Holding

Banks are not covered by the Assam Money‑Lenders Act, 1934; consequently the suit is maintainable.

Summary

The Central Bank of India sued Associated Timber Industries and others for recovery of a loan. The defendants contended that the suit was not maintainable because, under the Assam Money‑Lenders Act, 1934, a bank that advances loans is a "money‑lender" and must be registered, which the bank was not. The trial court dismissed the suit; the Gauhati High Court reversed that decision, holding that the Act does not apply to banks. On appeal, the Supreme Court examined whether a bank falls within the definition of "money‑lender" in the Assam Act and whether the Act can be read to cover banking activities regulated by the Banking Regulation Act, 1949. Relying on a purposive interpretation and the constitutional allocation of banking to the Union List, the Court held that banks are excluded from the Assam Money‑Lenders Act, and therefore the suit is maintainable. The appeal was dismissed with costs.

Issues considered

Whether the Central Bank of India is a 'money‑lender' within the meaning of Section 2(1) of the Assam Money‑Lenders Act, 1934.
Whether the Assam Money‑Lenders Act, 1934 applies to banks that are regulated under the Banking Regulation Act, 1949.
Whether the suit for recovery of a loan filed by the bank is maintainable in the absence of registration under the Assam Act.

Legislation cited

Banking Regulation Act, 1949s. 2, s. 21, s. 21-A, s. 22, s. 26, s. 27, s. 3, s. 47-A, s. 5(b), s. 5(c), s. 6(1)(a), s. 6(1)(b), s. 6(1)(c), s. 6(1)(d), s. 6(1)(e), s. 6(1)(f), s. 6(1)(g), s. 6(1)(h), s. 6(1)(i), s. 6(1)(j), s. 6(1)(k), s. 6(1)(l), s. 6(1)(m), s. 6(1)(n), s. 6(1)(o), s. 6(2)

Subjects

Money‑lender definitionBanking Regulation ActAssam Money‑Lenders ActRegistration requirementMaintainability of suitConstitutional listsPurposive statutory interpretation

Judgment

A ASSOCIATED TIMBER INDUSTRIES AND ORS.
v.
CENTRAL BANK OF INDIA AND ANR.

AUGUST 9, 2000

B [D.P. MOHAPATRA AND SHIVRAJ V. PATIL, JJ.]

Assam Money Lender's Act, 1934-Sections 2(1)(3) and 7-D-Banking
Regulation Act, 1949-Sections 2. 5(b)(c), 6(1 )(a) to (o) and 6(2)-Bank isnot
a money lender under the Money Lender's Act-Banks do not come under the
C preview of the Act-The provisions of enactments bring forth wide difference
in the fields of operation of Banks and activities of money lenders-Consti-
tution of India, 1950-Vllth Schedule--List 1 item 45, List II item 30.

Words and Phrases- 'Banking Business'·- 'Money Lender'-Meaning
of
D
Respondent-Bank had filed a suit for realisation of certain amount
from the appellant. The appellant raised objection to the maintainability
of the suit on the ground that the Bank being a money lender, has not been
registered under the Assam Money Lenders Act, and in the absence of
E registration, the suit was not maintainable. The Trial Court dismissed the
suit as not maintainable.

In appeal, the High Court, set aside the judgment of the trial court,
holding that the provisions of the Act were not applicable to the Bank, and
directed the trial court to dispose of the case on merit.
F
In appeal to this Court, the appellants contended that the High
Court was not right in holding that the provisions of the Act were not
applicable to the respondent-Bank, as advancement of loan by the re-
spondent-Bank to the appellants made the transaction between the parties
a 'loan' as defined in Section 2(3) of the Act and the Bank a 'money lender'
G as defined in Section 2(1) of the Act; that in the absence of a notification by
the State Government declaring the respondent to be a notified Bank for
the purpose of the Act, the exclusionary provision in Section 2(3) is not
attracted. Respondent-Bank contended that it is engaged in "banking
activity", which is different from mere money lending activity, and there-
H fore, the provisions of the Act are not applicable to it; that the activities of
310
ASSOCIATED TIMt!ER INDUSTRIES v. CENTRAL BANK OF INDIA 311
Banks are governed under the Banking Regulation Act, 1949 which is a A
Parliamentary enactment; that the Banks registered under the said Act are
under the regulatory control and supervision of the Reserve Bank of India;
that the expression 'money-lender' as defined in Section 2(1) of the Act
should be so interpreted as to include a person whose sole activity is
lending money to others and charging interest; considered on that basis the B
respondent does not come within the scope of the definition of 'money-
lender', which is the sine qua non for application of the statute; and that
since the Act has no application to the respondent the question of getting
itself registered under the said Act does not arise.

Dismissing the appeal, the Court C
HELD : 1.1. Adopting a purposive and meaningful interpretation of
the provisions of the statute, the Court is of the view that 'Banks' do not
come under the purview of Assam Money Lenders Act. [322-G]

1.2. The provisions in the two enactments, viz. Banking Regulation D
Act, 1949 and Assam Money Lenders Act, 1934, one Central and the other
State, bring forth the wide difference in the fields of operation of Banks
and activities of money-lenders. While 'Banks' are financial institutions
which are engaged in improving the flow of trade, movement of commerce
and expansion of business and thereby improving the socio-economic con-
dition of the people; 'money-lenders' are engaged in making personal
E
profits; while the former are guided by policies and decisions of the Cen-
tral Government and the wide spectrum of activities in which they are
engaged are all controlled or regulated by the Reserve Bank of India; there
is no such regulatory policy in the case of the latter. [318-D-E]
F
Mis. Fatehchand Himmatlal v. State of Maharashtra, [1977] 2 SCC 670;
Mahaluxmi Bank Ltd. v. Registrar of Companies, West Bengal, AIR (1961)
Cal. 666 and Reserve Bank of India v. Peerless General Finllnce and Invest-
ment Co. Ltd. and Others, [1987] l SCC 424, referred to.

2. Other State legislatures have taken caution to exclude Banks from G
the operations of the statutes presumably with a view to avoid any conflict
with the Parliamentary enactment. Unfortunately, the Assam Money-Lend-
ers Act, 1934 does not incorporate any such provision in it. It may be noted
here that 'banking' is covered under item No. 45 in List-I of the Union List
of the Vllth Schedule of the Constitution, while 'Money-Lending' and H
312 SUPREME COURT REPORTS (2000] SUPP. 2 S.C.R.
A 'Money Lenders' : relief of Agricultural indebtedness comes under Item
30 of List-II-State List of the Vllth Schedule of the Constitution.[322-F]

P. Ramanatha Aiyer's Law Lexicon, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4446 of 2000.
B ,-
From the Judgment and Order dated 29.7.98 of the Gauhati High Court
in F.A. No. 78 of 1989.

Bhaskar P. Gupta and Ranjan Mukherjee for the Appellants.

C R.N. Trivedi, Additional Solicitor General, Manoj Wad and Ashish Wad
for the Respondent.

Yijay Hansaria and S. Borthakur for Yl/s. Jain Hansaria & Co. for the
State of Assam.

D The Judgment of the Court was delivered by

D.P. MOHAPATRA, J. Leave granted.

The question that arises for determination in this case is whether the
Central Bank of India is a 'money-lender' under the Assam Money Lenders
E Act, 1934 (Assam Act IV of 1934) (hereinafter referred to as "the Assam Act")
and, therefore, is required to take a licence under the said Act to carry on its
activities? The question having been answered in the negative by a Division
Bench of the Gauhati High Court, the defendants have filed this appeal assail-
ing the judgment.

F The factual backdrop of the case relevant for determination of the ques-
tion may be stated thus :

The Central Bank of India, respondent herein, filed the suit for realisa-
tion of certain amount from the Associated Timber Industries, Chabua and
others, appellants herein, being the amount due to the Bank towards sums
G advanced to the defendants. The defendants raised an objection against
maintainability of the suit on the ground of non-compliance with the provisions
of the Assam Act, particularly Section 7-D. To be more specific the objection
was that the Bank being a 'money-lender' has not been registered under the
Assam Act; in the absence of a registration certificate, the suit is not maintain-
H able and, therefore, cannot be proceeded with.
ASSOCIATED TIMBER INDUSTRIES'" CENTRAL BANK OF INDIA [D.P. MOHAPATRA, J.] 313
The Additional District Judge, Dibrugarh, framed an issue • whether the A
suit is maintainable? The said issue was taken up as a preliminary issue. By
the order dated 26th June, 1989 the learned trial judge dismissed the suit as not
maintainable. The plaintiff challenged the Judgment of the trial court before the
High Court in First Appeal No. 78 of 1989, wherein a Division Bench by the
judgment dated 29th July, 1998 set aside the judgment of the trial court and
directed disposal of the suit on merits in accordance with law. The said judg· B
ment is under challenge in this appeal.

Shri Bhaskar P. Gupta, learned senior counsel appearing for the appel-
lants strenuously urged that the High Court is not right in holding that the
provisions of the Assam Act are not applicable to the respondent-Bank. Elu-
cidating his contention, Shri Gupta submitted that advancement of loan by the
c
respondent-Bank to the appellants makes the transaction between the parties a
'loan' as defined in Section 2(3) of the Assam Act and the Bank a 'money
lender' as defined in Section 2(1) of the Assam Act. It was the further submis-
sion of Shri Gupta that in the absence of a notification by the State Government
declaring the respondent to be a notified Bank for the purpose of the Assam D
Act, the exclusionary provision in Section 2(3) is not attracted. The resultant
position, contended Shri Gupta, is that in the absence of a registration certifi-
cate the suit filed by the respondent-Bank is not maintainable and the trial court
rightly held su; the High Court fell into error in holding in favour of
maintainability of the suit.
E
Shri R.N. Trivedi, learned Additional Solicitor General, supporting the
impugned judgment contended that the respondent is engaged in "banking
activity", which is different from mere money lending activity, and therefore,
the provisions of the Assam Act are not applicable in case of a Bank, like the
respondent. The activities of banks are governed under the Banking Regulation
Act, 1949 which is a Parliamentary enactment. The banks registered under the F
said Act are under the regulatory control and supervision of the Reserve Bank
of India. Shri Trivedi further contended that lending money to customers is not
the only activity of the respondent; it is one of multifarious activities under-
taken by it. According to Shri Trivedi the expression 'money-lender' as defined
in Section 2(1) of the Act should be so interpreted as to include a person whose
sole activity is lending money to others charging interest; considered on that
G
basis the respondent does not come within the scope of the definition of the
term 'money-lender', which is the sine qua non for application of the statute.
Since the Assam Act has no application to the respondent the question of
getting itself registered under the said Act does not arise. It was the further
contention of Shri Trivedi that accepting the contentions raised by the appel· H
SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
314
A !ants will lead to serious consequences inasmuch as the entire lending activity
carried on by the respondent will be taken as illegal and the sums advanced
will not be realisable. Such a drastic consequence should be avoided by reading
down the provision in Section 2(1) to mean that a 'money-lender' means 'a
person who solely carries on the business of advancing money on condition of
the repayment with interest'.
B
On the case of the parties and the contentions raised by the learned
counsel appearing for them, the point formulated earlier arises for determina-
tion.

In P. Ramanatha Aiyer's Law Lexicon the term "Banking business" is
c stated to be the business of banking, as defined by law and custom, consists
in the issue of notes intended to circulate as money where the banks are banks
of issue; in receiving deposits payable on demand; in discounting commercial
paper; making loans of money on collateral security; buying and selling bills
of exchange, negotiating loans, and dealing in negotiable securities issued by
the Government, State and national municipal and other corporations.
D
We shall next consider some relevant provisions of the Statutes which
control and regulate the activities of banks and those of money-lenders.

The Banking Regulation Act, 1949 has been enacted by the Parliament
to consolidate and amend the law relating to banking. In section 2 of the said
E Act it is declared that the provisions of the Act shall be in addition to, and not,
save as expressly provided, in derogation of the Companies Act, 1956 and any
other law for the time being in force.

Under Section 3

F (a) a primary agricultural credit society;

(b) a co-operative land mortgage bank; and

(c) any other co-operative society, except in the manner and to the extent
specified in Part V.
G are excluded from the purview of the Act.

Section 5 of the Act which is the interpretation provision, provides in
clause (b) that 'banking' means the accepting, for the purpose of lending or
investment of deposits of money from the public, repayable on demand or
H otherwise and withdrawable by cheque, draft, order or otherwise.
ASSOCIATED TIMBER INDUSTRIES v. CENTRAL BANK OF INDIA [D.P. MOHAPATRA. J.] 315
Under clause (c) of section 5 'banking company' means any company A
which transacts the business of banking in India. In the explanation to the
clause it is provided that any company which is engaged in the manufacture
of goods or carries on any trade and which accepts deposits of money from the
pubic merely for the purpose of financing its business as such manufacturer or
trader shall not be deemed to transact the business of banking within the
B
meaning of this clause.

The provisions clearly indicate the broad spectrum of activities to be
undertaken by a Bank like borrowing, raising, or taking up of money; the
lending or advancing of money either upon or without security; the drawing
making, accepting, discounting, selling, collecting and dealing in bills of ex- C
change, hoondees, promissory notes, coupons, drafts, bills of lading, railway
receipts, etc. negotiating loans and advances; the receiving of all kinds of
bonds, scrips or valuables on deposits or for safe custody or otherwise; the
providing of safe deposit vaults; the collecting and transmitting of money and
securities.
D
Section 6 deals with the forms of business in which banking companies
may engage. Under scb-sections l(a) to (o) of the said section are enumerated
different forms of business in any one or more of which a banking company
may be engaged. In section 6(l)(n) it is provided that a banking company may
be engaged in doing all such other things as are incidental or conducive to the E
promotion or advancement of the business of the company. In clause (o) it is
laid down that the banking company may engage in any other form of business
which the Central Government may, by notification in the Official Gazette,
specify as a form of business in which it is lawful for a banking company to
engage.
F
In sub-section (2) of section 6 it is expressly provided that no banking
company shall engage in any fonn of business other than those refetTed to in
sub-section ( 1).

Under section 21 of the Act control over advances by banking companies
is vested in the Reserve Bank of India. In sub-section (I) thereof it is laid down G
that where the Reserve Bank is satisfied that it is necessary or expedient in
public interest or in the interest of the depositors or banking policy, so to do,
it may determine the policy in relation to advances to be followed by banking
companies generally or by any banking company in particular, and when the
policy has been so determined, all banking companies or the banking company H
316 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A concerned, as the case may be, shall be bound to follow the policy as so .
determined.

In sub-section (2) of section 21 provision is made that without prejudice
to the generality of the power vested in the Reserve Bank under sub-section
(1) enabling the Reserve Bank to give directions to banking companies regard-
B ing certain particular matters like (a) the purpose for which advance may or
may not be made (b) the margins to be maintained in respect of secured
advances, ..... (e) the rate of interest and other terms and conditions on which
advances or other financial accommodation shall be bound to comply with any
directions given to it under this section.
c
Section 21-A is a provision ousting the jurisdiction of Courts from re-
opening any transaction between the banking company and its debtor on the
ground that the rate of interest charged by the banking company in respect of
such transaction is cxcessi ve. In section 22 are contained the provisions for
licensing of banking companies.
D
Under the provisions in Sections 26 and 27 every banking company is
required to submit a return in the prescribed form to the Reserve Bank.

Under section 47-A power is vested in the Reserve Bank to impose
E penalty on a banking company in case of contravention or default of the nature
referred to in sub-section (3) or sub-section (4) of section 46.

Coming to the Assam Money-Lenders Act, 1934, in the preamble of the
Act it is stated "whereas it is expedient to make better provision for the control
of money-lending and to give additional powers to Courts to deal with money
F lenders in Assam; And whereas the previous sanction of the Governor General
has been obtained under sub-Section.(3) of s.80-A of the Government of India
Act. It is hereby enacted as follows ..... "

In section 2( I) of the Act 'Money-Lender' is defined to mean a person
G who in the regular course C!f business advances a loan as defined in this Act
and shall include, subject to the pmvisions <!f s.6, the legal representatives and
the successors-in-interest whether by inheritance, assignment or otherwise {)(
the person who advanced the loan and money-lending shall be construed
accordingly.

H (Emphasis supplied)
ASSOCIATED TIMBER INDUSTRIES'" CENTRAL BANK OF INDIA [D.P. MOHAPATRA. J.] 317 j.

In sub-section (3) 'loan' means an advance, whether of money or in kind, A
made on condition of repayment with interest and incudes any bond bearing
interest executed in respect of past liabilities and apy transaction which is in
substance a loan, but does not include -

(a) a loan to or by, or a deposit with, any society or association
rcgffitered under the Societies Registration Act, 1960 or under any B
other law relating to public religious or charitable objects;

(b) a loan advanced before or after the commencement of this Act-

by a Bank which has been declared to be a notified Bank under
S.2-A whether or not such bank was declared to be a Bank at the time C
the loan was advanced.
a loan advanced by Life Insurance Corporation of India, Financial
Corporation of India or any other corporate body.

Section 2-A provides that the State Government may, by notification in
the official Gazette, declare any bank to be a notified bank for the purpose of
D
this Act.
Under section 4 any contract made before or after the commencement
of this Act for the loan of money by a money-lender shall be illegal in so far
as it provides directly or indirectly for the payment of compound interest or
E
for the rate or amount of interest being increased by reason of any default in
the payment of sums due under the contract.
) Section 6 provides that every money lender shall regularly maintain an
account for each borrower separately of all transactions with dates and places
of such transaction in respect of any loan advanced to that borrower and furnish F
such borrower every year with an eligible statement of accounts in the pre-
scribed manner signed by the money-lender or his authorised agent.

In section 6-A provision is made that every money-lender, who received
repayment, from his borrower on account of any loan advanced to him or
payment of any interest therein shall forthwith give a receipt therefor. G
In section 7-B it is laid down that 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 Registrar in prescribed form and prescribed fees and,
for such registration, the Registrar shall grant a registration certificate to him
in such form as may be prescribed. H
318 SUPREME COURT REPORTS [2000) SUPP. 2 S.C.R.
A In Section 7-C it is provided that no person shall carry on the business
of money-lending unless he holds a valid registration certificate in this behalf.

Under sub-section (2) contravention of the provisions of sub-section(!)
is made punishable with simple imprisonment and fine.

B Section 7-D on the basis of which the defendant raised the objection
regarding maintainability of the suit reads :

"7-0 Suits to proceed without registration certificate, etc. No suit for
the recovery of a loan advanced by a money-lender shall proceed in
a civil court until the court is satisfied that he holds a valid registration
c certificate or that he is not required to have a registration certificate
by reason of the fact that he does not carry on the business of money-
lending."

From the provisions in the two enactments, one Central and the other State,
bring forth the wide difference in the fields of operation of banks and activities
D of money-lenders. While 'banks' are fim1ncial institutions which are engaged
in improving the flow of trade, movement of commerce and expansion of
business and thereby improving the socio-economic condition of the people:
'money-lenders' are engaged in making personal profits; while the former are
guided by policies and decisions of the Central Government and the wide
E spectrum of activities in which they are engaged are all controlled or regulated
by the Reserve Bank of India; there is no such regulatory policy in the case
of the latter.

In the case of Mis. Fa1ehchand Himmatlal v. S!ale of Maharashtra,
[ 1977] 2 SCC 670 the Constitution Bench of this Court considering the con-
F stitutional validity of the Maharashtra Debt Relief Act, 1976 observed :

"A meaningful, yet minimal, analysis of the Debt Act, read in the light
of the times and circumstances which compelled its enactment, will
bring out the humane setting of the statute. The bulk of the benefici-
aries are rural indigents and the rest urban workers. These are weaker
G sections for whom constitutional concern is shown because institu-
tional credit instrumentalities have ignored them. Money-lending may
be ancillary to commercial activity and benignant in its effects, but
money-lending may also be ghastly when it facilitates no flow of trade.
no movement of commerce, no promotion of intercourse, no servicing
H of business, but merely stagnates rural econo'Tiy, strangulates the
ASSOCIATED TIMBER INDUSTRIES<'. CENTRAL BANK OF INDIA [D.P. MOHAPATRA, J.] 319
borrowing community and turns malignant in its repercussions. The A
former may surely be trade but the latter - the law may well say - is
not trade. In this view, we are more inclined to the view that this
narrow, deleterious pattern of money-lending cannot be classed as
'trade'. No other question then arises, since the petitioners and appel-
lants cannot summon Article 301 to their service."
B
The Division Bench of the Calcutta High Court in Mahaluxmi Bank Ltd.
v. Registrar of Companies, West Bengal, AIR (1961) Cal. 666 construing the
definition of the word "Banking" in Section 5(1)(b) of the Banking Companies
Act, 1949 observed inter alia (at p.669) :

"Now this definition makes it clear that receiving money on deposit
c
from customers and honouring their cheques is the essential character-
istic of banking. The money deposited by the customers can be utilised
by the banker for lending it er for investing it but the bank also
undertakes the obligation to repay the deposit on demand or otherwise
and the mode by which the withdrawal of the deposit can be effected D
is by the issue of cheques, drafts, orders or otherwise, that is, by like
methods.

In Harts Law of Banking, a banker or bank is defined as one who,
in the ordinary course of his business receives money which he pays
E
by honouring the chcq ues of persons from or on whose account he
receives it. Sir John Paget in his book on Banking has pointed out that
"no person or body corporate or, otherwise can be a banker who does
not(!) take deposit accounts, (2) take current accounts, (3) issue and
pay cheques, and (4) collect cheques crossed and uncrossed for his
customers." Sheldon in his book on the Practice and Law of Banking, F
seventh edition at page 183, formulates, the following definition of a
banker.

"A person cannot claim to be carrying on the business of banking
unless he receives money or instruments representing money on
G
current account, honours cheques drawn thereon, and collects the
proceeds of cheques which his customers place into his hands for
collection."

In the case of Re Bottomgatc Industrial Co-operative Society
( 1891) 65 LT 712 al p. 714 Smith. J. defines the business of bankers H
320 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.

A thus :

"The principal part of the business of a banker is receiving money
on deposit, allowing the same to be drawn against as and when the
depositor desires and paying interest on the amounts standing on
deposit."
B
Then Sec. 6(1) of the Banking Companies Act, 1949, provides,
that in addition to the business of banking, a banking company may
engage in any one or more of the different kinds of business specified
in the various sub-clauses of sub-sec. (!)of Sec. 6. This indicates that
the main or real business of a banking company is as stated in Sec. 5(1)
c of the Act but banking companies usually carry on and are permitted
to carry on other kinds of business which are auxiliary or incidental
to the main business. Sub-section (2) of Sec. 6 lays down that no
banking company shall engage in any form of business other than
those referred to in sub-section ( 1). So the banking company is ex-
D pressly prohibited from carrying on any kind of incidental or allied
business other than those enumerated in sub-clause (a) to (o) of sub-
section (I) of Sec. 6 of the Act. Thus it is abundantly clear that the
essence of banking is the relationship which is brought into existence
at the time of the deposit; that is the core of banking. It is true that the
business of banking covers every possible phase or combination of
E
deposit, custody, investment, loan, exchange, issue and transmission
of money, creation and transfer of credit and other kindred activities
but if the essential characteristic of banking namely the power to
receive deposits from the public which are repayable in the manner
indicated in Sec. 5( l)(b) of the Banking Companies Act is absent and
F merely the power of granting loans is retained and exercised that, in
my view does not make the company a banking company. Lending of
money may be one phase of a banking business but it is not the main
phase or the distinguishing phase."

In the case of Reserve Bank of India v. Peerless General Finance and
G Investment Co. Ltd. and Others., [ l 987] 1 SCC 424 a Bench of learned two
Judges of this Court considered the validity of the provisions of Prize Chits and
Money Circulation Schemes (Banning) Act, 1978 made the following obser-
vations regarding interpretation of inclusive definition in statute.

H "Interpretation must depend on the text and the context. They are the
ASSOCIATED TIMBER INDUSTRIES v. CENTRAL BANK OF !NOIA [D.P. MOHAPATRA, J.] 321
bases of interpretation. One may well say if the text is the texture, A
context is what gives the colour. Neither can be ignored. Both are
important. That interpretation is best which makes the textual interpre-
tation match the contextual. A statute is best interpreted when we know
why it was enacted. With this knowledge, the statute must be read, first
as a whole and then section by section, clause by clause, phrase by
B
phrase and word by word. If a statute is looked at, in the context of
its enactment, with the glasses of the statute-maker, provided by such
context, its scheme, the sections, clause, phrases and words may take
colour and appear different than when the statute is looked at without
the glasses provided by the context. With these glasses we must look
at the Act as a whole and discover what each section, each clause, each C
phrase and each word is meant and designed to say as to fit into the
scheme of the entire Act. No part of a statute and no word of a statute
can be construed in isolation. Statutes have to be construed so that
every word has a place and everything is in its place. It is by looking
at the definition as a whole in the setting of the entire Act D
and by reference to what preceded the enactment and the reasons
for it that the court construed the expression 'Prize Chit' in Srinivasa
(1981] l SCR 801 and we find no reason to depart from the court's
construction."

Here we may also take note of the definition of the expression 'money- E
lenders' in some other State Money-Lenders Acts.

In Bombay Money-Lenders Act, 1946 Section 2 clause (IO) provided
that money-lender means (i) an individual, or (ii) an undivided Hindu family;
or (iii) a company or (iv) an unincorporated body of individuals, who or which F
(a) carries on the business of money-lending in the State or (b) has his or its
principal place of such business in the State and includes a pawn-broker but
does not include - (i) Government (ii) a local authority (iii) a bank (iv) the
Agricultural Refinance Corporation constituted under the Agricultural Refi-
nance Corporation Act, 1963; or (v) any other banking financial or any insti-
tution which the State Government ni.ay, by notifica>...m in the Official Gazette, G
specify in this behalf.

The expression "bOsiness of money-lending" is defined in section (2) to
mean the business of advancing loans whether in cash or kind and whether or
not in connection with or in addition to any other business. H

J
322 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A In Tamil Nadu Money-Lenders Act, 1957 the :xpression 'money lender'
is defined in s.2(8) to mean a person whose main or subsidiary occupation is
the business of advancing and realizing loans, but excludes a bank or a co-
operative society. The explanation to the said section lays down that where a
person who carries on in the (State of Tamil Nadu) the business of advancing
and realizing loans is resident outside the State of Tamil Nadu, the agent of such
B
person resident in the State of Tamil Nadu shall be deemed to be the money-
lender in respect of that business for the purpose of the Act.

In the Bengal Money-Lenders Act, 1940 it is provided that loan means
an advance whether of money or in kind, made on condition of repayment with
c interest and includes any transaction which is in substance a loan but does not
include .......... (d) a loan advanced before or after the commencement of this
Act (i) by a bank; or (ii) by a co-operative life insurance society, co-operative
society, insurance company, life assurance company (Life Insurance Corpora-
tion of India) mutual insurance company, provident insurance society or provi-
dent society or from a provident fund. The term 'money-lender' is defined in
D section 2(13) of that Act to mean a person who carries on the business of
money-lending in West Bengal or who has a place of such business in West
Bengal and includes a pawnee as defined in section 172 of the Indian Contract ·
Act, 1872.

From the provisions in the other State enactments also it is clear that the
E
legislatures have taken caution to exclude banks from the operations of the
statutes presumably with a view to avoid any conflict with the Parliamentary
enactment. Unfortunately, the Assam Money-Lenders Act, 1934 does not in-
corporate any such pro.vision in it. It may be noted here that 'banking' is
covered under item No. 45 in List-I of the Union List of the VII Schedule of
F the Constitution, while 'Money Lending' and 'Money-Lenders' : Relief of
Agricultural indebtedness comes under item 30 of List II - State List of the
VIIth Schedule.

Adopting a purposive and meaningful interpretation of the provisions of
the statute we are persuaded to take the view that 'banks' do not come under
G the purview of the Assam Money-Lenders Act. Therefore the High Court was
right in holding that the suit filed by the respondent-bank is maintainable.
Accordingly, the appeal is dismissed with costs.

K.K.T.
' Appeal dismissed.