Mohd. Maqdoom Madani and another vs Chunilal

Ahmed Mohiuddin Ansari, J.—This is a revision petition by the defendant against the Order of the Court of Small Causes, deciding that the Plaintiff must be considered, under the circumstances of the case to be a licence-holder, and as such, the suit will be decided on merits. The facts relating to this Order are that:

The plaintiff was a licensed money-lender up to 9-4-1357 Fasli. After the expiry of this, he did not have his licence renewed. Later on, after the expiry of about a year, he gave a fresh application for a licence on 2-3-1358 P. But before the licence could be issued under the application, the plaintiff advanced a loan on a Promissory Note to the defendant on 11-3-1358 F. It is admitted that on this date the plaintiff was not in receipt of a licence from the Government.

The learned Judge of the Small Causes Court holds that in view of the fact that the plaintiff was previously a licence holder and had already applied for a renewal of the licence which was eventually granted, he must be considered to have been a licence-holder on the date this transaction took place.

The learned Advocate for the petitioner argues that u/s 3, Sub-section 5 plaintiff was prohibited from transacting money-lending business and the mere fact that he had applied for a licence was not enough to declare him a licence-holder. On account of the non-observance of Section 3, Sub-section 5, the transaction is null and void. He cites 1951 Hyd L R 349 and ''Govind Singh v. Vali Mahomed'', AIR 1951 Hyd 44, and in both these decisions it was laid down that any contract in violation of the provisions of Section 3 of the Hyderabad Money Lenders'' Act will not be enforceable.

In reply it is urged on behalf of the respondent that u/s 3 it was incumbent upon him to have applied for the licence and pending the grant of the same, he was not expected to stop all his business and wait. He did every thing that was required of him, and it was on the part of the Government to have issued a licence to him at once, therefore he has committed no breach by carrying on his business.

But whatever the fault of the Officers of the Government Department concerned, there is no denying the fact that on the date this transaction took place, plaintiff was not in possession of a licence, and as such, he was not authorised to lend money to the defendant and u/s 9 of the Hyderabad Money Lenders'' Act, as was decided by the two rulings referred to above, this contract is not enforceable.

Another argument of the respondent is that according to the defendant he had money dealings with the plaintiff even before the execution of the Promissory Note, and the money-lending actually took place at a time when the plaintiff was a licence-holder. But in my opinion, no weight can be attached to this argument. This is not what the plaintiff has said in his plaint, according to which the transaction of lending took place on 11-3-1358 P., and he cannot go back upon it.

I do not agree with the contention that since the plaintiff had applied for a licence his transaction could be considered a bona fide one and he himself a licence-holder, In view of the fact that he eventually got a licence which covered this period also, for, the provisions of Section 3, Subsection 5 are quite clear and the licence had no retrospective effect. Petition is, therefore, allowed with costs, and the Order of the Lower Court set aside. The suit is dismissed without costs.