Published on: 8 August 2023 at 14:15 IST
Court: High Court of Delhi
Citation: Rajat Jain V. Neeta Gupta (2017)
Honourable High Court of Delhi has held that the a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage shall not be covered under the definition of the loan as per Punjab Registration Of Money Lender Licence Act 1938. It is held that a person does not become a money lender merely because he may, upon one or several occasions, lend money to a stranger. There must be a business of money lending and the ‘business’ imports the notion of system, repetition and continuity to be covered under the definition of money lender under this statute.
8. It is therefore apparent that this statute would have applicability only in respect of and against persons of firms who are engaged in the business in of advancing loans as defined under the Act. The expression ‘loan’ is defined under Sub-section (8) of Section 2. ‘Loan’ has been defined to mean 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. Certain exceptions to this definition has been carved out and under Sub-clause (vi) of Sub-section (8) of Section 2 it is specifically stipulated that a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage shall not be covered under the definition of the loan.
The loan as defined in Section 2(8) of the Act of 1938 specifically excludes an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note. In Amar Singh v. Kuldeep Singh AIR 1952 Punj 207, it was held by the Court that a man does not become a money lender merely because he may, upon one or several occasions, lend money to a stranger. There must be a business of money lending and the ‘business’ imports the notion of system, repetition and continuity to be covered under the definition of money lender under this statute.
Drafted By Abhijit Mishra
Published on: 8 August 2023 at 14:10 IST
Court: High Court of Delhi
Citation: Rajat Jain V. Neeta Gupta (2017)
Honourable High Court of Delhi has held that the a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage shall not be covered under the definition of the loan as per Punjab Registration Of Money Lender Licence Act 1938. It is held that a person does not become a money lender merely because he may, upon one or several occasions, lend money to a stranger. There must be a business of money lending and the ‘business’ imports the notion of system, repetition and continuity to be covered under the definition of money lender under this statute.
8. It is therefore apparent that this statute would have applicability only in respect of and against persons of firms who are engaged in the business in of advancing loans as defined under the Act. The expression ‘loan’ is defined under Sub-section (8) of Section 2. ‘Loan’ has been defined to mean 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. Certain exceptions to this definition has been carved out and under Sub-clause (vi) of Sub-section (8) of Section 2 it is specifically stipulated that a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage shall not be covered under the definition of the loan. The loan as defined in Section 2(8) of the Act of 1938 specifically excludes an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note. In Amar Singh v. Kuldeep Singh AIR 1952 Punj 207, it was held by the Court that a man does not become a money lender merely because he may, upon one or several occasions, lend money to a stranger. There must be a business of money lending and the ‘business’ imports the notion of system, repetition and continuity to be covered under the definition of money lender under this statute.
Drafted By Abhijit Mishra