Thomson CJ:

This appeal raises a question of some importance as to the effect of the Moneylenders Ordinance, 1951.

The facts are not in dispute.

On 2 July 1953, one CP borrowed $3,500 from VC, a licensed moneylender, and the same day by way of security he executed a charge in the form prescribed by Sch. XXIV(a) of the land Code over two pieces of land of which he was the registered proprietor and deposited with the chargee the documents of title. An authenticated copy of the charge was handed to CP before the money was delivered to him and the charge was duly registered.

On 14 January 1954, CP transferred the land which was still subject to the charge to Sockalingam Mudaliar, a moneylender who was for many years a familiar figure in the Courts, and on 22 July 1955, Sockalingam Mudaliar died leaving his name to adorn the local Law Reports and a Will of which the present appellants are the executors.

On 16 March 1954, VC transferred the charge to the present respondent, who is also moneylender, and on 7 April 1954, the respondent served on Sockalingam Mudaliar a notice under s. 138 of the Land Code requiring payment of the principal sum and interest.

This notice was not complied with and on 11 January 1957, the respondent commenced the present proceedings against Sockalingam Mudaliar's executors by way of Originating Summons claiming foreclosure and sale under the charge in satisfaction of the original debt. The executors (the present appellants) resisted the respondent's claim on the ground that the charge was a security given by a borrower in respect of a contract for the repayment of money lent to him by a Moneylender, that no note or memorandum of the contract had been signed and delivered in accordance with s. 16(1) of the Moneylenders Ordinance and that it was therefore not enforceable by reason of the provisions of that section. They went on to ask for an order that the respondent return to them the documents of title relating to the land which had been handed to the chargee when the land was charged and an order against the respondent to discharge or otherwise have it removed from the land register.

The learned trial Judge took the view that the charge itself contained all the particulars required by s. 16(3) of the Ordinance and it thus itself constituted a note or memorandum of the contract. He accordingly held that s. 16(1) of the Ordinance had been complied with and as there was no question of the fact of the loan or of the authenticity of the charge or of the devolutions of title on each side he gave, judgment for the applicant, the present respondent, as prayed.

Against that decision the executors have now appealed

The Moneylenders Ordinance, 1951, was intended to regulate the way in which moneylenders carry on their business and one of the ways in which it does this is by providing that before they lend money to a borrower they shall give him a memorandum of the terms upon which the money is lent. Section 16(1) enforces this by saying that:

No contract for the repayment by a borrower...... of money lent to him...... by a moneylender...... and no security given by the borrower...... in respect of any such contract, shall be enforceable unless a note or memorandum in writing of the contract...... be signed by the parties to the contract...... and unless a copy thereof authenticated by the lender...... he delivered to the borrower...... before the money is lent, and no such contract or security shall be enforceable if it is proved that the note or memorandum aforesaid was not so signed before the money was lent or before the security was given, as the case may be.

Section 16(3) provides that the note or memorandum "aforesaid," that is to say required by sub-section (1), shall contain all the terms of the contract and in particular shall show "separately and distinctly" (a) the date of the loan, (b) the principal, and (c) the rate of interest. Section 16(4) provides that where a promissory note give