Exceeding the maximum capital limit specified in a money-lender's license does not automatically render the loan transactions void or unenforceable in the absence of a specific provision in the relevant legislation.

JUDGMENT :

Misra, J. - The suit was filed for recovery of a Sum of Rs. 375- on the basis of a handnote (ext. 1) dated 15-12-1964: in respect of a loan of Rs. 200-. Plaintiff?s case was that the Defendant paid Rs. 5- and made an endorsement (ext. 18.) on the back of the pro note on 3-12-1957. Rs. 20. was paid on 21-11-1960 and another endorsement (ext. lb) was also made. Plaintiff is a registered money-lender and had taken license for Rs. 10,000- in December, 1954. The license was renewed in 1956-57 for an enhanced amount of Rs. 25,000-. Defendant denied the loan and the execution of the handnote. His case was that he was dealing in bell metal utensils as a hawker by taking those utensils from one Satyabadi Mohanty of his village. He had handed over, by way of security, a piece of paper in which on a revenue stamp he wrote in his own hand that he borrowed Rs. 200. as loan on that day. He admits his signature and thumb impression towards the bottom of the paper. His positive case is that the body of the hand note has been subsequently written in between the two thumb impression given by him. Thus he denies the execution of the hand note in the manner stated above. After the cessation of his dealings with Satyabadi Mohanty, he settled the accounts and wanted back the Kaida. Satyabadi did not return it saying that it was at. Bhingarpur. Defendant believed in him and did not press for its return. The said paper has been utilised as a handnote in the name of the Plaintiff under whom Satyabadi served.

2. The learned S.C.C. Judge dismissed the suit on two findings-

(i) Plaintiff failed to prove that the Defendant, after having executed the handnote in his favour, received a sum of Rs. 200 from him; and

(ii) The suit loan was not recoverable as it was in contravention of Section 8 of the Orissa Money-Lenders Act (hereinafter referred to as the Act) inasmuch as the total loans advanced by the Plaintiff till 15-12-1954 were more than Rs. 10,000- while the Plaintiff held a license for advancing loans to the tune of maximum capital of Rs. 10,000-. The subsequent renewal of? the license for Rs. 25,000- in 1956-57 has no retrospective operation.

3. The second finding is based on two Division Bench decisions of this Court in Bholanath Ganpath Ray Firm v. Gopinath Agrawalla and : Ors. AIR 1961 Cutt 21 and Kontari Naiko v. Madhusudan Mollana ILR 1962 Cutt 445. In an unreported decision of the Supreme Court in Modhusudano Mollana v. Kontary Naiko and Ors. 1965 S.C.D. L129, the decision in Kontari Naiko v. Madhusudan Mollana ILR 1962 Cutt 445 has been reversed. Their Lordships, after discussion of the various provisions of the Act, made the following observations we hold that in the absence of any specific provision in the Act in this case providing for fixing of the maximum capital which a money-lender can invest in money lending business, it was not open to the State Government to firmly a rule in that Regard and that the rules framed by it about mentioning, in the application, the maximum capital for which the registration certificate was wanted and the mention in the certificate that the amount of the maximum capital for which the certificate is granted, do not lead to the conclusion that the registration of the money-lender will become void if he exceeds the limit of the maximum capital laid down in the registration certificate.

Even on the finding that on the date of the advancement of the suit loan, the Plaintiff had advanced loans more than Rs. 10,000- on the basis of a license containing maximum capital of Rs. 10,000-, the suit loan is recoverable and the suit is not hit by Section 8 of the Act. The second finding of the learned Judge cannot be upheld.

4. The learned Judge did not accept the defence version that he handed over Ext. 1 by way of security. In support of his case, only d.w. 2 has been examined. He stated that the Defendant did not put any thumb impression on the paper but merely affixed his signature contrary to the admission of th