Case: Modhusudano Mollana Vs. Kontaru Naiko &amp; Others

1. This appeal, by special leave, is against the decree of the High Court of Orissa reversing the decree of the Court of the Subordinate Judge, Berhampur and dismissing the plaintiffs suit for recovery of Rs. 8,216 due on a promissory note executed by Kontaru Naiko, defendant No. 1 for Rs. 6,0002. The plaintiff money-lender obtained a registration certificate under S. 5 (4) and R. 5 ofthe Orissa Money-Lenders Act, 1939 (Act III of 1939), hereinafter called the Act, and the rules thereunder on March 31, 1952. He obtained another registration certificate in 1955 which said that the maximum capital for which the certificate is granted is Rs. 8,0003. The plaintiff advanced the loan to defendant No. 1 on May 19, 1954 and sued for the recovery of the amount due on this loan. It was contended for the defendant that the suit was not maintainable as the maximum capital for which the plaintiff had required the registration certificate in 1952 was Rs. 2,000 and under the provisions of the act and the rules framed thereunder, he could not have advanced loan in excess of that amount and that his doing so made the registration of the appellant as a money-lender void and, therefore, the suit for recovery of Rs. 2,000 even was not maintainable. These contentions were not accepted by the trial Court which decreed the suit against the defendants with the direction that defendants Nos. 2 and 3 sons of defendant No. 1, were not personally liable and were liable to the extent of the assets of their father in their hands. The High Court, however, took a different view, accepted the aforesaid contentions of the defendants and dismissed the suit.

Court's reasoning:
9.We hold that in the absence of any specific provision in the Act in this case providing for the fixing of the maximum capital which a money-lender can invest in money-lending business, it was not open to the State Government to frame a rule in that regard and that the rules framed by it about mentioning, in the application, the maximum capital for which the registration certificate was wanted and the mention in the certificate that the amount of the maximum capital for which the certificate is granted, do not lead to the conclusion that the registration of the money-lender will become void if he exceeds the limit of the maximum capital laid down in the registration certificate10. We do not consider it necessary now to decide the other point raised with respect to the retrospective operation of the registration certificates of higher denomination obtained during the currency of a registration certificate8. The question for decision in this case is practically the same as came up for decision before this Court in Sant Saranlal v. Parsuram Sahu, Civil Appeal No. 248 of 1964: (AIR 1966 SC 1852 ), judgment in which has been delivered today. The relevant provisions of the Bihars Act, 1938 and the Bihars (Regulation of Transaction) Act, 1938 are practically similar to the relevant provisions of the Orissa Act mentioned above. What we have said in that case appropriately covers the contentions of the parties in this case. We do not, therefore, consider it necessary to repeat the discussion of the various contentions in this case.