Letters Patent Appeal No. 113 of 2010 in Special Civil Application No. 66 of 2010, Civil Application No. 2794 of 2011 in Letters Patent Appeal No. 113 of 2010, Letters Patent Appeal No. 1094 of 2010 in Special Civil Application No. 5288 of 2009, Letters Patent Appeal No. 1095 of 2010 in Special Civil Application No. 13163 of 2008 and Letters .... Case: Radhe Estate Developers Vs Mehta Integrated Finance Co. Ltd and 3 Ors.. High Court of Gujarat (India)
| Case Number | Letters Patent Appeal No. 113 of 2010 in Special Civil Application No. 66 of 2010, Civil Application No. 2794 of 2011 in Letters Patent Appeal No. 113 of 2010, Letters Patent Appeal No. 1094 of 2010 in Special Civil Application No. 5288 of 2009, Letters Patent Appeal No. 1095 of 2010 in Special Civil Application No. 13163 of 2008 and Letters ... |
| Counsel | For Appellant: M. B. Gandhi, Chinmay Gandhi, Advs and For Respondent: S. R. Gupta; Jaswant K. Shah, AGP |
| Judges | S.J. Mukhopadhaya, C.J. and K.M. Thaker, J. |
| Issue | Bombay Money-Lenders Act, 1946 - Sections 2, 2(2), 2(4), 2(6), 2(9), 2(10), 4, 5, 6, 7, 8, 8A, 9, 11, 13A, 18, 19, 23, 25(1), 25(3), 26, 32, 33, 34, 35, 35A, 35B; Bombay Money-lenders (Unification and Amendment) Act, 1959; Reserve Bank of India Act, 1934 - Sections 3(1), 3(2), 3(3), 3(4), 45H, 45I, 45IA, 45IA(7), 45IC, 45J, 45JA, 45JA(1), 45K, ... |
| Citation | AIR 2012 Guj 7 |
| Judgement Date | April 26, 2011 |
| Court | High Court of Gujarat (India) |
Judgment:
S.J. Mukhopadhaya, C.J.
1. In all these appeals as common question of law is involved, they were heard together and disposed of by this common judgment.
2. The Appellants-Radhe Estate Developers of Letters Patent Appeal No. 113 of 2010 preferred a writ petition-Special Civil Application No. 13024 of 2009 for a direction on the Respondent-Assistant Registrar (Money Lending), Ahmedabad, to decide the application preferred by it for prosecution of the 1st Respondent-Mehta Integrated Finance Limited, for having obtained licence under the Bombay Money-Lenders Act, 1946, (hereinafter referred to as 'the Money-Lenders Act') and thereby prosecute it Under Section 35A and 35B of the Money-Lenders Act. Learned Single Judge, having noticed that the representation preferred by the Appellant-writ Petitioner is pending with the authorities, disposed of the writ petition by the impugned order dated 14th December 2009 with a direction to decide the said representation, giving rise to the appeal.
3. The other appeals, i.e. Letters Patent Appeals Nos. 1094, 1095 and 1097 of 2010, have been preferred by State of Gujarat or its authorities against the common judgment dated 13th January 2010 passed in four different writ petitions, wherein learned Single Judge held that the Bombay Money-Lenders Act, 1946, would not be applicable to the companies, which are Non-Banking Financial Companies (hereinafter referred to as 'N.B.F.Cs.') and governed by Chapter III of the Reserve Bank of India Act, 1934 (hereinafter referred to as 'the R.B.I. Act'), and thereby set aside the notices issued by the Assistant Registrar (Money-Lending) to four different companies under the Money-Lenders Act.
4. The questions required to be determined in these appeals are:
(i) whether the Bombay Money-Lenders Act, 1946, apply to the Non-Banking Financial Companies?
and (ii) whether the Bombay Money-Lenders Act, 1946, is repugnant to the extent of Non-Banking Financial Companies registered under the Reserve Bank of India Act, 1934?
5. Mr. Jaswant K. Shah, learned A.G.P. appearing on behalf of the State, while referring to the objects and reasons of the Money-Lenders Act, submitted that the said Act was enacted by the State to make better provisions for the regulation and control of transactions of money-lending in the State. The State Legislature has exclusive power to enact the laws under Article 246(3) of the Constitution of India, particularly with regard to money-lending. Entry 30 of List-II of the 7th Schedule of the Constitution empowers States to enact such laws with regard to 'money-lending and money-lenders' and according to him, salient provisions of Bombay Money-Lenders Act, 1946 are enumerated in Sections 5, 6, 8, 11, 18, 19, 23, 25(1) and 25(3), 26, 32, 33, 34 and 35. He has submitted that the contents of the provisions of these Sections make it clear that the same are made to protect 'weaker sections of the society' from the exploitation of the money-lenders.
6. So far as Non-Banking Financial Companies are concerned, learned A.G.P. submitted that the Reserve Bank of India is entrusted with the responsibility of regulating and supervising the Non-Banking Financial Companies by virtue of the power vested in it under Chapter IIIB of the R.B.I. Act, which came into effect from 1st December 1964. Sections 45H, 48-I, 45J, 45K, 45L, 45M, 45O, 45P and 45Q were initially inserted. Subsequently, by Reserve Bank of India (Amendment) Act, 1997, the provision relating to Non-Banking Financial Companies came to be introduced. Therefore, the provisions relating to N.B.F.Cs. having come to be incorporated w.e.f. 19th January 1997, Reserve Bank of India has the regulatory and supervisory powers with the following objects:
(a) to ensure healthy growth of the financial companies,
(b) to ensure that these companies function as part of the financial system within the policy framework in such a manner that their existence and functioning do not lead to systematic abrasions,
and (c) the quality of surveillance and supervision exercised by the Reserve Bank of India over the N.B.F.Cs. is sustained by keeping pace with the developments that take place in this sector of the financial system.
7. He would submit that if Chapter III of the R.B.I. Act is read in its entirety, it would mean that these provisions are made for protection of the interest of the depositors. There is no provision in this Chapter by which a borrower, who has taken loan from N.B.F.Cs., is granted protection.
8. Learned Counsel for the State would further contend that the Circular dated 24th May 2007 issued by the Reserve Bank of India refers to charging excessive rates of interest by N.B.F.Cs as against Fair Practices Code. There are no steps indicated by Reserve Bank of India against N.B.F.Cs. to be taken in such circumstances. The provisions contained in Chapter IIIB of R.B.I. Act, as amended in 1997, according to him, have been introduced altogether for different objects and purpose, and do not meet with the requirement of the provisions contained under the Money-Lenders Act. While assailing the common judgment dated 13th January 2010 rendered by the learned Single Judge, learned A.G.P. would contend that the learned Single Judge has allowed the writ petitions solely on the ground that in view of Chapter IIIB of the R.B.I. Act, the provisions of Money-Lenders Act will not apply to N.B.F.Cs., therefore, according to him, the provisions of the Money-Lenders Act contravene any of the provisions of Chapter IIIB of the R.B.I. Act, so far it relates to N.B.F.Cs. He submitted that except laying out appropriate internal principles and procedure for interest rate, processing and charges to be levied by the N.B.F.Cs, no punitive or regulatory steps have been prescribed under Chapter IIIB of the R.B.I. Act, and in absence of any overlapping provision, there is no repugnancy in any manner with the Money-Lenders Act.
9. Learned A.G.P. referred to different decisions of the Supreme Court and Federal Court with regard to repugnancy of an Act, which would be referred to at appropriate stage.
10. In Letters Patent Appeal No. 1095 of 2010, Respondent - M/s. Sundaram Finance Limited has taken a plea that it is a Company incorporated under the 'Indian Companies Act, 1913' and registered with the Reserve Bank of India as contemplated Under Section 45IA of the R.B.I. Act, and reclassified as a finance company. In other cases, Respondent G.E. Money Financial Services Limited of Letters Patent Appeal No. 1094 of 2010 and Respondent-Bussan Auto Finance India Private Limited in Letters Patent Appeal No. 1097 of 2010, it is stated that they are Companies registered under the 'Indian Companies Act, 1956', and also registered with the Reserve Bank of India Under Section 45IA of the R.B.I. Act. They were served with notices Under Section 13A of the Money-Lenders Act, calling upon them to produce certain documents with clear understanding that on failure to comply with the same, action can be initiated Under Section 34 of the Money-Lenders Act r.w. Sections 174 and 175 of the Indian Penal Code.
11. Learned Counsel for the Respondents referred to Section 45I(aa) r.w. Section 3 of the R.B.I. Act which defines "company", Section 45I(f) which defines "non-banking financial company" and some other provisions, to suggest that they are N.B.F.Cs. and guided by Chapter IIIB of the R.B.I. Act, and are not governed under the provisions of Money-Lenders Act. While referring to other provisions of the R.B.I. Act, i.e., Sections 45IA, 45IC, 45L, 45M, 45MC, 45N, 45NB, 45NC and 45Q, learned Counsel submitted that Chapter IIIB is a self-contained code in itself, governing the business and activities of the N.B.F.Cs in every way possible. They also referred to Supreme Court decisions, which will be dealt with at appropriate stage, and submitted that no interference is called for against the common judgment dated 13th January 2010 passed by the learned Single Judge.
12. We have heard learned Counsel appearing on behalf of the parties, perused the record and considered the provisions of law referred to above and different decisions of the Supreme Court and Federal Court.
13. For the determination of the issue, it is important to notice the relevant provisions of the Money-Lenders Act and the R.B.I...
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