The main legal point established in the judgment is that while the licence fee and security provisions for money lending business were upheld as necessary and within permissible limits, the provision for forfeiture of security (S.16A) was deemed arbitrary and unconstitutional, violating the constitutional rights of money lenders.

1. The provisions of the Kerala Money Lenders Act are in challenge in this batch of writ appeals and writ petitions. A learned single judge rejected the claim and dismissed the writ petitions. Hence the appeals. The Act has been subsequently amended. Thus the new writ petitions.

2. Money Lenders including pawn brokers are the appellants or the writ petitioners. Licence under the Act to carry on the business of money lending gives the money lenders a status and symbol which they would always gladly welcome. Rightly, therefore, there is no complaint against the insistence of a licence to conduct the business. But it is contended:

(1) that the fixation of a uniform licence fee of Rs. 1000/- under S.4(2) of the Act, not geared to the business turnover of the money lender is arbitrary;

(2) that the insistence of security on a graduated scale under S.4(2A) is unreasonable and arbitrary violating Art.19(1) (g) and Art.14 of the Constitution; and

(3) that the forfeiture of security as an additional penalty under S.16A of the Act with no guidelines for the exercise of that power is arbitrary and opposed to Art.14.

3. It is, therefore, necessary to advert to the object and the scheme of the Act and to the relevant statutory provisions and amendments.

4. Money lending business in Kerala is statutorily controlled by the Kerala Money Lenders' Act, 1958. It was intended to regulate the business of money tending, restrict the interest to be charged by the money lenders and to safeguard the interests of the borrowers. Under S.3 and 4 of the Act, money lending business can be carried on or continued only under a licence obtained under the Act in the prescribed form on payment of a licence fee of rupees one hundred. An application for licence can be refused (a) if the applicant has not complied with the provisions of the Act or the rules for making an application; (b) if the applicant has made wilful default in complying with or knowingly acted in contravention of any requirement of the Act or (c) that the applicant has (i) knowingly participated in or connived at any fraud or dishonesty in the conduct of or in connection with business of money-lending; or (ii) been found guilty of an offence under Chapter XVII or Chapter XVIII of the Indian Penal Code (Central Act XLV of 1860); or

(iii) been found guilty of an offence under S.11 or S.13 on two or more occasions; or (d) that the application is made within six months of the cancellation of the licence. Every money lender is also bound to exhibit over his shop or place of business, his name with the word "money-lender" and its equivalent in the regional language. The interest that could be charged by him is also regulated by the Act. This Act was amended in 1963 by the Amendment Act 33 of 1963 and subsequently by Act 11 of 1974 and later by the Kerala Finance Act, 1983, Act 19 of 1983. The material amendments made in 1983 are relevant for our purpose. S.4(2) was substituted thus:

"(2) Every licence shall be granted in such form as may be prescribed and shall be subject to the following conditions and to such other conditions as may be prescribed, namely:

(i) payment of a licence fee of one thousand rupees;

(ii) payment of security as provided in sub-s. 2 (A)." S.4(2A) and 4(2B) were inserted which read:

"(2A) Every licensee specified in column (1) of the Table below shall within such time and in such manner as may be prescribed, deposit in the Government Treasury in respect of each licence held by him, the amount specified in the corresponding entry in column (2) of the said table by way of security for the due observance of the conditions of the licence.

Explanation .-For the removal of doubts, it is hereby declared that a money lender who has branch or branches in the State of Kerala of his principal place of business is situate outside the State shall be liable to deposit the security under this sub-section in respect of the branch or each of the branches, as the case may be.

Table:#1

(2B) Fo