Section 13 of the Bengal Money Lenders' Act, 1940 does not bar the maintainability of a suit filed by an unlicenced money lender, but it precludes the Court from passing a decree or order in favour of such a money lender with respect to such a loan if the money lender does not hold a valid licence as per the Act. However, the Court is bound to afford an opportunity to the money lender to cure the defect by paying the penalty which cannot be more than three times the amount of licence fee.

This appeal is directed against a judgment and order dated 15th February, 2000 passed by the learned Single Judge of this Court in execution proceedings whereby the objection raised by the appellant with regard to the legality of the decree sought to be executed has been overruled by the learned Single Judge and the learned Single Judge has passed an order in furtherance of the execution of the proceedings or to facilitate the execution of the decree in question. Undoubtedly, the appellant before us is a judgment-debtor in the aforesaid execution proceedings.

2. A suit was filed by the respondent-Canbank Financial Services Limited against the appellant for recovery of money. That suit was decreed by the learned trial Judge on the basis of an agreement entered into between the parties in the suit. Actually, the terms of agreement were reduced into writing through a settlement which formed part of the decree. In the terms of settlement, the parties had agreed that the appellant/defendant shall pay an amount of Rs. 25 lacs in full and final settlement of the respondent/plaintiff's claim. The mode and manner of such payment, including the interest liability contingent upon the payment as per the agreed terms and/or the default was also included in the terms of settlement. Since the appellant/defendant neglected to pay the amount except a sum of Rs. 14 lacs, as agreed Ito by it, the respondent/plaintiff had no option but to put the decree into execution. When the appellant/defendant faced the execution proceedings arising out of the aforesaid decree before the learned Executing Court it raised an objection to the legality of the decree on the basis that the Court below had no jurisdiction to pass the decree in question in view of Section 13 of the Bengal Money Lenders Act, 1940. As noticed at the very beginning, the learned Single Judge did not agree with the aforesaid contention of the appellant and while rejecting the same, passed orders for execution of the decree in question.

3. Mr. P.K. Ray, learned Counsel appearing for the appellant has urged before us that the suit was not maintainable and that the Court below had no jurisdiction to pass the decree in question because of clear bar contained in Section 13 (supra), and that despite the agreement of the parties, the suit being hit by Section 13, the decree was illegal and not liable to be enforced by execution, the same being nullity in the eyes of law. In support of his contention Mr. Ray relied on a Single Bench judgment of this Court in the case of (1) Shib Kumar Todi v. Amal Chand Champalal reported in 1994 (1) CRN 49. Section 13 of the Bengal Money Lenders' Act, 1940 reads thus :-

"Section 1 . Stay of suit when money lender does not hold licence :-

(1) No Court shall pass a decree or order in favour of a money lender in any suit instituted by a money lender for the recovery of a loan advanced after the date notified under Section 8, or in any suit instituted by a money lender for the enforcement of an agreement entered into or security taken, or for the recovery of any security given, in respect of such loan, unless the Court is satisfied that, at the time or times when the loan or any part thereof was advanced, the money lender held an effective licence.

(2) If during the trial of a suit to which sub-section (1) applies, the Court finds that the money lender did not hold such licence, the Court shall, before proceeding with the suit, require the money lender to pay in the prescribed manner and within the period to be fixed by the Court such penalty as the Court thinks fit, not exceeding three times the amount of the licence fee specified in Section 10.

(3) If the money lender fails to pay the penalty within the period fixed under sub-section (2) or within such further time as the Court may allow, the Court shall dismiss the suit: if the money lender pays the penalty within such period, the Court shall proceed with the suit.

(4) The provisions of this section shall appl