Noor Mohammad v. Haridas

Sinha, J.:— This application in revision has been made by the plaintiff whose suit for recovery of a certain sum of money on a handnote has been dismissed. This application was at first placed before his Lordship the Chief Justice, but has been referred to a Division Bench by him.

The plaintiff is a registered money-lender. On the 10th January, 1948, the proforma defendant, namely, Amir Chand Khan Wali Mohammad Khah Wazir Mohammad Khan Gul Mohammad Khan, a registered firm of money-lenders, advanced a sum of Rs. 230 to the defendant, namely, Haridas Banerjee, at the rate of Rs. 10 per cent per month on the basis of the handnote in question. On the 15th of December, 1950, the proforma defendant endorsed the promissory note, the handnote in question, in favour of the plaintiff and delivered the same to him. The plaintiff brought the present suit for recovery of Rs. 313, principal, plus interest at 12 per cent per annum. The defendant pleaded the bar of section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act, 1939. It has been alleged by the defendant that the proforma defendant was not registered under the Bihar Money-Lender's Act at the time the loan was advanced and, therefore, the suit was not maintainable. The Court below has given effect to this defence.

Mr. Chattrji has contended the following points on behalf of the plaintiff-petitioner—(1) that it has not been shown that the plaintiff is not a casual moneylender, that is to say, the money-lending transactions of the proforma defendant did not exceed Rs. 500 in the year. (2) that, the plaintiff being a registered money-lender under the Act, the suit has been wrongly dismissed by the Court below; (2a) section 4 of the Act does not apply to this suit because in terms the bar applies to a person who has advanced a loan himself) and, the plaintiff not being such a person section 4 had no application to his suit; (3) that the plaintiff is a holder in due course under section 9 of the Negotiable Instruments Act and as such he was entitled to a decree; (4) two out of the four brothers mentioned as performa defendant had in fact been registered under the Money-Lenders Act in 1946, and, therefore the suit by the plaintiff was not liable to be dismissed; and (5) that, in any view of the matter, the plaintiff was entitled to a refund of the consideration money.

The Court below has found that the firm of the proforma defendant and the firm Gul Mohammad Khan Mohammad Amir Khan are two different firms and, therefore, the fact that the firm Gul Mohammad Khan Mohammad Amir Khari was registered under the Money-Lenders Act in 1946 did not protect the plaintiff from the bar of the provisions of section 4 of the Act. It was also found that the plaintiff could not be deemed to be a ‘holder in due course’ within the meaning of section 9 of the Negotiable Instruments Act and that the plaintiff cannot sue for the money lent because the plaintiff can have no better rights than the original money-lender, namely, the proforma defendant, who had advanced the money to the defendant.

It has been urged that there were four brothers, Amir Chand Khan, Wazir Mohammad Khan and Gul Mohammad Khan, and that they had been partners in a firm which had been registered in the name of these four brothers under the Partnership Act in 1941, of these four brothers, two, namely, Gul Mohammad Khan and Amir Chand Khan, had got themselves registered under the Money-Lenders Act on the 4th of July, 1946. According to the case of the plaintiff, the loan in question was advanced by the firm of these four brothers to the defendant on the 10th of January, 1948. The firm of the four brothers mentioned above was also registered under the Money-Lenders Act on the 26th of August, 1950. On the 19th of July, 1939, under section 3 of the Bihar Money-Lenders Act, 1938 (Bihar Act III of 1938]) the Governor of Bihar was pleased to exempt in all areas of the Chota Nagpur Division a casual money-lender whose money-lending did not exceed the total amount of Rs. 500 in cash in any particular year. On the strength of this notification it is urged that the proforma defendant was a casual money-lender within the meaning of that notification and, therefore, the plaintiff, in whose name the handnote was endorsed by the proforma defendant, was entitled to maintain his suit and the bar of section 4 did not apply to such a case. The answer to that question is that there is no material brought on the record to show that the proforma defendant was a casual money-lender and that his money-lending business did not exceed Rs. 500 a year. The plaintiff wants to take advantage of the exception, and it was for him, and not for the defendant, to have produced evidence to show that he was covered by the exception. Apart from this, it is established upon the plaintiff's own case that the proforma defendant was registered as a firm under the Money-Lenders Act in 1950 (exhibit 5). If the proforma defendant got itself registered firm in 1950, it cannot be said, in the absence of any other material, that its money-lending business was within Rs. 500 a year. The first contention, therefore, fails.

It is contended in the next place that, the plaintiff being a registered money-lender himself, the suit should not have been dismissed. It is said that his allegation in the plaint to the effect that the plaintiff is a registered, money-lender has not been disputed in the written statement, and it must be taken, therefore, that the plaintiff is a registered money-lender and that, the plaintiff being the successor-in-interest of the proforma defendant, it should be held that the bar of section 4 did not affect his suit. Under section 4 of the Money-Lenders Act, the money-lender who has advanced a loan must be registered on the date the loan was advanced and, if he was not then registered, he cannot bring a suit under that section. If does not matter in the least if the plaintiff was in fact a registered money-lender on that date. The loan was advanced not by the plaintiff, but by the proforma defendant and the proforma defendant was not a registered firm under the Money-Lenders Act on the 10th of January, 1948, when the loan was advanced to the defendant. In my judgment, there is absolutely no merit in this contention also.

It is then contended that section 4 has no application because in terms that section does not apply to the plaintiff's suit. The relevant portion of that section runs as follows:—

“No Court shall entertain a suit by a money-lender for the recovery of a loan advanced by him after the commencement of this Act unless such money-lender was registered under the Bihar Money-Lenders Act, 1938, at the time when such loan was advanced………”

It is said that the plaintiff has not sued for the recovery of a loan ‘advanced by him’. It is said that the loan was advanced by the proforma defendant and the suit is by the plaintiff; therefore, that section should not have been applied bar to defeat the plaintiff's suit by the Court below. Such a contention was also raised in the case of Meghraj v. Panchu and a Division Bench of this Court negatived that contention. Das, J., in delivering the judgment of that case, said as follows: “The expression ‘advanced 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;……….” It is quite clear that in the present case the plaintiff, under the definition of ‘money-lender’ given in section 2(g), is a successor-in-interest of the money-lender who had advanced the loan. It is found that the proforma defendant, who had advanced the loan, was not a registered moneylender on the date the loan was advanced and, therefore, the plaintiff, who brings a suit on the basis of that loan advanced by the proforma defendant, cannot be heard to say that, although the person who advanced the loan was not registered, the plaintiff, having been registered, was not bound by the provisions of that section. The plaintiff is the successor-in-interest of the proforma defendant by assignment, and he cannot have a higher right than that of the proforma defendant. It is true that the plaintiff himself had not advanced the loan, but in my judgment, the bar of section 4 will apply to him also because the plaintiff has stepped into the shoes of the proforma defendant. If the contention made on behalf of the plaintiff is correct, then the provisions of section 4 of the Act could be easily defeated by a money-lender, who is not registered as a money-lender, under the Act, by endorsing the handnote on which money was lent in favour of a person who is a registered money-lender and, in my judgment, that could not possibly have been the intention of the Legislature. I would hold, therefore, that the predecessor-in-interest of the plaintiff, namely, the proforma defendant, not being a registered moneylender on the date when the loan was advanced, the plaintiff, an assignee from that proforma defendant, cannot maintain the suit. In my judgment, therefore, this contention must be rejected.

It is contended further that under section 9 of the Negotiable Instruments Act the plaintiff is entitled to a decree. section 9 of the Negotiable Instruments Act runs as follows:—

“‘Holder in due course’ means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer or the payee or endorsee thereof if payable to order before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.”

This section only defines the ‘holder in due course’. The Court below has found that the plaintiff is not a ‘holder in due course’ for the reasons given in the judgment under revision. Conceding for a moment that the, plaintiff is a ‘holder in due course,’, that by itself will not entitle him to bring a suit. The bar under section 4 of the Money-Lenders Act applies to the plaintiff who comes within the definition of “money-lender” given in that Act. If the proforma defendant, the predecessor-in-interest of the plaintiff, was hit by the bar imposed by section 4 of the Bihar Money-Lenders Act, I do not see how the plaintiff can escape that bar. Mr. Chatterji has referred to several decisions of this Court, namely, Sagarmed Marwari v. Bhuthi Ram and Deo Nandan Prasad v. Ram Prasad. It is, however, now firmly established that the Bihar-Money-Lenders Act is a good legislation and that it is not ultra vires the Bihar Legislature because in ‘pith and substance’ it is a legislation dealing with money-lenders (item 27 of List II of the Seventh Schedule to the Government of India Act, 1935), although its ancillary effect may be upon the provisions of the Negotiable Instruments Act. Similar provisions were embodied in the Bengal Money-Lenders Act (Act X of 1940) and that Act was held to be intra vires the Provincial Legislature [Prafulla Kumar Muhkerjee v. Bank of Commerce, Ltd., Khulna] which was followed in the aforementioned case in I.L.R 30 Patna, 1075. That being the position, the plaintiff cannot escape the bar mentioned in section 4 of the Bihar Money-Lenders Act and his suit for recovery of the money must fail and he cannot get any assistance from the provisions contained in the Negotiable Instruments Act. Even if some of the provisions of the Bihar Money-Lenders Act were repugnant to the provisions of the Negotiable Instruments Act, the Bihar Money-Lenders (Rgulation of Transactions) Act, having received the assent of the Governor-General, as provided by section 107, clause (2), of the Government of India Act, 1935, the provisions of the Bihar Money-Lenders Act must prevail in the State of Bihar. In that view of the matter also, in my judgment, the plaintiff cannot take any advantage of the provisions of the Negotiable Instruments Act and his suit must be held to be barred under section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act.

The fourth contention of Mr. Chatterji is that the loan was advanced by the four brothers in 1948, two of whom, namely, Gul Mohammad Khan and Amir Chand Khan, having been registered as moneylenders, the suit could not have been dismissed under section 4 of the Act. This contention has no merit at all. The Court below has found fact that there was a firm in the name of the four brothers which had advanced the loan. That firm was not registered under the Money-Lenders Act on the date the loan was advanced. The other firm in the name of the two brothers, which had come into existence in 1946, is different from the firm in the name of the four brothers. In my view, therefore, the plaintiff cannot take any advantage of the fact that a firm in the name of the two brothers Gul Mohammad Khan and Amir Chand Khan had been a registered firm under the Bihar Money-Lenders Act before the loan in question was advanced.

The last contention of Mr. Chatterji is that, in any view of the matter, if the plaintiff cannot get a decree on the basis of the handnote, he should be given a decree for refund of consideration, I must confess I was not able to appreciate this contention. There is no charm in the expression ‘refund of consideration’. It is not a case where the suit on the promissory note having failed, for one reason or the other the plaintiff should be entitled to a decree on the loan itself. The present suit, however, is based on the promissory note itself and not on the loan advanced. In the present case under section 4 of the Bihar Money-Lenders (Regulation of Transactions) Act a suit for the recovery of a loan is barred if the money-lender was not a registered money-lender on the date of the advance of the loan. If the proforma defendant was not a registered moneylender on the date of the advance of the loan, he cannot bring a suit for the recovery of that loan. The plaintiff, in whose favour the handnote has been endorsed, can have no better right than the proforma defendant to recover that loan. I would, therefore, dismiss this contention also. Mr. Chatterjee had referred to the decisions in Sri Sri Iswar Sridhar Jieu Thakur v. Jahor Lal Mukhopadhya and Babu Raja Mohan Manucha v. Babu Manzoor Ahmad Khan but the facts in those cases were entirely different and they were not cases governed by the Bihar Money-Lenders (Regulation of Transactions) Act or any such similar enactment.

For the reasons given above, in my judgment, there is no merit in this application which must be dismissed with costs, and I fix the hearing fee at two gold mohurs.

Rai, J.:— I agree.

Rule discharged.

S.H