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Judgment
Bharucha, J.—An interesting question is raised in this appeal in regard to the obligation of the court in transactions covered by the Bombay Money-lenders Act, 1946.
The respondents are money-lenders. They had made various advances to the appellants prior to 30th November 1979. They filed against the appellants a Summary Suit (being Summary Suit No. 1332 of 1980) for the recovery of Rs. 3,41,917/-, whereof Rs. 3,00,000/- was the principal amount. The appellants filed in that suit a petition u/s 30 of the Act for taking an account of the transactions between themselves and the respondents. An agreement was then arrived at and recorded on 19th June 1981. Thereunder the appellants agreed to pay to the respondents the sum of Rs. 3,00,000/- without interest, by the installments therein mentioned. The summary suit was withdrawn and the petition u/S. 30 dismissed. The appellants committed defaults in making payment of the installments provided under the agreement. Thereupon the respondents filed the present suit. The appellants again filed a petition u/S. 30. The respondents contested it. The learned single Judge took the view that the petition was not maintainable and dismissed it.
Section 30 of the Act entitles a debtor to make an application to court for taking accounts and for declaring the amount payable by him to a money-lender. The court is then obliged to make an inquiry and, after taking an account of the transactions between the parties, to pass an order declaring the amount payable in respect of principal and interest, if any. In taking such account the court is obliged to follow, inter alia, the procedure u/S. 29. S. 29 reads thus :
S. 29 "Notwithstanding anything contained in any law for the time being in force, the Court shall, in any suit to which this Act applies, whether heard ex parte or otherwise -
(a) reopen any transaction, or any account already taken between the parties;
(b) take an account between the parties;
(c) reduce the amount charged to the debtor in respect of any excessive interests;
(d) if on taking account sit is found that the money-lender has received more than what is due to him pass a decree in favour of the debtor in respect of such amount.
Provided that in the exercise of these powers, the Court shall not -
(i) reopen any adjustment or agreement purporting to close previous dealings and to create new obligations which have been entered into by the parties or any person through whom they claim at a date more than six years from the date of the suit;
(ii) do anything which affects any decree of a Court,
Explanation :-- For the purpose of this section "excessive interest" means interest at a rate which contravenes any of the provisions of S. 25."
For our purposes what is material is that the court shall in a suit to which the Act applies reopen any adjustment or agreement purporting to close previous dealings and to create new obligations which has been entered into by the parties on a date more than six years before the date of the suit. A suit to which this Act applies is, by reason of S. 2(17), a suit for the recovery of a loan made after the date on which the Act comes into force and a suit for the enforcement of any agreement made after the date on which the Act comes into force in respect of any loans made either before or after that date.
The agreement that was arrived at between the appellants and the respondents was dated 19th June 1981. The suit was filed on 13th September 1985. The time bar placed upon the reopening of agreements u/S. 29 does not, therefore, apply. Upon the appellant''s petition the court was bound to reopen the agreement and to order an account to be taken by the Commissioner for Taking Accounts of all the transactions between the parties which were purported to be settled by the agreement.
That an earlier suit was filed in which a petition u/S. 30 was preferred and that that suit was withdrawn and the petition dismissed do not, in our view, make any difference to the aforesaid position.
Also not relevant, in our view, are the contentions that the respondents have ceased to be money-lenders or that they would be required to produce books of account relating to years long past. The suit is in relation to an agreement entered into when they were money-lenders and the provisions of the Act must apply to it. The Act is a piece of beneficial social legislation. It is intended to keep a firm check on the transactions of money-lenders. With that end in view money-lending business cannot be carried on unless licenced. Money-lenders are obliged to maintain books of account as prescribed and to furnish statements of account to their debtors. The court is empowered to scrutinise their dealings and even to reopen agreements purporting to close previous dealings and creating new obligations. This latter is subject to a time bar, as aforesaid. Until the time bar comes into operation the money-lenders must preserve books of account relating to the previous dealings purported to be closed by the agreements.
The appeal is allowed. The order under appeal is set aside. The petition is made absolute in terms of prayer (a). The Commissioner for Taking Accounts shall proceed to take accounts as stated in prayer (a). There shall be no order as to costs.
Appeal allowed