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Rajasthan Money Lenders Act, 1963
THE RAJASTHAN MONEY-LENDERS ACT, 1963
(RAJASTHAN ACT NO. 1 OF 1964)
[Published in Rajasthan Gazette, Part IV-A, Extraordinary, dated 3-1964.]
List of Amending Acts & ordinances
CONTENTS
Sections
1. Short title, extent and commencement
2. Definitions
(1) Bank
(2) Business of Money-lending
(3) Capital
(4) Company
(5) Co-operative Society
(6) Interest
(7) Licence
(8) Licence fee
(9) Loan
(10) Money Lender
(11) Principal
(12) Provident fund
(13) Recognized Language
(14) Register
(15) Suit to which this Act applies
(16) Trader
3. Appointment of Registrar General, Registrars and Assistant Registrars
4. Registers of money-lenders
5. Money-lenders not to carry on business of money-lending except for area
under licence and except in accordance with terms of licence
6. Application by money-lender for grant or renewal of licence
7. Inquiry into and disposal of application
8. Grounds for refusal of licence
9. Registrar's power to cancel licence
10. Term of licence
11. Dismissal of suit by money-lender not holding licence
12. [Omitted]
13. Application for cancellation of licence
14. Application of section 5 of Central Act IX of 1903 to certain appeals
15. Registrar, Assistant Registrar and authorized officer to have powers of civil
courts
16. Power of authorized officer to require production of record documents
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Rajasthan Money Lenders Act, 1963
17. Court's power to cancel or suspend a licence
18. No compensation for suspension or cancellation of licence
19. Persons debarred from doing business during period of suspension or
cancellation of licence
20. Person whose licence is suspended or cancelled not to apply without giving
particulars of endorsement of disqualification
21. Transfer of licence to heir
22. Duty of money-lenders to keep accounts and furnish copies
23. Delivery of statement of accounts and copies thereof by money lender
24. Fees for certain statements supplied to debtor and Assistant Registrars
25. Debtor not bound to admit correctness of accounts
26. Procedure of court in suits regarding loans
27. Maximum amount of interest recoverable on loans and discharge of loans in
certain cases
28. Power of court to direct payment of decretal amount by instalments
29. Limitation on rates of interest
30. Prohibition of charge for expenses on loans by money-lenders
31. Notice and information to be given on assignment of loans
32. Application of Act as respects assignees
33. Reopening of transaction or accounts already taken
34. Application to court by debtor for taking account
35. Deposit in court of money due to money-lender
36. When interest to be paid for entire month
37. Money-lenders to exhibit their names over shops
38. Entry of wrong sum in bond etc. to be an offence
39. Penalty for molestation
40. Punishment for contravention of sections 5, 22, 23, 29, 30 and 37
41. Offences by corporation etc.
42. Cognizance of certain offences
43. Compounding of offences
44. Arrest and imprisonment in execution of decree for money- against agricultural
debtors abolished
45. Every officer to be public servant
46. Protection to persons acting under this Act
47. Provisions of Rajasthan Act 28 of 1957 saved
48. Power to make rules
49. Repeal
SCHEDULE
APPENDICES A, B & C
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Rajasthan Money Lenders Act, 1963
List of Amending Acts & Ordinances
1. The Rajasthan Money Lenders (Amendment) Ac t, 1976 (Raj. Act No. 13 of
1976) vide Notification No. F. 2(37) Vidhi /75, dated 13 -2-1976, Pub. in Raj. Gazette,
Extra-ordinary, Part IV-A, dated 13-2-1976, Page 181 to 185.
2. The Rajasthan Money -Lenders (Amendment) Act, 1986 (Raj Act No. 6 of
1986) vide Notification No. F. 2(4) Vidhi/86, dated 13 -2-1986, Pub. in Raj, Gazette,
Extra-ordinary, Part IV -A, dated 13 -2-1286, Page; 105 to 107, and shall be deemed
to have come into force on 30-12-1985, the date of Raj Ordinance No,l3 of 1985.
List of Ordinances
1 The Rajasthan Money Lenders (Amendment) Ordinance, 1975 (Raj Ordinance
No. 14 of 1974) Pub. in Raj. Gaz ., Extraordinary Part IV -B, dated 15 -8-1975, P. 65 -
67,
2. The Raj. Money Lenders (Amendment) Ordinance, 1985 (Raj. Ordi. No. 13 of
1985) which come into force from 30-12-1985, Vide No. 4(13) Vidhi/1 5. dated 30 -12-
1985, Pub. in, Raj, Gaz., Extra -ordinary, Part IV-B, dated 30-12-1985 Page 15 w.e.f.
30-12-1985,
THE RAJASTHAN MONEY LENDERS ACT, 1963
(RAJ, ACT NO. 1 OF 1964)
[Received the assent of the President on the 9ih day of March, 1964]
An Act To make better provision for the regulation and control of transactions of
money-lending in the State of Rajasthan.
Be it enacted by the Rajasthan State Legislature in the Fourteenth Year of the
Republic of India as follows: —
1. Short title, extent and commencement--(I) This Act may be called the Rajasthan
Money-lenders Act, 1963.
(2) It extends to the whole of the State of Rajasthan.
(3) It shall come into force on such date as the State Government
may, by notification in the Official Gazette, appoint in this behalf.
NOTIFICATION
Notification No. F. 23 (2) Rev. (D)/54 dated 25-8-1955.
In exercise of the powers conferred by sub section (3) of section 1 of the
Rajasthan Money-lenders Act, 1963 (Rajasthan Act 1 of 1964), the State Government
hereby appoints the 1st day of October, 1965 as the date -on which the said Act shall
come into force.
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Rajasthan Money Lenders Act, 1963
{Pub. in Raj Gaz , Extra-ordinary, Part IV-C, dated 1-9-1965.]
SYNOPSIS
1. Application of the Act & Scope of application
2. Construction of provisions
3. Object of the Act
4. Principles of interpretation of statutes
5. Amending Act No, 13 of 1976 - Extent of retrospective effect
6. Order 41, Rule 27, C.P.C & Sections 22 & 23 of the Act.
7. Statement of objects & reasons
COMMENTARY
I. Application of the Act - Scope of- It was held that section 29 has not been made
retrospective and section 29 of the Act does not apply to transactions entered into
before the Act came into force —Nanu Ram vs Vishwa Mitra , ILR (1968) 18 Raj.
534=1968 RLW 358 (AIR 1953 Bombay 125, relied on.) J|
The application of the Act is not restricted to loans only by professional money -
lenders. - Ramula Bose vs. Manmath Nath, AIR 1945 FC 108. "\
The provisions of the Act do not apply to a loan to trader for trade, — Wassiahmul
vs. Good Luck Pictures, 64 Bom. LR 549.
The rule of Damdupat applies to all classes of money -lenders and money- lending
transactions in the State - Sajan Lai vs. Gulabchand, AIR 1953 Bom. 123 : 54 Bom.
LR 132.
The rule of Damdupat does not apply to mortgages —Gopal Ram Ch andra vs.
Ganga Ram, 20 Bom. LR 72L
The rule of Damdupat does not apply to decrees but the court has discretion in
the matter—Achyut Narayan vs. Ramchandra, AIR 1925 Bom 362 : 27 Bom LR 492
The rule of Damdupat has no application where The original debtor is a
Mohammadan-- Hiralal vs. Nagar Jayram, 21 Bom. LR 38.
The section conferring power on the Court to limit interest applied to all leans
whether they were to traders or other parties — Wassiamull vs. Good Luck Picture ,
64 Bom. LR 549.
The provisions of the Act, except sections 23 & 25, do not apply to a trader, (ibid).
The Act does not apply to a suit for the redemption – Chunilal vs. E. Christopher ,
AIR 1926 Born. 65: 27 Bom LR 1462 & Thakan Sahu vs. Ram Partay; AIR 1950 Pat
201
2. Construction of Provi sion.—In construing the Act which takes away vested
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Rajasthan Money Lenders Act, 1963
rights and curtails freedom of contractor, the court should interpret it literally and
strictly- Bhupendra Nath vs. Debendranath, AIR l942Cal. 370.
In clear case of repugnance, in the subject or context, the-court can assign
another suitable meaning to the expression —The Official Liquidator vs. Jugal
Kishore, AIR 1936: All Secretary of State vs, Arunachalam, AIR 1936 Mad. 711.
3. Object of Act —The Act was intended to put down a very serious evil in the
society. It was intended to keep control over money lending transactions and to see
that excessive rate of interest was not charged by money -lenders, and the only way
that such control can be maintained is by providing penalties for doing money lending
business without a proper licence from the State —54 Born. LR 160: 21 Bom. Or, C.
317: ILR (1952) BOM. 914: AIR 1952 Bom; 276 (276,297),
The object of the Act appears to be that unwary agriculturists and non -traders and
parties who are into banking and comme rcial transactions should be protected --
Wassiamull v. Good Luck Pictures, 64 Bom. L.R. 549.
The Act intended to keep control over money -lending transactions and to see that
excessive rate of interest was not charged by money -lenders- In Re. Parshuram, AIR
1952 Bom. 279: 54 Bom. LR 549.
It was the view of the legislature that commerce and business methods of loans
should in no way, be hindered by reason of provisions of the Act — Wassiamull vs.
Good Luck Pictures, 64 Bom. LR 549.
The provisions of the Act h ave been enacted to prevent unscrupulous money -
lenders exploiting the needs of the poor and a breach of the provisions cannot be
countenanced—State vs. Devi Dose, 62 Bom. LR 316,
The object of the rules is clearly to protect debtors from unscrupul ous creditors —
1951 NLJ (Notes) 92 : 1951 NLJ (Notes) 10.
4. Principles of Interpretation of statutes having Retrospective effect.
It is a fundamental rule of interpretation of statutes that no statute shall be construed
to have a retrospective operation unless su ch a construction appears very clearly in
the terms of the Act or arises by necessary and dis tinct implication. A statute is not to
be construed to have a greater retros pective operation than its language renders
necessary.
The question arose whether the rates of interest fixed by the State Government
under section 29 would be applicable even to those transactions which had been
entered into prior to the coming into force of the Act. It was observed that there is
nothing in section 29 to show that the leg islature intended that the maximum rate of
interest fixed by the State Government under sub -section (!) of section 29 shall also
apply to those transactions which had been entered into prior to the coming into force
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Rajasthan Money Lenders Act, 1963
of the Act.
It was held that section 29 has not been made retrospective and does not apply to
transactions catered into before the Act came into force (AIR 1953 Bom, 125 relied
on); Nanu Ram vs. Vishwa Mitra, ILR (1968) 1« Raj. 534=1968 RLW358.
5. Amending Act No. 13 of 1976 —Extent of its retro spective appli cation —
Since amending Act No. 13 of 1976 prohibits issue of licenses with retrospective
effect licenses shall have prospective effect henceforth. Thus contravention of section
5 of this Act cannot be condoned.—Narayan vs. State of Raj., 1979 RRD »24,
According to section 6 of the Money -lenders Act, the persons doing the business
of money lending are bound to obtain licenses within the stipulated period before
actually carrying on the money lending business. Time factor is an important eleme nt
for applying for the licence.
Section 7 of the Act envisages issue of licenses prospective and not with a
retrospective effect. Old sections 11 & 12 of the Act enabling issue of licenses
retrospectively stand amended and thus omitted to have retrospec tive effect
thereafter on and from the application of Rajasthan Amendment Act No. 13 of
1976.—Narayan vs. State, 1979 RRD 124.
Normally all legislation is prospective and an intention to divest citizens of vested
rights, will not be imputed to the legislatu re unless it is expressly mentioned.—Sajjan
Lal vs. Gulabchand. AIR 1953 Bombay 125 • 54 Bom. LR 632
Sections 11 and 26(b) as Amended by the Amending Act No. 13 of 1976 have
retrospective effect Sec.11 and 26 of the Act were amended in 1976. In section 11
the Legislature expressly provided an exception of its application to pending cases,
but no such exception was earned out in Section 26(b) when the legislature acts at
the particular point of time in legisl ating two provisions in the same Act and in
retrospective effect is avoided by making an exception and in the other drastic
consequences are contempl ated by not enacting such an explanation, this court,
while interpreting the law has got no option but to respect the wishes of the
legislature though see mingly it may create hardship to those money lenders who
have already filed their suits and were not aware of the drastic consequences of non -
compliance of the section of the Act. Such an intention of the legislature cannot be
changed unless it lapse any legislative authority or become violate of any of the
constitution. None of the two contingencies contemplated have been shown to exist
as there is no challenge to plenary authority nor there is any violation of the
constitutional provisions. General Principal of interpretation of the statute is that the
statute should be treated prospective and not retrospective, more so, when the
provisions are penal in nature. However, it all depends upon the scheme of the Act,
intention to enact a particular statute and merely on the basis of generalization when
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Rajasthan Money Lenders Act, 1963
expressly by providing contra language in Section I in contra to section 26(b), the
Legislature expresses its intention, this court cannot enter to the contrary (Para 5 &
6), Ramchandra vs Prabhulal, 1982 Raj LR 275.
Section 27 of the Act should be given retrospective effect (AIR 1953 Bom, 420,
(1889) 9 Q B D. 672, AIR 1936 Rom 37, AIR 1949 Ori. 37, relied on AIR 1936 Cal
334. AIR 1938. Nag. 112, 1968 RLW 658 S.B. Civil Revision No. 270 of 1969,
decided by the Rajasthan High court on October 29, 1969 unreported, Man Mohan v.
Ram Gopal explained and distinguished Durgadas vs Kanhilal and others, IL R
(1971) 21 Raj 1127=1971 R.L W. 50=1970 WLN 563
6 Order 41, Rule 27, CPC & Sections 22 & 23 of the Act. -Money advanced and
documents, executed in 1967, statement of accounts, not sent to debtor. Fresh
documents executed in 1973 without showing interest and adjustment of money,
repaid—Held, Ss, 22 and 23 not complied with.
In the first appellate court certain documents we re sought to be prod uced under
Order 41, R. 27, CPC and the court having considered the implications of these
documents cannot save the Plaintiff from the drastic consequences of dismissal of
suit in as much as they relate to the year 1974 to 1976, It was then held that in the
documents of 1975 and 1976, the rates of interest have not been shown nor any
payments have been adjusted and it has not been shown for showing compliance of
Sections 22 and 23 of the Act that any statement of account was sent to the latter. On
these findings the first appellate court after examining the document submitted by the
plaintiff has held that sections 22 and 23 have not been complied with. Held, finding
about non -compliance of sections 22 and 23 of the Act does not call for any
interference (Para 9). -Ramchandia vs. Prabhulal, 1982 RLR 275
7. Statement of Objects and Reasons, —The Rajasthan Money Lenders Act, 1963
regulates and controls the business of money lending in the State. This Act is,
however, not applicable to certai n registered societies, insurance companies and
banks. It has been felt that certain bodies institutions engaged in financing housing
schemes, etc. also need exemption from the said Act so that they can give loans to
the public for housing and other welfar e purposes. Sub -clause (iii) of Clause (10) of
section 2 of the Act is, therefore, to be substituted so as to empower the State
Government to exempt an institution from the provisions of this Act by issuing a
notification in the Official Gazette.
Since the Rajasthan Legislative Assembly was not in session and the circumst -
ances existed which made it necessary to issue an Ordinance, the Governor of the
State of Rajasthan made and promulgated the Rajasthan Money -lenders
(Amendment) Ordinance, 3985 (Ordinanc e No, 13 of 1985) on 28th day of
December, 1985.
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Rajasthan Money Lenders Act, 1963
[Raj. Bill No. I of 1986 vide Notification No. F. 13(1) ,- oh-“kk-/ 86 fnukad 23-1-
1986 tks jkt- jkti= foks’kkad Hkkx III-d, fnukad13-1-1986 ds i`’B 47-50 ij Nik].
Vi Sha./ 86 dated 23-1-1986 State Gaz. Notification Spl. Part III-A, dated 13-1-1986
Printed at Page no. 47-50
2. Definitions.- In this Act, unless there is anything repugnant in the subject or
context;
(1) 'bank’ means a banking company as defined in the Banking Companies Act,
1949 (Centr al Act X of 1949), and includes the State Bank of India and any other
banking institution notified by the Central Government under sec. 51 of the said Act;
(2) 'business of money -lending’ means the business of advancing loans whether
or not in connection with or in addition to any other business;
(3) 'capital’ means a sum of money which a money -lender invests in the business
of money -lending;
(4) 'company’ means a company as defined in sec. 3 of the Compan ies Act, 1956
(Central Act I of 1956);
(5) 'co-operative society ’ means a society registered or deemed to have been
registered under the Rajasthan Co-operative Societies Act, 1953 (Rajasthan Act IV of
1953) or under the Co-operative Societies Act, 1912 (Central Act II of 1 912) or under
any Act of any other State Legislature relating to co-operative societies;
(6) 'interest’ includes any sum, by whatsoever name called, in excess of the
principal paid or payable to a money -lender in consideration of or otherwise in
respect of a loan, but does not include any sum lawfully charg ed by a money- lender
for or on account of costs charges or expenses in accordance with the provisions of
this Act or any other law for the time being in force;
(7) 'licence’ means a licence granted under this Act;
(8) 'licence-fee' means the fee payable in respect of a licence;
(9) 'loan means an advance at interest, whether of money or in kind, but does not
include: —
(a) a deposit of money or other property in a Government Post Office Savings
Bank or in any other bank or in a company or with co-operative society;
(b) a loan to or by, or a deposit with, any society or association regis tered or
deemed to be registered under the Rajasthan Societies Registration Act, 1958 or any
other enactment, relating to a public, religious or charitable objects;
(c) a loan advanced by Government or by any local authority authorized by Govt.;
(d) a loan advanced to a Government servant from a fund established for the
welfare and assistance of Govt. servants and which is sanctioned by the State Govt;
9
Rajasthan Money Lenders Act, 1963
(e) a loan advanced by a co-operative society;
(f) an advance made to a subscriber to, or a depositor in, a Provid ent Fund from
the amount standing to his credit in the fund in accordance with the rules of the fund;
(g) a loan to or by an insurance company as defined in the Insurance Act, 1938
(Central Act IV of 1938);
(h) a loan to, or by a bank;
(i) an advance made on the basis of a negotiable instrument as defined ju the
Negotiable Instruments Act, 1881 (Central Act XXVI of 1881) other than a promissory
note:
(j) except for the purposes of sections 27 and 29.
(i) a loan to a trader, or
(ii) a loan to a money-lender who holds a valid licence;
(10) "money-lender'" means:-—
(i) an individual or
(ii) an individual Hindu family, or
1(iii) a company (not being a banking company as defined in section 5 of the
Banking Regulation Act, 1949;, body or institution other than such of them as may, by
notification in the Official Gazette, be exempted from the provision's of this Act by the
Stale Government on being satisfied that it is necessary or expedient so to do in
public interest, or]
(iv) an un incorporated body of individuals,
who or which—
(a) carries on the business of money-lending in the State; or
(b) has his or its principal place of such business in the State.
(11) "principal” means in relation to a loan, the amount actually advanced to the
debtor;
(12) "Provident Fund” means a Provident Fund as defined in the Provident Funds
Act, 1925 (Central Act X of 1925) and includes a Government Fund and a Railway
1 Substituted for the original expression —(iii) a company other than a banking company as defined in sec. 5 of
the Banking Company Act, !949, or by the Rajasthan Money -lenders Amendment Act, 1986 (Raj. Act No. 6 of 19e'6)
vide Notification No. R 2 (4), vidhi/86, dated / 3 -2-1986 Pub. in Raj, Gaz., Extra -ordinary, Part IV-A, dated 13-2-1986
at pages 105-107 and came into force w e.f. 30 -12-1985 the day on which Raj. Ordinance No. 13 of 1985 came into
force.
10
Rajasthan Money Lenders Act, 1963
Provident Food as defined in the said Act;
(13) 'recognized language’ means—
(i) Hindi written in the Devnagri script, or
(ii) English, if the debtor so desires in writing, or
(iii) where both the parties speak the same language, that language;
(14) ‗register’ means a register of money-lenders maintained under sec. 4
(15) 'suit to which this Act applies’ means any suit or proceeding—
(a) for the recovery of a loan made after the date on which this Act comes into
force; or
(b) for the enforcement of any security taken or any agreement
made after the date on which this Act comes into force in respect of any loan made
either before or after the said date; or
(c) for the redemption of any security given after the date on which this Act comes
into force in respect of any loan made either before or after the said date;
(16) 'trader’ means a person who in the regular course of business buys and sells
goods or other property, whether movable or immovable, & includes—
(a) a whole-sale or retail merchant,
(b) a commission agent,
(c) a broker,
(d) a manufacturer,
(e) a contractor, and
(f) a factory owner,
but does not include an artisan or a person who sells his agricultural produce or
cattle or buys agricultural produce or cattle for his use.
Explanation.—For the purposes of clause (16) an 'artisan' means a person who
does not employ more than ten workers in manufacturing pro cess on any one day of
the twelve months immediately preceding.
Notification No. F 2 (2) Rev /Gr. 4/85/5 dated February 3, 1986.
S.O. 185 -In exercise of the powers conferred by sub -clause (iii) of clause 10 of
section 2 of the Rajasthan Money Lenders Act, 1963 (Rajasthan Act 1 of 1964) as
amended by the Rajasthan Money Lenders (Amendment) Ordinance, 1985
(Ordinance No. 13 of 1985), the State Government, hereby exempts the Housing
Development Finance Corporation Limite d a Com pany incorporated under Indian
Companies Act, 1956 (1 of 1956) from the provisions of this Act. [Pub. in Raj. Gaz.
Extra-ordinary, Part 1V-C, dated 13-2-1986, p. 381],
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Rajasthan Money Lenders Act, 1963
SYNOPSIS
1. Business of Money lending—Meaning explained
2. Interest
3. Licence
4. Loan
5. Suit - Meaning of RL.L. XV—27
COMMENTARY
/. Business of Money lending —Meaning explained -The word 'business‘ imports
the notion of system repetition and continuity,
'Money lenders‘ —Meaning of causal money lender not a professional money
lender business what does it import.
The mere fact that the money was advanced on interest on more than one
occasion would not necessarily import that the person was not engaged in the
business of advancing loans nor does a man become money lender merely because
he may on one or several isolated occasions lend money to a stranger.
In the present case the statement of the plaintiff simply showed that he was a
casual money-lender and not a professional money lender who alone is contemplated
under clause (10) of section 2. (1006) 1 KB 584, 1896 AC 325 and 17 ALJ 1147
relied on Gaurishanker v. Magbaram, ILR (1974) 24 Raj, 658=1974 RLW 106 = 1974
WLN 93=AIR 1974 Raj. 238.
The provisions of the Act relating to licence do not apply to Foreign Money
lenders.—ILR 1947 Nag 137=1947 NLJ 385=A1R 1947 Nag 201.
The creditor must plead that he is merely a causal money lender .- AIR 1974
Patna 103.
Cooperative society.—Since the Rajasthan Co -operative Societies Act 1953 (Raj.
Act 4 of 1953) has been repealed and substituted by the Rajas than Co -operative
Societies Act, 1965 (Rajasthan Act 13 of 1965) reference to the said Rajasthan Co -
operative Societies Act, 1953 shall be deemed to be a reference to the Rajasthan
Cooperative Societies Act, 1965 under section 8 of the General Clauses Act;
A Co-operative Society is deemed to be a validly registered Co operative Society
who holds a valid registration certificate issued or deemed to have been issued under
the respective law for the time being in force arid which has not been cancelled as yet
by the competent authority in accordance with the law.
2. Interest — An interest is essential ingredient of loan - AIR 1955 Nagpur(NUC)
2456 = ILK 1955 Nag. 513 =1955 Nag. LJ 359
12
Rajasthan Money Lenders Act, 1963
An interest free advance is not loan as contemplated under this Act —
Ramchandra vs. Bhao Rao, 1960 Nag. LJ (notes) 89.
The use of word 'includes' in the definition of the term interest de notes, it is not
exhaustive.
Original amount is principal and balance is nothing but the interest — Maganlal
Pragibhai vs. State of Bombay, AIR 1958 Bom. l54=-56 Bom LR 139(FB).
There must be something more than the excessive rate of interest to satisfy the
court that the transaction is unfair.-- Mehdi Razvi vs. Panaa Lai -- AIR 1917 Pat. 336.
Where there is a payment covering the entire amount of the interest due at the
bound rate also towards the principal the excess payment will certainly go towards
reduction of the principal —Ramswaroop Mahtar vs. Mathura Prasad Singh, 4 DLR
Pat. 237.
If the excess amount bears to the loan a ratio higher that th e rate of interest
prescribed, the money-lender comes within the mischief of the Act —Maganlal Praggi
Bhai vs. State of Bombay, AIR 1958 Bom 92.
An agreement for payment of interest in excess of the maximum rate was void. —
In Re Parshuram, AIR 1952 Bom. 276.
Where the interest charged in excess of the prescribed rate, the court is required
to presume that the transaction is pot fair —Elias Suleh Mahammed vs. Khumull, AIR
1959 Mys. 132.
The executing court has to investigate the contention that the decree hol der was
recovering larger amount by way of interest than principal. — Ramlal vs. Shrinhar,
AIR 1960 MPLJ (Notes) li.
The court cannot decree on account of interest, a sum greater than principal. —
Pandurang vs. Nuru Miya, 62 Bom LR 547.
In view of the words, 'Notwithstanding anything contained in any other enactment,
the court had power to reopen the transaction and disallow interest —Bisanlal vs.
Malilal, 1960 Nag. U (Notes) 83.
As the plaintiff failed to maintain and send accounts he was not entitled to
interest—Dattatraya vs. Maroli, 1959 NLJ (Notes) 113.
Even though the note did not make any specific mention of interest, the plaintiff
was entitled to interest at 6% per annum by virtue of section 80 of the Negotiable
Instruments Act—Abdul Hussain vs. Seth Fazal Bhai, AIR 1957 Bom. 529.
The court could disallow interest where the plaintiff did not supply the statement of
accounts--Shankar vs. Rania, 1956 NLJ (Notes) 148.
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Rajasthan Money Lenders Act, 1963
There is no inconsistency between Sections 27 and 33 for deter mining quantum
of interest Transaction can be reopened. Principal being Rs. 1689.11/- and interest of
Rs. 1500/ already paid. Held, Plaintiff can claim Rs. 189.11/- towards interest
Section 27 of the Rajasthan Act can only be construed according to the definition
given to the word ‗ principal' in section 2(11) and for deter mining the quantum of
interest, the transaction between the debtor and the creditor can be ripped up and re -
opened and to me there does not appear to be any conflict or inconsistency between
the provisions of sections 27 and 33 of the Rajasthan Act
The principal of the loan is Rs. 189.11/-The Plaintiffs can only claim a sum of Rs.
180.11/-by way of interest and beyond that the defendant is not liable to pay any
interest. The total liability with regard to interest ca n be to the extent of the amount of
Rs. 1689.11/- and a sum of Rs.1500/ -has already been paid by the defendant to be
appropriated as interest. Thus the plaintiffs are only entitled to a decree of Rs1879/ -
Basti Ram v. Ghewarchand and anr. 1979 WLN 51=1979 RLW 50= AIR 1979
Raj.148.
3. Licence—It is mandatory for every person to obtain licence 'before" doing
money-lending business--Desai Bhao vs. Kaniram, AIR 1952 Hyd. 142.
4. Loan—The expression 'an advance at interest' covers cases ". -where the
interest was provided by the contract as well as cases when the interest was payable
under a statute. In a suit filed on a promissory note in which the rate of interest was
not mentioned and no interest was claimed in the suit, the question was whether the
transaction was a 'loan' within the meaning of the Act. Held that by virtue of sec 80 of
the Negotiable instruments Act, ' 88', the advance made under the promissory note
was an, advance at Interest and, therefore, a loan within the meaning of the Act -
(1971) 73 BLR 458=1971 Mah. LJ 608.
The legislature has not made any provision that the interest payable in respect of
loans borrowed before the Act came into force be reduced - Sajjanlal vs. Gulabchand,
AIR 1953 Bom 125=54 Bom LR 635.
The word 'loans' in plural in the defi nition points out that if a person tends money
on a single occasion on interest, he cannot be considered to be a money -lender --
Binapani vs. Ravindranath, AIR 1959 Cal. 213.
The advance of money in cash or by a cheque is loan. - Shivlal Seth vs. Devendra
Kumar, 1960 MPLJ (Notes) 166.
The definition of 'loan' covers a loan which is unsecured. -- Emperor vs. Jheverilal,
AIR 1960 Bom. 119= 51 Bom LR 991; Bansilal Ramgopal vs. Harishchand, AIR 1953
Bom. 420=55 Bom LR I44=ILR 1953 Bom. 1055.
The amount advanced without interest on account of cordial relations did not
14
Rajasthan Money Lenders Act, 1963
amount to a loan—Ranuhandar vs. Bhao Rao, 1960 NLJ (Notes) 89.
Debt is not necessarily a loan. —Radha Krishna vs. Keshavdeo, AIR 1957 SC
743.
The goods sold on credit do not amount to loan -- Mangilal vs. R.R. Contractor,
1952 MFC 442.
The renewed bond where interest is capitalized is loan although no money is
actually advanced—Fatehchand vs. Akimuddin, AIR 1943 Cal. 163.
A compromise decree allowing the balance to be paid in instalments with same
rate of interest does not convert the unpaid purchase price into a loan —Radha
Krishna vs. Keshavdeo, AIR 1957 SC 743.
The transaction of selling gold ornaments does not amount to loan. — Daulal vs.
Ramsingh, 1961 MPLJ (Notes) 301.
There may be debt contract ed without contracting a loan. —Mangilal vs. R.R.
Contractor, 1959 MPC 442.
The unpaid purchase price converted as a loan by an agreement, is loan. —Fateh
Chand vs. Akimuddin, AIR 1943 Cal. 108.
A promissory note taken in satisfaction of the unpaid purchase price, amount to a
loan—Nirode Barani vs. Sisir Kumar, AIR 1942 Cal. 538
Price of goods supplied on credit with stipulation to pay interest is a debt and not
a loan—Surendra Sekhar vs. Lalit Mohan, AIR 1941 Cal. 538.
Rent realizable from tenants by the mor tgage in possession is interest as the
mortgage transaction is a loan — Maherunnissa Bibi vs. Satish Chandra, AIR 1944
Cal. 288.
A security Bond taken for the balance of the price of the goods already supplied
and to be supplied in future is not a loan Ku nj Behari vs. Satyendranath, AIR 1941
Cal. 689.
A mortgage essentially falls under the definition of loan --Ganpatrao vs. Jagannath
Das, AIR 1940 Nag. 1 9=1940 NLJ 1940 NLJ 187, Emperor vs, Jhaverlal, AIR 1950
Bom. 119 = 51 Bom. LR 991; Bansilal vs. Harish C handra, AIR 1953 Bom. 420=55
Bom LR 444.
Where the purchaser of bullocks executes a bond in favour of the seller agreeing
to pay the purchase money within a certain date and its case of its failure to do so to
pay interest the transaction was held to be a loan. Dattatraya vs. Maroti, 1958 NLJ
(Notes) 113.
A deposit of money may under certain conditions amount to loan. — Mohammed
15
Rajasthan Money Lenders Act, 1963
Akbar vs. Atarsingh, AIR 1936 PC 171: 38 Bom. LR 731; Suleman Haji vs. Haji
Abdulla, AIR 1940 PC 132 : 42 Bom. LR 871.
Lend and Loan—Meaning explained, AIR 1966 SC 495.
5. Suit—Meaning of—The word 'suit' includes pending suits court to dismiss suit if
provisions of secs. 22 & 23 are not complied.
Keeping in view the purpose and object or the reasons and spirit of the Act the
provisions of section 26 (b) of the Act as they stand after the amendment by the
amending Act of 1976 will apply to the pending suits also and if sections 22 and 23
have not been complied with then the court has to dismiss the suit as the word -suit'
as used in ame nded section 26(b) embraces within it the pending suits —Kanhiiyalal
vs. Shri Lai and others, 1980 WLN 469 = 1980 RLW 301.
Secs. 22, 23 and 26 provisions of se cs. 22 & 23 not complied with in respect of
whole claim. Held, amended sec. 26(b) to apply to pending cases.
The intention of the legislature has been clearly and undoubtedly expressed that
the amended section 26(b) is to apply to the pending suits. It is enjoined that the
court shall dismiss the whole suit where it finds that the provision of sections 22 and
23 of the Act have not been complied with by the Money lender in respect of the
whole claim —Ranchordass vs. Malook Chand, 1980 WLN 580,
In a suit to which the Act applies the Court must take account even if the
defendant is absent.—Vithal Krishan vs. Sogmal Nathmal & Co., AIR 1958 Bom. 92:
59 Bom. LR 1048.
3. Appointment of Registrar General, Registrars and Assistant Registrars —
The State Government may, by notification in the official Gazette appoint such
officers, as it thinks proper, to be a Reg istrar General, Registrars and Assistant
Registrars of money -lenders for the purposes of this Act and may define the areas
within which each such officer shall exercise his powers and perform his duties.
NOTIFICATIONS
1. Notification No. F. 23(2) Rev./D/54, dated 25-8-65.
In exercise of the powers conferred by sec. 3 of the Rajasthan Money lenders Act,
1963 (Rajasthan Act 1 of i964), the State Government hereby appoints the Registrar.
Co-operative Societies to the Registrar General of Money-lenders for the whole of the
State of Rajasthan and appoints Deputy Registrars and Assistant Registrars, Co -
operative Societies, for the areas within their respective jurisdiction to be Deputy
Registrars and Assistant Registrars of Money -lenders respectively, for the p urposes
of the said Act.
This notification shall have effect on and from the 1st day of Oct. 1965,
16
Rajasthan Money Lenders Act, 1963
[Published in Rajasthan Gazette, Part IV-C. Extraordinary, dated 1-9-1955]
2. Notification No. F 23(2) Rev./B/M, dt. January, 1967.
In exercise of the powers conferred by Section 3 of the Rajasthan Money Lenders
Act, 1963 (Act I of 1964} the State Government hereby makes the following
amendment to this department (second) notification No. F. 23(2) Rev./D/64, dated the
25th August, 1965, published on page 215 in the Rajasthan Gazette Part 1V-C, dated
the September, 1965, namely: —
AMENDMENTS
In the said notification, after the words "appoints Deputy Registrars‖ a comma
shall be inserted and for the expression and Assistant Registrars, Co -operative
Societies for the areas within their respective jurisdictions to be Deputy Registrars
and Assistant Registrars of Money Lenders respectively for the following expression
shall be substituted, namely:—
"Co-operative Societies to be Registrars of money lenders and fu rther appoints
Assistant Registrars and Additional Assistant Registrars, Co operative Societies, to
be Assistant Registrars of money lenders for the areas within their respective
jurisdictions‖
[Pub. in Raj. Gaz. 4(Ga)-Dt. 15-6=67 Page 208]
…….
3- vf/klwpuk la[;k i- 2(6) jktLo xzqi 4@75] fnukad 20&9&1975-
Tkh-,l-vkj- 15835%& jktLFkku lkgwdkj vf/kfu;e 1963 jktLFkku vf/kfu;e 1 lu~
1964 dh /kkjk 3 }kjk iznr “kfDr;ksa dk iz;ksx djrs gq, rFkk fufer tkjh fd, x;s
leLr fo|eku vf/klwpukvksa dkvfrdze.k djrs gq, jk T; ljdkj ,rn~}kjk mDRk
vf/kfu;e ds iz;ksukFkZ Jh vkj- eq[kthZ lnL; jktLo eaMy] jktLFkku vtesj dks lEiw.kZ
jktLFkku jkT; ds fy, lkgdkj egkiath;d fu;qDr djrh gSA
rFkk leLr ftyk dyDVjksa vkSj mi[kaM vf/kdkfj;ksa dks viuh vf/kdkfjrk {ks=ksa ds
fy, dze”k% lkgwdkj iath;d vkSj lgk;d iath;d fu;qDr djrh gSA ;g vf/klwpuk
1&10&1975 ls izHkko”khy gksaxsA
[jkt- jkti= Hkkx 4 (x)(1)] fnukad 25&9&1975 i`’B 530 (64)]
……..
4. vf/klwpuk la[;k i- 2(6) jkt@xzqi 4@75] fnukad 5&10&1976-
bl foHkkx dh foKfIr le fnukad 20&9&1975 ds vkaf”kd la”kks/ku esa ,oa jktLFkku
17
Rajasthan Money Lenders Act, 1963
lkgwdkj vf/kfu;e 1963 jktLFkku vf/kfu;e 1 lu~ 1964 dh /kkjk 3 }kjk iznr
“kfDr;ksa dk iz;ksx djrs gq, rFkk fufer tkjh fd, x;s leLr fo|eku vf/klwpukvksa
dkvfrdze.k djrs gq, jkT; ljdkj ,rn~}kjk mDRk vf/kfu;e ds iz;ksukFkZ J h ds-,l-
jLrksxh lnL; jktLo eaMy] jktLFkku vtesj dks lEiw.kZ jktLFkku jkT; ds fy,
lkgwdkj egkiath;d fu;qDr djrh gSA ;g vf/klwpuk rqjUr izHkko ls izHkko”khy gksxhA
5- vf/klwpuk la[;k i- 2(9) jkt@xzqi 4@75] fnukad 26&8&1976-
jktLFkku lkgwdkj vf/kfu;e 1963 jktLFkku vf/kfu;e 1 lu~ 1964 dh /kkjk 3 }kjk
iznr “kfDr;ksa dk iz;ksx djrs gq, jkT; ljdkj ftyksa ds leLr vij ftyk/kh”kksa dks
mDRk vf/kfu;e ds iz;ksukFkZ dks vius vius vf/kdkfjrk {ks= ds Hkhrj ,rn~}kjk lkgwdkj h
ds jftLVzkj (iath;d) fu;qDr djrh gSA
---------
vf/klwpuk la[;k i- 2(6) jkt@xzqi 4@75@33] fnukad tqykbZ 23]1984-
jktLFkku lkgwdkj vf/kfu;e 1963 jktLFkku vf/kfu;e 1 lu~ 1964 dh /kkjk 3 }kjk
iznr “kfDr;ksa dk iz;ksx djrs gq, rFkk bl fufer iwoZ esa tkjh dh x;h bl foHkkx dh
lela[;d vf/klwpuk fnukad 14 tqyk bZ 1982 dks vfrf’Br djrs gq, jkT; ljdkj
,rn~}kjk mDRk vf/kfu;e ds iz;ksukFkZ Jh erh d`’.kk HkVukxj] lnL; jktLo eaMy]
jktLFkku vtesj dks lEiw.kZ jktLFkku jkT; ds fy, lkgwdkj egkiath;d fu;qDr djrh
gSA ;g vf/klwpuk rqjUr izHkko ls izHkko”khy gksxhA
[jkt- jkti= fo”ks’kkad Hkx 1(d)] fnukad 26&7&1984 ds i`’B 37 ij Nik]
4. Register of money-lenders. — Every Assistant Registrar shall maintain for the
area of his jurisdiction a register of money -lenders in such form as may be
prescribed:
Provided that any such regist er maintained in any area immediately before the
commencement of his Act under the provisions of the enactments repealed by
section 49 shall, in so far as it is not inconsistent with this Act or the rules made
thereunder, be deemed to have been maintained under this A7ct.
5. Money- lenders not to carry on business of money-lending except for area
under licence and except in accordance with term of licence. --Save is provided
in section 49, no money -lender shall after the expiration of six months from the da te
on which this Act is brought into forces carry on, or continue to carry on, the business
of money-lending except in accordance with the terms and conditions of such licence.
6. Application by money -lender for grant or renewal of licence. — Every
money-lender shall make an application in the prescribed form for the grant of a
licence to the Assistant Registrar of the area within the limits of which the place,
where he intends to carry on the business of money -lending, or, if he intends to carry
18
Rajasthan Money Lenders Act, 1963
on such bu siness at more than one place in the area, the principal place of such
business, is situated.
(2) Such application shall contain the following particulars, namely: —
(a) the name in which such money-lender intends to carry on business and the
name of the person proposed to be responsible for the management of the business;
(b) if the application is by or on behalf of —
(i) an individual, the name and address of such individual;
(ii) an undivided Hindu family, the names and addresses of the manager and the
adult coparceners of such family;
(iii) a company, the names and addresses of the directors, manager or principal
officer managing it;
(iv) an un -incorporated body of individuals, the names and address of such
individuals;
(c) the area and the place or principal place of the business of money- lending in
the State;
(d) the name of any other place in the Slate where the business of money-
lending is carried on or intended to be carried on;
(e) whether the person singing the application has himself, or any of the ad ult
coparceners of an undivided Hindu family or any director manager or principal officer
of the company or any member of the un -incorporated body on behalf of which such
application has been made, as the case may be. has carried on the business of
money-lending in the State in the year ending on the 31st day of March immediately
preceding the date to the application either individually or in partnership or jointly with
any other copartner or any other person and whether in the same or any other name;
(f) the total amount of the capital which such person intends to invest in the
business of money-lending in the years for which the application has been made;
(g) if the places at which the business of money -lending is to be carried on are
more than one, the names o f persons who shall be in charge of the management of
the business at each such place;
(h) such other particulars as may be prescribed.
(3) The application shall be in writing and shall be signed, —
(a) (i) if the application is made by an individual, by the individual;
(ii) if the application is made on behalf of an undivided hindu family, by the
manager of such family;
(iii) if the application is made by a company or un -incorporated body, by the
managing director or any other person having control of its principal place
of business in India or of its place of business in the area in which it
intends to carry on the business; or
19
Rajasthan Money Lenders Act, 1963
(b) by an agent authorized in this behalf by a power of attorney by the individual
money- lender himself, or the family or the company or the un - incorporated body, as
the case may be.
(4) The application shall be accompanied by a licence fee at the following rates:
a if the place at which the busi-
ness of money-lending is to be
carried on is not more than
one
Rs 15/-
b if the business of money -
lending is to be carried on at
more than one place within
the limits of the area of the
Registrar.
Rs. 15/ - for the licence for the
principal place of business, and Rs.
6/- for the licence for each of the
other places in the area.
Explanation. — For the purposes of this section, "place" means, in relation to the
business of money-lending, the shop or address or place at which the money-lender
carries on his business of money-lending.
(5) The fee payable under this section shall be paid in the manner prescribed and
shall not be refunded, notwithstanding the fact that the grant of the licence is refused
or the application is withdrawn.
(6) An application for the renewal of a licence previously granted under this Act
shall be made wit hin two months before the expiration of the term thereof to the
Assistant Registrar referred to in sub -section (1) in the prescribed form and
containing the prescribed particulars:
Provided that where an application is made after the expiry of the period s pecified
in this sub -section, it shall be accompanied by a licence fee at double the rates
prescribed therefor.
(7) Save as otherwise provided in this Act, the provisions thereof shall, as far as
may be, apply to the renewal of licenses and to renewed licence in the same manner
as they apply respectively to the grant of licence granted originally.
(8) Where a licence granted to a money -lender is lost, destroyed or torn or
otherwise defaced in such manner as to reader it illegible, the mon ey-lender may
obtain a dup licate licence in the prescribed manner on pay ment of such fee as may
be prescribed.
COMMENTARY
Scope of sections 6 & 7 of the act, effect of—According to section 6 of the Money
Lenders Act, the persons doing the 'business of money lending* are bound to obtain
20
Rajasthan Money Lenders Act, 1963
licenses within the stipulated period before actually carrying on the money lending
business. Time factor is an important element for applying for the licence.
Section 7 of the ActExcerpt shown. Open the full act in Lexace.