IMPORTANT POINT
Banks are not money lenders and as such Banks do not come under the purview of the Assam Money Lenders Act.

Headnote:(i) Assam Money-Lenders Act, 1934-Section 7-D r/w Section 2(1)-Banking Regulation Act, 1949-Section 5-Money lender-Banking Company-Whether a money lender-Suit by Bank for recovery of money-Whether barred under Section 7-D for want of registration certificate?-Bank is not money lender-Provisions of Assam Act not applicable to Bank-Banks do not come under purview of Assam Money Lenders Act. (Paras 31, 40 and 41)
       (ii) Banking Regulation Act, 1949-Sections 2 and 5-Assam Money Lenders Act, 1934-Sections 2 and 7-D-Banking-Suit for recovery-Defence that suit not maintainable sine Bank did not hold registration certificate under Assam Money Lenders Act-Not tenable-Bank is not a money lender-Banks do not come under purview of Assam Money Lenders Act-Suit maintainable.
       From the provisions in the two enactments (Banking Regulation Act and Assam Money Lenders Act), one central and the other State, bring forth the wide difference in the fields of operation of banks and activities of money lenders. While banks are financial institutions which are engaged in improving the flow of trade, movement of commerce and expansion of business and thereby improving the socio-economic condition of the people; money-lenders are engaged in making personal profits; while the former are guided by policies and decisions of the Central Government and the wide spectrum of activities in which they are engaged are all controlled or regulated by the Reserve Bank of India; there is no such regulatory policy in the case of the latter. (Para 31)
       From the provisions in the other State enactments also it is clear that the legislatures have taken caution to exclude banks from the operations of the statutes presumably with a view to avoid any conflict with the Parliamentary enactment. Unfortunately, the Assam Money-Lenders Act, 1934 does not incorporate any such provision in it. It may be noted here that banking is covered under item No. 45 in List-I of the Union List of the VII Schedule of the Constitution, while Money-lending and Money-Lenders : Relief of Agricultural indebtedness comes under Item 30 of List II- State List of the VIIth Schedule. Adopting a purposive and meaningful interpretation of the provisions of the statute we are persuaded to take the view that banks do not come under the purview of the Assam Money-Lenders Act. Therefore the High Court was right in holding that the suit filed by the respondent-bank is maintainable. (Paras 40 and 41)

JUDGMENT

D.P. Mohapatra, J.-Leave granted.

The question that arises for determination in this case is whether the Central Bank of India is a money-lender under the Assam Money Lenders Act, 1934 (Assam Act IV of 1934) (hereinafter referred to as "the Assam Act") and therefore is required to take a licence under the said Act to carry on its activities? The question having been answered in the negative by a Division Bench of the Gauhati High Court, the defendants have filed this appeal assailing the judgment.

2. The factual backdrop of the case relevant for determination of the question may be stated thus :

The Central Bank of India, respondent herein, filed the suit for realisation of certain amount from the Associated Timber Industries, Chabua and others, appellants herein, being the amount due to the Bank towards sums advanced to the defendants. The defendants raised an objection against maintainability of the suit on the ground of non-compliance with the provisions of the Assam Act, particularly Section 7-D. To be more specific the objection was that the Bank being a money-lender has not been registered under the Assam Act; in the absence of a registration certificate, the suit is not maintainable and therefore, cannot be proceeded with.

3. The Additional District Judge, Dibrugarh, framed an issue - whether the suit is maintainable? The said issue was taken up as a preliminary issue. But the order dated 26th June, 1989 the learned trial judge dismissed the suit as not maintainable. The plaintiff challenged the judgment of the trial Court before the High Court in First Appeal No. 78 of 1989, wherein a Division Bench by the judgment dated 29th July, 1998 set aside the judgment of the trial Court and directed disposal of the suit on merits in accordance with law. The said judgment is under challenge in this appeal.

4. Shri Bhaskar P. Gupta, learned senior counsel appearing for the appellants, strenuously urged that the High Court is not right in holding that the provisions of the Assam Act are not applicable to the respondent-Bank. Elucidating his contention, Shri Gupta submitted that advancement of loan by the respondent-Bank to the appellants makes the transaction between the parties a loan as defined in Section 2(3) of the Assam Act and the Bank a money lender as defined in Section 2(1) of the Assam Act. It was the further submission of Shri Gupta that in the absence of a notification by the State Government declaring the respondent to be a notified Bank for the purpose of the Assam Act, the exclusionary provision in Section 2(3) is not attracted. The resultant position, contended Shri Gupta, is that in the absence of a registration certificate the suit filed by the respondent-Bank is not maintainable and the trial Court rightly held so; the High Court fell into error in holding in favour of maintainability of the suit.

5. Shri R.N. Trivedi, learned Additional Solicitor General, supporting the impugned judgment contended that the respondent is engaged in "banking activity", which is different from mere money lending activity, and therefore, the provisions of the Assam Act are not applicable in case of a Bank, like the respondent. The activities of banks are governed under the Banking Regulation Act, 1949 which is a Parliamentary enactment. The banks registered under the said Act are under the regulatory control and supervision of the Reserve Bank of India. Shri Trivedi further contended that lending money to customers is not the only activity of the respondent; it is one of multifarious activities undertaken by it. According to Shri Trivedi the expression `money-lender as defined in Section 2(1) of the Act should be so interpreted as to include a person whose sole activity is lending money to others charg ing interest; considered on that basis the respondent does not come within the scope of the definition of the term `money-lender , which is the sine qua non for application of the statute. Since the Assam Act has no appl

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2000 Supreme(SC) 1297

IMPORTANT POINTBanks are not money lenders and as such Banks do not come under the purview of the Assam Money Lenders Act.

Cases Referred (3)

IMPORTANT POINT
Banks are not money lenders and as such Banks do not come under the purview of the Assam Money Lenders Act.