GAJANAN AND ORS. versus SETH BRINDABAN

Citation: [1971] 1 S.C.R. 657 · Decided: 20-07-1970 · Supreme Court of India · Bench: J.M. SHELAT · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
GAJANAN AND ORS. 
v. 
SETH BRINDABAN 
July 20, 1970 
[J. M. SHELAT AND I. D. DUA, JJ.J 
651 
C. P. Money Lenders, Act 13 of 1934, ss. llF and llH-Act debarring 
carrying on o.f money lending business in any district without valid regis· 
tration certificate in respect of that dis1rict--Certificare held for one dis-
trict-Isolated transaction in another district whether void for contraven-
tion of Act-Stare Decisis-English authorities, value of. 
The plaintiff (respondent herein) was doing money-lending business in 
Yeotmal District in 'former Central Provinces (now Madhya Pradesh) and 
had obtained the requisite licence under the C. P. Money lenders' Act, 
1934 for that district in August, 1947. 
The licence was regularly .re-
newed thereafter. 
In 1947 the plaintiij gave a loan to the defendant' in 
Chanda District against the security of property situated in that District. 
In 1950 he filed a suit for foreclosure. 
The trial court held that since the 
transaction in question was in contravention of ss. llF & llH of the C. P. 
Money Lenders' Act the suit was not maintainable. The High Court 
however decided in favour of the plaintiff on the view that an isolated 
transaction in another district does· not come witl!in the mischief of the 
Act. With certificate appeal was filed in this Court. The appellant relied 
on the decision of the House of Lords in Cornelius v. Philip.r. 
HELD: (i) The case of Cornelius v. Phillips was distinguished by the 
Nagpur High Court in Pa ti Ram v. Baliram. The Madhya Pradesh High 
Court also in Janki Bai's case distinguished Cornelius v. Phillips observing 
that it would be unsafe to call in aid the decision relating to the interpreta· 
tion of s. 2 of the English Act 'for construing s. llF of the C. P. Act. The 
Bombay High Court in Hajarimal's case took 
the same view. 
It was 
correctly held in these cases that the provisions of the English Act cons-
trued in Cornelius and of the C. P. Act were not completely identical. 
[ 665 G-ll; 666 Fl 
(ii) From the scheme of the Act and the definition in s. 2(v) it is 
evident that for a person to be a money-lender he must, in the regular 
course of business, advance a loan. There is a long catena of attthorities 
on the statutes regulating and controlling money-lenders in which the ex-
pression money-lender has been so construed as to exclude isolated tran-
saction or transactions of money-lending. [667 F-668 CJ 
(iii) Section 11 F on plain reading only prohibits the carrying on of 
the business of money-lending in any district without holding a valid re-
gistration certificate in respect of that district. It does not prohibit and, 
therefore, does not invalidate an isolated transaction 
of lending money. 
Such ar. isolated transaction is outside the rigour of the prohibition. The,-
fact that a registered money-lender in one district has entered into 
an 
isolated transaction of lending money in another district in which he is 
not registered would not make any difference in this respect and such iso-
lated transaction would not be hit by the prohibitory mandate. Seotion 
11 ·H ·also operates only against the suits by money-lenders on Joans ad-
vanced by them and would similarly exclude from its purview a suit on 
an isolated transaction not entered into by a money-lender in the regular 
13 Sllj!. C 1/70-13 
658' 
SUPRLlfE COURT REPORTS 
[1971] 1 S.C.R. 
course of business. Interference with freedom of contract appears to have 
been limited under the Act only to the eXtcnt necessary for regulating and 
controlling the business of moncy·lcnJing. 
Section 11 C which provides 
for composition of offences also suggests that inUividual transactions are 
not considered void. 
The view of law taken by the Nagpur and M. P. 
High Courts in Patira111, llajari11ud and Jank/ Bai was thus in conformity 
with the statutory inten<lmcnt and must be held to be correct. [668 G· 
669 DJ 
(iv) People in <trranging their affairs are entitled to rc·ly on decision 
of the highest court which appears to have prevailed for a considerable 
length of time and it woulJ rC'quirc san1c- exceptional reason to iustify 
its reversal when such reversal is likely to create serious cmbarrassn1ent 
for those who have acted on the faith of what 'ecmc<l to be the settled 
law. 
Where the n1eaning of the statute .is an1biguous and capable 
of 
n1orc interpretation than one, and one view ;.1ccrptcd by the higher court 
ha~. stood for a long period during whic

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