TMI Blog1961 (9) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... The applicant did not produce her certificate of registration required to be taken under Section 11-B of the Central Provinces and Berar Moneylenders Act, 1934 (hereinafter called the Act). She did not prove that the non-applicants executed the promissory note or that there was any consideration for it. Thereupon, the applicant filed a revision and subsequently produced her registration certificate, which she had applied for and obtained during the pendency of the suit, with an application for receiving the certificate as additional evidence under Order 41 Rule 27 Civil Procedure Code. On the evidence led in the case, Tare J., who heard the revision, took the view that the exception of the promissory note and the consideration paid therefore were duly established. He was also inclined to admi the registration certificate as additioual evidence. But he felt that the question involved should be referred to a larger Bench for reasons which may be given in his own words : The case of Shamshir Ali v. Ratanji AIR 1952 Hyd 58 (FB), relied on by a Division Bench of this Court in Patiram v. Baliram ILR (1953) Nag 997 : (AIR 1954 Nag 44), was subsequently overruled by another Full Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act for carrying on the business without a valid registration certificate. (Page 1008 of ILR Nag): (p. 48 of AIR) Both before and after Patiram's case ILR (1953) Nag 997 : 'AIR 1954 Nag 44), the same view has been consistently taken by this Gouit by Bose J, (as he then was) in Laxman v. Yogaji, Civil Revn. No. 770 of 1941, D/-2-12-1942 (Nag.), by Hidayitullah J. (as he then was) in Sukbdias v. Pundahk, Civil Kevn. No. 744 of 1949 (Nag, by V. R. Sen, J. in Nilkanth Naik v Sonya, Civil Revn. No. 403 of 1951, D/- 27-2-1952 (Nag), by Sinha C. J. (as he then was) in GanuJal v. Mahadeo, Civil Revn. No 41 of 1952, DA 6-11-1952 (Nag), by R. K. Rao J. in Vishwanathrao v. Mahadeo Civil Revn. No. 543 of 1952, D/- 30-9-1953 (Nag), by Naik J. in Hiralal v. Sudarsban, Second Appeal No. 81 of 1952, D/- 30-8-1957 (MP), and bv T. C. Shrivastava J. in Lallooram v. Rameshwarprasad, Civil Revn. No. 29 of 1957, D/- 5-12-1957 (MP). I should hesitate to depart from the view taken in these decisions which is not manifestly erroneous or mischievous and which has stood for many years because, from its very nature, it may be supposed to have affected the conduct of numerous persons in mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no provision for registering money-lenders. The Amendment Act XIII of 1936, which remained in force for four years, provided for the first time for registration of money-lenders and matters incidental thereto. Thereafter, by the Central Provinces Money-lenders (Amendment) Act, 1940 (XIV of 1940), Sections 11-A to 11-I were inserted, by Section 11-B, every person, who carries on or intends to carry on the business of moneylending, is required to register himself in every district in which he carries on, or intends to carry on, the business. It is implicit in this provision that any one may apply for so doing and, on his paying the prescribed fee, the Sub-Registrar shall grant to him a registration certificate, which, under Section 11-C will now be valid, when so granted, for a period of one year or two years . Section 11-D provides that the registration certificate granted for one district does not entitle the holder thereof to carry on the business of moneylending in any other district. Sections 11-F, 11-G and 11-H, which in the sequel will be examined more fully, enact as follows : 11-F. (1) No person shall carry on the business of moneylending in any district unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a penalty on any unlicenced person acting as a broker. Parke B. observed:- It is perfectly settled, that where the contract which the plaintiff seeks to enforce, be it express or implied, is expressly or by implication forbidden by the common or statute law, no court will lend its assistance to give it effect. It is equally clear that a contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies a prohibition...... And it may be safely laid down, notwithstanding some dicta apparently to the contrary, that if the contract be rendered illegal, it can make no difference, in point of law, whether the statute which makes at so has in view the protection of the revenue, or any other object. The sole question is, whether the statute means to prohibit the contract...... . After examining the provisions of the Act, Parke B. went on to say that the language shews clearly that the legislature had in view as One object, the benefit and security of the public in those important transactions which are negotiated by brokers. The clause, therefore, which imposes a penalty, must be taken ........to imply a prohibition of all u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use it is only certain persons who can by law obtain such certificates. In that respect, the case is different from Smith v. Mawhood, where the object of the Legislature was to compel the obtaining of licenses, which any one might obtain, to deal in a particular commodity . In St. John Shipping Corporation v. Joseph Rank Ltd., 1957-1 QB 267, it was contended that the contract in question was impliedly prohibited by a statute. Deolin, J. who dealt with the case, referred to a quotation from (1836) 2 M and W 149 (which I have reproduced earlier), and observed: Now this language--and the same sort of language is used in all the cases--shows that the question always is whether the statute meant to prohibit the contract which is sued upon. One of the tests commonly used, and frequently mentioned in the later cases, in order to ascertain the true meaning of the statute is to inquire whether or not the object of the statute was to protect the public or a class of persons, that is, to protect the public from claims for services by unqualified persons or to protect licensed persons from competition. Lord Halsbury has summed up the law m these words : Where a penalty is impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng obviously illegal, or at any rate to bring them into Court; so the kind of question which arises in practice under this head is whether an act, or some part of a series of acts, agreed upon between parties, does or does not contravene some legislative enactment or regulation made by lawful authority. The decision may turn on the construction of the agreement itself, or of the terms of the Act or other authoritative document in question, or on both. In particular it may have to be considered whether the intention of the legislator was to prevent certain things from being done, or only to lay down terms and conditions on which they might be done .... Broadly speaking, that which has been Forbidden in the public interest cannot be made lawful by paying the penalty for it. ..... , (Indian Contract Act, 8th Edition, page 158) In view of the authorities noticed in the last two paragraphs, the position is well settled. When an enactment merely imposes a penalty, without declaring a contract made in contravention of it to be illegal or void, the imposition of the penalty, by itself and without mure, does not necessarily imply a prohibition of the contract. In such cases, the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility to pay tax under Section 3 of the Act lies are known to the State so that it may realise the tax from them. The challenge therefore to the constitutionality of Section 4 (1) must fail. These observations are important as indicating the object of making a provision like Section 11-F of the Act in a revenue statute. This brings me to the main question which is whether Section 11-F of the Act providing for compulsory registration of moneylenders with a penalty for its infraction was enacted with the object of protecting the general public or any class thereof. Preambles, which are integral parts of .statutes. have often been regarded as important guides to construction. If an enactment is not clear, resort may be had to the preamble to explain it. However, in Powell v. Kempton Park Racecourse Co. 1899 AC 143 at p. 157, the Earl of Halsbury explained its limitation in these words : Two propositions are quite clear, one that preamble may afford useful light as to what a statute intends to enact, and the other that if an enactment is itself clear and unambiguous, no preamble can qualify or cut down the enactment. Since the intention of the Legislature in the sense in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ILR Nag) : (pp. 46-7 of AIR)) The learned counsel for the non-applicants had to concede that registration of money-lenders made no difference in the position of their debtors. However, relying upon the observations made by Buckley, J. in Victorian Daylesford Syndicate, Ltd. v. Dott. (1905) 2 Ch 624, he said that a money-lender had to deal obviously and notoriously with his debtors for their protection and therefore he was required to get himself registered. I think these observations do not have, and at no time had, any bearing on the conditions obtaining in this State. In connexion with the submission just mentioned, we are referred to Section 2 of the English Money-lenders Act of 1900 and the way in which that section was construed in (1905) 2 Ch D 624 (supra), Bonnard v. Dott, 1906-1 Ch 740, White-man v- Sadler 1910 AC 514, In re, Robinson's Settlement, Gant v. Hobbs, 1912-1 Ch 717, Cornelius v. Phillips 1918 AC 199 and Vorst v. Cold-stem, 1924-2 KB 372. Section 2 of the English Act reads as follows : 2. (1) A money-lender as defined by this Act : (a) shall register himself as a money-lender in accordance with regulations under this Act, at an office provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for an enactment of that kind. The English Act was founded on the report of a Select Committee of the House of Commons which sat for two Sessions in 1897 and 1898. The Committee inter alia reported : The evidence shows that money-lending transactions frequently owe their inception to misrepresentation of a fraudulent character . A professional money-lender, after exposure under different aliases, will sometimes resort to such descriptions as a 'wealthy capitalist residing in a private house', a 'widow lady', a bank , a 'finance and advance corporation', or even a bank expressly incorporated under act of parliament to advance money at a low rate of interest to respectable persons'. Having regard to the mischief which had to be cured as well as to the cure provided, it would appear that, in the English Act, registration of the name and address of every money-lender was made compulsory in order to remedy the evil flowing from the methods mentioned in the report which he adopted for enabling him to make fraudulent misrepresentations to his debtors. It was for this reason that Buckley, J. observed in 1905-2 Ch 624 (supra), as follows : The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, by carrying on the trade in a house in which these requisites are not complied with; and there is no addition to his criminality if he makes fifty contracts for the sale of tobacco in such a house. It seems to me, therefore, that there is nothing in the act of Parliament to prohibit every act of sale, but that its only effect is to impose a penalty, for the purpose of the revenue, on the carrying On of the trade without complying with its requisites. (Page 464). In this view, an unregistered moneylender cannot be punished undcr Section 11-F for every advance of loan made by him in the course of his business. Indeed, an individual transaction is not within the mischief of that section at all. Since the Act does not declare every loan advanced in contravention of Section 11-F of the Act to be illegal and void, it is permissible to ascertain the intention of the Legislature in enacting that section ex-visceribus actus. Lord Coke said long ago : It is the most natural and genuine exposition of a statute to construe one part of a statute by another part of the same statute, for that best expresseth the meaning of the makers ...... and this exposition is ex visceribus ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t then see what light is thrown on the true view to be taken of the definition clause by other provisions of the Act or even by the aim and provisions of subsequent statutes amending the Act. or dealing with the same subject-matter . (Pages 132-33 (of SCR) : (at p. 127 of AIR)). As shown, Section 7 of the Act requires the Court trying any suit or proceeding relating to a loan to decide, before considering the claim on merits, two preliminary questions, one whether the money-lender, maintained accounts in the manner prescribed and the other whether he furnished to the debtor annual statements of account. Obviously, even these preliminary questions would not arise in the case of a loan advanced by an unregistered money-lender if, as contended, the loan is illegal and void. Therefore, in all such cases, the initial question would be whether the money-lender was duly registered at the time when he advanced the loan. The Legislature, which disclosed an awareness of the need for trying certain matters in contest as preliminary questions, did not require that this matter also be decided before considering the claim on merits. Nay, it made, as I will show in a moment a contradicting pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present and continuously (Halsbury's Laws of England, HailsKam Edition, Vol. XXXI, p. 572; Legislative Methods and Forms : Sir Churtney Ilbert, page 248; and Legislative Drafting and Forms : Sir Alison Russel, Fourth Edition, page 107). So regarded the expressions aforesaid used in the present tense have reference to the time when the suit is about to proceed. It is at that stage that the money-lender must, before the suit can proceed, satisfy the Court that he holds a valid registration certificate or that he does not carry on the business of money-lending in any district of the State. I agree that the two alternatives, if modified as suggested, would not be inapplicable, the first referring to the requirement of having a registration certificate at the time of the advance and the second envisaging the rare case of a money-lender of another State, who, having advanced the loan in his own State, prefers to bring his suit for its recovery in a Court in this State. But this, by itself, can be no reason for adopting the modifications, including addition of words, suggested by the learned counsel. The general rule is not to import into statutes words which are not there. Only wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afford to his debtors any additional protection not available under the other provisions of the. Act. An unregistered money-lender can be punished only for the collective act of carrying on the business of money-lending and not for every loan advanced by him without a registration certificate. In a money-lender's suit, his failure to obtain a registration certificate is not regarded as a vital consideration and is, for that reason, not required to be tried before considering the case on merits. On the other hand, Section 11-H of the Act envisages that a loan advanced by an unregistered moneylender can be recovered by him. if he subsequently obtains a registration certificate which is in force at the time of his suit. These considerations clearly indicate that Section 11-F was not enacted for the protection of persons dealing with money-lenders. Its only object appeals to be the protection of the revenue. This conclusion is further supported by the fact that the annual fee payable for a registration certificate was subsequently raised from ₹ 4/8/- to ₹ 12/-. Therefore, on the basis of the principles already stated, a loan advanced by an unregistered money-lender c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n similar to Section 9 (2) of the Hyderabad Act. In 1958 Nag LJ 294 (supra), a Division Bench of the Bombay High Court, which was required to construe Sections 11-F and 11-H of the Act. expressly dissented from the view taken in Patiram's case for these reasons : (i) In Patiram's case ILR (1953) Nag 997 : (AIR 1954 Nag 44), reliance was placed upon Shamshir Ali's case ILR (1952) Hyd 95 : AIR 1952 Hyd 58 (FB), which was subsequently overruled. (ii) According to Section 11-H, the money-lender had to show that he held a valid registration certificate at the time of the transaction or that he was not then required by law to hold such a certificate. (iii) There is no provision in the Act similar to Section 10 of the Bombay Money-lenders Act, providing for stay of the suit in order to give to the money-lender an opportunity to apply for and obtain a registration certificate. (iv) Section 11-F is a bar against doing any money-lending business at all without obtaining a certificate of registration. The first two reasons have already been considered. In regard to the third, it is implicit in Section 11-H that an opportunity has to be given to the money-lender, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
