ASSAM MONEY LENDERS ACT, 1934

S.1 Short title, extent and commencement

(1) This Act may be called the Assam Money Lenders Act, 1934.

(2) It extends to the whole of Assam including the territories mention#31;ed in S. 14 of the Assam General Clauses Act, 1915.

(3) It shall come into force on such date as the State Government may by notification direct.

S.2 Definitions

In this Act, unless there is anything repugnant in the subject or context—

(1) Money-lender means a person who, in the regular course of business, advances a loan as defined in this Act and shall include, subject to the provisions of S. 6, the legal representa#31;tives and the successors-in-interest whether by inheritance, assignment or otherwise of the person who advanced the loan and money-lending shall be construed accordingly ;

(2) Interest means rate of interest and includes the return to be made over and above what was actually lent whether the same is charge or sought to be recovered specifically by way of interest or otherwise ;

(3) Loan’ means an advance, whether of money or in kind, made on condition of repayment with interest and includes any bond bearing interest executed in respect of past liabilities and any transaction which is in substance a loan,

S.3 Penalty for stating larger amount in the bond than actually lent

If the loan actually made be less than the sum entered in the bond or hand-note, the money-lender shall be guilty of a contravention of the provisions of this Act and shall, on conviction, be punishable with fine not exceeding two hundred rupees.

S.4 Prohibition of compound interest and provisions as to defaulting

Any contract made before or after the commencement of this Act for the loan of money by a money-lender shall be illegal in so far as it provides directly or indirectly for the payment of compound interest or for the rate or amount of interest being increased by reason of any default in the payment of sums due under the contract.

S.5 Prohibition of charge for expenses on loans by money-lender

Any agreement between a money-lender and a borrower or intending borrower for the payment by money lender of any sum on account of costs, charges or expenses incidental to or relating to the negotiations for or the granting of the loan or proposed loan shall be illegal, and if any sum is paid to a money-lender by a borrower or intending borrower as for or on account of any such costs, charges or expenses, that sum shall be recoverable as a debt due to the borrower or intending borrower, or, in the event of the loan being completed, shall, if not so recovered beset off against the amount actually lent and that amount shall be deemed to be reduced accordingly.

Explanation. This will not debar money-lenders from recovering reasonable costs of inspection of Revenue or Registration records including examination of titles and also costs of inspection of property, in cases where the contract includes a stipulation that property is given as security or

S.6 .

(1) Every money-lender shall—

(a) regularly maintain an account for each borrower separately of all transactions with dates and places of such transaction in respect of any loan advanced to that borrower ;

(b) furnish such borrower every year within a legible statement of accounts in the prescribed manner signed by the money-lender or his authorised agent of any balance or account that may be outstanding against such borrower on such dates. Such state#31;ment of accounts shall include all transactions in respect of the) loan entered into during the year to which the statement relates.

(2) The account required under Cl. (a) of S. (1) shall be so maintain#31;ed that items due by way of interest shall be shown as separate and distinct from the principal sum and separate totals of principal and interest shall be shown. The money-lender shall not include the interest of any portion of

S.6-A Receipts for repayment of loan

Every money-lender, who received repayment from his borrower en account of any loan advanced to him or payment of any interest therein shall forthwith give a receipt therefor.

S.7 Obligation of money-lender to supply information as to statement of loan and copies of documents relating thereto

(1) In respect of every con#31;tract for repayment of a lean made by a money-lender, whether made before or after the commencement of this Act the money-lender shall, on demand in writing being made by the borrower at the time of executing the contract or at any time during the continuance of the contract, supply to the borrower, or if the borrower so requires, to any person specified in that behalf in the demand, a statement signed by the money-lender or his agent showing—

(a) the date on which the loan was made, the amount of the princi#31;pal of the loan, and the rate per cent per annum of interest charged ; and

(b) the amount of any payment already received by the money#31;lender in respect of the loan and the date on which it was made ; and

(c) the amount of every sum due to the money-lender, but unpaid, and the date upon which it became due and the amount of interest accr

S.7-A Register of money-lenders

(1) Every Registrar shall maintain a register of money-lenders in such form as may be prescribed.

(2) Such register shall be deemed to be a public document within the meaning of the Indian Evidence Act, 1872.

S.7-B Registration of money-lenders and registration certificates

Every person who carries on or intends to carry on the business of money-lending shall get himself registered by an application made to the Registrar in prescribed form and prescribed fees, and, for such registration, the Regis#31;trar shall grant a registration certificate to him in such form as may be prescribed.

S.7-C Bar to carry on business without registration certificate

(l) No person shall carry on the business of money-lending unless he holds a valid registration certificate in this behalf.

(2) Whoever contravenes to the provisions of sub-S. (1) shall be punishable for the first offence with simple imprisonment which may extend to three months or with fine which may extend to Rs. 500 or with both and for a second or subsequent offence, with imprisonment of either descrip#31;tion which may extend to six months or with fine which may extend to rupees one thousand or with both.

S.7-D Suits to proceed without registration certificate, etc.

No suit for the recovery of a loan advanced by a money-lender shall proceed in a civil court until the court is satisfied that he holds a valid registration certi#31;ficate or that he is not required to have a registration certificate by reason of the fact that he does not carry on the business of money-lending.

S.8 Presumption in the case of certain loans

Where in any suit in respect of any money lent or any security taken for money lent by a money lender after the commencement of the Usarious Loans Act, 1918, it is found that the interest charged exceeds the rate of 9 3/8 per cent per annum in the case of a secured loan or 12 1/2 per cent per annum in the case of an unsecured loan, the Court shall not decree as interest any sum in excess of 9 3/8 per cent per annum and 121/2 per cent per annum respectively.

Explanation. “Secured loans” means mortgage debts as well as bonds for the satisfaction of the interest whereof land has been delivered by debtors, in conformity with local custom, into the possession of creditors to be enjoyed in lieu of interest by the latter.

S.9 .

(1) No money-lender shall, in respect of any loan made before or after the commencement of this Act, recover, on account of interest and principal, whether through Court or otherwise or by way of usufruct of lands in usufructuary for anomalous mortgages, a sum greater in aggregate than double the principal of the loan :

Provided that nothing in this sub-section shall affect—

(i) a Bank advancing money at interest not exceeding 6 per cent per annum, or

(ii) subscribers to a loan made to or debenture or other securities of any description issued by Government, a public body, a Bank, or a Company ;

Provided further that in case of anomalous mortgage, where the contract is closed before the commencement of the Assam Money Lenders (Amendment) Act, 1954, it shall not be re-opened.

Explanation. The term aggregate means and includes the amount already pa

S.10 Deposit in Court of money due to money-lender

(1) Where a bor#31;rower has sent to a money-lender by postal money order or by registered post with acknowledgment due any sum of money due from him to the money-lender in respect of a loan and the money-lender has refused to accept the same, the borrower may apply in the prescribed manner to the lowest Civil Court having jurisdiction over the place where he resides for permission to deposit the said sum in Court to the account of the money#31;lender, and the Court shall thereupon keep the sum in deposit and shall send a notice of the deposit in the prescribed manner to the money-lender.

(2) If the money-lender accepts money sent in the manner specified in sub-S. (1) by a borrower or withdraws money deposited under the said sub#31;section he shall not be bound by any statement made by the borrower in remitting or depositing the money.

S.11 Restrictions on money-lending advertisements

(1) No person shall knowingly send or deliver or cause to be sent or delivered to any person except in response to his written request any circular or other document advertising the name or address of a money-lender, or containing an invitation—

(a) to borrow money from a money-lender ; or

(b) to enter into any transaction involving the borrowing of money from a money-lender ; .or

(2) Agent and canvassers inviting borrowers must not be employed by money-lenders No money-lender or any person on his behalf shall employ any agent or canvasser for the purpose of inviting any person to borrow money or to enter into any transaction involving the borrowing of money from money-lender, and no person shall act as such agent or canvasser or dema

S.12 General provisions regarding penalties

Whoever fails to comply with or acts in contravention of any provision of this Act, shall be punishable—

(a) for the first offence, with simple imprisonment which may extend to two months or with fine which may extend to rupees five hundred or with both ; and

(b) for the second or subsequent offence, with imprisonment of either description which may extend to six months or with fine which may extend to rupees one thousand or with both.

S.12-A Court competent to try offences under this Act and take cogni#31;zance of offences

(1) No Court other than a Court of Magistrate of the first class shall take cognizance of, or try an offence under this Act.

(2) No Court shall take cognizance of any offence under this Act except on a complaint in writing made by an aggrieved person or an officer not below the rank of a Sub-Inspector of Police or by the Registrar or any other officer specially or generally authorised in this behalf by the State Government.

Legal Commentary on Section 12-A of the Assam Money Lenders Act, 1934

Introduction

The Assam Money Lenders Act, 1934 was enacted to regulate money lending practices in Assam, ensuring that money lenders operate within a legal framework that protects borrowers from exploitation. Section 12-A specifically addresses the consequences of non-compliance with the provisions of the Act.

What does Section 12-A Say

Section 12-A stipulates that any money lender who contravenes the provisions of the Act shall be subject to penalties, including fines and imprisonment. This section serves as a deterrent against unlawful money lending practices.

Essential Ingredients

Contravention: The section identifies specific actions or omissions that constitute a breach of the Act.
Liability: It establishes the liability of money lenders who fail to comply with the legal requirements set forth in the Act.

Scope of Section

The scope of Section 12-A encompasses all money lenders operating within Assam, mandating compliance with the registration and operational guidelines outlined in the Act. It aims to ensure that money lending is conducted fairly and transparently.

Punishment for Section

The penalties for contravening Section 12-A include:- Fines: Monetary penalties that may vary based on the severity of the contravention.- Imprisonment: For serious violations, offenders may face imprisonment, which can extend to three months for first-time offenders.

Legal Comments

Contravention - A money lender who fails to comply with the provisions of the Act is guilty of contravention and may face penalties. -
Registration Requirement - No person shall engage in money lending without a valid registration certificate, as mandated by the Act. -
Penalties - The Act prescribes specific penalties for non-compliance, including fines and imprisonment, to deter unlawful practices. -
First Offence - For a first offence, the punishment may include simple imprisonment for up to three months. -
Service of Orders - Orders under Section 12-A must be served to the money lender in accordance with the procedures for serving summons. -
Scope of Application - The Act applies to all money lenders in Assam, ensuring a uniform regulatory framework. -
Amendments - The Act has undergone amendments to enhance its provisions and penalties, reflecting the evolving nature of money lending practices. -
Judicial Interpretation - Courts have interpreted the Act to ensure that it serves its purpose of protecting borrowers from exploitative lending practices. -
Exemptions - The Act does not apply to loans provided by banks, which are governed by separate regulations. -
Public Interest - The overarching goal of the Act is to protect the economically vulnerable from usurious interest rates and unfair lending practices. -
Compliance Monitoring - Authorities are tasked with monitoring compliance to ensure that money lenders adhere to the legal framework. -
Legal Recourse - Borrowers have legal recourse against money lenders who contravene the provisions of the Act, reinforcing consumer protection. -
Impact on Borrowers - The penalties imposed on money lenders serve to protect borrowers from predatory lending practices. -
Legislative Intent - The Act reflects the legislative intent to create a fair and transparent money lending environment in Assam. -
Enforcement Challenges - Despite the provisions, enforcement remains a challenge, necessitating ongoing legal and regulatory reforms. -
Consumer Awareness - Increased awareness among consumers about their rights under the Act is crucial for its effective implementation. -
Future Amendments - Continuous evaluation and potential amendments to the Act may be necessary to address emerging issues in the money lending sector. -

S.13 Appeal

Any order of conviction passed under this Act shall be appealable to the Court to which appeal ordinarily lies under the Code of Criminal Procedure, i898, irrespective of the amount of fine to which an accused may be sentenced.

S.13-A .

Notwithstanding anything contained ;n this Act the provisions of Ss. 3, 4, 8, 9 and 10 of the Act shall apply also to a person or body of persons who advances a loan but who is not a money-lender as defined in sub-S. (1) of S. 2 of this Act.

S.14 Power of State Government to make rules

(1) The State Govern#31;ment may make rules for carrying out the purposes of this Act.

(2) In particular, and without prejudice to the generality of the fore#31;going power, such rules may provide for all or any of the following matters, namely :

(i) the form and manner in which the money-lenders shall keep accounts and furnish the same to the borrower under sub-S. (1) of S. 6;

(ii) the form of maintaining register, fixation and realisation of registration fees, issue of registration, provided in Ss. 7-A and 7-B;

(iii) the manner in which an application for a deposit is to be made under sub-S. (1) of S. 10, and a notice of the ; deposit is to be sent to the money-lender under the said sub-section ; and

(iv) the enforcement of orders made under sub-S. (1) of S. 12 ;

(v) any other matter which is required to be or may be prescri

S.15 .

The provisions of the Transfer of Property Act, 1882 (Act IV of 1882), the Indian Contract Act, 1872 (Act IX of 1872), the Indian Registra#31;tion Act, 1908 (Act XVI of 1908) and the Civil Procedure Code, 1908 (Act V of 1908) shall to the extent necessary to give effect to the provisions of this Act, be deemed to have been repealed or modified. #2;