Rai Shyam Bahadur vs Rameshwar Prasad Rohatgi and Another

Agarwala, J.—C.R. 280 of 1941. On 2nd May 1939 defendant 2 as the legally appointed guardian of defendant 1 who was then a minor, borrowed from the plaintiff a sum of Rs. 350. This loan was contracted with the sanction of the District Judge and a handnote in evidence of it was executed in which defendant 2 described himself as the guardian of defendant 1 and signed the handnote in that capacity. Sometime later in the year (the month appears to be November) steps were taken to remove defendant 2 from the guardianship of the minor and for a fresh guardian to be appointed. A fresh guardian was appointed sometime during the end of the year 1939. The minor attained his majority during the pendency of the present suit, which was instituted in the Court of Small Causes. The defence to the suit was that the money had not been borrowed at all or that if it was borrowed, it was not borrowed on behalf of the minor. The Court below, in view of the fact that the District Judge had sanctioned the loan, found no difficulty in holding that the loan had been contracted on behalf of the minor.

It has, however, been strenuously contended on behalf of defendant 1 in this Court that no loan was in fact taken at all. Reference has been made to the fact that the plaintiff is a nephew of the defendant who was the guardian of the minor at the time of the loan, and largely from this circumstance, it has been argued that no money was advanced at all. The books of the parties were produced at the trial and in the defendants'' book there is an entry showing that Rs. 350 was received as a loan on 2nd May 1939 and on the other side are entries showing that the greater part of this money was expended in discharge of obligations of the minor''s estate on the very same date. It has been argued that there was no necessity for this loan because it has been admitted that there were (various sums of money in the hands of the estate on 2nd May. It may be assumed that at the various t places where portions of the estate are situated there was money which the servants of the estate received from the tenants; but at the head-quarters of the estate the books show that the amount in hand at head-quarters was very considerably less than the amount which was spent there on 2nd May and this amount could not have been spent in discharge of the estate''s obligations but for the receipt of Rs. 350 from the plaintiff. There is nothing in the evidence in this case to suggest that the entries in the defendants'' books relating to the sums spent on behalf of the estate on 2nd May 1939 are not genuine. The only criticism that can be levelled against these entries is that the entries were made at the time that defendant 2 was the guardian of the minor''s estate. The entries, however, as I have stated, have not been shown to represent fictitious payments and from the books, in my opinion, it is quite clear that the estate received Rs. 350 on 2nd May and that most of it was spent on behalf of the estate on that date.

It has been argued that the guardian had no right to bind the minor or his estate by a contract; but the Court below has quite rightly relied on the decision in Benares Bank Ltd. Vs. Dip Chand and Another, which was a case of a handnote executed by the guardian of a minor as evidence of a loan contracted by the guardian on behalf of the minor with the sanction of the District Judge. The facts of that case are on all fours with the present case so far as this point is concerned and in my view the decision of the Court below should be upheld.

The result is that Civil Revision No. 280 must be dismissed with costs; Hearing fee one gold mohur.

Civil Revision No. 279--The facts of this case are precisely the same as those of the case just dealt with except in one particular. The parties are the same, the amount of the loan is the same, but the date on which the loan was taken was 9th June 1939. Before this loan was contracted the Money-Lenders Act of 1939 had been enacted. Section 4 of that act debars a Court from entertaining a suit for the recovery of a loan advanced after the commencement of the act unless the money-lender was registered under the previous act of 1938 or unless he was registered within six months of the commencement of the act of 1939. The plaintiff in this case was not registered under the Act of 1938 and by the time he was registered under the present Act six months from its commencement had expired. Prima facie, therefore, the plaintiff is not entitled to recover the amount advanced on 9th June 1939.

It is, however, contended that he is exempted from registration by reason of a notification issued by the Local Government in exercise of the powers conferred on it by Section 3 of the Act. That section empowers a Provincial Government by a notification to exempt any olass of money-lenders'' loans from the operation of all or any of the provisions of the Act. By a notification issued on 19th July 1939 the local Government exempted from the operation of Section 4 of the act persons who in the course of a year have not advanced more than Rs. 500. The learned Small Cause Court Judge on an examination of the plaintiff''s bahi found that the only amount which the plaintiff bad advanced after the date when the act came into force, that is to say, after 3rd May 1939, was the sum of Rs. 350 which was advanced to the defendants. On behalf of the defendants it is contended that that circumstance alone is insufficient to invite the application of the notification and that the bahi relied upon by the Small Cause Court Judge shows that during the year 1939, that is to say, 1st January until 31st December of that year, several sums had been advanced to various people aggregating very much more than Its. 500. It is contended on behalf of the plaintiff that as all these sums were advanced before the Act came into force, the Act does not apply to them at all. It appears that the reason for the exemption, as stated in the notification itself, was to avoid the necessity for the registration of persons who merely made casual advances to friends and so on, provided that the transactions of this nature did not exceed Rs. 800 in any one year. That was the test prescribed by the Local Government for the purpose of deciding whether a person should be exempted from registration. Ordinarily year means a period from 1st January to the following 31st December and I see no reason why in deciding whether a person is of that class to which the notification was intended to apply, this definition of year, which is given in the General Clauses Act, should not be enforced. In this view of the matter the plaintiff was a person not exempt from registration by the notification and, therefore, is a person whose suit is barred by Section 4 of the Act. The result is that so far as this sum advanced on 9th June 1939 is concerned, the plaintiff is debarred from recovering it and the decision of the Small Cause Court Judge must be set aside in respect of this sum. The defendant is entitled to his costs throughout; the hearing fee in this Court is assessed at one gold mohur.