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Madhya Pradesh High Court
A. P. SEN,S. M. N. RAINA,M. L. MALIK
Rajaram Bhiwaniwala, Calcutta - Appellant
Versus
Nandkishore, Bilaspur - Respondent
Decided On : 11/23/1974
Per Majority-The purpose of section 7 is to secure strict compliance of the requirement as to maintenance of accounts by moneylenders under clause (a) of sub-section (1) of section 3, and of furnishing statements of accounts to the debtors under clause (b) thereof in the manner prescribed. [Para 6
The words 'found due' appearing in section 7 (c), cast a duty upon the Court to ascertain the amount of interest which would accrue upon the loan, and then to disallow the interest thereon, in whole or in part, as the justice of the case demands. [Para 14
The Court has power under section 7 of the Act, to reopen the account so as to traverse the entire period from the date of the loan to-the dale of the suit, where the moneylender has not complied with the requirements of clauses (a) or (b) of section 3 (1) of the Act: and, under clause (b) of section 7 to disallow the whole or any interest found due as may seem reasonable to it, in the circumstances of the case, in case of non-compliance of section 3 (1) (a), and under clause (C) of section 7 exclude every period for which he had failed to furnish account as required by section 3 (1) (b), subject to the proviso to section 7. 23 MPLC 328 & 1959 JLJ 135-approved. 30 MPLC 305 held obitor on this point [Para 27
Per Minority-Although the Act controls the quantum of interest which a moneylender may recover from the debtor through Court, it does not declare the interest which has already been paid by the debtor in accordance with the contract between him and the creditor as illegal In other words it does not interfere with the contract between the parties although it empowers the Court to disallow a particular relief as to interest on his failure to comply with the provisions of clause (a) and (b) of sub-section (1) of section 3 of the Act. [Para 43
Unless a certain amount is payable on the date of the suit. it cannot be treated as 'due' on such date. Where an amount which had fallen due in the past bas already been paid, it ceases to be due. 1969 JLJ 155 referred to. [Para 48
The expression "interest due" necessarily means the interest claimed as due upon the loan and cannot include interest which has already been paid and is no longer due. [Para 49
The interest which has already been paid cannot be disallowed and adjusted towards the principal amount under clauses (b) and (c) of section 7 of the Act. [Para 57
(2) Interpretation of Statutes- welfare legislation - construction of -Moneylenders Act, 1934 (MP)-S. 7.
Per Majority-In construing a welfare legislation, the Court should adopt a beneficent rule of construction: if a section is capable of two constructions, that construction should be preferred which furthers the policy of the Act, and is more beneficial of the debtors in whose interest the Act has been passed In dealing with the interpretation of section 7, we must keep in view the scheme of the Act. 1970 JLJ 912 (SC) relied on. [Para 20
Where the language of the Act is clear and explicit, as in section 7 of the Act, we must give effect to it whatever may be the consequences for in that case the words of the statute speck the intention of the legislature, where the language is explicit, its consequences are for the legislature not for the Courts, to consider. The argument from inconvenience and hardship is a dangerous one and is only admissible in construction where the meaning of the statute is obscure and there are alternative methods of construction AIR 1945 PC 48 referred to. [Para 25
Per Minority-The provisions of section 7 of the Act have not been enacted to benefit the debtor. In my view they have been enacted to penalise the creditor who fails to comply with the provisions of section 3 of the Act and the provisions being of a penal character must be construed narrowly. [Para 51
(3) Precedents-stare decisis-terms of section ambiguous - matter governed by principle of stare decisis.
Even assuming that the terms of section 7 of the M P. Moneylenders Act are ambiguous, the matter would be governed by the principle on which the rule of stare deoisis is based. 1970 JLJ 912 (SC) relied on. [Para 26
Per Minority-The basic reason for adhering to an earlier decision is that parties, who have, on the faith of a particular interpretation, entered into contracts or property transactions, should not feel frustrated by a different construction being put upon the statutory provisions governing the contracts or the transactions, as the case may be.
But the rule does not apply to the construction of section 7 of the Act. [Para 41
A. P. SEN, J. : - The case has been referred to the Full Bench for reconsideration of the decision in Tulsiram Ramdayal v. Badriprasad Jankiprasad, ILR (1948) Nag 203 : (AIR 1949 Nag 31) and that in Shrikishan v. Mahadeo, 1959 MP LJ 50.
2. There is no material point of fact which is now in dispute. The suit out of which this appeal arises, was brought by the appellants as trustees of Seth Kirodimal Charity Trust, for recovery of Rs. 1,50,000, as principal and Rs. 10,950 as interest, on the foot of a mortgage dated 18th November, 1953, as plaintiffs, against the respondents who had executed the same, to secure a loan advanced of Rs. 1,50,000. The loan carried interest @ 6% per annum, and it is not in dispute that upto 1st October, 1962, interest was regularly paid. Thus the respondents had in all paid Rs. 79,875 as interest. On 7th January 1964, the appellants filed the suit for recovery of Rs. 1,50,000 as principal and Rs. 10,950 by way of interest due from 1st October 1962 till the date of suit. The appellants explicitly admitted that they were money-lenders, and that they had not maintained any account of the loan, nor furnished to the respondents any statement of accounts in respect thereof, as required by Section 3 (1) (a) and (b) of the Act. The non-compliance of these provisions not being in dispute, the learned trial Judge, while passing a decree on the mortgage, disallowed the entire interest under Section 7 of the Act, including the one that had already been paid, i.e. amounting to Rs. 79.875, and the same was taken towards reduction of the principal and accordingly a decree was passed only for Rs. 70,125, the remaining amount of principal.
3. The referring Bench did not state, in so many words, the question on which the opinion of the Full Bench was invited, and, therefore, I would formulate the question as follows :
Where the moneylender has not complied with the requirements of clause (a) or (b) of Section 3 (1) of the Money Lenders Act, 1934 (hereinafter referred to as the Act), whether the Court has power under Section 7 of the Act, to reopen the account so as to traverse the entire period from the date of the loan to the date of the suit, and under clause (b) of Section 7 to disallow the whole or any interest found due, as may seem reasonable to it, in the circumstances of the case, in case of non-compliance of Section 3 (1) (a), and under clause (c) of Section 7 exclude every period for which he has failed to furnish accounts, as required by Section 3 (1) (b), subject to proviso to the section in ILR (1946) Nag 203 : (AIR 1949 Nag 31) (supra), Grille, C. J. and Hidayatullah J., answered the question in affirmative. while dealing with a case falling under clause (e) of Section 7.
4. Section 3 of the Act, so far as material, reads :
"Section 3 (1). Every Money-lender shall -
(a) regularly maintain an account for each debtor separately of all transactions in respect of any loan advanced to that debtor;
(b) furnish such debtor every year with a legible statement of accounts signed by the money-lender or his agent of any balance or amount that may be outstanding against such debtor on such dates and in such areas as may be prescribed. Such statement of accounts shall include all transactions in respect of the loan entered into during the year to which the statement relates and shall be furnished, in the court language of the district in which the debtor resides, and in such manner, in such form, containing such details and on such date as may be prescribed."
5. It is sufficient to say that breach of Section 3 (1) (a) and (b) of the Act was brought to the attention of the learned trial Judge. It became his duty to give it such effect on the rights of the parties as the law requires. The terms of Section 7 of the Act are clear and imperative. They are as follows : -
"Section 7, Procedure of Court in suit regarding loans : Notwithstanding anything contained to any other enactment for the time being in force, in any sui
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