A valid money lending license exists at the time of the loan transaction, essential for maintaining a recovery suit under Karnataka's Money Lending Act.

ORAL JUDGMENT

This Regular Second Appeal is filed by the appellant challenging the judgment and decree dated 30.10.2014 passed in R.A.No.152/2011 by the learned II Additional District and Sessions Judge, Tumkur and the judgment and decree dated 20.08.2011 passed in OS No.63/2005 by the learned Senior Civil Judge and JMFC, Kunigal.

2. For convenience, the parties are referred to based on their ranking before the trial Court. The appellant was the plaintiff and the respondents were the defendants. 3. Brief facts, leading rise to the filing of this appeal are as follows:

The plaintiff filed a suit against the defendants for recovery of money of ₹1,38,400. It is contended that defendants No.1 and 2, being a Husband and wife respectively, and on behalf of their minor children, defendant Nos.3 and 4, had jointly borrowed a sum of ₹1,00,000/- from the plaintiff and the plaintiff paid the loan amount through cheque bearing No.8218011 dated 1.8.2003 drawn on Canara Bank, Amruthur Branch, Kunigal Taluk. The loan was received for the legal necessity and thereby executed a registered mortgage deed dated 1.8.2003 by mortgaging the land bearing Sy.No.27/4B, 1 ¼ guntas with a constructed RCC building situated in Mavinakatte village, Kunigal taluk and it was agreed to pay the interest at the rate of 1.50% per month after a period of 6 months from the date of execution of above said deed. It is contended that the defendants have issued a legal notice dated 01.09.2005 by taking evasive stand and the plaintiff replied to the same through and reply notice dated 16.09.2005. However, the defendants did not repay the loan amount, after completion of 6 months. Hence, a cause of action arises for the plaintiff to file a suit for recovery of money. Accordingly, prays to decree the suit.

4. The defendants filed a written statement, admitting the transaction between the plaintiff and defendants and also the rate of interest, but the defendants have taken the defence that the plaintiff was not possessing a valid money lender license for lending the money. Hence, the suit filed by the plaintiff is not maintainable. Hence, on these grounds, prays to dismiss the suit.

5. The Trial Court based on the pleadings of the parties, framed the following issues;

“1) Whether the defendants prove that the plaintiff is claiming exorbitant and excessive rate of interest at the rate of Rs. 1.50 Ps.

P.m.?

2) Whether plaintiff is a habitual money lender and he is carrying money lending business by violating the mandatory provisions of Karnataka Money Lending Act?

3) Whether the suit is properly valued and court fee paid is insufficient?

4) Whether the defendants prove that the plaintiff has obtained 4 blank signed cheques bearing Nos.(1) 888383 (2) 888384 (3) 888385 and (4) 888387 for the security of the loan amount?

5) Whether the defendants prove that the plaintiff has created a new story to knock off the suit schedule property?

6) Whether the plaintiff is entitled for the suit claim?

7) What order or decree?”

6. Issue No.2 was treated as a preliminary issue.

The trial court recorded the evidence on preliminary issues i.e., defendants examined 2 witnesses as DW.1 and DW.2 and marked 39 documents as Exs.D1 to D39. On the other hand, in rebuttal, the plaintiff was examined as PW1 and marked one document as Ex.P.1.

7. After recording the evidence of the parties and hearing both sides, the Trial Court answered preliminary issue in the affirmative and consequently dismissed the suit of the plaintiff as barred under Section 11 of Karnataka Money Lenders Act, 1961. The plaintiff, aggrieved by the order on the preliminary issue dated 20.08.2011 passed i