MODHUSUDANO MOLLANA versus KONTARU NAIKO AND OTHERS

Citation: [1966] 1 S.C.R. 345 · Decided: 06-08-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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345· 
MODHUSUDANO MOLLANA 
v. 
KONTARU NAIKO AND OTHERS 
August 6, 1965 
(K. SUBBA RAO, RAGHUBAR DAYAL AND R. S. BACHAWAT, JJ.l 
Or;,sa Money-Lenders Act, 1939 (Act 3 of 1939), s. 5 ( 4) : 
Orissa 
Money Lenders Rules, 1939, r. 5-Registration certificate under r. 5-
providing for 
n1axilnu1n ca·pi'.tal to be invested in business-No such 
provision in Act-J~ule providing for 1naximum capital lVhether valid .. 
The appellant filed a suit against the respondents for the recovery 
of Rs. 8216 due on a promissory note executed by respondent No. 1 
for a sum of Rs. 6000. 
The plea taken in defence was that the suit 
was not maintainable because the registration of the appellant under 
s. 5(4) and r. 5 of the Orissa Money Lenders Act 1939 had become void 
on account of the money lent being in excess of the maximum amount 
of Rs. 2,000 which the appellant_ was authorised to invest in the busi-
ness by his registration certificate. 
The contention was not accepted by 
the trial court but the High Court~ accepting it, dismissed the suit. 
In 
appenl, before this Court, by special leave, it was urged on behalf of the 
appellant that the main Act did not provide for any restriction on the· 
amount of capital that could be invested and that the rules went beyond' 
the Act in making such a provision. 
HELD : In the absence of any specific provision in the Act providing 
for the fixing of the maximum capital which a money lender can invest 
in money~tending business, it was not open to the State Government to 
frame a rule in that regard and the rules framed by it about mentioning, 
in the application, the maximum 
capital for which the 
registration 
certificate was \Vanted and the mention in the certificate of 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 certificate. [348 D] 
F 
Sant Saran/a! v. Parsuram Salm, [1966] 1 S.C.R. 335, relied on. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No. 167 of 
1964. 
Appeal by special leave from the judgment and decree dated 
April 11, 1962 of the Orissa High Court in First Appeal No. 61 
G of 1959. 
A. V. Viswanatha Sastri and T. V. R. Tatachari, 
for the 
appellant. 
A. N. Sinha and B. P. !ha, for respondents Nos. 1 and 2. 
H 
The Judgment of the Court was delivered by 
Raghubar Dayal, J'. 
This appeal, by special leave, is against 
the decree of the High Court of Orissa reversing the decree of 
346 
SUPREME COURT REPORTS 
[1966] l S.C.R. 
the Court of the Subordinate Judge, Berhampur and dismissing 
A 
the pla;ntiff's suit for recovery of Rs. 8,216 due on a promissory 
note executed by Kontaru Naiko, defendant No. 1 for Rs. 6,000. 
The plaintiff money-lender obtained a registration certificate 
under s. 5 ( 4) and r. 5, of the Orissa Money-Lenders Act. 1939 
(Act III of 1939), hereinafter called the Act, and 
the 
rules 
thereunder, on March 31, 1952. 
He obtained another registra-
tion certificate in 1955 which said that the maximum capital for 
which the certificate is granted is Rs. 8,000. 
The plaintiff advanced the loan to defendant No. I 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 maintain-
able 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 Ac~ 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. 
I, were not personally liable and were liable to the extent of 
the assets of their father in their hands. 
The High Court, how-
ever, took a different view, accepted the aforesaid contentions of 
the defendants and dismissed the sui~. 
The sole contention for the appellant is that the High Court 
was in error in holding that the registration of the appellant as 
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a registered money-lender in March 1952 became void when he 
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advanced a loan in suit in excess of Rs. 2,000 in 1954 and that 
the High Court was als

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