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G.P.SINGH, S.M.N.RAINA
PARMANAND JAIN – Appellant
Versus
FIRM BABULAL RAJENDRA KUMAR JAIN – Respondent
What is the meaning of "loan" under the Moneylenders Act, 1934 (MP) and when does a transaction amount to a loan in substance? What constitutes a regular course of business for defining a moneylender under the MP Money Lenders Act, and can a person who lends on isolated occasions be considered a moneylender? Can a son be personally liable for his father's business debts or be liable to the extent of his share in joint family property, where the business is conducted in the father's name?
Key Points: - The definition of loan under the Moneylenders Act is an actual cash or in-kind advance at interest, including in-substance loans via transactions that amount to an actual advance (!) (!) (!) (!) . - The inclusive clause allows in-substance loans where no actual cash changes hands, but the transaction yields an actual loan, with case law illustrating this through accounting and renewal of hand-notes (!) (!) (!) . - A moneylender is someone who advances loans in the regular course of business; mere lending on isolated occasions does not suffice to be a moneylender (!) (!) (!) . - Regular course of business implies system and continuity; various authorities emphasize repetition and habit of moneylending rather than isolated acts (!) (!) (!) . - A son can be liable to the extent of his share in joint family property for debts incurred by the father’s business, even if not personally liable; if no partition exists, the son may bear liability to the extent of share (!) . - In the specific case, the plaintiff (Parmanand Jain) was not held to be a moneylender; the two loans through hand-notes did not establish regular moneylending business, and Rajendra Kumar’s liability is limited to joint family share, if any (!) (!) (!) .
( 1 ) THIS judgment shall also dispose of First Appeal No. 153 of 1971. The facts giving rise to these appeals are that the plaintiff Parmanand Jain filed a suit on 9th October, 1968 for recovery of a sum of Rs. 10,041 against the defendants choudhary Babulal and his son Rajendra Kumar. The plaintiff alleged that the defendants borrowed from him on 24th November 1967 a sum of Rs. 9,081 at 12 per cent interest. It was further alleged that the defendant Babulal executed a hand-note on the same date in the plaintiff's favour. The plaintiff in addition to the principal amount of Rs. 9,081 claimed interest amounting to Rs. 954 upto the date of the suit at 12 per cent and Rs. 6 as notice charges. The decree against Rajendra Kumar was claimed on the basis that the defendants carried on a joint business of Adhat in the name of Babulal Rajendra Kumar and the loan was taken for this business. The defendant Rajendra Kumar pleaded that he had nothing to do with the suit transactions and that the business carried on by Babulal was this separate business. The defendant Babulal pleaded that the plaintiff carried on the business of moneylending, that the plaintiff used to deposit in the
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