Case: Associated Timber Inds.  Vs. Central Bank Of India

(1) of Section 6 of the Act. Thus it is abundantly clear that the essence of banking is the relationship which is brought into existence at the time of the deposit into existence at the time of the deposit; that is the core of banking. It is true that the business of banking covers every possible phase or combination of deposit, custody, investment, loan, exchange, issue and transmission of money, creation and transfer of credit and other kindred activities but if the essential characteristic of banking namely the power to receive deposits from the public which are repayable in the manner indicated in Section 5(1)(b) of the Banking Companies Act is absent and merely the power of granting loans is retained and exercised that, in my view does not make the company a banking company. Lending of money may be one phase of a banking business but it is not the main phase or the distinguishing phase." 35. In the case of Reserve Bank of India v. Peerless General Finance and investment Co. Ltd. and others, 1987(1) SCC 424 a Bench of learned two Judges of this Court considered the validity of the provisions of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 made the following observations regarding interpretation of inclusive definition in statute. "Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know whey it was enacted. With this knowledge, the statute must be read, first as a whole and then Section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses we must look at the Act as a whole and discover what each Section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the Court construed the expression `Prize Chit in Srinivasa 1981(1) SCR 801 and we find no reason to depart from the Courts construction." 2 36. Here we may also take note of the definition of the expression `money-lenders in some other State Money-Lenders Acts. 37. In Bombay Money-Lenders Act, 1946 Section 2 clause (10) provides that money-lender means (I) an individual, or (ii) an undivided Hindu family; or (iiia) a company or (iv) an unincorporated body of individuals, who or which (a) carries on the business of money-lending in the State or (b) has his or its principle place of such business in the State and includes a pawn-broker but does not include - (I) Government (ii) a local authority (iii) a bank(iv) the Agricultural Refinance Corporation constituted under the Agricultural Refinance Corporation Act, 1963; or (v) any other banking financial or any institution which the State Government may, by notification in the Official Gazette, specify in this behalf. 38. The expression `business of money-lending is defined in Section (2) to mean the business of advancing loans whether in cash or kind and whether or not in connection with or in addition to any other business. 39. In Tamil Nadu Money-Lenders Act, 1957 the expression `money lender is defined in Section 2(8) to mean a person whose main or subsidiary occupation is the business of advancing and realizing loans, but excludes a bank or a co-operative society. The explanation to the said Section lays down that where a person who carries on in the (State of Tamil Nadu) the business of advancing and realizing loans is resident outside the State of Tamil Nadu, the agent of such person resident in the State of Tamil Nadu shall be deemed to be the money-lender in respect of that business for the purpose of the Act. 40. In the Bengal Money-Lenders Act, 1940 it is provided that loan means an advance whether of money or in kind, made on condition of repayment with interest and includes any transaction which is in substance a loan but does not include ......(d) a loan advanced before or after the commencement of this Act (I) by a bank; or (ii) by a co-operative life insurance society, co-operative society, insurance company, life assurance company (Life Insurance Corporation of India) mutual insurance company, provident insurance society or provident society or from a provident fund. The term `money-lender is defined in Section 2(13) of that Act to mean a person who carries on the business of money-lending in West Bengal or who has a place of such business in West Bengal and includes a pawnee as defined in Section 172 of the Indian Contract Act, 1872. 41. From the provisions in the other State enactments also it is clear that the legislatures have taken caution to exclude banks from the operations of the statutes presumably with a view to avoid any conflict with the Parliamentary enactment. Unfortunately, the Assam Money-Lenders Act, 1934 does not incorporate any such provision in it. It may be noted here that `banking is covered under item No. 45 in List-I of the Union List of the VII Schedule of the Constitution, while `Money-lending and `Money-Lenders; Relief of Agricultural indebtedness comes under Item 30 of List II - State List of the VIIth Schedule.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]36. Here we may also take note of the definition of the expressionin some other State. In BombayAct, 1946 Section 2 clause (10) provides thatmeans (I) an individual, or (ii) an undivided Hindu family; or (iiia) a company or (iv) an unincorporated body of individuals, who or which (a) carries on the business ofin the State or (b) has his or its principle place of such business in the State and includes abut does not include(I) Government (ii) a local authority (iii) a bank(iv) the Agricultural Refinance Corporation constituted under the Agricultural Refinance Corporation Act, 1963; or (v) any other banking financial or any institution which the State Government may, by notification in the Official Gazette, specify in this behalf.The expression `business ofis defined in Section (2) to mean the business of advancing loans whether in cash or kind and whether or not in connection with or in addition to any other business.In Tamil NaduAct, 1957 the expression `money lender is defined in Section 2(8) to mean a person whose main or subsidiary occupation is the business of advancing and realizing loans, but excludes a bank or asociety. The explanation to the said Section lays down that where a person who carries on in the (State of Tamil Nadu) the business of advancing and realizing loans is resident outside the State of Tamil Nadu, the agent of such person resident in the State of Tamil Nadu shall be deemed to be thein respect of that business for the purpose of the Act.In the BengalAct, 1940 it is provided that loan means an advance whether of money or in kind, made on condition of repayment with interest and includes any transaction which is in substance a loanbut does not include......(d) a loan advanced before or after the commencement of this Act (I) by a bank; or (ii) by alife insurance society,society, insurance company, life assurance company (Life Insurance Corporation of India) mutual insurance company, provident insurance society or provident society or from a provident fund. The termis defined in Section 2(13) of that Act to mean a person who carries on the business ofin West Bengal or who has a place of such business in West Bengal and includes a pawnee as defined in Section 172 of the Indian Contract Act, 1872.From the provisions in the other State enactments also it is clear that the legislatures have taken caution to exclude banks from the operations of the statutes presumably with a view to avoid any conflict with the Parliamentary enactment. Unfortunately, the AssamAct, 1934 does not incorporate any such provision in it. It may be noted here that `banking is covered under item No. 45 inof the Union List of the VII Schedule of the Constitution, while; Relief of Agricultural indebtedness comes under Item 30 of List IIState List of the VIIth Schedule.