AIR 1954 PATNA 301

Patna High Court

Hon'ble Judge(s): Misra , J

(A) Bihar Money Lenders (Regulation of Transactions) Act (7 of 1939) , S.4— Debt Laws - Applicability of Act to loan on promissory note. AIR 1945 Pat 297, held not good law. All loans howsoever evidenced will come within the provisions of the Money Lenders' Act unless the money-lender can prove that he is not a professional money-lender, or in certain circumstances, if the loan advanced by him in any particular year did not amount to above Rs. 500/-. Thus, a loan under a promissory note also is, in substance, money-lending; the promissory note is an instrument for securing the loan and has no independent significance of its own so as to exempt such transaction from the provisions of the Money Lenders' Act. (B) Bihar Money Lenders (Regulation of Transactions) Act (7 of 1939) , S.4— Debt Laws - Casual money-lender - Test to determine. In order to determine whether a person is a money-lender, in every individual case the Court will have to see the gist of the transaction, whether it is for gain or whether it is for some other purpose, although it has the appearance of an ordinary loan with a claim for interest. The crux of the matter is whether money is being advanced by the plaintiff purely as a money-lender for the purpose of gain having no oth....