A single loan transaction may not constitute the business of money-lending as defined by the U.P. Regulation of Money-Lending Act, 1976. Excessive interest rates for friendly loans may not be enforceable.

Prafulla C. Pant, J.

1. This appeal, preferred under Section 100 of Code of Civil Procedure, 1908, is directed against the Judgment and decree dated 20.02.2003, passed in Civil Appeal No. 1 of 2001, whereby judgment and decree dated 20.07.2000 passed by Trial Court, in Civil Suit No. 111 of 1998 was confirmed.

2. Brief facts of the case are that a suit was filed by plaintiff/respondent for recovery of Rs. 78,500 from the defendant/appellant. As per the plaint case, the plaintiff is a retired Range Officer and defendant's father was his colleague. On 10.09.1995, defendant took a loan of Rs. 50,000 from the plaintiff through Cheque No. 27307 dated 10.9.1995 and executed a pronote and a receipt. According to the plaintiff, the defendant purchased a vehicle by a loan taken from a bank and for repayment of said loan to the bank, the aforesaid amount was taken from the plaintiff. However, when on 29.01.1998, the plaintiff demanded repayment by sending a notice, the defendant failed to repay the loan. As such, the plaintiff instituted a suit for recovery of money with interest.

3. Defendant contested the suit before the Trial Court and filed his written statement. However, he admitted having his father's close relation with the plaintiff. It is pleaded that it was the plaintiff, who took loan of Rs. 50,000 in the year 1994, which was paid back by the plaintiff to him by the aforesaid cheque. A specific plea was raised in the written statement that the plaintiff is not a registered money-lender, as such he cannot recover the loan in question by filing a suit.

4. On the basis of the pleadings, the Trial Court framed following three issues:

1. Whether defendant took a loan of Rs. 50,000 on the compound interest at the rate of 18% per annum through cheque No. 27307 dated 10.09.1995 from the plaintiff and repaid the installment of the loan taken from the bank with said sum?

2. Whether defendant is owner of truck registration No. DEL 4371, which was purchased by him after the loan is taken from a bank for it?

3. To what relief, if any, the plaintiff is entitled?

5. After recording the evidence and hearing the parties, learned Trial Court decreed the suit with the costs for Rs. 78,500 with 18% compound interest per annum there-on with quarterly rests for the period of pendency of suit till the payment is made. Aggrieved by said judgment and decree dated 20.07.2000, a Civil Appeal No. 1 of 2001, was filed by the defendant, which was also dismissed on 20.02.2003. Hence this Second Appeal by the defendant.

6. Heard learned Counsel for the parties and perused the record.

7. Substantial question of law involved in this appeal is as under:

1. Whether the plaintiff/respondent, without holding a valid certificate of registration to carry on the business of money-lending, as required under Section 10 of U.P. Regulation of Money-Lending Act, 1976, could have entered into business of money-lending?

8. The U.P. Regulation of Money-Lending Act, 1976 (U.P. Act No. 29 of 1976), came into force w.e.f. 20th July, 1976, when it was published in U.P. Gazette after the assent of the President received on 17th July, 1976. The preamble of said Act, shows that the Act was passed 'to provide, in the interest of general public, for the regulation of money-lending transactions and for all the money lenders and for matters connected therewith or incidental thereto'. The statement of objects and reasons of the Act, shows that there were complaints that many money-lenders have been indulging in malpractices in their dealings with economically weaker-sections of the public and that they have been exploiting them. In order to put an end to such malpractices and exploitation, it is necessary to regulate the business of money-lending and to provide for registration of money-lenders. Section 10 of U.P. Regulation of Money-Lending Act, 1976, provides that no person shall carry on the business of money-lending unless he holds a valid certificate of registration. Section 18 of the