Motilal Kulmi vs Ghasi Khan - 1996 Supreme(MP) 1247

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

Advocates Appeared:
For the Appellant : Y.I. Mehta.
For the Respondent: S.K. Pavnekar.

Headnote:(1) Money Lenders Act, 1934 (M.P.) – S. 5 – debtor – not bound to admit correctness of the account – money lender failing to furnish accounts showing amount of principal and interest separately – account may be reopened.
       (2) Money Lenders Act, 1934 (M.P.) – S. 7 (c) and 3 – provisions of section 3 not complied with – interest may be refused till filing of the suit – interest after the suit till realisation may be awarded.
       (3) Money Lenders Act, 1934 (M.P.) – S. 7 (b) and 3 – provisions of S. 3 not complied with – plaintiff is not entitled to costs of the suit.
        Short Note
       1. Appeal is directed against the judgment and decree dated 28.6.1980 of District Judge Mandsaur passed in Civil Appeal No. 21 – B/78 whereby while modifying the decree granted by Civil Judge 1st Class, Mandsaur passed in Civil Suit No. 17 – B/76 dated 15.9.1978 the amount of decree has been enhanced from Rs. 3,581/ – to Rs. 4,000/ – with a further direction that the plaintiff shall not be entitled for any cost and interest even after the decree.
       2. The brief history of the case is that plaintiff appellant filed a suit against defendant – respondent with the assertions that they were having business relations. Defendant was taking and returning the money from the plaintiff. There was account between two and ultimately Rs. 5,596.36 Paise was found due against the defendant. Defendant acknowledged the amount due against him and signed in the account – book. The plaintiff is further entitled to interest @ 1% per month from the defendant. Defendant failed to deposit the money as such a suit for recovery of money 6,300/ – was filed.
       3. The defendant denied the claim and further submitted that plaintiff is carrying on the business of money lending. He has not sent annual account to him by showing the principal and interest amount separately. As such he is not entitled for any interest. He has further submitted that while taking acknowledgment after statement of account the compound interest was charged and included in it.
       4. Learned trial Judge found that plaintiff is a money lender and has failed to comply with the requirements of Money Lenders Act. As such a decree of Rs. 3,581/ – only was granted against him.
       5. Plaintiff filed an appeal against the same. Learned 1st Appellate Court enhanced the amount of decree to Rs. 4,000/ – . Hence, this Second Appeal.
       6. The contention of learned counsel for the appellant is that after the statement of account between the parties the same could not be reopened and that the plaintiff is entitled to interest after filing of the suit and for the cost of the suit.
       7. As against it learned counsel for the respondent has submitted that as the plaintiff is a money – lender and has failed to produce the account showing the principal and interest amounts separately Hence, he is not entitled to the decree as claimed.
       8. The Court was taken to evidence on record. This is not in dispute that plaintiff is a money – lender and has been carrying on the business of money – lending much before filing of the suit and money transaction between him and the defendant.
       9. Section 5 of Money Lenders Act provides that debtor is not bound to admit correctness of accounts supplied.
       10. Though defendant denied his signature on document but the same has been found proved and rightly so as it stands proved from the statement of plaintiff and his witnesses.
       11. It is also not in dispute that plaintiff has failed to furnish the accounts showing the amount of principal and interest separately and, therefore, the Court was justified in re – opening the account and coming to a conclusion as to the actual principal amount given on loan to the defendant. The defendant in his statement (Para 5) has admitted that he took Rs. 4,000/ – as loan from the plaintiff.
       12. Since the plaintiff has not complied with the provisions of section 3 of the Money – lenders Act and, therefore, learned judges of Courts below were justified in disallowing the interest u/s. 7 (c) of the Act.
       13. Section 7 (b) of the Act further provides that if the Court finds that provisions of section 3 or of section 6 have not been complied with by the money – lender, it shall, if the plaintiff's claim is established in whole or in part, 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 disallow costs.
       14. In view of the provisions above the plaintiff is not entitled for any interest till filing of the suit. However, he is entitled for interest from the date of the filing of the suit.
       15. Learned lower Courts were justified in not allowing the costs in exercise of powers u/s. 7 (b) of the Act above.
       16. These are benevolent provisions to save the interest of debtors unscrupulous money – lenders often take undue advantage of the position of debtors and charge heavy interest and, therefore, if the Courts below disallowed the cost and interest the same cannot be said to be incorrect or unjustified.
       17. The suit in this case was filed on 11.7.1975 and therefore, though the plaintiff – money – lender would not be entitled for any interest prior to the period of filing of the suit but he would be entitled for the interest from the date of the suit till realisation of the same. In the opinion of this Court, the First Appellate Court was not justified in disallowing future interest.
       18. As a result the appeal partly succeeds. The decree of Rs. 4,000/ – as granted by the Appellate Court on the basis of admission of defendant is affirmed and it is further held that the plaintiff would be entitled for the interest from the date of filing of the suit i.e. 11.7.1975 @ 6% per annum till realisation of the same.
       19. Since plaintiff failed to furnish account separately he is not entitled for the costs throughout. If defendant – respondent has not deposited the money till date he shall be entitled to deposit it in four equal and quarterly instalments.
       20. If any of the instalment is not paid at the expiry of three months the whole of the amount shall become due and recoverable. The first instalment if not paid till today shall be paid on or before 15th of May, 1996 and the rest amount shall be paid in quarterly instalments thereafter.
       21. In the facts and circumstances of the case, the parties shall bear their own costs.