' ABDUL HAYEE KURESHL J.-This is an appeal under clause 10 of the Letters Patent as applicable to the erstwhile High Court of West Pakistan, against the judgment of a learned Single Judge on the original side whereby Suit No, _25/1969, filed by the appellant Syed Mubarak Ali against the respondents Inayat Hussain and Shafakkat Hussain was dismissed. On the conclusion of the hearing of the appeal we had by a short order dismissed the same with no order as to costs. The reasons for such short order presently follow.
2. The brief facts relating to the suit filed by appellant Syed Mnbarak Ali (hereinafter referred to as the plaintiff) against the respondents Inayat Hussain and Shafakkat Hussain (hereinafter referred to as the defendants) are as follows.
3. In the plaint the plaintiff has shown himself as a mortgagor and the defendants as mortgagees in respect of premises Nos, G/8 and G/9 with the structure thereon, corresponding to Survey Nos, 46 and 47, Sheet R. B. 6, located on Bunder Road, Karachi. The plaintiff states that the defendants carry on business of money lending without a licence and had advanced a loan of Rs, 60,000 in August, 1965, against an equitable mortgage of the said property and such loan carried interest at 9% per annum according to the mortgage deed. The plaintiff, however, states that the defendants had actually charged interest at the rate of 3% per month viz. 36% per year. A promissory note was also executed as collateral security. The plaintiff further states that a few months after the execution of the first mortgage deed he obtained a further loan of Rs, 10,000 from the defendants against security of the same title deeds and at the same rate of interest. He states that by February, 1967, the defendants had received a sum of Rs, 56,000 by way of the exorbitant interest and he could not meet such usurous demands of the defendants and in these circumstances the defendants converted the initial equitable mortgage into an English Mortgage and compelled the plaintiff to have it registered before the Sub-Registrar of Assurances and on 13-2-1967, such document was registered disclosing liability of Rs, 50,000. Such document, according to the plaintiff, was executed under undue influence and -coercion. The plaintiff further that states he had been charged interest at the rate of 3% per month after the execution of this subsequent mortgage. The further averment of the plaintiff is that the defendants had all along kept him under the impression that they were licensed money-lenders but in fact they were not so licensed.
According to the plaintiff, he requested the defendants to adjust Rs, 56,000 paid by him to the defendants to the total principal loan of Rs, 70,000 leaving a balance of Rs, 14,000 as payable. The plaintiff has further stated in the plaint that another illegal agreement was also entered into between the parties on- 3-12-1968, whereby the liability was reiterated. It seems that thereafter correspondence was carried on between the parties and the defendants insisted on taking action within the terms of the subsequent mortgage deed. The plaintiff then filed a suit on the original side of this High Court claiming the following the following reliefs :- .(a) Judgment and decree for cancellation and delivering up the English Mortgage Deed dated 13- 2-1967, for reason of the same being void, inoperative and not binding
(b) Declaration that the plaintiff had fully paid up the loan to the defendants anti redeemed the mortgage (c)Injunction to restrain the defendants from interfering with the possession and ownership of the plaintiff in respect of the mortgaged property ; , (d) Costs of the suit ; and
(e) Any other relief which may be just and reasonable.
4. In their written statements the defendants denied that they were carrying on business of money lending or. Had represented to the plaintiff that they had a licence. They admitted having lent a sum of Rs, 60,000 to to the plaintiff for the purposes of his business as also the execution of an equitable mortgage. They admitted that interest at 9 % per annum was payable on the amount advanced. The defendants denied that they had advanced a 'further sum of Rs, 10,000 to the plaintiff against the same security and they also denied having received a sum of Rs, 56,000 as interest. The, defendants have further stated that a sum of Rs, 60,000 and interest was repaid to the defendants' by the plaintiff sometimes in February, 1967. The case of the defendant is that they had agreed to advance to the plaintiff a sum of Rs, 50,000 on execution of an English Mortgage in their favour. They denied that the document was executed under circumstances amounting to undue influence or coercion. The case of the defendants is that the plaintiff had failed to repay the amount of the mortgage deed in spite of notice of demand. The plaintiff approached the defendents requesting for further time to repay and on negotiation the plaintiff agreed to execute an equitable'niortgage of some other property at Nazimabad and he actually executed this subsequent agreement also whereby the amount was made payable by 7-1-1969. Some cheques were also given by the plaintiff to the defendants but the same bounced on presentation. In short, the case of the defendants is that the mortgage was a valid and subsisting document in their favour and the plaintiff was not entitled to any relief.
5. On such state of pleadings the following issues were framed by the learned Single Judge :-
(1) Whether the defendants have carried on business of money lending without a valid licence under the West Pakistan Money Lenders' Ordinance, 1960. If so, what is the effect on-
(i) the loan advanced by the defendants to the plaintiff.
(ii) the English Mortgage executed by the plaintiff in the defendants' favour.
(iii) rate of interest payable by the plaintiff to the defendants.
(2) Is the English Mortgage continuation of any previous equitable mortgage ?
(3) Has the plaintiff repaid in full the amount of the loan to the defendants ?
(4) Are the defendants entitled to realist the loan,' if any, by sale of the property covered by the English Mortgage.
(5) Relief.
6. The learned, Single Judge came to the conclusion that the transaction between the parties did not attract the provisions of West. Pakistan Money Lenders Ordinance XXIV of 1960 and that the English Mortgage was an independent transaction between the parties and was not in continuation of the previous equitable mortgage. On determination of that first two issues the learned Single Judge dismissed the suit but' left the parties to bear their own costs.
7. 'At the trial, the plaintiff examined himself and his brother Ali. One Hussain, a Clerk in the Timber Market Branch of Has Ltd. Was examined to prove encashment of two cheques, each of Rs, 25,000 issued by the defendants in favour of the plaintiff at the time of execution of the English Mortgage.
From among the defendants Inayat Hussain entered the witness box and furnished the evidence.
8. The main contention of Mr. Abdul Aziz Khan, appearing for the appellant-plaintiff was that the transactions between the parties was hit by the provisions of the West Pakistan Money Lenders Ordinance, 1960, hereinafter referred to as the Ordinance. The further contention of Mr. Abdul Aziz Khan was that interest at the rate of 36% per annum had been charged by the defendants from the plaintiff and since they were not licensed money lenders they were not entitled to carry on business of money lending and the heavy interest charged should be adjusted to the principal amount.
9. Initially, we propose to examine the provisions of the Ordinance. This Ordinance was promulgated on 20-7-1960, with the object of amending and consolidating the law relating to money lenders, their registration and the regulation of their trade. The word "loan" is defined in clause (1) of section 2 of the Ordinance as follow s :- "(1) 'loan' means an advance whether secured or unsecured of money or in kind at interest and shall include any transaction which the Court finds to be in substance a loan, but shall not include -
(i) an advance in kind made by a landlord to his tenant for the purposes of husbandry ; provided the market value of the return does not exceed the market value of the advance as estimated at the time of advance ; (ii)a deposit of money or other property in a Post Office Saving Bank, or any other bank or with a company, or with a co-operative society or with any employer as security from his employees ;
(iii) a loan to, or by, or a deposit with, any society or association registered under the. Societies Registration Act, 1860, or under any other enactment relating to religious or charitable societies ;
(iv) a loan advanced by or to the Central or any Provincial Government or by or to any local authority or other body corporate set up under the authority of the. Central or any Provincial Government ;
(v) a loan advanced by a bank, a co-operative society or a company whose accounts are subject to audit by a certified auditor under the Companies Act, 1913 ;
(vi) a loan advanced by a trader to a trader, in the regular course of business, in accordance with trade usage ;
(vii) an advance made on the basis of a negotiable Instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note."
Clause (m) of the same section defines "money-lender" to mean a person carrying on the business of advancing loans.' Section 10 of the Ordinance provides for the consequences in a suit by a money-lender who is not licensed. It reads as follows :- "(1) Notwithstanding anything contained in any other enactment, a suit by money-lender for recovery of a loan or an application by a moneylender for the execution of a decree relating to a loan shall be dismissed unless at the time of the institution of the suit or at the time of presentation of the application for execution of the decree, as the case may be, the money-lender--
(a) holds as effective licence granted under section 3 ; or
(b) holds a certificate granted under section 7 specifying the loan in respect of which the suit is instituted or the decree in respect of which the application for execution is presented."
10.. It must be stated at the outset that section 10 only provides for consequence when a suit is filed by a money-lender for recovery of loan or execution of a decree. The present suit has not been filed by the lender but by the borrower. In such circumstances, it appears doubtful if this provision was at all attracted. It seems that this point was permitted to be argued by the learned Single Judge at length on equitable considerations. We have also permitted arguments being addressed to us on the point for the same reason. The main question before us was whether a legal liability was created against the plaintiff by reason of the mortgage money carrying interest. Even if it is assumed that section 10 of the Ordinance can be stretched to the present case we have no hesitation in answering the question in favour of the defendants and against the plaintiff. The main question is whether the defendants were money-lenders within the meaning of clause (m) of section 2 of the Ordinance. It is not every transaction relating to lending of money that makes the lender a money lender within the meaning of the Ordinance for what is provided is that money- lender is the person who carries on "the business of advancing loans".1 The question then narrows down within the small compass viz. Whether the defendants were carrying on business of money lending. In the case of Litchfield v. Dreyfus Limited (1). Farwall, J. Examined the definition of the word "money-lender" as appeared in the Money Lenders Act of 1900. The English Act defines a "money- lender" as- "Every person whose business is that of money lending, or who holds himself out in any way a carrying on that business."
' In this case, one of the parties was carrying on business as an Art Dealer and in the course of his business it was necessary and incidental thereto to give long credit and to take from his customers bills and payments of the amounts they owed to him for their purchases and to discount and renew the bills from time to time. The party carried on business as an export Art valuer and advisers and he also had two other art business in which he was largely interested, by discounting for them their customers' bills and by taking bills for interest from time to time due on the debentures he held in one of those business. It was held that the party was principally only helping his clients and he was not a money-lender within the meaning of the term. The learned Judge came to the conclusion that by merely limiting his clientele and choosing to call them as his friends a money-lender cannot be allowed to evade the consequences of the law but it was always a matter of fact as to whether a person is or was not a money-lender.
11. In the matter of Bhairo Dutt Bandard (2) the Full Bench was considering the case of misconduct by a Legal Practitioner for the reason of occasional and is connected loans being given by him to his relations and friends. The question arose whether the Legal Practitioner on that
(1) (1906) 1 K B 584 (2) AIR 1940 All. I score could be termed a money-lender or engaging in money-lending business. The Full Bench observed as follows "The question that arises for consideration is whether the advances of loan admitted by the Advocate do or do not amount to engagement in money-lending business by the Advocate and the answer ' to the question is beset with considerable difficulty. Investments of his savings by an Advocate do not necessarily amount to engagement in money-lending business, the more so when such investments are few and far between and are mostly made to relations and friends.
Nevertheless, if investments by way of loan are made as a matter of regular business and for gain there can be no escape from the conclusion that such investments constitute engagement in moneylending business. What does or does not constitute money-lending business must depend on the facts and circumstances of each case and is not capable of an exact definition. The question is a mixed question of fact and law -and the answer to the question must depend on the facts found in each particular case."
12. In another English case reported (1918) 1 K B 205 the concept was examined and McGardie, J.
Made the following observations :- "A man does not become a money-lender by reason of occasional loans to relations, friends, or acquaintances, whether interest be charged or not. Charity and kindliness are not the bases of usury. Nor does a man become a money-lender merely because he may upon one or several isolated occasions lend money to a stranger. There must be more than occasional and disconnected loans. There must be a business of money-lending, and the word 'business' imports the notion of system, repetition, and continuity. The line of demarcation cannot be defined with closeness or indicated by any specific formula.. Each case must depend on its own peculiar features. It is ever a question of degree.
13. In the case of Sono Kashinath C'howdhury v. Patitto Sabot (1) Haries, C. J. Who delivered the judgment on behalf of the Division Bench also considered the same question and came to the conclusion that the elemental of continuity and habit is essential to constitute the the exercise of a profession or business. The learned Chief Justice was of opinion that there must be more than occasional and disconnected loans and the word 'business' imports the notion of system, repetition and continuity. He concluded the discourse by stating that when instances of lending are few and spread over a long period of time and further when it is found that there is some particular reason why such loan had been given then the circumstances will strongly suggest that the lender was not carrying on the business of money-lending.
14. In Smith v. Anderson (2) Jessel M. R., after citing several dictionaries defined 'business' as anything which occupies the time and, attention and labour of a man for the purpose of profit."
15. The Concise Oxford Dictionary defines 'business' as "habitual occupation, profession, trade; serious work with a definite purpose".
(1) AIR 1942 Pat. 384 (2) (15) Ch. 33 258
16. On a consideration of the various connotations of the word business it would seem that the relevant considerations are the instance of money-lending proved, the period over which those are spread, the variety of persons to whom amounts have been lent, the relationship between the money-lender and the borrower, the profits accruing to the borrower. No person could be said to carry on business of money-lending, with or without interest, by a mere fact of having advanced money to one person on one or two occasions or conversely to two or three persons on one occasion each. Indeed it will be perilous to lay any rule to the contrary for in that case any person advancing any money even with the noble instinct of helping another would run the risk of being dubbed as a money-lender and in the transaction lose not merely the instinctive reward of having helped another man but also his own money. It cannot be said better that what Farwell, J. Said that it is a question of fact, to which may be added the words "deducible from the circumstances of each individual case". Applying this test to the instant case the record discloses that the defendants advanced moneys to the plaintiff on two occasions and once to the brother of the plaintiff for purchase of motor car, which however, was never purchased so that the amount was returned. There is no evidence on the record that the defendants ever advanced any money to any other person on any occasion. The mere fact of the advances being made as stated in the evidence on record would not be sufficient to set up a conclusion that the defendants are unlicenced money-lenders. The learned Advocate for the appellant/plaintiff has invited our attention to the several transactions between the parties or between Ahmed Ali, the brother of the plaintiff and the defendants, as are detailed in para. 7 of the judgment of the learned Single Judge.
Most of these transactions have been denied by the defendants and have not been satisfactorily proved. What is satisfactorily proved on the record is the two transactions between the plaintiff and the defendants and one more between the brother of the plaintiff and the defendants. We entirely agree with the process of reasoning adopted by the learned Single Judge that most of these transactions are not proved and cannot be used against the defendants in the determination on this point. Moreover, the parties had business dealings also.
17. The next contention on the same issue was in regard to validity of the second mortgage. This mortgage was created by a registered document and is independent of the first mortgage, Two cheques of Rs, 25,000 each were delivered by the two defendants to the plaintiff in the presence of the Sub-Registrar. Both these cheques have been cashed and the plaintiff is shown as payee of these two cheques. On the back of the cheque the signature of the plaintiff appears in token of his having received the amount. Placed in these circumstances, Mr. Abdul Aziz has urged that these two cheques were in fact returned by the plaintiff to the defendants after signing the same at the back in token of having encashed them but in fact these cheques were cashed by the defendants.
It is difficult to rely on such explanation and we have no reason to take a different view from the view of the learned Single Judge in such regard.
18. On the second issue the learned Single Judge came to the conclusion that the second mortgage viz. The English mortgage was not a transaction in continuity of the earlier morte age transaction by equitable mortgage of of the property. The' plaintiff's allegation is that he had initially taken a loan of Rs, 70,000 out of which he had returned Rs, 56.000, thus leaving a small balance of Rs, 14,000. On the other baud, he has set up a conflicting case that at the time of execution of second mortgage he had to repay a sum of Rs, 50,000. These appear to be conflicting versions but on the other hand the receipt of two cheques of Rs, 25,000 each clearly points to the conclusion that the transaction of the English Mortgage in favour of the defendants was an altogether independent transaction having no bearing on the first mortgage except of course in the sense that the mortgagor and mortgagees were the same. The plaintiff has even alleged that a letter written by him to the defendants (Exh. 5/10) was written in the office of an advocate and by force of circumstances amounting to coercion or undue influence, In this letter, the plaintiff has disclosed all the circumstances relating to the transaction and has admitted his liabilities. He has not examined any witness to prove any such attending circumstances as might cast a doubt in regard to the letter not having been written by him of his own volition. We agree with the finding of the learned Single Judge on the second issue.
19. No other point was urged before us and we see no reason for interfering with the judgment of the learned Single Judge. This appeal is as a consequence dismissed but since a question of law was involved and the plaintiff is likely to lose his property also we shall leave the parties to bear their own costs.