An unlicensed money lender can file a suit for recovery of a loan under the Bengal Money Lenders Act, 1940, but the court cannot proceed with the trial or pass a decree without the plaintiff producing an effective license or depositing the penalty under Section 13 of the Act. Dishonour of a cheque issued in settlement of a loan amount is an independent cause of action under the Negotiable Instruments Act, 1881.

The judgment of the Court was as follows:––

This is an application under Chapter-XXIIA of the Original Side Rules of this Court for pronouncing final judgment. The fact in the affidavit in support of the Master's Summons is summarised as hereunder :––

2. The plaintiff lent a substantial amount as inter-corporate loan, which has not been paid. One point of time parties struck to settlement for repayment. The settlement was that the defendant should pay a sum of Rs. 11,00,000/- and the plaintiff will accept as full time settlement. Apart from the aforesaid amount parties agreed that the defendant should pay further sum of Rs, 44,476/- as and by way of interest for the period from 1st April, 2001 to 12th July, 2001. The aforesaid interest amount was calculated after deducting a sum of Rs. 11,398/- towards tax deduction at source. Pursuant to the aforesaid settlement and acting thereupon the defendant issued a cheque of Rs. 11 lacs. However, the said cheque was dishonoured by non-payment. Therefore, the plaintiff sues the defendant for recovery of the entire amount of loan in view of settlement being fallen through.

3. I understand from the plaint and the affidavit-in-support of the Master's Summons that the suit is based not only on the basis of the agreement for repayment of the loan but on the ground of dishonour of the aforesaid cheque.

4. Therefore, the plaintiff has sought for recovery of the entire amount regardless of the settlement. In the affidavit-in-opposition, on merit, I prima facie find, no substance in the defence, excepting the point raised in casual manner that the suit is not maintainable under the Bengal Money Lenders Act, 1940 Mr. Saha was emphasising the above point in support of the case. He submits that the plaintiff/petitioner being the money lender does not possess any licence under the Bengal Money lenders Act, 1940. Therefore, even non-production of licence per se is an issue which required to be tried at the time of the trial of the suit. He also submits that under the said law there is no embargo to file suit but no Court shall proceed with the trial of the suit unless the licence is produced or the penalty is deposited under Section 13 of the aforesaid Act. He further contends that trial of the suit is possible only after filing of written statement. In support of his submission he relied upon a decision of the learned Single Judge reported in 1994(1) CHN 49 and another Division Bench judgment of this Court reported in (2) 2000 (2) CLJ 185, lastly, the decision of the Supreme Court reported in (3) AIR 1970 Supreme Court 1420.

5. Upon proper reading of the Sections 10, 13 of the Bengal Money Lenders Act, it has also been observed by the Division Bench Judgment of this Court reported in 2002(2) CLJ 185 that there is no embargo to file a suit by un-licensed money lender but embargo has been put under statute against trial of the suit and passing decree without effective licence being produced. Even, the Bench has gone further by saying that the trial can be proceeded with and the decree, may be passed once the licence has been shown to the Court, or imposing penalty. The Supreme Court's decision as above is wholly inappropriate as in that case Hyderabad Money Lenders Act, 1849 was under reference and the same has provision for dismissal of suit of un-licensed money lender, but in corresponding Act in Bengal there is no such provision.

6. Mr. Saha submits that in Harayana Money Lenders Act there is a provision that the suit has to be dismissed in the event no licence is produced but in the Act of this case there is no such provision for dismissal of the suit because of non-production of licence rather the statute requires that payment of penalty to remove the legal infirmity to maintain suit by an un-licensed money lender.

7. The next point is whether this Act is applicable or not. Mr. Banerjee has submitted that there is no whisper in the affidavit-in-opposition that the plaintiff/petitioner is a money