1. This application for revision is referred to a Division Bench for disposal as it raises a question of law of general importance.
2. The applicant-defendant had executed a bond and a promissory note in favour of the non-applicant-plaintiff who is found by the lower Court to be a money-lender. The latter did not hold the registration certificate required by Section 11-B of the C.P and Berar Money-lenders Act, 1934, hereinafter referred to as the Act, either on the dates of these transactions or on the date of the institution of the suit, but he applied for it during the pendency of the suit and produced it before the delivery of judgment. He did not maintain accounts nor did he furnish annual statements of accounts as required by the Act. The trial Court, therefore, disallowed costs and interest and decreed the claim for the principal amounts. The applicant contends that as the plaintiff had no valid registration certificate at fee time the transactions were entered into the suit should have been dismissed as the two agreements in suit are void because they are forbidden by the following provisions of the Act or they are of such a nature that if permitted they would defeat them:
“11-F.(1) No person shall carry on the business of money-lending in any district unless he holds a valid registration certificate in respect of that district.
(2) Whoever contravenes the provisions of sub-s. (1) shall be punishable with fine which may extend to one hundred rupees, or if he has previously been convicted of an offence under that sub-section with fine which may extend to two hundred rupees.”
3. The question then is, do these provisions forbid a person, who does not hold a valid registration certificate, from entering into any transaction of money-lending? They are expressed in words which apply directly to the money-lender rather than to the transaction. They do not say that the money-lending transaction shall be void but say that no person shall carry on the business of money-lending unless he holds a valid registration certificate, and if he contravenes these provisions he shall be punished with fine. There is thus no express prohibition of the transaction. We have then to see if there is an implied prohibition of the transaction, or if the transaction is of such a nature that, if permitted, it would defeat the abovementioned provisions of the Act. That would depend upon the intention of the legislature because
“……………, the intention of the legislature as embodied in the statute constitutes the law thereof.” (Page 246, section 160, Statutory Construction by Crawford).
4. Pollock and Mulla in their Indian Contract Act (Edn. 7) at page 138 say:
“…………; so the kind of question which arises in practice under this head is whether an act, or some part of a series of acts agreed upon between parties, does or does not contravene some legislative enactment or regulation made by lawful authority. The decision may turn on the construction of the agreement itself, or of the terms of the Act or other authoritative document in question, or on both. In particular it may have to be considered whether the intention of the legislature was to prevent certain things from being done, or only to lay down terms and conditions on which they might be done. It is easy to say that properly drawn Acts or Regulations ought to leave no doubt on that point, but experience has shown that such doubts are possible and have not been uncommon. Broadly speaking, that which has been forbidden in the public interest cannot be made lawful by paying the penalty for it; but an act which is in itself harmless does not become unlawful merely because some collateral requirement imposed for reasons of administrative convenience has been omitted.”
5. The learned authors further observe at p. 139:
“It is possible for a statute to attach a penalty to making a particular kind of agreement, and at the same time to provide that such an agreement, if made, shall not be, therefore, void x x x
Cases under this head have arisen principally in connection with Excise Acts, and they have almost all been decided with reference to English law. The principles may be stated thus: ‘When conditions are prescribed by Statute for the conduct of any particular business or profession, and such conditions are not observed, agreements made in the course of such business or profession are void if it appears by the context that the object of the Legislature in imposing the condition was the maintenance of public order or safety or the protection of the persons dealing with those on whom the condition is imposed; (but they) are valid if no specific penalty is attached to the specific transaction, and if it appears that the condition was imposed for merely administrative purposes, e.g, the convenient collecting of the revenue.” (See also Pollock. Principles of Contract, Edn. 11, pages 276-277).
6. No specific penalty is attached to the individual money-lending transaction in this case. To hold a money-lender liable to a penalty under sub-sec. (2) of S. 11-F it will not be enough to prove that he has given a loan to another person though he does not had a valid registration certificate. It will have to be proved that he is carrying on the “business of money-lending” i.e that the loan was advanced in the regular course of business. As has been held in — ‘In the matter of Bhairo Dutt’, AIR 1940 All 1 (A) and — ‘Sitaram v. Bajya’, AIR 1941 Nag 177 (B) an isolated act of lending money cannot constitute a business of money-lending within the meaning of the Act. The question then is if the condition of registration was imposed for merely administrative purposes.
7. The English law on the point is the same. In —‘Smith v. Mawhood’, (1846) 15 LJ Ex. 149 (C), Parke, B. observed at page 154:
“………, I think the object of the legislature was not to prohibit a contract of sale by dealers who have not taken out a licence pursuant to the act of parliament. If it was, they certainly could not recover, although the prohibition were merely for the purpose of revenue. But, looking at the Act of Parliament, I think its object was not to vitiate the contract itself, but only to impose a penalty on the party offending, for the purpose of the revenue. The plaintiffs, therefore, would be entitled to recover upon their contract, according to the principle laid down in — ‘Johnson v. Hudson’, (1809) 11 East 180 (D).
The third plea is not had in form, because it alleges that the plaintiffs are dealers in and manufacturers of tobacco: but it is bad upon the other ground, that the legislature did not intend to vitiate the contract by reason of a non-compliance with the requisites of the 26th section, but only to render the party carrying on trade upon such premises liable to a penalty. I quite agree, that if it be shewn that the legislature intended to prohibit any contract, then whether this were for the purpose of revenue or not, the contract is illegal and void, and no right of action can arise out of it.”
8. In the same case Alderson, B., observed at page 155:
“The question is, does the legislature mean to prohibit the act done or not? If it does, whether it be for the purposes of revenue or otherwise, then the doing of the act is a breach of the law, and no right of action can arise out of it. But here the legislature has merely said, that where a party carries on the trade or business of a dealer in or seller of tobacco, he shall be liable to a certain penalty, if the house in which he carries on the business shall not have his name, etc. painted on it, in letters publicly visible and legible, and at least an inch long, and so forth x x x x
It seems to me, therefore, that there is nothing in the act of parliament to prohibit every act of sale, but that its only effect is to impose a penalty, for the purpose of the revenue, on the carrying on of the trade without complying with its requisites.”
9. What has been laid down in — ‘Smith v. Mawhood’, (C) (supra) was approved of in — ‘Taylor v. The Crowland Gas and Coke Co.’, (1854) 156 ER 455 (E) wherein Parke, B., observed at page 456:
“The true principle is laid down in — ‘Cope v. Rowlands’, (1836) 2 M & W 149 (F) and — ‘(1646) 14 M & W 452 (C); and the question in all these cases is, whether, looking at the statute, the object of the Legislature in imposing a penalty was to prohibit the particular act, or whether it was for a different purpose.”
10. Alderson B., added at page 457—
“The question is very plain. The principle being admitted, what we have to consider is this, does the statute prohibit the act being done by an unqualified person, or does it merely require that every person who does it shall pay for a certificate? I think the former. The statute after having declared that every person, except a particular class, who shall do the act without a certificate, shall be subject to a penalty, goes on to provide that nothing therein contained shall prevent any person from doing another particular act. If that act would not have been prevented except for the proviso, then its words have no meaning.”
11. It was held in that case that the prohibition being against unqualified persons acting as conveyancers was in the interest of general public and that the plaintiff who was not licensed could not recover remuneration for the work done by him.
12. Under the Act any person who declares that he is carrying on or intends to carry on the business of money-lending can obtain a certificate without any enquiry. The registering Officer has not to decide whether the applicant is a fit person to carry on the business. It is a matter of supreme indifference to him whether the person applying is financially sound or is otherwise a desirable money-lender. ‘Smith v. Mawhood’, (C) was a case of an enactment which granted licence to any person applying for it, while — ‘Taylor v. The Crowland Gas and Coke Co.’, (E) was a case of an enactment under which the applicant had to possess certain qualifications before he could get a certificate.
13. The Act which was passed in the year 1934 and came into force on 1-4-1935 did not contain the provisions regarding registration of money-lenders now found in Ss. 11-A to 11-J. The provisions of the Act as they existed in 1935 left the part of loan transaction concerning the principal untouched and deprived the money-lender only of the interest and costs when certain conditions were not fulfilled. Their object as will appear from the preamble was to make better provision for the regulation and control of the transactions of money-lending. There was nothing in the preamble or in the provisions to suggest that the money-lending transaction was prohibited under any circumstances. It was by the C.P and Berar Money-lenders (Amendment) Act, 1940 (Act XIV of 1940) that Ss. 11-A to 11-J were inserted, and it is significant that no change was made in the preamble at that time. As observed by Crawford in his Statutory Construction at page 124, S. 88, the preamble of a statute is an excellent aid to the construction of ambiguous statutes or statutes of doubtful meaning. It is a key to the construction of a statute and should be resorted to unlock the minds of its makers. It can, therefore, be safely inferred from the fact that the preamble was kept unaltered that in inserting Ss. 11-A to 11-J the legislature did not want to go beyond what was intended when the Act was passed in 1935.
14. The learned counsel for the applicant, however, says that the preamble itself shows that the condition of registration is imposed for the protection of the persons dealing with these on whom the condition is imposed. In this connection we have to take into consideration the tact that the condition of registration was introduced in the year 1940 when all the other provisions of regulation and control of the transactions of money-lending were already there. So far as the debtor is concerned, this condition of regulation made very little change, and we are of the opinion that this condition was imposed for merely administrative purposes. We find strong support for this view in S. 11-C and its amendment in 1949. The section as it stood in 1940 prescribed a registration fee of Rs. 18/- for four years in respect of each district. In 1949 that fee was raised to Rs. 12/- per annum in respect of each district. This shows that the condition of registration and the penalty for its contravention were imposed for collection of revenue.
15. The learned counsel for the applicant then relied on the House of Lords decision in — ‘Cornelius v. Phillips’, (1918) AC 199 (G) which was a case under the English Moneylenders Act. The question which had arisen in that case was the same as the question in this case, namely whether the transaction was void or it only exposed the money-lender to liability for criminal proceedings without rendering the transaction void. It was decided in that case that the transaction amounted to a carrying on of his business by the money-lender at an address other than his registered address in contravention of Section 2, sub-section 1(b) of the Moneylenders Act, 1900 and that the effect of the Act was to avoid the transaction. A comparison of the English Money-lenders Act, 1900 and the C.P and Berar Money-lenders Act, 1934 will clearly show that the two differ on several important points. The definition of “moneylender” in the two Acts is not the same. The former contains provisions regarding “registered name” and “registered address” which are not to be found in the latter. Section 2(1)(c) of the former expressly prohibits individual agreements which is not the case with the latter. So the cases decided under the English Money-lenders Act cannot be of much help in deciding cases under the Central Provinces and Berar Money-lenders Act. We may here quote the warning given by their Lordships of the Privy Council in — ‘Lasa Din v. Mt. Gulab Kunwar’, AIR 1932 PC 207 (H):
“It is they think, always dangerous to apply English decisions to the construction of an Indian Act.”
16. We, therefore, do not propose to discuss the other cases under the English Money-lenders Act cited by the learned counsel for the applicant.
17. There is another provision regarding registration, namely S. 11-B which also strengthens the view that the Central Provinces and Berar Money-lenders Act does not prohibit individual transactions. It provides that every person who carries on or intends to carry on the business of money-lending shall get himself registered. The operation of this amendment was not postponed to enable the money-lenders to obtain valid registration certificates. So we cannot accept the interpretation of the learned counsel for the applicant that the word “carries” in S. 11-B refers only to the date on which the amendment came into force and that every transaction made by a money-lender thereafter without first obtaining a certificate to that effect is invalid. For that purpose we shall have to modify the provision of substituting the words “is carrying on the date the amendment comes into force” for the word “carries”.
18. This modification is not permissible unless the language in its ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the enactment or to some inconvenience, or absurdity, hardship or injustice, presumably not intended. (Maxwell on Interpretation of Statutes, Edn. 9, page 236, Chap. IX, S. I). This special statute which trenches on the contractual rights must be construed strictly against those who seek to avail of it. There are no reasons to suppose that the Legislature intended that every transaction of money-lending, made after the amendment came into force till the lender was able to obtain a registration certificate was invalid and unenforceable thereby enriching the debtor at the cost of the creditor without any fault of the latter. The learned counsel has not brought to our notice any compelling reasons to accept his construction which manifestly leads to injustice to the money-lenders.
19. Under Section 69 of the Indian Partnership Act a suit by or on behalf of a firm is not maintainable in certain cases unless the firm is registered. The Act provided that this provision would come into force a year after the Act came into force, evidently to enable the firms to get themselves registered and even then the-point of time when a firm must be a registered firm is the date of the institution of the suit and not the date of the transaction or the date when the provision came into force. Section 214 of the Indian Succession Act provides that no Court shall pass a decree against a debtor of a deceased person except on production of a succession certificate etc. Production of such a certificate is, therefore, not necessary for the valid institution of a suit but necessary for the passing of a decree. A somewhat similar provision has been made in S. 11-H of the Act which provides that no suit for the recovery of a loan advanced by a money-lender shall proceed in a civil Court until the Court is satisfied that he holds a valid registration certificate etc. It thus does not authorise the Court to straightway dismiss a suit if a valid registration certificate is not produced. What is to be done in those circumstances is given in — ‘Laxman v. Yogaji% Civil Revn. No. 770 of 1941, D/- 2-12-1942 (Nag) (I) wherein it has been held that S. 11-H affects the procedural law and not the substantive law and that the provision applies even to suits to recover loans made before the passing of the Act. It says that the suit cannot be dismissed but can only be stayed to enable the money lender to get himself registered and to produce the registration certificate, and it can be dismissed only if the money-lender is recalcitrant and does not produce the certificate within the reasonable time allowed by the Court. The High Court granted time to the plaintiff in that case to get himself registered and to produce the certificate.
20. The following observations in the Statutory Construction by Crawford at page 524 apply to the present case:
“Each statute must be judged by itself as at whole, regard being had, not only to its language, but to the objects and purposes for which it was enacted. If the statute does not declare a contract made in violation of it to be void, and if it is not necessary to hold the contract void in order to accomplish the purpose of the statute, the inference is that it was intended to be directory, and not prohibitory of the contract.”
21. It will be clear from all this discussion that S. 11-F applies to the business of money-lending and not to an individual transaction of lending money and that the condition is attached and the penalty is imposed for the convenience of collection of the revenue, and the legislature did not declare an individual transaction of money-lending made by the money-lender who had not obtained a registration certificate invalid. It is not necessary for the validity of the contract of loan that the money-lender must be registered on the date of the transaction. He, however, cannot obtain a decree on his loan unless he possesses a valid registration certificate on the date on which the decree is to be passed. Though the transactions of money-lending are not affected for want of a registration certificate, a money-lender is exposed to the penalty provided by S. 11-F of the Act for carrying on the business without a valid registration certificate. We may Shamshir Ali… v. Ratnaji….’, AIR 1952 Hyd 58 (FB) (J). The application for revision, therefore, fails and is dismissed with costs. Counsel's fee Rs. 50/- if certified.
B/K.S.B
22. Revision dismissed.