A money lender who does not hold an effective license at the time of the loan cannot obtain a decree in his favor, even if he is willing to pay the penalty prescribed under Section 13(2) and (3) of the Bengal Money Lenders Act, 1940.

1. This is a suit for recovery of money lent and advanced along with unpaid interest. Six issues were raised on behalf of the defendants and those were as follows:-

"1. Was there any agreement to pay interest at the rate of 18% per annum at quarterly intervals as pleaded in paragraph 3 of the plaint?

2. Was there any agreement to pay interest at the rate of 18% per annum, compoundable yearly with effect from 1st of April, 1988 as alleged in paragraph 6 of the plaint?

3. Has this Court jurisdiction to receive the instant suit as alleged in paragraph 4 of the written statement?

4. Is the claim for interest in the suit contrary to the provisions of the Bengal Money Lenders Act, 1940?

5. Is the suit un-maintainable for the reasons stated in paragraph 4 of the written statement?

6. To what reliefs, if any, is the plaintiff entitled?

2. Mr. Barin Ghosh appearing for the defendant has not pressed the third issue and has contested the suit mainly on the fourth and the fifth issues mentioned above.

3. In so far as the loan of the principal amount of Rs. 1 lakh is concerned there could be no dispute that the plaintiff did lend this sum. Also there could be no dispute that there was an agreement to pay simple interest @ 18% per annum. The Judge's brief or documents was by consent marked as Exbt. A. A bare perusal of three documents viz. serial no.1, serial no.2, and the serial no.14 of Ex. A would leave no manner of doubt in regard to the amount of loan and the rate of interest mentioned above. Accordingly, I conclude that, so far as the arithmetic of the claim is concerned, the loan was granted on the 10th of December, 1985 and that save for payment of two several sums of Rs. 20,000/- each, one of which is mentioned in P.D. No.7, there was no other payment forthcoming from the defendant. Thus, if, the defendant were to fail on the fourth and the fifth issues, the decree as claimed in claim (a) of the plaint, as well as appropriate pendente lite and further interest thereon would have to be granted in favour of the plaintiff.

4. As to the agreement to pay any interest at a compounded rate, I am unable to come to the conclusion, that there was any such agreement entered into by and between the parties, some two/three years after the loan, as alleged in the plaint and as sought to be made out by the plaintiff from the box. The only document subsequent to this alleged oral agreement is P.D. No.9 which mentions interest amount of Rs. 200/- only. It is not possible to ascertain here from that the same represents a compounded rate, as the same was calculated on a sum less than the original principal amount. Thus, the question of compounding of interest, or calculating interest on interest did not arise. I would, accordingly, answer the issue no.2 in favour of the defendants.

5. In regard to the application of the Bengal Money Lenders Act to the institution of suit, Mr. Ghosh relied upon several definition Sections and in particular upon S. 13 of the said Act. The Sections were also referred to by Mr. Tibrewal in his arguments seeking to establish the inapplicability of the same to the suit in hand. Mr. Tibrewal, further, relied upon Ss. 30 and 30(A) of the said Act, which are concerned inter alia with the reliefs to be granted to the borrower, like a ceiling to the interest rates.

6. Mr. Tibrewal contended for the plaintiff that the detrimental effect of the Act, in so far as it concerns the plaintiff, is limited to these sections, which grant relief to the borrower. He submitted that the other Sections relied on by Mr. Ghosh would not have any effect upon the suit, save only that his client might be required to pay a certain penalty, being at most three times the licence fee, for the purpose of continuing the suit, in case the Court comes to the conclusion that the plaintiff was at all a money-lender within the meaning of the Act. Mr. Tibrewal emphasized that in case of the instant loan the plaintiff could in no view of the matter be taken as a