SMT. SUDHA KANKARIA vs SMT. BHAVYA BOTHRA

OD-11

IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE

APDT/2/2026
WITH CS/162/2020
IA NO: GA/1/2026

SMT. SUDHA KANKARIA
VS
SMT. BHAVYA BOTHRA

BEFORE:
HON'BLE JUSTICE DEBANGSU BASAK
-A N D-
HON'BLE JUSTICE MD. SHABBAR RASHIDI




For the Appellant : Mr. Debrup Bhattacharjee, Adv.
Mr. Subroto Goswami, Adv.
Mr. Siddharth Singh, Adv.

For the Respondent : Mr. Aritra Basu, Adv.
Mr. Ratul Das, Adv.
Mr. Dwip Raj Basu, Adv.

HEARD ON : 18.05.2026
DELIVERED ON : 18.05.2026

DEBANGSU BASAK, J.:-


1. The appeal is at the behest of the defendant and directed
against the judgment and decree dated December 17, 2025 passed in
CS 162 of 2020.
2. By the impugned judgment and decree, learned Trial Judge,
decreed the suit filed for recover of money lent and advanced.

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3. Learned advocate appearing for the appellant submits that,
the respondent is a money lender within the meaning of the Bengal
Money Lenders Act, 1940. He submits that, the issue as to whether
or not the respondent is a money lender within the meaning of the
Act, 1940 was decided by the learned Trial Judge. He refers to the
order dated November 16, 2023 passed in IA GA 1 of 2021 being
application under Order XII Rule 6 of the Code of Civil Procedure as
also, the order dated May 7, 2024 passed in the suit.
4. Learned advocate appearing for the appellant submits that in
the application for judgment on admission, being IA GA 1 of 2021,
learned Trial Judge noted the stand of the respondent in the affidavit
in reply in such application that, the respondent applied for grant of
license under the Act of 1940 and that, the same was yet to be
received by the respondent. In view of such admission made by the
respondent as plaintiff in the affidavit in reply learned Trial Judge,
refused to pass a decree on admission as prayed for by the
respondent as the plaintiff. He submits that, no appeal was carried
against the order dated November 16, 2023.

5. Learned advocate appearing for the appellant draws the attention
of the Court to the order dated May 7, 2024 and submits that the
respondent as the plaintiff admitted that, it applied for grant of
license under the Act of 1940 and did not receive the same till the
date of such order. The respondent as the plaintiff invited the Court

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to pass direction upon the concerned authority under the Act of 1940
to dispose of the application for grant of license by imposing penalty
upon the respondent.
6. Learned advocate appearing for the appellant submits that, no
license under the Act of 1940 was tendered in evidence and marked
as exhibit. He submits that, in absence of a license being produced
under the Act of 1940 the provisions of Section 13 of the Act of 1940
would stand attracted. He submits that, the suit was required to be
dismissed by the learned Trial Judge, upon the respondent as the
plaintiff not producing the license within the time as allowed by the
learned Trial Judge by the orders dated November 16, 2023 and May
7, 2024.
7. Learned advocate appearing for the appellant submits that, the
issue as to whether or not, the respondent is a money lender was
decided. Therefore such issue could not be reopened on the
principles of res judicata . He submits that, the issue of res judicata
applies at different stages type of the same proceedings. In support of
such contention, he relies upon 2005 (1) SCC 787 (Bhanu Kumar
Jain vs. Archana Kumar & Arn.) .
8. Learned advocate appearing for the appellant refers to exhibits G
and G1. He submits that those exhibits are returns filed by the
respondent before the Income Tax Authorities. He draws the
attention of the Court to the columns of advances and submits that,

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apart from the appellant the respondent lent and advanced monies to
others. He draws the attention of the Court, replies to the question
put in cross-examination to the witness of the respondent being
question nos. 102 and 103.
9. Learned advocate appearing for the appellant submits that,
although, the case of the plaintiff is that, the money was lent and
advanced together with the interest, actually no interest was initially
agreed to be paid. He submits that in cross-examination the witness
of the respondent, stated that, initially no interest was agreed upon
and that, subsequent to the appellant committing default in payment
of the loan interest was agreed upon.
10. Learned Advocate appearing for the appellant relies upon three
decisions of the Supreme Court rendered in Special Leave to Appeal
(Criminal) No. 5485/2024 ( Raj Kumar Santoshi Vs. Prashant
Malik ) dated July 23, 2024, February 16, 2024 and April 6, 2026 to
contend that the suit of the respondent was not maintainable and
therefore no decree could be passed therein.
11. Learned advocate appearing for the respondent draws the attention
of the Court to the finding of the learned Trial Judge. He submits
that the learned Trial Judge found the respondent not to be a money
lender within the meaning of the Act of 1940. He submits that since
the respondent was found not to be a money lender the rigours of the
Act of 1940 do not apply.

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12. Learned advocate appearing for the respondent, draws the attention
of the Court to the answer given by the witness of the respondent, to
question nos. 102 and 103 put in cross-examination of such witness.
He submits that, one solitary instance of the lending money to an
acquaintance cannot be construed to be a money lending business
within the meaning the Act of 1940.

13. Relying upon 2011 (2) CHN 969 (Sitaram Poddar vs. Bhagirath
Chouchary) learned advocate appearing for the respondent submits
that, since, there is no evidence that, the respondent lent and
advanced money on a continuous basis to diverse persons and that,
the respondent was consequently carrying on money lending
business within the meaning of the Act of 1940, the rigors of the Act
of 1940 will not apply. He submits that the learned Trial Judge
correctly decreed the suit.
14. Learned advocate appearing for the respondent draws the attention
of the Court to the order dated July 23, 2024 passed by the Hon’ble
Supreme Court in SLP (Crl.) No. 5485/2024 (Raj Kumar Santoshi
vs. Prashant Malik) and submits that the subject matter of such
proceeding was under the Punjab Registration of Money Lenders Act,
1938. The provisions of the Act of 1940 are not pari materia with the
Act of 1938. Moreover, he submits that in order to constitute the
money lending business the person concerned must be effecting
continuous transactions of such nature which is not the case here.

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Consequently he submits that, the decisions of the Supreme Court
dated July 23, 2024, February 16, 2026 and April 6, 2026 passed in
SLP (Crl.) No. 5485/2024 (Raj Kumar Santoshi) (supra) will not
apply.
15. The respondent herein filed a suit for recovery of money lent and
advanced as against the appellant. Such suit was registered as CS
162/2020. In such suit, the respondent applied under Order XII Rule
6 of the Code of Civil Procedure seeking a decree on the basis of
judgment on admission. Such application was registered as IA GA 1
of 2021.
16. By the order dated November 16, 2023 passed in IA GA 1 of 2021
learned Single Judge, refused to pass a decree on the basis of
admission after returning the finding that, the respondent took a
stand in the affidavit in its reply that it would obtain a license under
the Act of 1940 and that, it applied for grant of such license and that
the same was yet to be granted.
17. No appeal was carried against such order dated November 16, 2023
by the parties. There is therefore a conclusive finding by the learned
Trial Judge as to the applicability of the Act of 1940 to the proceeding
on the basis of the admission made by the respondent in its affidavit
in reply. The respondent in its affidavit in reply filed in IA GA 1 of
2021 acknowledged that it was carrying on money lending business
within the meaning of the Act of 1940. A Licence under the Act of

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1940 was required to obtain a decree in the suit and that it applied
for such licence.
18. There is a subsequent order dated May 7, 2024 passed in the suit by
the learned Trial Judge, at the instance of the respondent. By such
order, in the course of witness action at the trial of the suit, the
submissions made on behalf of the respondent were recorded. The
relevant portions of the order dated May 7, 2024 are as follows :
“Counsel for the plaintiff has admitted that he had applied
for grant of licence but till date the same has not been granted.
Counsel for the plaintiff also submits that the application filed
by the plaintiff is still pending before the concerned authority
and if this Court will pass an order directing the plaintiff to pay
the penalty, the plaintiff is ready to pay the penalty.
In view of the above, the concerned authority who is dealing
with the grant of licence of money lenders under the Bengal
Money Lenders Act, 1940 shall dispose of the application filed
by the plaintiff for grant of licence by imposing the penalty not
exceeding three times of the amount as prescribed under Section
10 of the said Act.
The concerned authority is directed to dispose of the application
by imposing penalty upon plaintiff within a period of four weeks
from the date of receipt of the copy of this order.”

19. Again, none of the parties preferred any appeal against the order
dated May 7, 2024. In the order dated May 7, 2024 the issue of the
applicability of the Act of 1940, was raised and discussed. It is on

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such discussion and at the instance of the respondent, were the
directions as noted in the order dated May 7, 2024 were issued.
20. Bhanu Kumar Jain (supra) discussed the principles of res judicata
and its applicability at different stages of a proceeding. It held that
such principles applied in different stages of the same proceeding. It
noted that, the principles of res judicata can be invoked not only in
separate subsequent proceeding but get attracted in subsequent
stage of the same proceeding. Once an order made in the course of
the proceeding becomes final it would be binding at that stage of that
proceeding.
21. Applying the ratio of Bhanu Kumar Jain (supra) in the facts and
circumstances of the present case two orders dated November 16,
2023 and May 7, 2024 held that, the provisions of Act of 1940
applied to the transactions in question, between the parties to the
suit. Such finding was returned in the order dated November 16,
2023, in view of the stand taken by the respondent, in its affidavit in
reply filed in IA GA 1 of 2021.
22. The respondent, took a stand in the affidavit in reply in IA GA 1 of
2021 that the provisions of Act of 1940, applied to the transaction
between the parties to the suit and that, the respondent applied for
grant of license under the Act of 1940 which was awaited. The
respondent cannot be allowed to take a stand contrary to such
declared stand in a subsequent stage of the same proceeding.

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Moreover, the respondent invited the Court on May 7, 2024 when the
witness action of the suit was in progress to issue direction upon the
concerned authority to dispose of the application for grant of license
by imposing penalty under the Act of 1940.
23. Therefore, not only did the respondent acknowledged and admitted
that, the provisions of the Act of 1940 applied to the transactions in
question, but also invited the Court to pass necessary orders for
grant of licence to the respondent under the Act of `1940.
24. Section 13 of the Act of 1940 is as follows:
13 (1) No Court shall pass a decree or order in favour of a money-
lender in any suit instituted by a money-lender for the recovery of
a loan advanced after the date notified under section 8, or in any
suit instituted by a money-lender for the enforcement of an
agreement entered into or security taken, or for the recovery of
any security given, in respect of such loan, unless the Court is
satisfied that, at the time or times when the loan or any part
thereof was advanced, the money-lender held an effective licence.
(2) If during the trial of a suit to which sub-section (1) applies, the
Court finds that the money-lender did not hold such licence, the
Court shall, before proceeding with the suit, require the money-
lender to pay in the prescribed manner and within the period to
be fixed by the Court such penalty as the Court thinks fit, not
exceeding three times the amount of the licence fee specified in
section 10.
(3) If the money-lender fails to pay the penalty within the period fixed
under sub-section (2) or within such further time as the Court may
allow, the Court shall dismiss the suit: if the money-lender pays

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the penalty within such period, the Court shall proceed with the
suit.
(4) The provisions of this section shall apply to a claim for a set-off by
or on behalf of a money-lender.
(5) In this section, the expression "money-lender" includes an
assignee of a money-lender, if the Court is satisfied that the
assignment was made for the purposes of avoiding the payment of
licence fee and penalty which may be ordered to be paid under
this section.
25. Sub-section (1) of Section 13 requires the Court in seisin of a
proceeding not to pass a decree or order in favour of the money
lender in any suit instituted by a money lender for its recovery
unless, the money lender produced an effective licence. Sub-section
(2) allows the Court to require the money lender to pay penalty and
obtain the licence. Sub-section (3) prescribes that the in the event of
failure of the money lender to pay penalty, the Court shall dismiss
the suit. Sub-section (4) prescribes that provisions of such section
apply to a claim for a set off made by order on behalf of the money
lender.
26. In the facts and circumstances of the present case respondent,
invited the Court to undertake exercise under Section 13(2) of the Act
of 1940 as is recorded in the order dated May 7, 2024. The
respondent is yet to produce a licence under the Act of 1940 even at
the final hearing of the appeal.
27. In view of the failure of the respondent to produce the effective
licence under the Act of 1940, the Court was obliged to proceed

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under Section 13(3) of the Act of 1940 and dismiss the suit. Learned
Trial Judge, however, proceeded to decree the suit in favour of the
respondent. In decreeing the suit, learned Trial Judge noted that the
respondent referred to two orders passed with regard to the Act of
1940. While dealing with the issue nos.5 and 6, learned Trial Judge
also noted that there was no evidence that the respondent was
engaged in money lending business. There was no pleading of the
respondent in this respect except the plea of the appellant that the
respondent did not possess the requisite licence. Therefore, the
learned Trial Judge held that it cannot be concluded that the
respondent was engaged in money lending business at the time of
advancing the loan and that, absence of licence was fatal to the suit.
28. With the deepest of respect the learned Trial Judge overlooked the
two orders passed dated November 16, 2023 and May 7, 2024 where
the issue as to the applicability of the Act of 1940 was decided as
against the respondent and at the invitation of the respondent itself.
There was no further material produced at the trial to dislodge such
a finding.

29. Independent of the two orders noted above, there are materials on
record to establish that the respondent was engaged in money
lending business under the Act of 1940. That the respondent is
engaged in money lending business can be established from Exbt.-G
and Exbt.-G/1. Exbt.-G and Exbt.-G/1 are income tax returns of the

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respondent. In such income tax returns, under the heading ‘loans
and advances’, the respondent acknowledged that, it lent and
advanced money of diverse amounts, to at least five persons. In
reply to question no.103, the witness of the respondent,
acknowledged that, it lent and advanced money on interest to one of
the persons noted in Exbt.-G and Exbt.-G/1. The claim of the
respondent in the suit, was not limited to the recovering of the
principal amount but was together with the accrued interest. The
agreement as to interest was sought to be explained in answer to
question no.102 by the witness of the respondent by stating that
initially no interest was agreed upon. On the default of appellant
paying the defaulted amount, interest was agreed upon.
30. Given the materials in Exbt.-G and Exbt.-G/1 coupled with the
admission of the respondent in its affidavit-in-reply in IA GA No.1 of
2021 the irresistible conclusion is that the respondent was a money
lender within the meaning of the Act of 1940.
31. In view of such finding being returned by us that the respondent is a
money lender within the meaning of the Act of 1940, the ratio laid
down in Sitaram Poddar (supra) is not attracted. Factual matrix in
the case at hand is completely different to that of Sitaram Poddar
(supra). In Sitaram Poddar (supra) the plaintiff therein did not
acknowledge that it required a licence under the Act of 1940 as done
by the respondent as a plaintiff in this case.

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32. Our attention was drawn in course of hearing of the appeal to the
orders passed by the Supreme Court in SLP (Crl.) No.5485/2024 ( Raj
Kumar Santoshi ). Such orders are dated July 23, 2024, February
16, 2026 and April 6, 2026.
33. In its order dated July 23, 2024 passed in Raj Kumar Santoshi
(supra) , Supreme Court noted the menace of money lent on interest
without any licence thereof. It noted that, in order to constitute a
money lending business within the meaning of the Act of 1938, the
person concerned must be effectuating continuous transactions of
such nature. It noted that, Shylockian attitude sans shame
continues in such instances where, despite repaying the amount
actually advanced, the borrower is constrained to pay sometimes
double the amount or more, towards interest. It noted the desire to
regulate such instances to rescue the hapless borrowers.
34. In its order dated February 16, 2026 passed in Raj Kumar Santoshi
(supra) , the Supreme Court, noted that, during the pendency of the
matter, the parties entered into a settlement. It noted that, there was
a draft bill which was prepared and was in circulation with the
respective States/Union Territories with regard to necessary
legislation. In view of such stand being taken by the Union of India,
the Supreme Court directed closure of the suo moto action.
35. The order dated February 16, 2026 was later clarified by the
Supreme Court by its order dated April 6, 2026 passed in Raj Kumar

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Santoshi (supra) . Relevant portion of the order dated April 6, 2026
are as follows:
“4. It is pertinent to note that for unlicensed money lending
against the promissory notes, whether accompanying with
any other security such as cheque, title deeds or not, there
already exists a Statutory Bar in State Money Lending Law.
There is also a bar of “Dam Dupat” even under a money-
lending licence i.e. against charging interest more than the
principal amount actually disbursed. There is a further
statutory disability against enforceability of such loan
amount by unlicensed money lender. Moreover, such money
lending is a punishable offence under the State Money-
Lending Law.
5. Therefore, the Courts should ensure that the proceedings
instituted by such private money lender are nipped in bud,
whether Civil or Criminal, unless the money lender at the
threshold produces license for money lending or shows that
money was not advanced by him at interest.”

36. The mandate contained in the order dated April 6, 2026, particularly,
in paragraph 5 thereof, is binding upon us. The mandate requires a
Court to nip any proceeding civil or criminal, including a suit for
recovery of money lent and advanced in the bud, unless the money
lender, at the threshold, produces the license for money lending or
shows that the money was not advanced by such money lender at
interest.
37. In the facts of the present case, the respondent as the plaintiff
acknowledged before the Learned Single Judge that provisions of the

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Act of 1940 apply and that, the respondent as the plaintiff was
required to obtain money lending licence. The money lending licence,
as noted, is yet to be produced. That the respondent is engaged in
money lending business is established from exhibits G and G1. The
respondent lent and admitted money to the appellant for interest.
Consequently, the directions contained in Raj Kumar Santoshi
(supra) apply.

38. In such circumstances, we are constrained to set aside the impugned
judgment and decree. CS/162/2020 is dismissed.
39. APDT/2/2026 is allowed, without any order as to costs. IA
No.GA/1/2026 is disposed of.

(DEBANGSU BASAK, J.)
40. I agree.



(MD. SHABBAR RASHIDI, J.)

TR/RS