The Madhya Pradesh Money-Lenders Act, 1934 Act 13 of 1934 Keyword(s): Bank, Co-Operative Society, Court, Money-Lender, Interest, Loan DISCLAIMER: This document is being furnished to you for your information by PRS Legislative Research (PRS). The contents of this document have been obtained from sources PRS believes to be reliable. These contents have not been independently verified, and PRS makes no representation or warranty as to the accuracy, completeness or correctness. In some cases the Principal Act and/or Amendment Act may not be available. Principal Acts may or may not include subsequent amendments. For authoritative text, please contact the relevant state department concerned or refer to the latest government publication or the gazette notification. Any person using this material should take their own professional and legal advice before acting on any information contained in this document. PRS or any persons connected with it do not accept any liability arising from the use of this document. PRS or any persons connected with it shall not be in any way responsible for any loss, damage, or distress to any person on account of any action taken or not taken on the basis of this document. THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 No. 13 of 1934 TABLE OF CONTENTS rreamble Sections

1. Short title, extent and commencement.

2. Definitions.

2.

-A. Money-lender to deliver voucher to the debtor containing description of loan etc. o. Maintenance of accounts by money-lender and suppiy of statements thereof to debtors.

6. *

8. .

9.

Evidential value of copies of accounts. Debtors not bound to admit correctness of accounts supplied. Receipt for repayment of loan. Procedure of court in suits regarding loans. Savings. Power of court to limit interest recoverable in certain cases.

10.

, Power of court to limit interest to the extent of principal of loan.

11. Power to direct payment of decretal amount by instalments.

11. -A. Register of money-lenders.

11.

-B. Registration of money-lenders and regist- ration certificate.

11.

-BB. Transfer of old record by Sub-Registrar to Tahsildar.

11.

-C. Registration fee.

11.

-D. District in which business is to be carried on.

11.

-E. (omitted)

11.

-F. Bar to carry on business without registration I certificate.

1. 1 -FF. Penalty for contravention of provisions of section 2-A and section 3(1) (G) of the Act.

11.

-G. Composition of offences.

11.

-H- Suit not to proceed without registration certificate, etc.

11. -I. Continuance in force of registration certi-

ficates.

11.

-J. Interpretation of district.

12. : Power to make rules.

13. Inapplicability of Act to proprietors.

14. Inapplicability of Act to certain Corporations.

THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 (No. 13 of 1934)i An Act to regulate the transactions of money-lending in Madhya Pradesh 2 Preamble. Whereas it is expedient to make better provision for the regulation and control of the transactions of money-lending; And whereas the previous sanction of the Governor - General, required under sub-section (3) of section 80-A of the Government of India Act, has been obtained to the passing of this Act ; It is hereby enacted as follows : —

1.

(1) This Act may be called the Madhya Pradesh’ Money- ShortUt^ate a lenders Act 1934. (2) It extends to and shall be in force in the whole Madhya Pradesh. 4

2. In this Act, unless there is anything repugnant in the Definitions,

subject or context — (i) “bank” means company carrying on the business of ban- king and registered under any of the enactments relating to compa- nies for the time being in force in the United Kingdom or in any of the Colonies or Dependencies thereof, or in a part A State or a Part C State 3 or incorporated by an Act of Parliament of the United Kingdom 6 or by Royal Charter or Letters Patent or by any Central Act 7 ; (ii) “company” means a company registered under any of the enactments relating to companies for the time being in force in the United Kingdom or any of the Colonies or Dependencies thereof, or in a Part A State or a Part C State 3 , or incorporated by an act or Parliament of the United Kingdom 7 or by Roy a Charter or Letters Patent and includes Life Assurance Companies to which the Indian Life Assurance Companies Act, 1912 VI °*

1912. 8 , applies;

(iii) “co-operative society” means a society registerred under the Co-oprative Societies Act, 1912, II of 1912 9 ; J.

8. .

9.

For Statement of Objects and Reasons and Report _ of Select Committee, see Centrsl Provinces Gazette, dated the 12tii January,

1934. and 3rd August, 1934, Part II, pages 3 to 6 andp ages 188 to

194.

, respectively. Fordiscussion, see Central Provinces Legislative Council Proceedings, dated the 18th January, 1934, 23rd January, 1934 and

22nd. August, 1934, pages 15, 150 to 161 of Vol. VII of 193-t and pages

512. to 535 of Vol. VIII of 1934, respectively.

Subs, by A. O. 1950, for “C. P. and Berar”. Subs, by M. P. Act 23 of 1958, S. 3 (4), Sch. Part A, item 29 for “C. P. and Berat”. Subs, by S. 3 (3), ibid, for “Sub-sections (2) and (3) . Subs, by A. O. 1950, for “British India”. Ins. ibid. „ Subs, ibid , for “Act of the Central Legislature . See now the Insurance Act, 1938 (IV of 1938). See now the Co-operative Societies Act, 1960 (17 of 19o0) THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 (iv) vency . mcl udes a court acting in the exercise of insol- jurisdiction ; (v) _ mony-lender means a person who, in the regular course of business, advances a loan as defined in this Act and shall in- clude, subject to the provisions of section 3, the legal representa- tives ^ and the successors in interest whether by inheritance assignment or otherwise of the person who advanced the loan and money-lending shall be construed accordingly!; . ‘interest" includes the return to be made over and above what was actully lent whether the same is charged or sought to be recovered specifically by way of interest or otherwise whe- +i, er no ^ interest is capitalized within twelve years from the date of the last transaction] 1 2 3 ; (vu) loan means an actual advance made within twelve years from the date of the last transaction 3 whether of money or m kind at interest and shall include any transaction, which the court finds to be m substance a loan, but it shall not include- (a) a deposit of money or other property in a Government post office, bank or any other bank or in a company or with a co-operative society, (b) a loan to or by or a deposit with any society, or associa- tion registered under the Societies Registration Act,

1860.

, (XXI of 1860) or under any other enactment. (c) a loan advanced by any Government 4 5 of by any local authority authorized by any Government 4 , (d) a loan advanced by a bank, a co-operative society or a company whose accounts are subject to audit by a certificated auditor under the Companies Act, 1913 (VII of 1913), (e) an advance made on the basis of a negotiable instru- ment , as defined in the Negotiable Instruments Act,

1. 881 (XXVI of 1881), other than a promissory note.

(f) a transaction which is a charge created by operation of law on, or is in substance a sale of , immovable property., 5 (g) a loan advanced to an agricultural labourer by his employer; (viii) “prescribed” means prescribed by rules made under this Act; (viii-a) “Sub-Divisional Officer” means the Sub-Divisional officer within the meaning of section 22 of the Madhya Pradesh Land Revenue Code, 1959 (No. 20 of 1959) ;

1. I Ins. by C. P. and Berar Act 14 of 1940, S. 2. (i).

2. Subs, by C. P. and Berar Act 18 of 1939, S. 2.

3. Subs, by S, 2 (ii), ibid., for “means an advance”.

4. Subs, by A.O. 1937, for “Government”.

5. Subs, by C. P. and Berar Act 23 of 1939, S. 2.

THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 (ix) <£ Tahsildar” means a Tahsildar appointed under sub- section (1) of section 19 of the Madhya Pradesh Land Revenue Code, 1959 (No. 20 of 1959 »

2.

-A. (1) Every money-lender shall, on advancing a loan to a debtor forthwith deliver to the debtor a voucher under his signa- ture evidencing the transaction of loan. Money-lender to deliver voucher to the debtor containing description of loan. etc. (2) Such voucher shall contain, — (a) amount or, as the case may be, the quantity of loan advanced ; (b) sufficient description of movable or immovable pro- perty pledged or mortgaged, as the case may be, so as to enable identification of property; (c) the rate of interest chargeable on the loan advanced; (d) where movable property is being pledged, acknow- ledgement of the delivery of such movable property by the debtor and receipt thereof by the moeny- iender; and (e) such other particulars as may be prescribed. (3) The money-lender shall also forward a copy of th e voucher delivered to the debtor under-section (1) to the bub- Divisional Officer 3 concerned within such time as may be pres- cribed.

3.

(1) Every money-lender shall— (a) regularly maintain an account for each debtor separa- tely of all transactions in respect of any loan advanced to that debtor ; (b) furnish such debtor every year with a legible state- ment of accounts signed by the money-lender or his agent or any balance of amount that may be outstan- ding against such debtor on such date and in such areas as may be prescribed. Such statement oi accounts shall include all transactions in respect oi the loan entered into during the year to which the statement relates and shall be furnished, in the court language of the district in which the debtor resides, and in such manner, in such form, containing such details and on such date as may be prescribed. Maintenance of accounts by money-lender and supply of statements thereof to debtors ( c ) furnish to the Sub-Divisional Officer? concerned a copy of every statement of account furnished to a debtor under clause (b).

1. Subs, by M. P. Act 43 of 1934, S. 2.

2. Ins. by M. P. Act 30 of 1982, S. 3.

3. Subs, by M. P. Act 43 of 1984, S. 3., for “Registrar”.

4. Ins. by M. P. Act 30 of 1982, S. 4.

THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 T J u acc ° u ^ required under clause (a) of sub-section UT1 i haU be SO raamtained that items due by way of interest shall be shown as separate and distinct from the principal sum and separate totals of principal and interest shall be shown. The money-lender shall not, in the absence of agreement, include the interest or any portion of it in the principal sum, and the principal and interest shall be seperately shown in the opening balance of each new annual account: 1 Provided that — (i) if the loan has, since it was originally advance, passed by inheritance or assignment to a widow or a minor such widow or minor shall not be bound to maintain and furnish the account under sub-section (1) for a period of two years from the date of such passing; (ii) nothing in this section shall be deemed to lay upon any person the duty of maintaining and furnishing the account under sub-section (l)"i n the case of a loan wherein the title to recover is sub-judice bet- ween two or more persons claiming as money-len- ders adversely to each other unless and until the title has been finally decided by a court of competent jurisdiction. Evidential value of copies 4. Copies of entries in the account required to be maintained of accounts. under clause (a) of sub-section (1) of section 3, when certified in such manner as may be prescribed, shall be admissible in evidence for any purpose in the same manner and to the same extent as the original entries. Debtors not bound to 5. A debtor to whom a statement of accounts has been furnished admit correctness of under clause (b) of sub-section (1) of section 3 shall not be bound accounts supplied. to acknowledge or deny its correctness and his failure to protest shall not by itself be deemed to be an admission of the correctness of the Account. Receipt for repayment of Every money-lender, who receives repayment from his loan - debtor on account of any loan advanced to him, shall forthwith give a receipt therefor. Procedure of court in suits regarding loans. A Notwithstanding anything contained in any other enact- ment for the time being in force, in any suit or proceeding relating to a loan — ■ (a) the court shall, before deciding the claim on the merits, frame and decide the issue whether the money- lender has complied with the provisions of clauses (a) and (b) cf sub-section (1) of section 3; (b) if the court finds that the provisions of clause (a) of | sub-section (1) of section 3 or of section 6 have not been complied with by the money-lender, it shall, if the plain tiff, s claim is established in whole or in part, disallow the whole or any portion of the interest found due, as may seem reasonable to it in the cir- cumstances of the case, and may disallow costs;' and THE MADHYA PRADESH MONEY-LENDERS AGT, 1934 (c) if the court finds that the provisions of clause (b) of sub-section (1) of section 3 have not been complied with by the money-lender, it snail, in computing the amount of interest due upon the loan, exclude every period for which the moneylender omitted duly to furnish the account as requied by that clause: Provided that if the money-lender has, after the time pres- cribed in that clause, furnished the account and the plaintiff satisfies the court that he had sufficient cause for not furnishing it earlier^ the court may, notwithstanding such omission, include any such period or periods for the purpose of computing the interest. Explanation.— A money-lender who has maintained his account and furnished his annual statement of accounts m the prescribed form and manner shall be : held to have complied with the provisions of clauses (a) and (b) of sub-section (1) of section 3 inspite of any errors and omissions if the court finds that such errors and omissions arc accidental and not material and that the accounts have been kept in good-faith with the inten- tion of complying with the provisions of those clauses.

8. The provisions of sections 3, 4, 5, 6 and 7 shall not apply to any loan made before this Act comes into force :

Provided that, if any fresh transaction in respect of a loan made before this Act comes into force is made after this Act comes into force, such transaction shall be subject to the provisions o those sections. Savings.

9. Notwithstanding anything contained in any other enact-

ment for the time being in force, no court original or appellate' shall decree, in respect of any loan made before this Act comes into force, on account of arrears of interest^ a sum greater than the principal of such loan * * * *

10. No court shall, in respect of any loan made after this

Act comes into force, decree on account of arrears of interest a sum greater than the principal of the loan.

11. The court may, at any time on the application of a judg-

ment-debtor, after notice to the decree holder, direct that the amount of any decree passed against him, whether before or after this Act comes into force, in respect of a loan shall be paid m such number of instalments and subject to such conditions on the dates fixed by it as, having regard to the circumstances of the Judgement debtor and the amount of the decree, it considers fit. During the pendency of an inquiry under this section, the court may order the stay of execution of -the decree, subject to such conditions as it may impose. Such order shall bn deemed to have been passed under section 47 of the Code of Civil Proce dure, 1908 (V of 1908)

1. Ins. by C. P. Act 24 of 1937, S. 3. , .

2. Words “unless it is satisfied that the money-lender had reasonable grounds for not enforcing his claim earner” omitted by C. i. Act

18. of 1939 S. 3.

3. Ins. by C. P. Act 29 of 1937, S. 3.

Power of court to limit interest recove- rable in certain cases. Power of court to limit interest to the extent of principal of loan. Power to direct payment of decretal amount by instalments. THE MADHYA PRADESH MONEY-LENDERS ACT, 1934 Register of money-leaders. Registration of money-len- ders and registration certificate. Transfer of old record by Sub-Regisrtrar to Tahsil- dars. Registration fee. District in winch business is to be carried on.

1. 1-A.j (1) Every Tahsildar shall maintain a register of money lenders in such form as may be prescribed 2

(2) Such register shall be deemed to be a public document within the meaning of the Indian Evidence Act, 1872 (I of 1872), * * P ! 11-B. (l)Every person who carries on or intends to carry on the business of money lending shall get himself registered by an application made to the Tahsildar of the tahsil of the district or ai|y one of the districts in which he carries on or intends to carry on such business and, on such registration the Tahsildar shall grant a registration certificate to him in such form as may be pres- cribed : Provided that no person being a firm or partner of a firm of money-lenders shall be so registered except upon production before the Tahsildar of a certified copy of an entry showing such person as the firm or partner, as the case may be, made in the Register of Firm under section 59 of the Indian Partnership Act, 1932 (No.

9. of 1932) 1 .

(2) The appplication made under sub-section (1) shall be in writing and shall specify the district or districts in which the applicant carries on or intends to carry on the business of money- lending and such other particulars as may be prescribed.

11.

-BB. All the record held by Sub- Registrar prior to 29th September, 1984 shall stand transferred to the Tahsildar. 5 ^[11-C.[(1). The person who makes an application under* section 11-B shall pay in the prescribed manner a registration fee at the rate of fifty rupees per annum in respect of each district in which he carries on or intends to carry on the business of money-lending : Provided that the State Government may, by notification, exempt any class of persons from the paymmt of the registration fee either generally or for any specified area. 7 (2) A registration certificate may, at the request of the applicant therefor, be granted for a period of one year or two years].

11.

-D. The registration certificate granted under section 11-B shall not entitle the holder thereof to carry on the business of money-lending in any district other than the district or districts for which such certificate has been granted.

1. 1-e. * * * * * 8

1. Subs, by C. P. aud Berar Act, 14 of 1940, S. 3.

2. Subs, by M. P. Act 43 of 1984, S. 5.

! 3 - Words “or the same Act as applied to Berar” omitted by M. P. Act

23. of 1958, S. 3. (3) Sch. Part A, item 29.

4. Subs by M. P. Act 43 of 1984, S. 6.

5. Subs, by S. 7, ibid.

6. Subs, by C. P. and Berar Act 9 of 1949, S. 2

7. Subs, by M. P. Act 43 of 1984, S. 8.

; 8. Omitted by C. P. and Berar Act, 9 of 1949. S 3. THE MADHYA PRADESH MONEY-LENDERS ACT, 1^34 jsvy*rjs: part '*•*= certificate in respect of that district. U2) Whoever contravenes the provisions of sub-section S fine which may extend to five hundred rupees.] 1 n 1 FF Whoever contravenes the provisions of section 2-A i' F trtnf sub-section (1) of section 3 shall be punishable i 1 r 3171) IThe Sub-Divisional Officer 4 may accept from U ' G - 3 i,v,n has committed an offence against sub-section nfoKction 11 J 11-FF a sum of money not ex- ceeding five hundred rupees by way of compensation or .11 offence.] ion on payment of such sum of money, no further proceed - ingishaU be P taken against such person in respect oi suclr offence, and if in custody he shall be discharged.

1. 1 tt v„ su n f or the recovery of a loan advanced oy a satisfied t^t he holds a vmtu g on certiflcate by reason of the

busing of money-lending m any of the district oi Madhya Pradesh. Provided that this section shall not apply to a suit instituted before the 1st October, 1940.

11.

-1. Notwithstanding the expiry of a°ny Money-lenders (^ndmemf jfSSLSffif b? deemed to W been ^antyd in respect for which it was granted. Bar to carry on hostess without registration certificate. Penalty for contravention of provisions of setion

2.

-A and section 3 (1) (c) of the Act. Composition of offences. Suit not to proceed without registration cer- tificate, etc. Continuance in force of registration certificate. P TF C and UJttM 4 ^““ shall Save the mean\og ) assigned to it m thCf Central Provnices L nd Revenue Act, 1917 (II of 1 917)" L_

1. 1 -B I nterpretation of district .

1. .

3.

o.

7.

Subs, by M. P. AcMO of 1%5 3- Ins. by M. P. Act 30 of 19o2, S. .. Subs, by M. P. Act 30 of i982 , b. ■ Collector or the Sub- Subs. by M. P. Act 43 of 1984, a. v.tot 22 of the Madhya Divisional Officer within the meaning of s^Uoa 2 o Pradesh Land Revenue Code. 19o9 (No. 20 ono , , ,1 ri Ar.t on (ass for “Mahakoshal region Subs by M. P. Act 23 oi 1959") wZh- “'the Bern Sieved Cod. 928”, emitted by M. P. Act 23 of 1958, S 3 (3), Sch. Part A, >tem 29. Power to make rules. the MADHYA; PRADESH MONEY-LENDERS ACT, 1934 Inapplicability of Act to proprietor®! madl’by^he late cteC&d Xf h“ ^ Act wjth this Act. ent anc s “ a ^ consistent p*E&„. rUkS Sha “ te SUbjeCt “ * he “» of previous : (3) In particular and without nremdire to n,, „ ... p^ribS^“ g P ° WCr ’ * he State Government may majte rules J [(«) (*) the other particulars to be stated in the voucher | g-A^ clause W of sub-section (2) of section (u) the time within which a copy of the voucher shall be forwarded to the [Sub-Divisional Officer 2 under sub-section (3) of section 2-A;] J (««) the manner and form with numerals in which statement of accounts shall be furnished and the ri? nf !°n bC ? VCn n? S r Ch s ! atement under clause bj of sub-section (1) of section 3: i ? i W " er A w !“ ch c °P ies of ®tries in the account shall be certified under section 4; I 4 [( c ) the form under section 11 -A; » *e form of registration certificate under sub-section (lj ot section 11-B; ( e ) the particulars of an application under sub-section (2) of section 11-B; S [(/) the manner in which the Registration fee payable under section 11-C shall be paid; iff) the manner in which refund shall be made; andp (g) the grant of copies of registration certificates. ETairPor n , 0t &PpIy t0 / P ro P rictor who advances I f y excJusiv ely to any of his tenants for seed, land improvement or agricultural operations. Explanation. --For the purpose of this section the word improvement shall have the meaning assigned to it in the Land Improvement Loans Act, 1883 (IX of 1883) [ * * * * ' ‘ — j . .

1. !.

2.

t

7.

Ins by M. P. Act 30 of 1982, S. 7. Subs, by M. P. Act 43 of 1984, S. 10, for “Registrar” Renumbered by M. P. Act 30 of 1982, S. 7. 8 Ins. by C. P. and Rerar Act 14 of 1940, S. 4. Subs, by C. P. and 5 Berar Act 9 of 1949, S. 4. Ins. by C. P. and Berar Act 37 of 1939, S. 2. A S' 23 on9 58 * ST n f c a f P £' ' ed A t0 Eerar ” omitted by M. P. Act 15 ot 1958, S. 3 (3), Sch Part A, item 29.