Das, J.:— This is a second appeal by the plaintiff, and the principal point of law which arises for consideration is whether the suit brought by the appellant for the recovery of a certain sum of money on a handnote executed on the 21st July 1944, was barred by reason of the provisions of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939.
The facts are these. The appellant alleged that on the 21st of July 1944, defendant no. 1 executed a handnote for Rs. 2,500 in favour of the appellant, and promised to pay on demand the amount with interest at the rate of twelve annas per cent per mensem. On the 7th of March 1946, defendant no. 1 paid the sum of Rs. 365 towards interest, and made an endorsement on the back of the handnote. Thereafter, no further payment was made in spite of demand. Hence, the suit was brought on the 20th of November 1946. It was alleged that the loan was taken for the benefit of all the defendants, the other defendants being sons of defendant no. 1. After deducting the amount paid on the 7th of March 1946, the appellant laid the claim at Rs. 2,655 including interest.
The defence was a plea of payment by way of certain transactions referred in paragraphs 7 and 8 of the written statement. There was a further defence that the appellant was not registered under the Bihar Money-lenders Act, 1938, and therefore, the suit was not maintainable under the provisions of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939.
The learned Munsif negatived the plea of payment. On the question of the bar of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, the learned Munsif held that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, applied, inasmuch as the appellant was not a casual money-lender, and the registration certificates [Exts. 7 and 7(a)] which were in the name of the firm Kushalchand Meghraj, were not of any help to the appellant; because the appellant had himself admitted that the firm Kushalchand Meghraj, of which the appellant was the proprietor, had nothing to do with the amount which had been advanced under the hand-note in question. The learned Munsif expressed himself as follows on this point: “The firm Kushalchand Meghraj had no concern at all with those amounts. P.W 2 has also admitted that the amounts which were advanced to defendant no. 1 out of the fund of the plaintiff's wife including the amount of the handnote in suit was never mentioned in the account books of firm Kushalchand Meghraj”. A third point was also taken before the learned Munsif to the effect that by reason of the expiry of Ordinance no. XI of 1945 after the 31st March 1947, section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, did not hit the present appellant. This contention was also negatived by the learned Munsif who dismissed the suit on his finding that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, which was still in force and effect, barred the action.
The learned Subordinate Judge, who heard the appeal, affirmed the findings of the learned Munsif, and agreed with him that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, was a bar to the entertainment of the suit. Accordingly, he dismissed the appeal.
Mr. B.C De, appearing for the appellant, has urged the following contentions before us. Firstly, he has contended that section 4 of the Bihar Moneylenders (Regulation of Transactions) Act, 1939, has no application to suits based on handnotes. For this argument, Mr. De has placed strong reliance on certain observations made by the Federal Court in Bank of Commerce, Ltd., Khulna v. Kunja Behari Kar. In that case the validity of the Bengal Money-lenders Act was in question with reference to sections 100 and 107 of the Government of India Act, 1935, and the legislative lists of the Seventh Schedule. One of the points raised was that the impugned Act was an invasion of entry 28 of List I which related to “cheques, bills of exchange, promissory notes and other like instruments”. Their Lordships of the Federal Court made the following observations on this question of invasion. It was contended that the rules enacted in sections 32, 79 and 80, Negotiable Instruments Act, were among the essentials of the law relating to promissory notes and that the provisions of sections 30, 36 and 38 of the impugned Act affect them so substantially that it would be impossible to regard them as merely amounting to an incidental encroachment on the law relating to promissory notes. This contention is in our judgment well-founded”. In another part of the judgment their Lordships said: “We may add that in the view that we take as to the scope of Entry 28 in List I, the attack against the impugned provisions of the Bengal Act will not be met by treating them as legislation with respect to ‘contracts’ (Entry 10 of List III) because sub-section (2) of section 100 makes even legislation on List III matters ‘subject to the preceding sub-section’, whenever such legislation is enacted by a Provincial Legislature.” On the basis of the aforesaid observations, it is contended that the provisions of the Bihar Money-lenders Act, 1938, or the provisions of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, can have no effect, when the loan is on a handnote and the suit is brought on the basis of the handnote. The contention in brief is that it was not open to the Provincial Legislature to make a law which would affect the “negotiability” of promissory notes, though it was open to the Provincial Legislature to make a law with regard to “money-lending and money-lenders”. It is contended that though in pith and substance the provincial Acts may relate to money-lenders and money-lending, the Acts to the extent that they affect negotiable instruments are not valid.
In my opinion, this contention is no longer open to the appellant, the point having been decided by their Lordships of the Privy Council in an appeal from the very decision of the Federal Court to which Mr. De has referred. The decision of their Lordships of the Privy Council is in Prafulla Kumar Mukherjee v. Bank of Commerce, Ltd., Khulna. Their Lordships dealt with three questions—
(1) Does the Act in question deal in pith and substance with money-lending?
(2) If it does, is it valid though it incidentally trenches upon matters reserved for the Federal Legislature?
(3) Once it is determined that the pith and substance is money-lending, is the extent to which the Federal field is invaded a material matter?
Their Lordships held that the Bengal Moneylenders Act dealt in pith and substance with fnoney-lending. They said: “In truth, however, the substance is money-lending and the promissory note is but the instrument for securing the loan”. On the second question, their Lordships said that it was not possible to make a clean cut between the powers of the various legislatures, and subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made and in what list is its true nature and character to be found. On the third question, their Lordships pointed out that the validity of an Act could not be determined by discriminating between degrees of invasion, but the extent of invasion is important only for the purpose of determining what is the pith and substance of the impugned Act. Accordingly, their Lordships held that the Bengal Act was not void either in whole or in part as being ultra vires the Provincial Legislature. This decision disposes of, I think, the contention raised by Mr. De. The two Bihar Money-lenders Acts, one of 1938 and the other of 1939, are valid pieces of legislation judged by the test laid down by the Privy Council, and no part of the provisions of those two Acts is invalid by reason of any invasion on the negotiability of promissory notes. So far as the question of registration of a money-lender is concerned, it is difficult to understand how such registration can be considered as anything but legislation with regard to money-lenders and “money-lending”. In view of the decision of the Privy Council, it is unnecessary to refer to the earlier decisions such as Sagarmal Marwari v. Bhuthu, A.L.S.P.P.L Subrahmanyan Chettiar v. Muthuswami Goundan and Deo Nandan Prasad v. Ram Prasad. In view of the decision of the Privy Council, the question of the application or expiry of Ordinance XI of 1945 does not arise. On the day the loan was advanced and on the day the suit was brought, there was a valid piece of legislation which required a money-lender to be registered, and which said that no court shall entertain a suit by a money-lender for the recovery of a loan advanced by him after the commencement of the Act unless such money-lender was registered under the Bihar Money-lenders Act. That being the position, I am unable to accept the contention that the provisions of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, did not apply to suits brought on promissory notes, on the alleged ground that the Provincial. Legislature could not encroach upon the negotiable character of a promissory note.
The next contention of Mr. De is that assuming that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, applies to suits on promissory notes, the section has no application in the present case by reason of the findings of the courts below. He has pointed out that the finding of the final court of fact is that the money was advanced out of the funds of the wife of the appellant with which the firm of the appellant had no concern. Mr. De has emphasised the words “for the recovery of a loan advanced by him” occurring in section 4. He contends that on the finding of the courts below the loan was not advanced by the appellant himself and the appellant was, as has been said by the learned Subordinate, Judge, a mere name-lender. In this view of the matter, it is contended that section 4 does not hit the appellant. I am unable to accept this contention of Mr. De. I concede that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, is so worded that certain difficulties of interpretation may arise with regard to other matters. The expression “advanced by him” must, I think, mean advanced by the money-lender who has brought the suit. The expression “money-lender” is defined as meaning a person who advances a loan and includes, inter alia, the legal representatives and successors-in-interest, whether by inheritance, assignment or otherwise of a person who advances a loan. The question is whether the word “advanced” means only the physical act of paying the money. I do not think that it does; otherwise, a servant counting and paying over the money would become a money-lender and would require registration. I do not think that is the intention. In the case before us, however, it is not merely the physical act of advancing which was made by the appellant. The right of recovery of the money was also in the appellant, though the money might have come out of the funds, of the wife. There was some controversy before us as to whether the promissory note in question was a negotiable instrument within the meaning of section 13 of the Negotiable Instruments Act. In view of Explanation (i) to section 13(1) of the Act, it seems that the promissory note in question was a negotiable instrument. Under section 8, the holder of a promissory note means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. In the case before us, the promissory note was in the name of the appellant: He was the holder, and was entitled to recover the amount due on the handnote. In the plaint, the appellant clearly stated that he sued on the handnote. Therefore, in the case before us, not merely the physical act of paying the money but also the right to recover the amount exist in the same person. A promissory note contains an unconditional undertaking to pay, and the question of a benami transaction does not really arise on a negotiable instrument of this kind. Even if the money came out of the funds of the wife, the appellant advanced it to defendant no. 1 on a handnote, and the appellant was entitled to recover the money. That being the position, I am of the opinion that the appellant was the money-lender who had advanced the loan within the meaning of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939. Any other interpretation would, I think, lead to very anomalous results. Section 5 talks of a suit brought by a money-lender in respect of a loan advanced after the commencement of the Act. The words “by him” do not appear in section 5. If, however, a person who advances a loan on a handnote in his name is allowed to say that the money came out of somebody else 3 funds and he is not the money-lender, then the position will be that he will not be hit by section 5, nor by section 7. It would then mean that a money-lender can always escape the provisions of the Bihar. Money-lenders (Regulation of Transactions) Act, 1939, by merely raising the plea of benami. I do not think that could be the intention of the legislature; nor do I think that the words of the section justify such an interpretation. Learned Counsel for the respondents has drawn our attention to section 5 of the Bihar Money-lenders Act, 1938, which states that it is open to a money-lender to State the name and style under which he carries on or desires to carry on business as a money-lender. It is contended by learned Counsel for the respondents that if the wife desired to carry on money-lending in the name of her husband, it was open to her to get herself registered in the name, of her husband. Learned Counsel for the respondents contends that surely, the Legislature could not have intended that the money-lender and his benamidar would both escape registration by merely alleging that neither of them were a money-lender within the meaning of the Act.
For the reasons given above, I would hold that the courts below were right in their view that section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, applied in the present case, and the appellant was not entitled to sue for recovery of the money on the handnote without being registered as a money-lender.
Lastly, Mr. De has contended that the courts below should have held that the appellant was either a casual money-lender or the registration in the name of the firm was sufficient compliance with the requirements of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939. If the appellant had not himself said that the firm which was registered as a money-lender, had nothing to do with this loan, the position would have been simple enough. The registration in the name of the firm would have entitled the appellant to sue for the recovery of the money, even though the suit was brought not in the name of the firm but in the name of the sole proprietor of the firm. But the trouble is that the appellant himself said that the firm had nothing to do with the loan. On the question whether this was a casual loan, there is a clear finding of fact by the learned Munsif. On a consideration of evidence in the case, the learned Munsif clearly held as follows: “Under these circumstances, the amount which has been advanced under the handnote in suit cannot be said to be a casual money-lending transaction under unforeseen circumstances; rather the plaintiff's wife or the plaintiff seems to me to be a money-lender by profession”. The learned Subordinate Judge affirmed this finding. Our attention was drawn to some statements of a witness who said that the plaintiff's wife did not advance loans to the defendants on any other occasion. The courts below had to consider the entire evidence on the record, and if there was evidence in support of the finding arrived at by the learnd Munsif and it is not disputed that there was such evidence, then it is not open to us in second appeal to go behind the finding of fact arrived at by the courts below. Our attention was drawn to two decisions, Mt. Surajbansi v. Mt. Larho and Bhutnath v. Nilkantha. Those were decisions relating to a casual money-lender. In view of the finding of the courts below, those decisions are of no help to the appellant.
It is true that the respondents are taking advantage of the provisions of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939, though their plea of payment has not been accepted; but however morally reprehensible the conduct of the respondents may be, they are entitled in law to plead the bar of section 4 of the Bihar Money-lenders (Regulation of Transactions) Act, 1939.
The courts below rightly held that the bar applied. The appeal accordingly fails and is dismissed, but in the circumstances of the case there will be no order for costs of the hearing in this Court.
C.P Sinha, J.:— I agree.
Appeal dismissed.
S.H