BENGAL MONEY-LENDERS ACT, 1940
(1) This Act may be called the Bengal Money-lenders Act, 1940.
(2) It extends to the whole of 11. Words subs, for the word "Bengal" by the Indian Independence (Adaptation of Bengal and Punjab Acts) Order, 1948. [West Bengal] 22. Words and figures ins. by W.B. Act 5 of 1949. [but it shall not apply to the Reserve Bank of India constituted by the Reserve Bank of India Act, 1934].
(3) It shall come into force on such date as the 33. Word subs. for the words "Provincial" by the Adaptation of Laws Order, 1950. State Government may, by notification in the Official Gazette, appoint.
In this Act, unless there is anything repugnant in the subject or context,
44. Clause (1) first subs. by W.B. Act 21 of 1965, then again subs. by W.B. Act 18 of 1966 and finally subs. by W.B. Act W.B. Act 30 of 1975. Previous clause (1) was as under: "(1) "bank" means a banking company as defined in clause (c) of section 5 of the Banking Companies Act, 1949, and Includes the State Bank of India constituted under the State Bank of India Act, 1955, any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959. and any other financial institution which may be notified in this behalf by the State Government;". (1) "bank" means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949, and includes
(i) a bank included in the Second Sche
1616. Sec 3 om. by W.B. Act 21 of 1965, which was as under: "3. Notified bank. The State Government may. by notification in the Official Gazette, declare any bank to be a notified bank for the pruposes of this Act: Provided that no bank shall be so declared to be a notified bank unless it complies with such conditions as may, with the approval of the State Legislature, be prescribed.". * * * * *
Notwithstanding anything contained in any other law, the Courts (hereinafter referred to as Competent Courts) which have jurisdiction to entertain proceedings under sections 16 and 19 and to pass orders therein are the Courts hereinafter specified, within the local limits of whose jurisdiction the money-lender actually and voluntarily resides or carries on the business of money-lending
(a) in Calcutta, the Court of Small Causes of Calcutta;
(b) outside Calcutta, the Court of the District Judge (hereinafter called a "District Court") and any Court to which he may transfer the proceedings.
(1) Subject to the provisions of this Act, a Competent Court shall, in proceedings under section 19, have the same powers and shall follow the same procedure as it has and follows in civil suits, and the provisions of section 24 of the Code of Civil Porcedure, 1908, shall apply to such proceedings.
(2) Every order made by a Competent Court under this Act shall be subject to appeal in accordance with the provisions of the Code of Civil Procedure, 1908, applicable to appeals.
(3) An appeal from a decision made by the Court of Small Causes of Calcutta under this Act shall lie to the High Court as if it were an appeal under sub-section (2) to the High Court from a decision made by a District Court.
There shall be a 1717. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Registrar for the purposes of this Act and as many Registrars and Sub-Registrars of money-lenders for assisting the Registrar as the 1717. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Government may from time to time determine. The 1717. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Government may define, by notification in the Official Gazette, the area within which each such officer shall exercise his powers and perform his duties and may prescribe the control which shall be exercised by the 1717. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Registrar over Registrars and Sub-Registrars and by a Registrar over Sub-Registrars:
Provided that no person who is not
Sec. 6A ins. by W.B. Act 21 of 1965. (1)The State Government may, by notification in the Official Gazette, appoint such persons as it thinks fit to be Inspectors for the purposes of this Act and define the area within which each such Inspector shall exercise his powers and perform his duties.
(2) An Inspector appointed under sub-section (1) shall exercise such powers and perform such duties as may be prescribed and may also
(a) call for a copy of the statement of accounts referred to in section 25,
(b) apply to the Sub-Registrar for cancellation of the licence of a moneylender if he has reasons to believe that such money-lender is guilty of contravention of any of the provisions of this Act,
Each Sub-Registrar shall maintain in the prescribed form a register of money-lenders holding licences issued by him.
After such date not less than six months after the commencement of this Act as the 2222. Words subs. for the words "Provincial" by the Adaptation of Laws Order, 1950. [State] Government shall, by notification in the Official Gazette, appoint in this behalf, no money-lender shall carry on the business of money-lending unless he holds an effective licence.
Explanation. An effective licence for the purposes of this Act comprises a licence issued to a person who is not disqualified for holding a licence.
(1) A licence shall be valid throughout the whole of 2323. Words subs. for the word "Bengal" by the Indian Independence (Adaptation of Bengal and Punjab Acts) Order, 1948. [West Bengal] for a period of three years from the date of its issue or until it is cancelled.
(2) On the expiration of the period for which the licence was granted or on the cancellation of a licence it shall be returned by the money-lender to the Sub-Registrar who issued it.
There shall be paid to the 2222. Words subs. for the words "Provincial" by the Adaptation of Laws Order, 1950. [State] Government a fee of 2424. Word subs. for the word "fifteen" by W.B. Act 21 of 1965. [twenty-five] rupees for a licence issued under this Act: Provided that the 2222. Words subs. for the words "Provincial" by the Adaptation of Laws Order, 1950. [State] Government may, by notification in the Official Gazette, remit any part of such fee either generally or for any particular class of money-lenders.
An application for the grant of a licence shall be made in the prescribed form and manner to the Sub-Registrar within the local limits of whose jurisdiction the money-lender has a place of money-lending business and shall contain such particulars as may be prescribed.
On receipt of an application under section 11 and on payment in the prescribed manner of the licence fee specified in section 10, the Sub-Registrar shall, subject to the provisions of section 16, enter the name of the applicant in the register and grant the applicant a licence in such form as may be prescribed.
(1) No Court shall pass a decree or order in favour of a money-lender in any suit
(2) If during the trial of a suit to which sub-section (2) applies, the Court finds that the money-lender did not hold such licence, the Court shall, before proceeding with the suit, require the money-lender to pay in the prescribed manner and within tha period to be fixed by the Court such penalty as the Court thinks fit, not exceeding three times the amount of the licence fee specified in section 10.
(3) If the money-lender fails to pay the penalty within the period fixed under sub-section (2) or within such further time as the Court may allow, the Court shall dismiss the suit: if the money-lender pays the penalty within such period, the Court shall proceed with
(1) A person shall be disqualified for holding a licence
(a) if so ordered by a Court under section 20, for the period ordered;
(b) if he has been convicted of any offence specified in the Schedule to this Act and if such conviction has not been set aside by any Court of appeal or revision under any law for the time being in force.
(2) The 2525. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Government may, at any time, on application in the prescribed form accompanied by the prescribed fee, remove a disqualification referred to in sub-section (1), having regard to the time which has elapsed since the order and the circumstances under which it was made or to the t
Where it is required to be proved for the purposes of this Act that any person has been convicted of an offience specified in the Schedule to this Act or has been disqualified by an order of a Court for holding a licence, such conviction or order may be proved, in addition to any other mode provided by any law for the time being in force
(a) by an extract certified under the signature of the officer having the custody of the records of the Court in which such conviction was had, or such order was passed to be a copy of the sentence or order, or
(b) in the case of a conviction, by a certificate signed by the officer in charge of the jail, in which the punishment or any part thereof was undergone, or by the production of the warrant of commitment under which the punishment was suffered, toget
(1) The grant of a licence shall not be refused except on one or more of the following grounds, namely:
(a) that the applicant has not complied with the provisions of the Act or of the rules made thereunder in respect of an application for the grant of a licence;
(b) that the applicant or any person responsible or proposed to be responsible for the management of the applicant's money-lending business is under this Act disqualified for holding a licence.
(2) A Sub-Registrar refusing a licence
(i) under clause (a) of sub-section (1) shall record his reasons of such refusal;
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Any Sub-Registrar may, after giving the money-lender to whom a licence entered in the register maintained by such Sub-Registrar was issued an opportunity of being heard, cancel the licence if it is proved that such money-lender was disqualified for holding a licence at the time which such licence was issued; and thereupon the provisions of clause (ii) of sub-section (2) and of sub-sections (3), (4), (5), (6) and (7) of section 16 shall apply.
For the purposes of an inquiry under this Act relating to a disqualification for holding a licence a Registrar or a Sub-Registrar shall have and may exercise the same powers as are vested in a Civil Court under the Code of Civil Proceduce, 1908, in respect of enforcing the attendence of any person and examining him on oath.
Any borrower may, in respect of any money-lender from whom he has taken a loan, make an application to a Competent Court for an order under section 20 on the ground that such money-lender has committed such contravention of the provisions of this Act or the rules made thereunder as render him unfit to carry on the business of money-lending, and on receipt of such application, the said Court shall hold such inquiry as it deems necessary.
(1) A Competent Court on an application under section 19 or a Court trying suit to which this Act applies or a Court passing an order of conviction upon a money-lender for an offence under this Act, if satisfied that the money-lender has committed such contravention of the provisions of this Act or of the rules made thereunder as, in its opinion, makes him unfit to carry on the business of money-lending
(a) shall cause the particulars of the conviction, if any, and of any order passed by the Court under this sub-section to be endorsed on the licence held by the money-lender or by any other person affected by such order; and
(b) may declare such money-lender or any person responsible for the management of his money-lending business or both disqualified for holding a licence for such period a
A person whose licence has been cancelled shall not be entitled to any compensation on such account nor to the refund of any licence fee paid in respect of such licence.
All licence fees and all penalties imposed under this Act shall be recoverable as public demands.
(1) Whoever being disqualified for holding a licence, applies for or obtains a licence during the pendency of such disqualification, without disclosing the fact thereof, shall be punishable, on conviction, with imprisonment which may extend to three months or with fine which may extend to five hundred rupees or with both, and any licence so obtained shall not be deemed to be an effective licence.
(2) Whoever obliterates or causes to be obliterated or attempts to obliterate an endorsement entered on a licence under this Act or abets such obliteration or attempt shall be punishable, on conviction, with imprisonment which may extend to three months or with fine which may extend to five hundred rupees- or with both.
(1) Every money-lender shall keep and maintain at least a cash book, a ledger and a receipt book in such form or forms as may be prescribed, and the same shall be written in Bengali or English in the regular course of business.
(2) Every money-lender shall
(a) deliver to the borrower at the time a loan is advanced a statement in Bengali or English as the borrower may desire, in such form as may be prescribed and showing such details of the conditions of the loan and such other information connected therewith as may be prescribed;
(b) give to the borrower a plain and complete receipt for every payment made on account of any loan at the time of such payment;
(1) Every money-lender shall, within two months of the commencement of each year, furnish each of his borrowers with a legible statement of accounts in Bengali or English as the borrower may desire signed by the money-lender or his agent and showing the amount outstanding against the borrower: such statement shall be in the prescribed form and shall show
(a) the amounts of principal and interest due to the money-lender at the commencement of the year:
(b) the amounts of any sums advanced to the borrower from time to time since the commencement of the year and the dates on which they were advanced;
(c) the amounts of any payments received from the borrower since the commencement of the year in respect of loans outstanding and the dates on which th
A borrower to whom a statement of accounts has been furnished under section 25 shall not be bound to acknowledge or deny its correctness, and his failure to do so shall not, by itself, be deemed to be an admission of the correetness of the account.
Notwithstanding anything contained in any law for the time being in force, in any suit to which this Act applies
(a) a Court shall, before deciding the claim on its merits, frame and decide the issue whether the money-lender has in respect of the claim in suit complied with the provisions of sections 24 and 25; and
(b) if the Court finds that the provisions of either of the said sections have not been so complied with, it may, if the plaintiffs claim is established either wholly or in part, disallow the whole or such portion of the interest found due as may, in the circumstance of the case, appear reasonable to the Court, and may also disallow costs, or in computing the amount of interest due upon the loan, the Court may exclude any period for which the money-lender omitted to comply with t
(1) Where any debt in respect of
(i) a loan advanced by a lender, whether before or after the commencement of this Act, or
(ii) interest on any such debt, or
(iii) the benefit of any agreement made, or security taken, in respect of any such debt of interest, is assigned to any person, the assignor (whether he is the lender by whom the loan was advanced or any person to whom the debt has been previously assigned) shall, before the assignment is made,
(a) give to the assignee notice in writing that the debt, interest thereon, agreement or security is affected by the operation of this Act, and
(b) where the debt is in respect of a loan advanced by a money-lend
(1) Subject as hereinafter provided, the provisions of this Act shall continue to apply as respects any debt due to a lender or money-lender in respect of loans advanced by him after the commencement of this Act or in respect of interest on such loans or of the benefit of any agreement made or security taken in respect of any such debt or interest, notwithstanding that the debt or the benefit of the agreement or security may have been assigned to any assignee, and except where the context otherwise requires, references in this Act to a lender or money-lender shall accordingly be construed as including any such assignee as aforesaid:
Provided that, notwithstanding anything contained in this Act
(a) any agreement with, or security taken by, a lender or moneylender in respect of a loan advanc
Notwithstanding anything contained in any law for the time being in force, or any agreement,
(1) [no borrower other than a borrower of commercial loan] shall be liable to pay after commencement of this Act
(a) any sum in respect of principal and interest which together with any amount already paid or included in any decree in respect of a loan exceeds twice the principal of the original loan,
(b) on account of interest outstanding on the date up to which such liability is computed, a sum greater than the principal outstanding on such date,
2828. Sub-clause (c) subs. by W.B. Act 21 of 1965, which was earlier as under: "(c) interest at a rate per annum exceeding in the case of (i) unsecured loan, ten pe
Sec. 30A Ins. by W.B. Act 4 of 1981, w.e.f. 2.2.1981. Notwithstanding anything contained in any law for the time being in force or in any agreement, no borrower of a commercial loan shall be liable to pay any interest other than simple interest at a rate per annum not exceeding in the case of
(i) unsecured loan-twenty per centum;
(ii) secured loan-seventeen per centum.
Sec. 31 subs. by W.B. Act 21 of 1965, which was earlier as under: "31. Prohibition of Interest on decretal amount. Notwithstanding anything contained in any law for the time being in force, no Court shall, In any decree passed in any suit to which this Act applies (a) If the loan to which the decree relates was advanced before the commencement of this Act, allow any interest on the decretal amount, or (b) if the loan to which the decree relates was advanced after the commencement of this Act, allow any interest other than interest not exceeding six per centum per annum on the principal sum adjudged.". Notwithstanding anything contained in any law for the time being in force or in any agreement, no Court shall, in any decree passed in any suit to which this Act applies or in any suit brought by a 32[borrower other than a borrower of commercial loan] for relief under section 36, allow any interest exceeding six per cent. per an
In the case of loans in kind, the money value of the commodity at the time when, and in the locality where, the loan was advanced shall, for the purposes of this Act, be deemed to be the principal of the loan, and in determining the amount which may, subject to the provisions of this chapter, be decreed in respect of any loan repayable in kind, the Court shall take into consideration the market value of the commodity in the said locality at the date or dates of repayment.
Any agreement between a lender and borrower or intending borrower for the payment to the lender of any sum on account of costs, charges or expenses incidental 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 lender by the borrower or intending borrower as, for or an 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, be set off against the amount actually lent and that amount shall be deemed to be reduced accordingly:
Provided that nothing in this section shall debar a lender from recovering the costs of investigating title, of stamp duty and registration of documents and other necessary and incidental expenses in cases where the agreement includes a s
(1) Notwithstanding anything contained in any law for the time being in force, or in any agreement, the Court shall
(a) in suits in respect of loans to which the provisions of Order XXXIV of the First Schedule to the Code of Civil Procedure, 1908, apply, on the application of the defendant and after hearing the plaintiff, notwithstanding the limit of six months provided therein, direct at the time of the passing of the preliminary decree under rule 2 or rule 4 of the said Order to the effect mentioned in sub-clause (i) of clause (c) of sub-rule (1) of the said rule 2,
(i) that the payment of the amount found or declared due under sub-rule (1) of rule 2 or sub-rule (1) of rule 4 of the said Order, as the case may be, is to be made, subject to such conditions as the Court may impose in such
Notwithstanding anything contained in any other law for the time being in force, the proclamation of the intended sale of property in execution of a decree passed in respect of a loan shall specify only so much of the property of the judgment-debtor as the Court considers to be saleable at a price sufficient to satisfy the decree, and the property so specified shall not be sold at a price which is less than the price specified in such proclamation:
Provided that, if the highest amount bid for the property so specified is less than the price so specified, the Court may sell such property for such amount, if the decree-holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest amount bid and the price so specified.
(1) Notwithstanding anything contained in any law for the time being in force 3333. Words ins. by W.B. Act 21 of 1965. [or in any agreement], if in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section whether heard ex parte or otherwise, the Court has reason to believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appropriate, namely, shall
(a) reopen any transaction and take an account between the parties;
3434. Clause (b) subs. by W.B. Act 21 of 1965. which was earlier as under: "(b) notwithstanding any agreement, purporting to close previous dealings and to create new obligations, reopen any account already taken b
Notwithstanding anything contained in any law for the time being in force, no Court shall order execution of a decree passed in any suit to which this Act applies by arrest and detention in prison of the judgment- debtor.
In the case where any loan is secured by a mortgage and the mortgagor ostensibly sells the mortgaged property on any of the conditions specified in sub-section (c) of section 58 of the Transfer of Property Act, 1882, then, notwithstanding anything to the contrary contained in the proviso to the said sub-section, the transaction shall always be deemed to be a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale for the purposes of the said sub-section.
(1) Any borrower may make an application at any time to a Court which would have jurisdiction to entertain a suit by the lender for the recovery of the principal and interest of a loan made before or after the commencement of this Act for taking accounts and for declaring the amount due to the lender. Such application shall be in the prescribed form and shall be accompanied by a fee of one rupee, and on receipt of such application the Court shall cause a notice thereof to be served on the lender.
(2) The Court shall thereafter take an account of the transactions between the parties and shall declare the amounts, if any,
(a) payable and already due,
(b) payable but not yet due, by the borrower to the
(1) Where any sum of money has been declared under sub-section (2) of section 38 to be payable by the borrower to the lender as principal of interest or both, or where a borrower has sent to a lender by postal money order any sum of money due from him to the lender in respect of a loan and the lender has refused to accept the same, the borrower may apply in the prescribed manner to the Civil Court of the lowest grade having jurisdiction over the place where he resides for permission to deposit the said sum in Court to the account of the lender, and the Court shall keep the said sum in deposit.
(2) The Court shall thereupon cause notice of the deposit to be served on the lender, and the lender may, on presenting a petition, verified as for a plaint and stating the sum them due in respect of the loan and his willingness to accept the mon
(1) No lender shall take from a borrower or intending borrower any note, promise to pay, power of attorney, bond or security which does not state 40[the address of the borrower, the date and place of the transaction,] the actual amount of the loan, the rate of interest charged and the time, if any, within which the principal is stipulated to be repaid in full, or which states any of such particulars incorrectly, nor shall he take from any borrower or intending borrower any instrument in which any entry is left blank for completion at a later date.
(2) Whoever intentionally contravenes the provisions of sub-section (1) shall, on conviction, be punishable with simple imprisonment which may extend to six months or with fine which may extend to one thousand rupees or with both.
(1) Whoever molests, or abets the molestation of, a debtor for the purpose of recovering or attempting to recover, a debt shall be punishable, on conviction, with imprisonment which may extend to one year or with fine which may extend to one thousand rupees or with both.
Explanation. For the purposes of this section, a person who, with intent to cause another person to abstain from doing any act which he has a right to do or to do any act which he has a right to abstain from doing,
(a) obstructs or uses violence to or intimidates such other person, or
(b) persistently follows such other person from place to place or interferes with any property owned or used by him or deprives him of, or hinders him in the use thereof, or
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(1) When any moneylender or any servant or agent of, or any person responsible for the management of the money-lending business of, money-lender knowingly and wilfully commits, authorises or permits any default in complying with, or any contravention of, any provision of this Act, if the money-lender or such servant, agent or person is
(a) an individual, such individual, or
(b) an undivided Hindu joint family, any member of such family who is knowingly and wilfully a party to such default or contravention, or
(c) a body corporate, any director or officer of such body who is knowingly and wilfully a party to such default or contravention, or
(d) an unicorporated body, any member of such body who is know
No suit, prosecution or proceeding shall lie against any 4343. Word subs. for the words "servant of the Government" by W.B. Act 21 of 1965. [person]4444. Words "In India" om. by the Adaptation of Laws Order. 1950. *** * * for anything which is in good faith done or intended to be done under this Act.
(1) The 4242. Word subs. for the word "Provincial" by the Adaptation of Laws Order, 1950. [State] Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for the following matters, namely;
(a) the conditions referred to in the proviso to section 3;
(b) the control to be exercised by the 42[State] Registrar over Registrars and Sub-Registrars and by a Registrar over Sub-Registrars;
4545. Clause (bb) ins. by W.B. Act 21 of 1965. (bb) the manner of appointment and qualifications of Inspectors
The Bengal Money-lenders Act, 1933, shall not apply to any loan to which this Act applies nor to any transaction connected with such loan.
Sec. 45A Ins. by W.B. Act 21 of 1965 The following Acts are hereby repealed, namely:
(1) the Usury Laws Repeal Act, 1855, in so far as it applies to West Bengal; and
(2) the Usurious Loans Act, 1918, in so far as it applies to West Bengal, except in cases relating to matters enumerated in sub-clauses (d), (e), (f), (h) and (i) of clause (12) of section 2.
SCHEDULE 1
THE SCHEDULE
[Sections 14 (1) (b) and 15.]
.Any offence punishable under any of the following sections of the Indian Penal Code, namely, sections 379 to 382, 384 to 389, 392 to 404, 406 to 409, 411 to 414, 417 to 424, 449, 450, 451 (with intent to commit theft), 454 (with intent to commit theft), 455, 457 (with intent to commit theft), 458 to 462, 465, 477 and 477A or under section 52 of the Indian Post Office Act, 1898.
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