ASSOCIATED TIMBER INDUSTRIES AND ORS. versus CENTRAL BANK OF INDIA AND ANR.

Citation: [2000] SUPP. 2 S.C.R. 310 · Decided: 09-08-2000 · Supreme Court of India · Bench: D.P. MOHAPATRA · Disposal: Dismissed

Judgment (excerpt)

A 
ASSOCIATED TIMBER INDUSTRIES AND ORS. 
v. 
CENTRAL BANK OF INDIA AND ANR. 
AUGUST 9, 2000 
B 
[D.P. MOHAPATRA AND SHIVRAJ V. PATIL, JJ.] 
Assam Money Lender's Act, 1934-Sections 2(1)(3) and 7-D-Banking 
Regulation Act, 1949-Sections 2. 5(b)(c), 6(1 )(a) to (o) and 6(2)-Bank isnot 
a money lender under the Money Lender's Act-Banks do not come under the 
C 
preview of the Act-The provisions of enactments bring forth wide difference 
in the fields of operation of Banks and activities of money lenders-Consti-
tution of India, 1950-Vllth Schedule--List 1 item 45, List II item 30. 
D 
Words and Phrases-'Banking Business'·-'Money Lender' -Meaning 
of 
Respondent-Bank had filed a suit for realisation of certain amount 
from the appellant. The appellant raised objection to the maintainability 
of the suit on the ground that the Bank being a money lender, has not been 
registered under the Assam Money Lenders Act, and in the absence of 
E 
registration, the suit was not maintainable. The Trial Court dismissed the 
suit as not maintainable. 
F 
G 
In appeal, the High Court, set aside the judgment of the trial court, 
holding that the provisions of the Act were not applicable to the Bank, and 
directed the trial court to dispose of the case on merit. 
In appeal to this Court, the appellants contended that the High 
Court was not right in holding that the provisions of the Act were not 
applicable to the respondent-Bank, as advancement of loan by the re-
spondent-Bank to the appellants made the transaction between the parties 
a 'loan' as defined in Section 2(3) of the Act and the Bank a 'money lender' 
as defined in Section 2(1) of the Act; that in the absence of a notification by 
the State Government declaring the respondent to be a notified Bank for 
the purpose of the Act, the exclusionary provision in Section 2(3) is not 
attracted. Respondent-Bank contended that it is engaged in "banking 
activity", which is different from mere money lending activity, and there-
H 
fore, the provisions of the Act are not applicable to it; that the activities of 
310 
ASSOCIATED TIMt!ER INDUSTRIES v. CENTRAL BANK OF INDIA 
311 
Banks are governed under the Banking Regulation Act, 1949 which is a 
A 
Parliamentary enactment; that the Banks registered under the said Act are 
under the regulatory control and supervision of the Reserve Bank of India; 
that the expression 'money-lender' as defined in Section 2(1) of the Act 
should be so interpreted as to include a person whose sole activity is 
lending money to others and charging interest; considered on that basis the 
B 
respondent does not come within the scope of the definition of 'money-
lender', which is the sine qua non for application of the statute; and that 
since the Act has no application to the respondent the question of getting 
itself registered under the said Act does not arise. 
Dismissing the appeal, the Court 
C 
HELD : 1.1. Adopting a purposive and meaningful interpretation of 
the provisions of the statute, the Court is of the view that 'Banks' do not 
come under the purview of Assam Money Lenders Act. [322-G] 
1.2. The provisions in the two enactments, viz. Banking Regulation 
D 
Act, 1949 and Assam Money Lenders Act, 1934, one Central and the other 
State, bring forth the wide difference in the fields of operation of Banks 
and activities of money-lenders. While 'Banks' are financial institutions 
which are engaged in improving the flow of trade, movement of commerce 
and expansion of business and thereby improving the socio-economic con-
dition of the people; 'money-lenders' are engaged in making personal 
profits; while the former are guided by policies and decisions of the Cen-
tral Government and the wide spectrum of activities in which they are 
engaged are all controlled or regulated by the Reserve Bank of India; there 
is no such regulatory policy in the case of the latter. [318-D-E] 
Mis. Fatehchand Himmatlal v. State of Maharashtra, [1977] 2 SCC 670; 
Mahaluxmi Bank Ltd. v. Registrar of Companies, West Bengal, AIR (1961) 
Cal. 666 and Reserve Bank of India v. Peerless General Finllnce and Invest-
ment Co. Ltd. and Others, [1987] l SCC 424, referred to. 
E 
F 
2. Other State legislatures have taken caution to exclude Banks from 
G 
the operations of the statutes presumably with a view to avoid any conflict 
with the Parliamentary enactment. Unfortunately, the Assam Money-Lend-
ers Act, 1934 does not incorporate any such provision in it. It may be noted 
here th

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