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High Court Of Madhya Pradesh
A. P. Sen and S. S. Sharma, JJ.
RAJARAM BAIJNATH
Versus
NANDKISHORE SHEOBUX RAI
Decided On : Feb 26,1975
Thus not every man who lends money at interest carries on the business of money-lending. Speaking generally a man who carries on a money-lending business who is ready and willing to lend money to all and sundry, provided that they are from his point of View eligible We do not, of course, mean to say that a money lender can evade the Act by limiting his clientele to those whom he chooses to designate as 'friends' or otherwise. LR (1906) 1 KB 584 and ILR (1940) All. 60, relied on.
It is therefore a question of fact in each case whether a person was really carrying on the business of money lending as a business, or was merely lending money as an incident of another business or to a few old friends by way of friendship [Para 11
There can be no doubt that the trust is Lot a person and therefore, does not C0me within the definition of the term 'moneylenders' as contained in section 2 (v) of the Act but the trustees acting as such undoubtedly are money lenders [Para 15
A trust registered as a public trust under the Madhya Pradesh Public Trusts Act, 1951, engaged in the business of money lending comes within the purview of the Madhya Pradesh Money Lenders Act, 1934 and must comply with the requirements of the Act. 1973 JLJ 904 referred to. [Para 16
(2) Money-lenders Act, 1934 (MP) - S.2 (vii), Cl. (b)-Public Trust loan advanced by - not excluded by Cl. (b)-scope of Clause (b)-words 'any other enactment'-meaning of.
Clause (b) of section 2 (vii) of the M. P. Money lenders Act refers to a loan advanced by any society or association registered under the societies Registration Act, 1860, or under any other enactment The words "any other enactment" obviously refer to an enactment for the registration of such society or association. The trust is certainly not a society and it cannot also be an association. That is because the trustees of their own volition cannot form themselves into an association qua the trust. The trustees are a creation of the settler, and not a voluntary organisation like a club in co-ownership. 1961 JLJ 1162 relied on. [Para 17
The exemption under clause (b) comes into play if two conditions are satisfied, (i) it must be a loan to or by or a deposit with any society or association and (ii) such society or association must be registered under the Societies Registration Act; 1860 or under any other enactment. The words 'any other enactment’ cannot, therefore, be read in isolation Condition (ii) refers to the registration of the society or association. The trust not being a society or association, condition (i) i, not attracted and, there• fore, there is no question of condition (ii) being brought into play. AIR 1971 SC 1033 relied on. [Para 20
(3) Money-lenders Act, 1934 - Ss.7 & 3 - awarding of interest-non compliance of provisions of section 3 - discretion of the Court-interest in redemption suits-Civil P.C, 1908 - S.34 and O.34, R. 4.
If the Court finds that the plaintiff is a money-lender, and that he has not complied with the provisions of clauses (a) and (b) of sub-section (1) of section 3 of the Act, it may under section 7 (b), in case of non-compliance of clause (a) of section 3 (1), disallow the whole or any portion of the interest found due as may seem reasonable to it in the circumstances of the case, and may also disallow costs; The Court has, therefore a discretion in the matter when the provisions of clause (a) of section 3 (1) have not been complied with In case of non-compliance of clause (b) of section 3 (1) however, the Court has no such discretion. It must under section 7 (c) exclude every period for which the money-lender had failed to furnish account as required by clause (b) of section 3 (1), subject to the proviso to section 7. [Para 22
The prohibition contained in section 7 of the Act does not, however, prevent the Court from awarding interest in respect of two periods (i) from the date of suit up to the date of redemption and (ii) thereafter till realisation. [Para 23
There can be no doubt that section 34 of the Code of Civil Procedure applies to mortgage decrees. Even where the provisions of section 3 of the M P Money lenders Act is not complied with the Court should allow interest at contract rates pendente lite and up to the date of realisation or actual payment, on the aggregate sum due. [Para 24
(4) Public Trusts Act, 1951 (MP, - Ss.32 and 2 (4) - trust is not a juristic person-may sue on behalf of all trustees.
A public trust is not a juristic person. It has no corporate personality. The trust may not engage in juristic acts, sue and be sued. A suit for the enforcement of rights on behalf of a public trust, bas to be brought by all the trustees acting together. Such a suit may, however, be brought by on trustee with sanction and approval of his co-trustees but such sanction or approval must be strictly proved. 1973 JLJ 904 relied on, I Para 16
( 1. ) THIS appeal by the plaintiffs is against the judgment and decree of the 3rd Additional District Judge, Bilaspur dated 25-4-1968 decreeing their suit for the enforcement by sale of the mortgaged property. The plaintiffs had brought the suit to recover Rs. 1,60,950 being the amount due under the mortgage, Rs. 1,50,000, as principal, and Rs. 10,950, as interest from 1-10-1962 to 18-12 1963. The learned Additional District Judge has, however, adjudged the sum due on the mortgage to be Rs. 70,125, by disallowing the entire interest including a sum of Rs. 79,875 paid by way of interest upto 1-10-1962 and adjusting the same towards the principal amount under clauses (b) and (c) of section 7 of the Madhya Pradesh Money-lenders act, 1934 (hereinafter referred to as "the Act" ).
( 2. ) THE facts are not in dispute. By a deed of settlement dated 13-5-1946, ex. P-64, the trust known as "seth Kirodimal Charity Trust", Raigarh was created. The settler Seth Kirodimal made over a sum of Rs. 30,00,000 to the board of Trustees constituting himself to be its Chairman, to hold upon the trust and for the purposes mentioned therein. The trust was registered as a public trust under the Madhya Pradesh Public Trusts Act, 1951, and was a trust for charitable purposes i. e. establishment and maintaining of hospitals, medical colleges, etc. The trustees by clause 5 of the deed, Ex. P-64, were empowered to make investments of the trusts funds. Clause 5, so far as relevant, reads:
"5 The Trustees may invest the Trust Fund either in the purchase of mortgage of immoveable properties or in such investments, whether authorised by the Indian Trust Act, 1882 or not, or in deposits with or loans to any Company, Bank, person or firm including the firm in which the Trustees or any or them may be directly or indirectly interested and on such terms as to interest as the Trustees may think proper with power to the Trustees to alter, vary or transpose such investments from time to time in such manner, they may in their absolute discretion think fit, for others of the same or of a like or different nature. "
( 3. ) THE defendant No. 1 Nandkishore and his father Seth Sheobux Rai, since deceased, borrowed from Seth Kirodimal, a sum of Rs. 1,50,000 on 18-11-1953 at Bilaspur for payment of their antecedent debts amounting to rs. three lacs and odd due on 7-11-1953 corresponding to Diwali Samvat 2010 to M/s Paluram Dhanania, Raigarh, a joint family business of which Seth paluram, the munim of Seth Kirodimal and a member of the Board of Trustees, was the karta. It appears that a telephonic message was received from Seth sheobux Rai by Seth Kirodimal and he sent the amount of Rs. 1,50,000 through mangiram (P. W. 2), munim of M/s Paluram Dhanania. The defendant No. 1 Nandkishore and his father Sheobux Rai, thereupon jointly executed the mortgage deed dated 18-11-1953, Ex. P-63, mortgaging their Flour and Dal mills known as "shri Krishna Rice Mills", Bilaspur as a security for repayment of the loan. On 20-11-1953, they repaid Rs. 1,50,000 to M/s Paluram Dhanania as per rokad, Ex. P-106. The mortgage amount was, therefore, borrowed by them to repay the debt of Seth Paluram. Incidentally, the application for registration, Ex. D-l, shows that Bhagirath Lal Gupta son of Seth Paluram became a partner of the firm Shri Krishna Rice Mills w. e. f. 7-11-1953.
( 4. ) THE defendant No. 1 Nandkishore and his father Sheobux Rai by the mortgage bond, Ex-P-63, covenanted to pay interest at 6% per annum, annually. If there was any default in payment, the interest due was to be added to the principal at the end of each year. The due date for repayment of the loan was 18-11-1963. By a subsequent deed dated 6-1-1954, Ex-P-104, the parties stipulated that the interest shall be payable by half-yearly instalments, and so long the interest was paid, the trustees would not make a demand for payment of the principal, with a further condition that on default of two consecutive instalments, t
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