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1978 Supreme(Bom) 26

Bombay High Court
TULPULE
Bhaskarrao Jageshwarrao Buty - Appellant
Versus
Saru Jadhorao Tumble - Respondent
Decided On : 02/27/1978

Advocates:
D.B. Najbile and K.A Choube, for Applicants in both the C.R.As; J.N. Chandurkar, for Opponents in both the C.R.As.

A money lender's ability to advance loans in kind, including foodgrains, under the Bombay Money Lenders Act, 1946, is subject to other laws and regulations, such as the Maharashtra Scheduled Foodgrains Order, 1966, which prohibits the sale or disposal of foodgrains by persons other than recognized dealers, except in certain specified circumstances.

Headnote:

MONEY LENDERS ACT - BOMBAY MONEY LENDERS ACT, 1946 - S. 2(9) - MAHARASHTRA SCHEDULED FOODGRAINS (STOCKS DECLARATION AND PROCUREMENT AND DISPOSAL, ACQUISITION, TRANSPORT AND PRICE CONTROL) ORDER, 1966 - CL. 10 - INDIAN CONTRACT ACT, 1872 - S. 65 - LOAN IN KIND - FOODGRAINS - LEGALITY - ENFORCEABILITY.

Fact of the Case:

Plaintiff, a licensed money lender under the Bombay Money Lenders Act, 1946, advanced a loan of foodgrains (paddy) to the defendant. The defendant failed to repay the loan. Plaintiff filed a suit for recovery of the loan. The trial court dismissed the suit, holding that the claim was not enforceable due to the Maharashtra Scheduled Foodgrains (Stocks Declaration and Procurement and Disposal, Acquisition, Transport and Price Control) Order, 1966.

Finding of the Court:

The High Court upheld the trial court's decision. It held that the Bombay Money Lenders Act permitted loans in kind, including foodgrains, but this did not mean that such transactions were exempt from other laws or regulations. The Maharashtra Scheduled Foodgrains Order prohibited the sale or disposal of foodgrains by persons other than recognized dealers, except in certain specified circumstances. The Court held that lending foodgrains constituted 'otherwise disposing of' foodgrains within the meaning of the Order and was therefore prohibited.

Issues: 1. Whether a money lender can advance loans in kind, including foodgrains, under the Bombay Money Lenders Act, 1946? 2. Whether such loans are subject to other laws and regulations, such as the Maharashtra Scheduled Foodgrains Order, 1966? 3. Whether lending foodgrains constitutes 'otherwise disposing of' foodgrains within the meaning of the Order?

Ratio Decidendi: 1. The Bombay Money Lenders Act permits loans in kind, including foodgrains, but this does not mean that such transactions are exempt from other laws or regulations. 2. The Maharashtra Scheduled Foodgrains Order prohibits the sale or disposal of foodgrains by persons other than recognized dealers, except in certain specified circumstances. 3. Lending foodgrains constitutes 'otherwise disposing of' foodgrains within the meaning of the Order and is therefore prohibited.

Final Decision: The High Court dismissed the plaintiff's revision applications, upholding the trial court's dismissal of the suit.

ORDER :- These two revision applications raise a common question of fact and law, and are, therefore, being decided by this common judgment.

2. The plaintiff, petitioner before me is a money-lender having a valid licence issued to him under the Bombay Money Lenders Act, 1946. It was his case that he advanced a loan in the form of foodgrain namely, paddy to the defendant. That he complied with the provisions of the Money Lenders Act, namely, sending statements, maintaining accounts and such other formalities. The grain was to be returned with interest which was agreed. Since, however, the defendant did not repay the loan of grain, either in the form of grain or in cash, the plaintiff brought this suit.

3. The defendant apart from denying the claim of the plaintiff, raised a contention that the claim was not enforceable by reason of the Maharashtra Scheduled Foodgrains (Stocks Declaration and Procurement and Disposal, Acquisition, Transport and Price Control) Order, 1966. The trial Judge accepted the contention and dismissed the plaintiffs suit. It is against this judgment and decree that the present revision applications are filed.

4. Mr. Najbile who appeared for the petitioner, raised before me two contentions. The first contention was that the Money-lenders Act permitted him to advance loans in kind which would include foodgrains. Therefore, he submitted that if one of the laws passed by the legislature permitted certain activity and the other did not, then inasmuch as one of its laws permitted such an activity it cannot be struck down. The second argument of Mr. Najbile was that, in any event, he was entitled to the benefit of S. 65 of the Indian Contract Act, 1872.

5. The first submission made on behalf of the petitioner is without any merit. It is true that the definition of the word " loan" in the Money-lenders Act to be found in sub-sec. (9) of S. 2, does include an advance at interest whether of money or in kind. An advance of grain, therefore, which is a loan in kind is permissible under the Bombay Money-lenders Act, but does not come within the exceptions which are noted thereunder. It is, therefore, clear that lending of grains is permitted under the Bombay Money-lenders Act. However, I am quite clear that it does not mean, therefore, that if dealing in a certain kind of commodity is otherwise prohibited by any other law, Order or Rule having a force of law, then the circumstance that the Bombay Money-lenders Act permits loan in kind cannot be put up as an argument against any such transaction. What the Bombay Money-lenders Act does, is that it permits loans being made in a certain Manner. But that does not mean that the Bombay Money-lenders Act is not subject to ether laws or any person dealing in money-lending or carrying on business of money-lending would not be governed by other laws dealing with money lending or dealing with other commodities which can become the subject-matter of loan. If a commodity or item of property becomes the subject-matter of any other control or law, then even if it would be a loan by a money-lender if the transaction is in contravention of such rule or law then that transaction, notwithstanding that the Bombay Money-lenders Act

otherwise permits it, would not be permitted. It is only if the other laws permit the disposal or dealing with a particular property in kind, the Bombay Money-lenders Act will control a loan of such property or article but not otherwise.

6. As regards S. 65 of the Indian Contract Act, 1872, the contention was that the transaction has been discovered to be void. That neither of the parties knew at the time when it was entered into that this transaction was infringement for the Maharashtra Scheduled foodgrains Order, 1966. The relevant provision in Cl. 10 of that Order are in these terms :

" 10. Persons other than recognised dealers not to sell foodgrains without authorisation. No person, other than a recognised dealer, shall sell or otherwise dispose of foodgrains t























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