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IN THE HIGH COURT OF ORISSA
Misra, Das, JJ.
DINABANDHU SAHU AND OTHERS - APPELLANT
Versus
KARUNAKAR SATAPATHY - RESPONDENT
Second Appeal No. 116 of 1964
Decided On : 31-01-1967
MONEY LENDERS - SUIT FOR RECOVERY OF LOAN - DISMISSAL FOR NON-COMPLIANCE WITH RULE 11(III) OF ORISSA MONEY-LENDERS RULES, 1939 - MAINTAINABILITY - SECTION 7 OF ORISSA MONEY-LENDERS ACT, 1939 - PENALTY FOR CONTRAVENTION - SCOPE - DISTINCTION.
Fact of the Case:
Plaintiff, a registered money-lender, filed a suit for recovery of Rs. 1970/- from the defendants, alleging that Defendant No. 1 had borrowed Rs. 1500/- on 8-1-1945 as the Karta of the joint family of the defendants for financing Gur (molasses) business and executed a promissory note in evidence of the loan. The defendants denied the loan and claimed that the suit promissory note was executed towards advances made by the Plaintiff in connection with a joint business of molasses. The trial court dismissed the suit for non-compliance with Rule 11(iii) of the Orissa Money-Lenders Rules, 1939, as the plaint did not contain a copy of the account referred to in Clause (a) of Section 7 of the Orissa Money-Lenders Act, 1939. The lower appellate court reversed the decision and decreed the suit.
Finding of the Court:
The High Court held that the suit was liable to be dismissed for non-compliance with Rule 11(iii) of the Orissa Money-Lenders Rules, 1939. The court found that the Plaintiff had not maintained any account as required under Section 7 of the Orissa Money-Lenders Act, 1939, and that the endorsement on the back of the promissory note could not be treated as accounts within the meaning of Section 7(a). The court further held that the existence of a provision for imposing penalty under Section 19 of the Act for contravention of Section 7 did not detract from the enforcement of Rule 11(iii), which would entail dismissal of the suit.
Issues: 1. Whether the suit was liable to be dismissed for non-compliance with Rule 11(iii) of the Orissa Money-Lenders Rules, 1939? 2. Whether the Plaintiff was required to maintain an account under Section 7 of the Orissa Money-Lenders Act, 1939? 3. Whether the endorsement on the back of the promissory note could be treated as accounts within the meaning of Section 7(a) of the Act?
Ratio Decidendi: 1. Rule 11(iii) of the Orissa Money-Lenders Rules, 1939 is mandatory and non-compliance therewith entails dismissal of the suit, unless the defect is rectified. 2. A registered money-lender is required to maintain an account under Section 7 of the Orissa Money-Lenders Act, 1939, in respect of every loan advanced by him and every transaction made by him relating to any loan advanced by him. 3. The endorsement on the back of the promissory note cannot be treated as accounts within the meaning of Section 7(a) of the Act, as the statutory provision insisting upon maintenance of accounts is to avoid forgery, fraud and creation of fictitious documents by the money lender.
Final Decision: The High Court allowed the second appeal, set aside the judgment of the lower appellate court, and dismissed the suit. The parties were directed to bear their own costs throughout.
JUDGMENT :
Misra, J. - The suit is for recovery of Rs. 1970/ - Plaintiff is a registered money-lender. His case is that on 8-1-1945 Defendant No. 1, father of Defendants 2 to 4- borrowed from him Rs. 1500/ - as the Karta of the joint family of the Defendants for financing Gur (molasses) business of the family stipulating to pay interest at 12 percent per annum and, in evidence of the loan, executed the suit promissory note (ext. 1) which was scribed by Defendant no 2. In all, Rs. 1030/ - was paid towards interest in different instalments on 20-9-1917, 2-8-1950, 18-6-1953 and 15-5-1956. As the balance was not paid, the suit was filed on 21-6-1957.
The defence plea is that the Plaintiff and Defendant No. 1 had a joint business of molasses of which Plaintiff was the financing partner. Both of them were to bear the profit and loss in equal proportions. Plaintiff advanced a sum of Rs. 500/ - on 16-10-1943 and Rs. 1001/ - on 19-10-1943, In 1444 he received a Bum of Rs. 213/5/ - from Defendant No. 1 towards profit. In subsequent years there was loss. Plaintiff did not take interest in the business the suit promissory note towards advances made by the Plaintiff in connection with the joint business and no consideration was paid in cash under ext. 1. Besides the payment of Rs. 1030/ -, Defendant No. 2 made a further payment of Rs. 500/ - on 26-8-1956 which was not adjusted towards the loan. It was averred that the suit is barred by limitation and hit by Rule 11(iii) of the Orissa Money-Lenders Rules, 1939 (hereinafter referred to as the Rules) as the plaint did not contain a copy of the account referred to in Clause (a) of Section 7 of the Orissa Money-Lenders Act, 1939 (hereinafter referred to as the Act).
2. The Courts below concurrently rejected all the essential defence pleas. Plaintiff's suit was, however, dismissed by the trial Court for non-compliance with Rule 11(iii). The lower appellate Court decreed the suit taking the contrary view.
3. The only point canvassed in second appeal is whether the suit is liable to be dismissed for non-compliance with Rule 11(iii). This Rule runs thus Every plaint in a suit by a money-lender as defined in Sub-clause (1) of Clause (j) of Section 2 shall, in addition to any other particulars that may be required by any law, contain the following particulars:
(i) date and number of his registration certificate, (ii) maximum capital in respect of which he holds certificate; and
(iii) a copy of the account referred to in Clause (a) of Section 7 of the Act relevant to the case.
4. It is not disputed that the plaint did not contain the particulars relating to Rule 11(iii). This is admitted in part 10 of the plaint itself thus-
That the Plaintiff has not maintained any account of the transaction in suit as provided by the rules prescribed under the Money-Lenders' Act, the transaction being one of the year 1948.
In para 5 of the written statement a specific objection was taken to the effect That the suit is liable to be dismissed for non-compliance of the provisions of Orissa Money Lenders Act and the Rules 11 and 12 framed thereunder.
At one time there was conflict of authorities in this Court as to whether Rule 11 was mandatory or not. The controversy was settled in Anirudha v. Dhanu ILR 1961 Cutt 430. Despite this pronouncement, the confusion of thoughts still prevails. Arguments are being entertained in one shape or other that the Rule is not mandatory and the suit is not liable to be dismissed unless prejudice is caused. Mr. Swain advanced the very line of reasoning. It is, therefore, desirable to clearly state the law.
5. The confusion of thought centres round the expression 'mandatory'. It, would be profitable to analyse the distinction between the mandatory character of certain provisions of law due to non-compliance with which the suit is liable to be dismissed in limine and other provisions of law for non-compliance with which the suit is liable to be dismissed not in limine but at a later stage. Section 8
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