P L D 1973 Lahore 466 (PLP)

(6) Whether the plaintiff has been complying with the provisions of section 3 of the Regulation of Account Act ? O. P. (7) Whether any of the parties is entitled to special costs, under section 35 (a) of the Civil Procedure Code ? O. P. (8) Relief. After recording the evidence of the parties, on the 28th of April 1961, on the application made by the defendant‑respondent under Order XIV, rule 5 of the Code of Civil Procedure, the trial Court framed the following additional issue No. 7‑A in the suit: 7‑A. Whether the plaintiff is a licensed money‑lender ?

4. After hearing the arguments, on the 23rd of September 1961, the learned Civil Judge, Lahore, decreed the suit of the plaintiff against the defendant for recovery of Rs. 4,000 with costs. He found in favour of the plaintiff on all these issues. But on appeal the learned Additional District Judge, Lahore reversed the finding of the trial Court on issue No. 7‑A only and consequently dismissed the suit of the plaintiff on the 31st of October 1961.

5. On issues Nos. 1 and 2 on the evidence produced before him the learned Civil Judge had no hesitation in concluding that the defendant failed to discharge the onus of these issues resting on her and prove that the pronotes in suit were without full consideration. The evidence led by her on issues Nos. 3 and 4 was not sufficient to affirmatively establish that there was any novation of the agreement between the parties under which one Mr. Aslam Lodhi accepted the responsibility for payment of the amount in suit to the plaintiff and in lieu thereof the defendant was discharged from the liability. Trial Court found that under the explanation to section 64 of the Negotiable Instruments Act the presentation of the pronotes in question was not necessary and found issue No. 5 in favour of the plaintiff. The Court decided issues Nos. 6 and 7 in favour of the plaintiff against the defendant. On issue No. 7‑A the plaintiff examined P. W. Noor Muhammad Malik, an employee of the Deputy Commissioner's Office, Lahore to establish that he was a licensed money‑lender the period of his licence expired on the 28th of January 1955. He applied for its renewal within time, but the matter was still pending with the authorities. On these facts the Court was of the opinion that in accordance with subsection (5) of section 3 of the West Pakistan Money‑Lenders Ordinance (XXIV of 1960) the existing licence should be deemed to be effective until an order was passed on his application for the renewal of the licence. In these circumstances the trial Court treated the plaintiff‑appellant as a licensed money‑lender for the purposes of this suit and decreed the same against the defendant. On appeal filed by the defendant she did not challenge these findings on Issues Nos. 1 to 7 before the Additional District Judge, Lahore. Bat he did not agree with findings of the trial Court on issue No. 7‑A. In the result he accepted the appeal before him, reversed the decree of the trial Court and dismissed the suit of the plaintiff.

6. In this second appeal before us the appellant has challenged the finding by the lower appellate Court under issue 7‑A only. The facts necessary for a disposal of this issue are not in dispute, P. W. Noor Muhammad Malik, Money Lending Licence Clerk of the office of the Deputy Commissioner, Lahore deposed that the appellant was a regularly licensed money‑lender. His licence was due to expire on the 28th of January 1955. But before it on the 27th of December 1954, he made an application to the Collector for its renewal for one year. The Collector did not pass any order on the application for a long time and kept it pending. In these circumstances the appellant filed his suit against the respondent for recovery of Rs. 4,000 in the trial Court on 17‑7‑1960 but without the money‑lender licence renewed in his favour.

7. The Punjab Registration of Money‑Lenders Act (III of 1928) was promulgated with a view to exercise control on money lending transactions and to check mal‑practices op the part of the dishonest money‑lenders. Under section 3 of the Act a suit by a money‑lender for recovery of loan shall be dismissed unless he was holding a valid licence issued to him under section 5 by the Collector for such period, in such form and on such conditions and on payment of such fees, as may be prescribed. Under the law the licence was liable to be renewed from time to time. In this connection the explanation to section 5 of the Act expressly provided that pending the disposal of an application made within time for the renewal of a licence, the existing licence shall be deemed to continue in force until orders on the application have been issued.

8. This Act was subsequently repealed and in its place the West Pakistan Money‑Lenders Ordinance (XXIV of 1960) was promulgated on 20‑7‑1960. Subsection (1) of section 3 of the Ordinance provides that no money‑lender shall carry on or continue to carry on the business of money‑lending unless he holds an effective licence under the Ordinance. Subsection (2). lays down that a money‑lender may apply to the Collector for a licence which may be granted for such a period in such form, on such conditions and on payment of such fees, as may be prescribed. Subsection (3) further provides that no money‑lender shall carry on the business of money‑lending except in accordance with the terms and conditions of his licence. Subsection (4) lays down that an application for a licence or for the renewal of a licence shall be in such form and shall contain such particulars as may be prescribed. In this connection subsection (5) of this section further lays down that when an application for the renewal of a licance has been received from a money‑lender before the expiry of the period of his licence, the existing licence shall be deemed to be effective until orders on the application have been made. Corresponding to section 3 of the repealed Act section 10 of the Ordinance lays down that notwithstanding anything contained in other enactment, a suit by a money lender for recovery of loan shall be dismissed unless at the time of the institution of the suit the money‑lender holds an effective licence granted under section 3 of the Ordinance.

9. On the 12th of June 1939 the Punjab Registration of Money, Lenders Rules, 1939 were framed under section 13 of the Punjab Registration of Money‑Lenders Act (III of 1938). These rules remained in force even after the repeal of the Act by the promul gation of the Ordinance. Rule 9 of the Rules lays down that an application for the grant or renewal of a licence shall be made to the Collector concerned in Form `C'. Rule 12 further lays down the scales of fee for the grant and renewal of a licence. Rule 14 provides that an application for the renewal of licence shall be made not less than one month before its expiry. Under rule 15 a licence may be issued or renewed for a period not exceeding three years at a time on pre‑payment by the applicant of the full fees for the period.

10. In the opinion of the trial Court under the circum stances of this case the old existing licence of the plaintiff must be deemed to be still effective on the date of the suit in accordance with subsection (5) of section 3 of the West Pakistan Money‑Lenders Ordinance, 1960. But according to the learned Additional District Judge the old existing licence held by the plaintiff‑appellant was due to expire on 28‑1‑1955. However, before this on 27‑12‑1954 he made an application to the Collector for the renewal of his licence for one year. The Collector did not pass any order on this application which was kept pending. In these circumstances in the opinion of the learned Additional District Judge by the operation of law the licence held by the plaintiff could be deemed to be effective for one year only. It could not entire beyond the period of one year after which he did not even apply for its renewal. There fore, according to the lower appellate Court, the plaintiff could not be deemed to be the holder of a valid licence on 12‑7‑1960, when this suit was instituted.

11. Section 3 of the West Pakistan Money‑Lenders Ordinance, 1960 lays down that a .money‑lender may apply to the Collector for a licence or its renewal. In this connection subsection (5) of section 3 of the Ordinance lays down as under: "When an application for the renewal of the licence has been received from the money‑lender before the expiry of the period of licence, the existing licence shall be deemed to be effective until orders on the application have been made." On a plain reading of this subsection it means that pending the disposal of an application for the renewal of a licence, the existing licence shall be deemed to be effective until orders on the application have been made. These words are wide enough and they do not in any way limit the effect of the deeming clause. Under this subsection the existing licence shall hold good so long as the Collector does not pass his order on they application of the money‑lender for the renewal of his licence. Therefore, the logical conclusion that follows is that the old existing licence held by the appellant was to enure until the Collector has disposed of the application pending before him for the renewal of his licence irrespective of the period for which this extension was sought.

12. In Interpreting the deeming clause we are reminded of the classic observations by Lord Asquith in East & Dwelling Company Ltd. v. Finsbury Borough Council (1952 A C 109). He observed that :‑ "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if inevitably have floated from or accompanied it. One of these in this case is emancipation from the 19391evel of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs." In Agha Shaukat Ali v. Settlement and Reh. Commissioner, Lahore and another (P L D 1965 Lah. 445) it was remarked that in Interpreting a deeming clause (like the one before us) the Court must give effect to the legal fiction without any prejudices and full effect must be given to the natural meanings of the clause. In doing so, unless the context otherwise directs, all the necessary consequences and incidents which naturally flow as corollaries must be recognised and carried to their logical conclusions.

13. In this case the relevant provision under discussion lays down that when an application for renewal of the licence is received from the money‑lender before the expiry of the period of the licence, the existing licence "shall be deemed" to be effective until orders on the application have been made. Full effect must be given to the deeming clause and the existing licence must be deemed to be effective until order on the application was made by the Collector. The explanation to section 5 of the Punjab Act III of 1938 was afterwards re‑enacted in the form of an independent subsection (5) of section 3 of the West Pakistan Money‑Lenders Ordinance, 1960. This change was not without significance. It lends support to the view that the scope of this explanation under discussion was not necessarily controlled by the provisions contained in main section 5 of the Act. In some respects it has a wider connotation warranted by the true and natural meanings of the language employed.

14. We are fully fortified in our conclusions in this case by Dad Muhammad Khan v. Bassa (P L D 1965 Lah. 77). In that case also it was held that as long as the application of a licensed money lender for the renewal of his licence was made within the prescribed time and was not disposed of, he could continue his business validly not by virtue of the licence or its renewal but under the statutory powers contained in the explanation to section 5 of the Punjab Registration of Money‑Lenders Act, 1938 or in clause (5) of section 3 of the West Pakistan Money -Lenders Ordinance, 1960. This was irrespective of the period prescribed for the renewal of a licence.

15. Before parting we have to deal with a further develop ment brought to our notice. On the 23rd of October 1971, the learned counsel for the appellant, filed an application before us under rule 27 of Order XLI of the Code of Civil Procedure for permission to adduce additional evidence. In this application the appellant alleged that the Collector has eventually accepted his application and renewed his licence on 18‑8‑1961. According to the appellant he passed the order in his absence without any notice to him and he learnt about it for the first time only daring the pendency of this appeal before us. The afore mentioned application made by the appellant for the renewal of his licence remained pending with the Collector since the 27th of December 1954. He did not take any early action on it. He finally renewed the licence in favour of the appellant on 18‑8‑1961 in his absence without any notice to him. There is no reason to doubt the version by the appellant that he was informed of this order pissed by the Collector only after this appeal was filed in this Court. He was, therefore, prevented by a good and a sufficient cause for not producing the renewed licence in the lower appellate Court at the hearing. The appellant was not to be blamed for this failure on the part of the Collector to pass an early order on his application for the renewal of his licence. In the interest of ju3tice we permitted him to product the renewed licence as additional evidence at this stags. In these circumstances the appellant could be deemed to be a licensed money‑lender until 18‑8‑1161, when the Collector finally passed his order on his application.

19. As a result of the above discussion we find that this appeal is bound to succeed and the learned Additional District Judge was not justified in reversing the decree passed by the trial Court. We, therefore, accept this appeal, reverse the decree under appeal and restore the one granted by the trial Court to the plaintiff against the defendant for recovery of Rs. 4,

000. But there shall be no order as to costs in these circumstances. K. B. A. Appeal accepted.