Illegal money lending

kiran (Querist) 29 February 2012 This query is : Resolved
For all the respected people out there,I would urgently want to know,if lending money without a proper license at interest rates of 8-10% is accepted and torturing for that money even after 4 years is allowed ,even on paying regular interest by the money borrower,who further cannot or is in a position in which he/she cannot pay the interests any more???
Can this case be legally fought in the court???

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Raj Kumar Makkad (Expert) 29 February 2012
Kiran! Money lender license is required to deal in the business of lending the money on interest.

So far limitation to recover the money is concerned, it is 3 years from last confirmation of debt.

Guest (Expert) 29 February 2012
Perfect advice by Shri Makkad.

Ghanshyam Prasad (Expert) 29 February 2012
you have good case.Money lending without licence is illegal.

V R SHROFF (Expert) 29 February 2012
Kiran,

you have good COLLEGE FORUM, Money lending without licence is illegal.

IF THREATENED TO PAY 8-10% PM, LODGE POLICE COMPLAINT. ML WILL NOT GO TO COURT AS TIME BARRED DEBT.

Guest (Expert) 29 February 2012
The period of limitation for recovery of money lent is only 3 years.Without license ,money landing is an illegal act.

Selvam Perumal (Expert) 29 February 2012
Dear Sir,

Doing money-lending business without licence will attract penalty. As such any act which attract penalty under a Statute is forbidden by law and cannot be enforceable before the court of law in view of Section 23 of the Indian Contract Act as held by the Hon’ble FULL BENCH of the Allahabad High Court which is reported in AIR 1994 Allahabad 298, FB as follows: Contract Act, Sec.23 – Void agreement – Agreement forbidden by law – Statute providing penalty for a matter or thing – Such a matter or thing – Is forbidden by law – Prohibition is implicit in penalty – Agreement offending Statute/public policy/forbidden by law – Is void from nativity – Neither party can enforce said agreement. [Para Nos. 8, 22 and 23]. (http://www.indiankanoon.org/doc/502158/)

Likewise the Hon’ble Division Bench of the Andhra Pradesh High Court which is reported in 1997 AIHC 135, AP, DB as follows: Hyderabad Money Lenders Act, Ss.3, 9 – Money lending without obtaining licence – Amounts to enforcing a contract contrary to the enactment – Said transaction would be hit by Section 23 of Contract Act – Accordingly it would be void. [Para No.14 and 16].

Similarly the Hon’ble Division Bench of the Patna High Court which is reported in AIR 1974 Patna 103, DB as follows: Bihar Money Lenders (Regulation of Transaction) Act, Sec.4 – Professional money lender – Who is – If investments by way of loan are made as a matter of regular business such investments constitute engagement in money-lending business. The fact that a person carried out isolated transactions of a particular kind did not mean that he carried on business of such a kind. A person might from time to time lend money to his friends or to persons close to him. If he made a habit of it for profit, then such lending might well become a business, but if the transactions were few and isolated, then the lending might well not be business. [Para No. 15]. (http://www.indiankanoon.org/doc/586876/)

I think the above submission will suffice for your query.

I request the learned Experts to correct my submission if any mistakes found in it.

adv. rajeev ( rajoo ) (Expert) 01 March 2012
It is an illegal business. File a complaint to the Dist., Registrar Co-op., societies, who issues the money lending license. Aftr four years he cannot recover the money, if he files any suit to recover the money contest the case. On the ground money lending license suit will be dismissed.