Gordhan Das and Co. Vs Iedu Khan

Instant Second Appeal is preferred by appellant-plaintiffs aggrieved from judgment dated 31.10.1998 in civil regular appeal No, 05/1996 passed by learned Additional District Judge, Malpura, District Tonk whereby appeal preferred by respondent-defendant against judgment and decree dated 31.10.1996 in civil suit No. 74/1981 was allowed and after setting aside judgment and decree was set aside thus dismissing civil suit preferred by appellant-plaintiffs.

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Learned counsel for appellant-plaintiff while placing reliance upon grounds of appeal submits that on 18.03.1981 ₹4,000/- was given on loan to defendant for a period of 2 days but after some days despite reminders same was not returned and ultimately plaintiff has to file a civil suit for recovery. He further submitted that the Trial Court has framed as many as 6 issues and all 6 issues were decided in favor of plaintiff which resulted into decree of the suit. He further referred the findings of Appellate Court and submitted that the findings on issue Nos. 1 and 2 were affirmed by the Appellate Court but issue No.3 was set aside and issue No.4 was not pressed whereas findings on issue Nos. 5 and 6 were set aside resulting in setting aside the judgment and decree. He further referred the factual matrix of the case and submitted that both the Courts below have passed concurrent finding that defendant has borrowed ₹4000/- from plaintiff and not returned to plaintiff. He further submitted that only on the ground that plaintiff does not possess a money lending license and he is not entitled to file a suit for recovery, dismissed the suit. He also submitted that the Appellate Court relying upon admission of about money lending licence but not produced in support of plaint has concluded that the plaintiff has not complied the provisions of Money Lending Act and set aside the findings of Trial Court. He also submitted that this was an advance and not a regular loan wherein the money lending license was not a sine qua non for filing a suit for money recovery. He further submitted that the Appellate Court has not only misunderstood and misconstrued

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the provision of law but it has set aside the findings without any basis.

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Aforesaid contentions were opposed by learned counsel for respondent on the ground that the plaintiff is a regular money lender and without a money lending license he has filed a civil suit for recovery, which is not maintainable and the Trial Court has committed serious error while passing the decree in favor of plaintiff and same was rightly set aside by the Appellate Court. He also submitted that without a money lending license, the instant suit is not maintainable.

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Heard learned counsel for the parties and perused the material available on record. 5. The facts giving rise to instant appeal are that plaintiffappellant filed a suit for recovery of ₹4120/- against defendant in the Court of Munsif Magistrate, Malpura with averment that plaintiff is a registered firm and doing a business of commission agent in Malpura. The plaintiff has further averred that defendant has borrowed ₹4,000/- on 18.03.1981 for a period of 2 days and an entry was made in the accounts book maintained on regular basis. The money was not returned and ultimately the plaintiff has filed a civil suit for recovery. The defendant has filed written statement and pleaded that plaintiff-firm is not a registered firm and defendant has never borrowed any money from plaintiff on 18.03.1981.

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On the basis of pleadings six issues were framed, two witnesses were examined by plaintiff and four documents were exhibited whereas DW-1 defendant examined himself in his evidence.

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The Trial Court has decided issue Nos. 1 to 3 in favor of plaintiff but decided issue No.4 in light of order dated 17.04.1989/21.04.1991. Issue Nos. 5 and 6 were decided against the defendant, as a result the suit of plaintiff was decreed. The defendant has filed an appeal and the Appellate Court has affirmed the finding on issue Nos. 1 and 2 but set aside partial finding on issue No.3 but affirmed the finding that defendant has borrowed ₹4,000/- from plaintiff. Issue No.4 was not pressed while deciding issue Nos. 5 and 6 the Appellate Court considered the admission of PW-1 Chandanmal that he is doing business of money lending and having money lending license and set aside the findings of Trial Court.

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While considering this appeal on 20.09.2000 following

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substantial question of law were framed for admission:-

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(1) Whether a loan given to a trader does not fall within the definition of “loan” as envisaged under subsection (9) of Section 2 of Rajasthan Money Lending Act, 1963?

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(2) Whether an amount of ₹4000/- given for two days on ad hos basis without interest, to defendant, can be treated as loan within the definition of loan as defined under Section 2(9) of Rajasthan Money Lenders Act, 1963,so as to attract the provision of the Rajasthan Money Lenders Act, 1963?

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(3) Whether a registered firm doing a business of Commission Agency, and aslo giving some money as an advance, will be covered/governed under the provisions of Rajasthan Money Lenders Axt, 1963 and in absence of non-filing of licence under Act of 1963, a suit filed on its behalf will be dismissed under Section 11 of the Act if 1963?

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Substantial question of law from 1 to 3.

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For convenience we are considering these question together as they are related with each other. The finding on issue Nos. 1 to 2 regarding registration of firm and advance

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4,000/- to defendant is on record and the defendantrespondent has not filed any cross-objection against finding on these issues. Thus, it is established that the defendant has borrowed ₹4,000/- on 18.03.1981 and same was not returned to plaintiff. A perusal of para No. 8 of judgment of Appellate Court indicate that the counsel for defendant has submitted to the First Appellate Court that plaintiff-firm got registered on 25.06.1981 only after accrual of cause of action. The Ex. 3 and 4 were referred by the counsel for defendant. The Appellate Court on the basis of evidence both documentary and oral concluded that defendant has borrowed ₹4,000/-on 18.03.1981 and the entries were made in the accounts book maintained regularly.

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The Trial Court while considering issue Nos. 5 and 6 has specifically referred the evidence of DW-1 defendant himself and observed that not a single word was uttered by defendant about issue Nos. 5 and 6. It is only on the basis of admission in cross-examination, the Appellate Court has drawn a conclusion that the money license was not produced.

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When we look at the provisions under the Rajasthan Money Lenders Act, 1963, then Section 11 provides dismissal of suit by money-lender not holding licence. A suit to which this Act applies is filed by a money-lender and the Court in which it is filed is satisfied that at the time when the loan or any part thereof to which the suit relates was advanced, the money lender did not hold a valid licence, shall dismissed the suit. Section 22 prescribes that a duty to money-lender to

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keep accounts and furnish copies whereas Section 23 provides for statement of accounts and copies thereof by money-lender.

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The definition of loan as provided under Section 2(9) is reproduced as under:-

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(9) 'loan means an advance at interest, whether of money or in kind, but does not include: —

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(a) a deposit of money or other property in a Government Post Office Savings Bank or in any other bank or in a company or with co-operative society;

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(b) a loan to or by, or a deposit with, any society or association registered or deemed to be registered under the Rajasthan Societies Registration Act, 1958 or any other enactment, relating to a public, religious or charitable objects;

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(c) a loan advanced by Government or by any local authority authorized by Govt.;

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(d) a loan advanced to a Government servant from a fund established for the welfare and assistance of Govt. servants and which is sanctioned by the State Govt

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e) a loan advanced by a co-operative society;

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(f) an advance made to a subscriber to, or a depositor in, a Provident Fund from the amount standing to his credit in the fund in accordance with the rules of the fund;

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(g) a loan to or by an insurance company as defined in the Insurance Act, 1938 (Central Act IV of 1938);

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(h) a loan to, or by a bank;

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(i) an advance made on the basis of a negotiable instrument as defined the Negotiable Instruments Act, 1881 (Central Act XXVI of 1881) other than a promissory note:

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(j) except for the purposes of sections 27 and 29.

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(i) a loan to a trader, or

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(ii) a loan to a money-lender who holds a valid licence;

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In case of Wassiahmul Vs. Good Luck Pictures, (1962)

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64 BOMLR 549-A it was held that provision of the Act do not

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apply to a loan to trader for trade. The provision of the Act appears to be that unwary agriculturists and no-traders and parties who are into banking and commercial transactions should be protected. Herein, this case the statement of plaintiff in the plaint and also in evidence along with Ex. 1 and 2 made it clear that defendant has borrowed money for 2 days. The statement of

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plaintiff was found to be trustworthy by the Courts below. PW-1 in his evidence has stated that defendant is having a shop of Doda in Phagi and to deposit money he borrowed money. This fact was found to be correct and same is entered in books of accounts. Having considered the provision as mentioned therein, an advance to a trader by another trader is not a money-lending as per Section 2(9)(j) of the Act.

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The Appellate Court has committed serious error while considering the fact that the production of money lending licence was necessary in order to maintain the suit. Herein, this case the defendant has not raised any serious objection about money lending licence. The plaintiff PW-1 has admitted about licence but neither the licence was demanded nor requisitioned. The defendant has not made any attempt to summon the licence from plaintiff. It is general law of interpretation that admitted facts are not required to be proved. The material on record clearly established that plaintiff is a trader and defendant has borrowed ₹4,000/- on short term basis and that too without interest for purpose of deposit about his shop, thus the advance was only for business purpose, thus, an advance by a trader to another trader and within the exception as provided under Section 2(9)(j) of Money Lender Act.

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In view of aforesaid, Section 11 of Money Lenders Act does not apply and the Appellate Court has not only transgressed the authority but it has recorded the findings against the record and without looking to provision of law has set aside findings recorded by the Trial Court.

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In view of aforesaid, substantial questions 1 to 3 are decided in favor of appellant-plaintiffs. As a result, instant second appeal has to be allowed and the judgment of the First Appellate Court is liable to be set aside and that of Trial Court is required to be restored.

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In view of discussion made hereinabove, the instant S.B. Civil Second Appeal is allowed and judgment dated 31.10.1998 in civil regular appeal 05/1996 passed by learned Additional District Judge, Malpura, District Tonk is set aside and judgment and decree dated 31.10.1996 in civil suit No. 74/1991 is hereby restored.

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No order as to costs.

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Decree be drawn accordingly.

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(ASHOK KUMAR JAIN),J

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MONU/153

Gordhan Das and Co. v. Iedu Khan

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Gordhan Das and Co. v. Iedu Khan

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