary to repeat the discuS>ion of the c
various contentions in this case.
We hold that in the absence of any specific provision in the
Act in this case providing for the fixing of the maximum car!:al
which a money-lender can invest in money-lending bu;incs<. i:
was not open to the State Government to frame a rule in that
regard and that the rules framed by it about mentioning, in the
application. the maximum capital for which the registration certi
ficate was wanted and the mention in the certificate of th~
amount of the maximum capital for which the certificate is grant-
ed, do not lead to the conclusion that the registration of the
money-lender will become void if he exceeds the limit of the
maximum capital laid down in the registration certificate.
We do not consider it necessary now to decide the other point
raised with respect to the retrospective operation of the registra
tion certificates of higher denomination obtained during the
currency of a registration certificate.
We accordingly allow the appeal, set aside the decree of the
Court below and restore the decree of the trial Court. We direct
the respondent> to pay the costs of the appellant in the High
Court and this Court.
A ppea/ allol<'ed
(I) [1966] I S.C.R. 335.
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