1953 (8) TMI 23 - HC - Indian Laws

Court validates hand-note as promissory note, applies Bihar Money Lenders' Act. Intent crucial in distinguishing casual vs. professional money-lending.

The court found the hand-note valid and clarified that promissory notes fall under money-lending. The plaintiff, not a registered money-lender, was ... - Issues:1. Validity of the hand-note and loan agreement.2. Applicability of Bihar Money Lenders' Act.3. Distinction between casual and professional money-lender.Analysis:1. The plaintiff filed a suit to recover a principal sum with interest based on a hand-note dated 27-12-1942. The defendant alleged the hand-note was forged. The Munsif found the hand-note genuine but ruled the plaintiff, not a registered money-lender, couldn't recover the loan. On appeal, the Subordinate Judge held the hand-note valid, citing a previous case. However, the Judicial Committee later clarified that promissory notes also fall under money-lending, irrespective of the form of the loan agreement.2. The appellant cited a Division Bench ruling and argued that all loans are covered by the Money-Lenders' Act without exemption for hand-note debts. The respondent contended that the plaintiff, being a casual money-lender, was not subject to the Act. The respondent referenced precedents where casual money-lending was distinguished from professional money-lending based on the circumstances of the loan. The court emphasized the need to examine the intent behind the loan transaction, whether for gain or other considerations.3. The court noted that the plaintiff had advanced over Rs. 500 to multiple individuals in the relevant year, shifting the burden to prove exemption under the Act. The defendant's plea aligned with Section 4 of the Act, requiring the plaintiff to demonstrate circumstances for exemption. Despite the respondent's claim of a friendly loan, the court found no evidence supporting casual money-lending. Consequently, the court concluded that the plaintiff failed to establish casual money-lender status, and the Bihar Money-Lenders' Act applied to the transaction, allowing the appeal with no costs awarded.