The Money-Lenders Act, 1940 (Bengal Act)

An Act further to regulate transactions of money-lending in Bangladesh.1

ACT NO. X OF 1940

1st August, 1940

Sections

An Act further to regulate transactions of money-lending in Bangladesh.¹ WHEREAS it is expedient to make further and better provision for the control of money-lenders and for the regulation and control of money-lending; It is hereby enacted as follows:-

Section 1. Short title, extent and commencement

(1) This Act may be called the ²* * * Money-lenders Act, 1940.

(2) It extends to the whole of Bangladesh.

(3) It shall come into force on such date as the Government may, by notification in the official Gazette, appoint.

Section 2. Definitions

In this Act, unless there is anything repugnant in the subject or context,-

(1) “bank” means a banking company as defined in section 277F of the Companies Act, 1913, whether incorporated in or outside Bangladesh;

(2) “borrower” means a person to whom a loan is advanced and includes a successor-in-interest or surety;

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(4) “commercial loan” means a loan advanced to any person to be used by such person solely for the purposes of any business or concern relating to trade, commerce, industry, mining, planting, insurance, transport, banking or entertainment, or to the occupation of wharfinger, warehouseman or contractor or any other venture of a mercantile nature, whether as proprietor or principal or agent or guarantor;

Explanation.- Notwithstanding anything contained in any agreement relating thereto, a loan shall not be deemed to be a commercial loan unless it is in substance a loan to be used solely for any of the purposes referred to in this clause.

(5) “co-operative life insurance society”, “mutual insurance company” and “provident society” have the same meanings as in the Insurance Act, 1938;

(6) “co-operative society” means a society registered under the ⁴* * * Co-operative Societies Act, 1940, or any Act of ⁵Parliament, for the time being in force, relating to such societies;

⁶(7) “insurance company” means an Insurance Company within the meaning of the Insurance Act, 1938;

(8) “interest” includes any sum by whatsoever name called, in excess of the principal paid or payable to a lender in consideration of, or otherwise in respect of, a loan whether the same is charged or sought to be recovered

specifically by way of interest or otherwise, but does not include any sum lawfully charged by a lender in accordance with the provisions of this Act or any other law for the time being in force for or on account of costs, charges or expenses;

(9) “lender” means a person who advances a loan and includes a money-lender;

(10) “licence” means a licence granted under this Act;

(11) “life assurance company” means a company whose business is the issue of, or the undertaking of liability under, policies of assurance upon human life, or the granting of annuities upon human life;

(12) “loan” means an advance, whether of money or in kind, made on condition of repayment with interest and includes any transaction which is in substance a loan but does not include-

(a) a deposit of money or other property,

(b) a loan to, or by, or a deposit with, any society or association registered under the Societies Registration Act, 1860, or under any other law relating to public, religious or charitable objects;

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

(i) by a bank which was a scheduled bank on the first day of January, 1939, or by a bank which has been declared to be a notified bank under section 3, whether or not such bank was a scheduled bank or was so declared to be a notified bank, as the case may be, at the time the loan was advanced; or

(ii) by a co-operative life insurance society, co-operative society, insurance company, life assurance company, mutual insurance company, provident insurance society or provident society or from a provident fund; or

(iii) by the Agricultural Development Finance Corporation established under the Agricultural Development Finance Corporation Act, 1952; ⁸or

(iv) by the Krishi Bank established under the Bangladesh Krishi Bank Order, 1973;

(e) an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note;

(f) a commercial loan;

(g) a loan advanced to any person for the purchase or construction of a house or for the construction of a house together with the purchase of the site thereof, within the limits of any area which has been or may hereafter be constituted a municipality under the provisions of the Municipal Administration Ordinance, 1960, if such loan is subject to the condition of repayment by instalments extending over a period of ten years or more;

(h) a loan made to or by the Administrator-General and Official Trustee of Bangladesh or the Administrator of Waqfs or the Official Assignee or the Official Receiver of the ⁹Supreme Court;

(i) a loan or debenture in respect of which dealing are listed on any Stock Exchange;

(13) “money-lender” means a person who carries on the business of money-lending in Bangladesh or who has a place of such business in Bangladesh, and includes a pawnee as defined in section 172 of the Contract Act, 1872;

(14) “money-lending business” and “business of money-lending” mean the business of advancing loans either solely or in conjunction with any other business;

(15) “prescribed” means prescribed by rules made under this Act;

(16) “principal” means in relation to a loan, the amount actually advanced to the borrower;

(17) “provident fund” has the same meaning as in the Provident Funds Act, 1925;

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(19) “register” means a register of money-lenders maintained under section 7;

(20) “scheduled bank” has the same meaning as in ¹¹the Bangladesh Bank Order, 1972;

(21) “suit” includes an appeal;

(22) “suit to which this Act applies” means any suit or proceeding instituted or filed on or after the 1st day of January, 1939, or pending on that date and includes a proceeding in execution-

(a) for the recovery of a loan advanced before or after the commencement of this Act;

(b) for the enforcement of any agreement entered into before or after the commencement of this Act, whether by way of settlement of account or otherwise, or of any security so taken, in respect of any loan advanced whether before or after the commencement of this Act; or

(c) for the redemption of any security given before or after the commencement of this Act in respect of any loan advanced whether before or after the commencement of this Act.

Section 3. Notified bank

The Government may, by notification in the official Gazette, declare any bank to be a notified bank for the purposes of this Act:

Provided that no bank shall be so declared to be a notified bank unless it complies with such conditions as may, with the approval of ¹²Parliament, be prescribed.

Section 4. Competent Courts under this Act

Notwithstanding anything contained in any other law, the Courts (hereinafter referred to as Competent Courts) which have jurisdiction to entertain proceedings under sections 16 and 19 and to pass orders therein are the Courts hereinafter specified, within the local limits of whose jurisdiction the money-lender actually and voluntarily resides or carries on the business of money-lending-

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(b) the Court of the District Judge (hereinafter called a “District Court”) and any Court to which he may transfer the proceedings.

Section 5. Procedure in Competent Courts

(1) Subject to the provisions of this Act, a Competent Court shall, in proceedings under section 19, have the same powers and shall follow the same procedure as it has and follows in civil suits, and the provisions of section 24 of the Code of Civil Procedure, 1908, shall apply to such proceedings.

(2) Every order made by a Competent Court under this Act shall be subject to appeal in accordance with the provisions of the Code of Civil Procedure, 1908, applicable to appeals.

Section 6. Appointment of Provincial and other Registrars

There shall be a Principal Registrar for the purposes of this Act and as many Registrars and Sub-Registrars of money-lenders for assisting the Registrar as the Government may from time to time determine. The Government may define, by notification in the official Gazette, the area within which each such officer shall exercise his powers and perform his duties and may prescribe the control which shall be exercised by the Principal Registrar over Registrars and Sub-Registrars and by a Registrar over Sub-Registrars:

Provided that no person who is not a Government servant shall be empowered to act as a Principal Registrar, Registrar or Sub-Registrar under this Act.

Section 7. Register of money-lenders

Each Sub-Registrar shall maintain in the prescribed form a register of money-lenders holding licences issued by him.

Section 8. Money-lending business not to be carried on except under licence

After such date not less than six months after the commencement of this Act as the Government shall, by notification in the official Gazette, appoint in this behalf, no money-lender shall carry on the business of money-lending unless he holds an effective licence.

Explanation.- An effective licence for the purposes of this Act comprises a licence issued to a person who is not disqualified for holding a licence.

Section 9. Licences

(1) A licence shall be valid throughout the whole of Bangladesh for a period of three years from the date of its issue or until it is cancelled.

(2) On the expiration of the period for which the licence was granted or on the cancellation of a licence it shall be returned by the money-lender to the Sub-Registrar who issued it.

Section 10. Licence fee

There shall be paid to the Government a fee of fifteen Taka for a licence issued under this Act:

Provided that the Government may, by notification in the official Gazette, remit any part of such fee either generally or for any particular class of money-lenders.

Section 11. Application for licences

An application for the grant of a licence shall be made in the prescribed form and manner to the Sub-Registrar within the local limits of whose jurisdiction the money-lender has a place of money-lending business and shall contain such particulars as may be prescribed.

Section 12. Entry in register and grant of licences

On receipt of an application under section 11 and on payment in the prescribed manner of the licence fee specified in section 10, the Sub-Registrar shall, subject to the provisions of section 16, enter the name of the applicant in the register and grant the applicant a licence in such form as may be prescribed.

Section 13. Stay of suit when money-lender does not hold licence

(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 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.

Section 14. Disqualification of persons for holding a licence

(1) A person shall be disqualified for holding a licence-

(a) if so ordered by a Court under section 20, for the period ordered;

(b) if he has been convicted of any offence specified in the Schedule to this Act and if such conviction has not been set aside by any Court of appeal or revision under any law for the time being in force.

(2) The Government may, at any time, on application in the prescribed form accompanied by the prescribed fee, remove a disqualification referred to in sub-section (1), having regard to the time which has elapsed since the order and the circumstances under which it was made or to the time which has elapsed since the conviction and to the nature of the offence.

Section 15. Proof of conviction or order for disqualification

Where it is required to be proved for the purposes of this Act that any person has been convicted of an offence specified in the Schedule to this Act or has been disqualified by an order of a Court for holding a licence, such conviction or order may be proved, in addition to any other mode provided by any law for the time being in force-

(a) by an extract certified under the signature of the officer having the custody of the records of the Court in which such conviction was had, or such order was passed, to be a copy of the sentence or order, or

(b) in the case of a conviction, by a certificate signed by the officer in charge of the jail, in which the punishment or any part thereof was undergone, or by the production of the warrant of commitment under which the punishment was suffered, together with, in each of such cases, evidence as to the identity of the person so convicted or in respect of whom such order was passed.

Section 16. Refusal to grant licence

(1) The grant of a licence shall not be refused except one or more of the following grounds, namely:-

(a) that the applicant has not complied with the provisions of this Act or of the rules made thereunder in respect of an application for the grant of a licence;

(b) that the applicant or any person responsible or proposed to be responsible for the management of the applicant's money-lending business is under this Act disqualified for holding a licence;

(2) A Sub-Registrar refusing a licence-

(i) under clause (a) of sub-section (1) shall record his reasons for such refusal;

(ii) under clause (b) of sub-section (1) shall record the evidence of the disqualification.

(3) An appeal from the orders of a Sub-Registrar refusing a licence shall, if made within thirty days from the date of such order, lie to a Registrar authorised under section 6 to hear such appeal.

(4) A Registrar referred to in sub-section (3) may decide, if such appeal is allowed, as to the Sub-Registrar to whom application for a licence shall be made and his decision shall, subject to the provisions of sub-section (5), be final for all purposes, and shall be binding on such Sub-Registrar whether he be under the control of such Registrar or not.

(5) A Competent Court may, on application made within ninety days from the date of the decision of the Registrar in appeal under sub-section (3), revise such decision.

(6) The procedure to be followed by a Competent Court or by a Registrar in proceedings under this section shall be in accordance with rules prescribed under this Act.

(7) The provisions of sections 4, 5 and 12 of the Limitation Act, 1908, shall apply to all appeals and applications for revision made under this section, and for the purposes of the said sections a Registrar shall be deemed to be a Court.

Section 17. Cancellation of licence by a Sub-Registrar

Any Sub-Registrar may, after giving the money-lender to whom a licence entered in the register maintained by such Sub-Registrar was issued an opportunity of being heard, cancel the licence if it is proved that such money-lender was disqualified for holding a licence at the time when such licence was issued; and thereupon the provisions of clause (ii) of sub-section (2) and of sub-sections (3), (4), (5), (6) and (7) of section 16 shall apply.

Section 18. Power to Registrar and Sub-Registrar to examine any person on oath

For the purposes of an inquiry under this Act relating to a disqualification for holding a licence a Registrar or a Sub-Registrar shall have and may exercise the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, in respect of enforcing the attendance of any person and examining him on oath.

Section 19. Application for cancellation of licence

Any borrower may, in respect of any money-lender from whom he has taken a loan, make an application to a Competent Court for an order under section 20 on the ground that such money-lender has committed such contravention of the provisions of this Act or the rules made thereunder as render him unfit to carry on the business of money-lending, and on receipt of such application, the said Court shall hold such inquiry as it deems necessary.

Section 20. Court’s power to cancel a licence

(1) A Competent Court on an application under section 19 or a Court trying a suit to which this Act applies or a Court passing an order of conviction upon a money-lender for an offence under this Act, if satisfied that the money-lender has committed such contravention of the provisions of this Act or of the rules made thereunder as, in its opinion, makes him unfit to carry on the business of money-lending-

(a) shall cause the particulars of the conviction, if any, and of any order passed by the Court under this sub-section to be endorsed on the licence held by the money-lender or by any other person affected by such order; and

(b) may declare such money-lender or any person responsible for the management of his money-lending business or both disqualified for holding a licence for such period as the Court may think fit and shall cancel and impound the licence held by the money-lender:

Provided that, except in the case of an order passed by a District Court or by the Court of an Additional District Judge, the period of disqualification shall not exceed one year.

(2) If a Court other than a District Court or the Court of an Additional District Judge is of opinion that a period of disqualification exceeding one year should be imposed, it shall record its opinion and forward the proceedings to the District Court having jurisdiction in the place where such Court is held.

(3) The District Court to which such proceedings are submitted may, if it thinks fit, examine the parties and recall and examine any person who has already given evidence in the proceedings, and may call for and take any further evidence, and shall pass such order in the case as it thinks fit in accordance with the provisions of sub-section (1).

(4) Any person aggrieved by the decision of a Court under this section may appeal against such order, to the Court to which an appeal ordinarily lies from the decision of the Court passing the order; and the Court which passed the order or the Court of appeal may, if it thinks fit, stay the operation of the order under this section pending the disposal of the appeal:

Provided that where the Court of appeal sets aside or varies an order passed under this section, it shall order that any endorsements made in pursuance thereof upon a licence held by a money-lender shall be erased or modified.

(5) The substance of any order passed under sub-section (1), sub-section (3) or sub-section (4) shall be sent forthwith in the prescribed form by the Court passing the order to the Principal Registrar and also together with the cancelled licence to the Sub-Registrar who maintains the register in which the licence affected has been entered for entry in the said register and for such circulation of the substance of the said order to other Registrars as may be prescribed.

(6) Any licence required by a Court for endorsement under sub-section (1) shall be produced in such manner and at such time as the Court may direct by the person by whom it is held, and any person who without reasonable cause makes default

herein shall be liable on conviction to a fine not exceeding fifty Taka for each day of the period during which the default continues.

(7) The powers conferred on a Court under sub-section (1) may be exercised by a Court in appeal or in revision.

Section 21. No compensation for cancellation of licence

A person whose licence has been cancelled shall not be entitled to any compensation on such account nor to the refund of any licence fee paid in respect of such licence.

Section 22. Licence fees and penalties recoverable as public demands

All licence fees and all penalties imposed under this Act shall be recoverable as public demands.

Section 23. Offences in respect of licences

(1) Whoever being disqualified for holding a licence, applies for or obtains a licence during the pendency of such disqualification, without disclosing the fact thereof, shall be punishable, on conviction, with imprisonment which may extend to three months or with fine which may extend to five hundred Taka or with both, and any licence so obtained shall not be deemed to be an effective licence.

(2) Whoever obliterates or causes to be obliterated or attempts to obliterate an endorsement entered on a licence under this Act or abets such obliteration or attempt shall be punishable, on conviction, with imprisonment which may extend to three months or with fine which may extend to five hundred Taka or with both.

Section 24. Duty of money-lender to keep accounts

(1) Every money-lender shall keep and maintain at least a cash book, a ledger and a receipt book in such form or forms as may be prescribed, and the same shall be written in Bengali or English in the regular course of business.

(2) Every money-lender shall-

(a) deliver to the borrower at the time a loan is advanced a statement in Bengali or English as the borrower may

desire, in such form as may be prescribed and showing such details of the conditions of the loan and such other information connected therewith as may be prescribed;

(b) give to the borrower a plain and complete receipt for every payment made on account of any loan at the time of such payment;

(c) upon repayment in full of a loan mark indelibly with words indicating full payment or cancellation every paper signed by the borrower, and discharge any mortgage, restore any pledge, return any note and cancel any assignment given by the borrower as security.

(3) Notwithstanding anything contained in the Evidence Act, 1872, a copy of the account referred to in sub-section (1) shall, if certified in such manner as may be prescribed, be admissible as evidence of the contents of such account.

Section 25. Money-lenders to furnish statements of accounts

(1) Every money-lender shall, within two months of the commencement of each year, furnish each of his borrowers with a legible statement of accounts in Bengali or English as the borrower may desire signed by the money-lender or his agent and showing the amount outstanding against the borrower; such statement shall be in the prescribed form and shall show-

(a) the amounts of principal and interest due to the money-lender at the commencement of the year;

(b) the amounts of any sums advanced to the borrower from time to time since the commencement of the year and the dates on which they were advanced;

(c) the amounts of any payments received from the borrower since the commencement of the year in respect of loans outstanding and the dates on which they were received;

(d) the amount of every sum due from the borrower remaining unpaid and the date on which each such sum became due and the amount of interest accrued due and unpaid in respect of every such sum;

(e) the amount of every sum not yet due which remains outstanding and the date upon which each such sum will become due; and

(f) such other particulars as may be prescribed.

(2) In respect of any particular loan, whether advanced before or after the commencement of this Act, a money-lender shall, on demand being made in writing by the borrower at any time while the loan or any portion thereof remains outstanding, supply to the borrower or to any person specified in that behalf in the demand, within thirty days from the date of receipt of the written demand by the money-lender or his duly authorised agent, a statement in Bengali or English as the borrower may desire, signed by the money-lender or his agent and showing in the prescribed form any or all of the particulars specified in sub-section (1):

Provided that the money-lender shall not be bound to comply with such demand if he has complied with a demand made not more than six months prior to the date thereof, or if within such period of six months he has furnished the statement required by sub-section (1).

(3) A money-lender shall, on a demand in writing by the borrower, supply to the borrower or to any person specified in that behalf in the demand a copy of any document evidencing an agreement to secure repayment of a loan advanced to the borrower:

Provided that a money-lender shall not be bound to comply with such a demand if he has previously furnished the borrower with such copy, except on payment of such fee as may be prescribed.

(4) In this section the expression “year” means the year for which the accounts of the money-lender are ordinarily maintained in his own books.

Section 26. Borrower not bound by money-lender’s statement of accounts

A borrower to whom a statement of accounts has been furnished under section 25 shall not be bound to acknowledge or deny its correctness, and his failure to do so shall not, by itself, be deemed to be an admission of the correctness of the account.

Section 27. Procedure in suits relating to loans by money-lenders

Notwithstanding anything contained in any law for the time being in force, in any suit to which this Act applies-

(a) a Court shall, before deciding the claim on its merits, frame and decide the issue whether the money-lender has in respect of the claim in suit complied with the provisions of sections 24 and 25; and

(b) if the Court finds that the provisions of either of the said sections have not been so complied with, it may, if the plaintiff's claim is established either wholly or in part, disallow the whole or such portion of the interest found due as may, in the circumstances of the case, appear reasonable to the Court, and may also disallow costs, or in computing the amount of interest due upon the loan, the Court may exclude any period for which the money-lender omitted to comply with the provisions of either of the said sections:

Provided that if the money-lender has, after the time specified in the said sections, given the receipt or furnished the statement, as the case may be, and if he satisfies the Court that he had sufficient cause for not doing so earlier, the Court may include any such period in computing the interest.

Explanation.- A money-lender who has given a receipt or furnished a statement in the prescribed form shall be held to have complied with the provisions of section 24 or section 25, as the case may be, in spite of any errors and omissions in such receipt or statement, if the Court finds that such errors and omissions are neither material nor made fraudulently.

Section 28. Notice and information to be given on assignment of loans by lenders

(1) Where any debt in respect of -

(i) a loan advanced by a lender, whether before or after the commencement of this Act, or

(ii) interest on any such debt, or

(iii) the benefit of any agreement made, or security taken, in respect of any such debt or interest,

is assigned to any person, the assignor (whether he is the lender by whom the loan was advanced or any person to whom the debt has been previously assigned) shall, before the assignment is made,-

(a) give to the assignee notice in writing that the debt, interest thereon, agreement or security is affected by the operation of this Act, and

(b) where the debt is in respect of a loan advanced by a money-lender, supply to the assignee in such form as may be prescribed all information as to the state of the loan together with copies of documents relating thereto.

(2) Any person who acts in contravention of any of the provisions of this section shall be liable to indemnify any other person who is prejudiced by the contravention, and shall also be punishable, on conviction, with imprisonment which may extend to one year or with fine which may extend to one thousand Taka or with both.

(3) In this section the expression “assigned” means assigned by an assignment inter vivos other than an assignment by operation of law; and the expressions “assignor” and “assignee” have corresponding meanings.

Section 29. Application of Act as respects assignees

(1) Subject as hereinafter provided, the provisions of this Act shall continue to apply as respects any debt due to a lender or money-lender in respect of loans advanced by him after the commencement of this Act or in respect of interest on such loans or of the benefit of any agreement made or security taken in respect of any such debt or interest notwithstanding that the debt or the benefit of the agreement or security may have been assigned to any assignee, and except where the context otherwise requires, references in this Act to a lender or money-lender shall accordingly be construed as including any such assignee as aforesaid:

Provided that, notwithstanding anything contained in this Act-

(a) any agreement with, or security taken by, a lender or money-lender in respect of a loan advanced by him after the commencement of this Act shall be valid in favour of any bona fide assignee or holder for value without notice of any defect due to the operation of this Act and of any person deriving title under him; and

(b) any payment or transfer of money or property made bona fide by any person, whether acting in a fiduciary capacity or otherwise on the faith of the validity of any such agreement or security, without notice of any such defect shall, in favour of that person, be as valid as it would have been if the agreement or security had been valid;

but in every such case the lender or money-lender shall be liable to indemnify the borrower or any other person who is prejudiced by virtue of this section, and nothing in this proviso shall render valid an agreement or security in favour of, or apply to proceedings instituted by, an assignee or holder for value who is himself a money-lender.

(2) The provisions of this Act shall apply and be deemed always to have applied and shall continue to apply as respects any debt due to a lender or money-lender in respect of loans advanced by him before the commencement of this Act or in respect of interest on such loans or of the benefit of any agreement made or security taken in respect of any such debt or interest, notwithstanding that the debt or the benefit of the agreement or security may have been assigned to any assignee, and except where the context otherwise requires, references in this Act to a lender or money-lender shall accordingly be construed as including any such assignee as aforesaid.

(3) Nothing in this section shall render valid for any purpose any agreement, security or other transaction which would, apart from the provisions of this Act, have been void or unenforceable.

Section 30. Limitations as to the amount and rate of interest recoverable

Notwithstanding anything contained in any law for the time being in force, or in any agreement,

(1) no borrower shall be liable to pay after the commencement of this Act-

(a) any sum in respect of principal and interest which together with any amount already paid or included in any decree in respect of a loan exceeds twice the principal of the original loan,

(b) on account of interest outstanding on the date up to which such liability is computed, a sum greater than the principal outstanding on such date,

(i) unsecured loans, ten per centum simple,

(ii) secured loans, eight per centum simple,

whether such loan was advanced or such amount was paid or such decree was passed or such interest accrued before or after the commencement of this Act;

(2) no borrower shall after the commencement of this Act, be deemed to have been liable to pay before the date of such commencement in respect of interest paid before such date or included in a decree passed before such date, interest at rates per annum exceeding those specified in sub-clause (c) of clause (1);

(3) a lender shall be entitled to institute a suit at any time after the commencement of this Act in respect of a transaction to which either or both of the preceding clauses applies or apply.

Section 31. Prohibition of interest on decretal amount

Notwithstanding anything contained in any law for the time being in force, no Court shall, in any decree passed in any suit to which this Act applies-

(a) if the loan to which the decree relates was advanced before the commencement of this Act, allow any interest on the decretal amount, or

(b) if the loan to which the decree relates was advanced after the commencement of this Act, allow any interest other than interest not exceeding six per centum per annum on the principal sum adjudged.

Section 32. Computation of interest on loans in kind

In the case of loans in kind, the money value of the commodity at the time when, and in the locality where, the loan was advanced shall, for the purposes of this Act, be deemed to be the principal of the loan, and in determining the amount which may, subject to the provisions of this chapter, be decreed in respect of any loan repayable in kind, the Court shall take into consideration the market value of the commodity in the said locality at the date or dates of repayment.

Section 33. Prohibition of charges for expenses on loans

Any agreement between a lender and a borrower or intending borrower for the payment to the lender of any sum on account of costs, charges or expenses incidental or relating to the negotiations for, or the granting of, the loan or proposed loan, shall be illegal, and if any sum is paid to a lender by the borrower or intending borrower as, for or on account of any such costs, charges or expenses, that sum shall be recoverable as a debt due to the borrower or intending borrower, or in the event of the loan being completed, shall, if not so recovered, be set off against the amount actually lent and that amount shall be deemed to be reduced accordingly:

Provided that nothing in this section shall debar a lender from recovering the costs of investigating title, of stamp duty and registration of documents and other necessary and incidental expenses in cases where the agreement includes a stipulation that property is to be given as security or by way of mortgage, or the costs of stamp duty and registration of documents in the case of unsecured loans, if both parties have agreed to such expenditure and the reimbursement thereof, nor from recovering such costs, charges or expenses as are leviable under the provisions of the Transfer of Property Act, 1882, or any other law for the time being in force.

Section 34. Power of Court to direct payment by instalments

(1) Notwithstanding anything contained in any law for the time being in force, or in any agreement, the Court shall-

(a) in suits in respect of loans to which the provisions of Order XXXIV of the First Schedule to the Code of Civil Procedure, 1908, apply, on the application of the defendant and after hearing the plaintiff, notwithstanding the limit of six months provided therein, direct at the time of the passing of the preliminary decree under rule 2 or rule 4 of the said Order to the effect mentioned in sub-clause (i) of clause (c) of sub-rule (1) of the said rule 2,-

(i) that the payment of the amount found or declared due under sub-rule (1) of rule 2 or sub-rule (1) of rule 4 of the said Order, as the case may be, is to be made, subject to such conditions as the Court may

impose in such number of annual instalments and on such dates as the Court thinks fit having regard to the circumstances of the plaintiff and the defendant and the amount of the decree; and

(ii) that in default of payment of any such instalment the plaintiff shall, after giving to the defendant such notice as may be prescribed, be entitled to apply for a final decree under sub-clause (ii) of clause (c) of sub-rule (1) of the said rule 2 or under sub-rule (1) of the said rule 4, as the case may be, and the date of such default shall be deemed to be the date fixed under sub-clause (i) of clause (c) of sub-rule (1) of the said rule 2 for payment of the whole amount found or declared due under or by the preliminary decree:

Provided that nothing in this clause shall affect the power of the Court to allow extension of time under sub-rule (2) of rule 2 or sub-rule (2) of rule 4 of the said Order:

Provided further that if the defendant, after receiving the notice referred to in sub-clause (ii) and before a final decree is passed, makes payment into Court of the amount due from him in respect of any such instalment, the payment of such instalment shall not be deemed to be in default and the Court shall not pass a final decree;

(b) in suits in respect of loans advanced before the commencement of this Act other than those referred to in clause (a)-

(i) on the application of a defendant and after hearing the plaintiff, order at the time of the passing of the decree, or

(ii) on the application of a judgment-debtor against whom a decree in such suit has been passed whether before or after the commencement of this Act and after notice to the decree holder, order at any time after the decree has been passed,

the amount of the decree shall, subject to such conditions as the Court may impose, be payable without interest in such number of annual instalments, on such dates and within such period not exceeding twenty years as the Court thinks fit having regard to the circumstances of the plaintiff and the defendant or the decree-holder and the judgment-debtor and the amount of the decree, and that, if default is made in making payment of any instalment, that instalment and not the whole of the decretal amount shall be recoverable;

(c) during the pendency of any enquiry under sub-clause (ii) of clause (b) order, subject to such conditions as the Court may impose, the stay of execution of the decree.

(2) In default of payment of any instalment referred to in clause (b) of sub-section (1), the decree-holder shall, after giving to the judgment-debtor such notice as may be prescribed, be entitled to apply for execution of the decree in respect of such instalment together with interest thereon at the rate of not more than six per centum per annum from the date of such default:

Provided that nothing in this sub-section shall affect the power of the Court to allow, prior to an order for execution of the decree, an extension of time of not less than one year for the payment of any instalment, and that if such extension of time is allowed, the payment of such shall not be deemed to be in default:

Provided further that if the judgment-debtor, after receiving the notice referred to in this sub-section and prior to an order for execution of the decree, makes payment into Court of the amount due from him in respect of any such instalment, the payment of such instalment shall not be deemed to be in default and the Court shall not order execution of the decree.

(3) Any order made under sub-clause (ii) of clause (b) of sub-section (1) shall be deemed to have been passed under section 47 of the Code of Civil Procedure, 1908.

Section 35. Sale of property in execution of decrees in respect of loans

Notwithstanding anything contained in any other law for the time being in force, the proclamation of the intended sale of property in execution of a decree passed in respect of a loan shall specify only so much of the property of the judgment-debtor as the Court considers to be saleable at a price sufficient to satisfy the decree, and the property so specified shall not be sold at a price which is less than the price specified in such proclamation:

Provided that, if the highest amount bid for the property so specified is less than the price so specified, the Court may sell such property for such amount, if the decree-holder consents in writing to forego so much of the amount decreed as is equal to the difference between the highest amount bid and the price so specified.

Section 36. Re-opening of transactions

(1) Notwithstanding anything contained in any law for the time being in force, if in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section whether heard ex parte or otherwise, the Court has reason to believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appropriate, namely, shall-

(a) reopen any transaction and take an account between the parties;

(b) notwithstanding any agreement, purporting to close previous dealings and to create new obligations, reopen any account already taken between the parties;

(d) if anything has been paid or allowed in account on or after the first day of January, 1939, in respect of the liability referred to in clause (c), order the lender to repay any sum which the Court considers to be repayable in respect of such payment or allowance in account as aforesaid:

Provided that in the case of a loan to which the provisions of sub-section (2) of section 29 apply the lender or money-lender and each of his assignees shall be liable to repay the sum which the Court considers to be repayable in respect of and in proportion to the sum received by such lender or money-lender and such assignee;

(e) set aside either wholly or in part or revise or alter any security given or agreement made in respect of any loan, and if the lender has parted with the security, order him to indemnify the borrower in such manner and to such extent as it may deem just:

Provided that in the exercise of these powers the Court shall not-

(i) reopen any adjustment or agreement, purporting to close previous dealings and to create new obligations, which has been entered into at a date more than twelve years prior to the date of the suit by the parties or any person through whom they claim, or

(ii) do anything which affects any decree of a Court, other than a decree in a suit to which this Act applies which was not fully satisfied by the first day of January, 1939, or anything which affects an award made under the ¹⁴* * * Agricultural Debtors Act, 1935.

Explanation.- A decree shall not, for the purposes of this section, be deemed to have been fully satisfied so long as there remains undisposed of an application by the decree-holder for possession of property purchased by him in execution of the decree.

(2) If in exercise of the powers conferred by sub-section (1) the Court reopens a decree, the Court-

(a) shall, after affording the parties an opportunity of being heard, pass a new decree in accordance with the provisions of this Act, and may award to the decree-holder such costs in respect of the reopened decree as it thinks fit,

(b) shall not do anything which affects any right acquired bona fide by any person, other than the decree-holder, in consequence of the execution of the reopened decree,

(c) shall order the restoration to the judgment-debtor of such property, if any, of the judgment-debtor acquired by the decree-holder in consequence of the execution of the reopened decree as may be in the possession of the decree-holder on the date on which the decree was reopened,

(d) shall order the judgment-debtor to pay to the decree-holder, in such number of instalments as it may think fit, the whole amount of the new decree passed under clause (a), and

(e) shall direct that, in default of the payment of any instalments ordered under clause (d), the decree-holder shall be put into possession of the property referred to in clause (c) and that the amount for which the decree-holder purchased such property in execution of the reopened decree shall be set off against so much of the amount of the new decree as remains unsatisfied.

(3) In this section the expression “suit to which this Act applies” includes a proceeding in respect of any application relating to the admission or amount of a proof of a loan advanced before or after the commencement of this Act in any insolvency proceedings.

(4) This section shall apply to any suit, whatever its form may be, if such suit is substantially one for the recovery of a loan or for the enforcement of any agreement or security in respect of a loan or for the redemption of any such security.

(5) Nothing in this section shall affect the rights of any assignee or holder for value if the Court is satisfied that the assignment to him was bona fide, and that he had not received the notice referred to in clause (a) of sub-section (1) of section 28.

(6) Notwithstanding anything contained in any law for the time being in force,-

(a) the Court which, in a suit to which this Act applies, passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by sub-sections (1) and (2)-

(i) in any proceedings in execution of such decree, or

(ii) on an application for review of such decree made within one year of the date of commencement of this Act, and the provisions of rules 2 and 5 of Order XLVII of the First Schedule to the Code of Civil Procedure, 1908, shall not apply to any such application;

(b) any Court before which an appeal is pending in respect of decree referred to in clause (a) may either itself exercise the like powers as may be exercised under sub-sections (1) and (2), or refer the case to the Court which passed the decree directing such Court to exercise such powers, and such Court shall after exercise thereof return the record with the additional evidence, if any, taken by it and its findings and the reasons therefore to the Appellate Court and thereupon the provisions of rule 26 of Order XLI of the First Schedule to the Code of Civil Procedure, 1908, shall apply.

Section 37. Prohibition of execution of decrees by arrest and detention in prison

Notwithstanding anything contained in any law for the time being in force, no Court shall order execution of a decree passed in any suit to which this Act applies by arrest and detention in prison of the judgment-debtor.

Section 38. Inquiry for taking accounts and declaring the amount due

(1) Any borrower may make an application at any time to a Court which would have jurisdiction to entertain a suit by the lender for the recovery of the principal and interest of a loan made before or after the commencement of this Act for taking accounts and for declaring the amount due to the lender. Such application shall be in the prescribed form and shall be accompanied by a fee of one Taka, and on receipt of such application the Court shall cause a notice thereof to be served on the lender.

(2) The Court shall thereafter take an account of the transactions between the parties and shall declare the amounts, if any,-

(a) payable and already due,

(b) payable but not yet due

by the borrower to the lender, whether as principal or interest or both. In taking accounts under this section the Court shall follow the same procedure as it does in regard to civil suits and, so far as may be, the provisions of Chapters IV, VI and VII.

(3) A proceeding under this section shall be deemed to be a suit for the purposes of section 11 of the Code of Civil Procedure, 1908, and a declaration under this section shall be subject to appeal, if any, as if it were a decree of the Court, and every decision in appeal shall be subject to appeal to the ¹⁵High Court Division in the same manner as a decree passed in appeal.

Section 39. Deposit in Court of money due to lender

(1) Where any sum of money has been declared under sub-section (2) of section 38 to be payable by the borrower to the lender as principal or interest or both, or where a borrower has sent to a lender by postal money order any sum of money due from him to the lender in respect of a loan and the lender has refused to accept the same, the borrower may apply in the prescribed manner to the Civil Court of the lowest grade having jurisdiction over the place where he resides for permission to deposit the said sum in Court to the account of the lender, and the Court shall keep the said sum in deposit.

(2) The Court shall thereupon cause notice of the deposit to be served on the lender, and the lender may on presenting a petition, verified as for a plaint and stating the sum then due in respect of the loan and his willingness to accept the money so deposited, receive the sum:

Provided that in accepting any sum deposited under this section, a lender shall not be bound by any statement made by the borrower in depositing the same:

Provided also that, if the Court is satisfied that the lender has, without reasonable excuse, refused to accept any sum sent to him by postal money order by the borrower in respect of the loan, it may direct the payment to the borrower, from the money so deposited or otherwise, of such sum as damages and costs as it thinks fit.

(3) Notwithstanding any agreement between the parties, when the borrower has deposited in Court under this section of the principal or any part thereof, the interest on such any sum due in respect of the loan, if such sum is in payment of the principal or part shall cease from the date of the service of notice on the lender under sub-section (2).

(4) Nothing in this section shall affect the operation of sections 83 and 84 of the Transfer of Property Act, 1882, in regard to loans to which those sections apply.

Section 40. Entry of an amount in a bond, etc., different to the amount actually lent to be an offence

(1) No lender shall take from a borrower or intending borrower any note, promise to pay, power of attorney, bond or security which does not state the actual amount of the loan, the rate of interest charged and time, if any, within which the principal is stipulated to be repaid in full, or which states any of such particulars incorrectly, nor shall he take from any borrower or intending borrower any instrument in which any entry is left blank for completion at a later date.

(2) Whoever intentionally contravenes the provisions of sub-section (1) shall, on conviction, be punishable with simple imprisonment which may extend to six months or with fine which may extend to one thousand Taka or with both.

¹⁶(2A) Notwithstanding anything contained in the Code of Criminal Procedure, 1898, an offence punishable under sub-section (2) of this section shall be cognizable and bailable.

(3) No money-lender shall take from any borrower or intending borrower any note, promise to pay, power of attorney, bond or security which describes or refers to as a commercial loan any loan which is not a commercial loan.

(4) Notwithstanding anything contained in any law for the time being in force, any note, promise to pay, power of attorney, bond, security or document referred to in sub-section (1) or sub-section (3) shall be void and unenforceable.

(5) Notwithstanding anything contained in any law for the time being in force, in any suit, or proceeding the burden of proving that a loan is a commercial loan shall be on the money-lender who advanced the loan.

Section 41. Penalty for molestation

(1) Whoever molests, or abets the molestation of, a debtor for the purpose of recovering or attempting to recover, a debt shall be punishable, on conviction, with imprisonment which may extend to one year or with fine which may extend to one thousand Taka or with both.

Explanation.- For the purposes of this section, a person who, with intent to cause another person to abstain from doing any act which he has a right to do or to do any act which he has a right to abstain from doing,-

(a) obstructs or uses violence to or intimidates such other person, or

(b) persistently follows such other person from place to place or interferes with any property owned or used by him or deprives him of, or hinders him in the use thereof, or

(c) loiters or does any similar act at or near a house, building or place where such other person resides or works or receives his pay or wages or carries on business or happens to be-

shall be deemed to molest such other person:

Provided that a person who attends at or near such house, building or place for the purpose only of making a formal demand for repayment of a loan due or of obtaining or communicating information shall not be deemed to molest.

(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1898, an offence under this section shall be cognizable and bailable.

(3) Nothing in this section shall be deemed to restrict the provisions of the ¹⁷* * * Workmen's Protection Act, 1934.

Section 42. General provisions regarding penalties

(1) When any money-lender or any servant or agent of, or any person responsible for the management of the money-lending business of, a money-lender knowingly and wilfully commits, authorises or permits any default in complying with, or any contravention of, any provision of this Act, if the money-lender or such servant, agent or person is-

(a) an individual, such individual, or

(b) an undivided Hindu joint family, any member of such family who is knowingly and wilfully a party to such default or contravention, or

(c) a body corporate, any director or officer of such body who is knowingly and wilfully a party to such default or contravention, or

(d) an unincorporated body, any member of such body who is knowingly and wilfully a party to such default or contravention.

shall, where a specific penalty has been provided in this Act, be punishable under the provisions of this Act providing such penalty, and where no such specific penalty has been provided, be punishable on conviction-

(i) for the first offence, with fine which may extend to two hundred Taka,

(ii) for the second offence, with fine which may extend to five hundred Taka, and

(iii) for any subsequent offence, with rigorous imprisonment which may extend to three months and shall also be liable to fine.

(2) Notwithstanding anything contained in the Code of Criminal Procedure, 1898, an offence punishable under sub-section (1) shall be cognizable and bailable.

Section 43. Protection to persons acting under this Act

No suit, prosecution or proceeding shall lie against any Government servant for anything which is in good faith done or intended to be done under this Act.

Section 44. Power to make rules

(1) The Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for the following matters, namely:-

(a) the conditions referred to in the proviso to section 3;

(b) the control to be exercised by the Principal Registrar over Registrars and Sub-Registrars and by a Registrar over Sub-Registrars;

(d) the form and manner in which an application for the grant of a licence shall be made, and the particulars to be therein contained;

(e) the manner in which licence fees and penalties shall be paid;

(f) the form of licences;

(g) the form of, and the fee payable on, an application under sub-section (2) of section 14;

(h) the procedure to be followed by a Competent Court or by a Registrar in proceedings under section 16;

(i) the form in which a Court shall send the substance of the order referred to in sub-section (5) of section 20, and the method of circulation of the same to other Registrars;

(j) the form in which a money-lender shall maintain his cash book, ledger and receipt book;

(k) the form of, and the particulars to be contained in, the statement to be delivered under sub-section (2) of section 24;

(l) the form of the statements to be furnished under section 25 and the fee to be paid under the proviso to sub-section (3) of that section;

(m) the form in which information shall be supplied to an assignee under clause (b) of sub-section (1) of section 28;

(n) the form in which notice shall be given by the plaintiff to the defendant under sub-clause (ii) of clause (a) of sub-section (1) of section 34, and by the decree-holder to the judgment-debtor under sub-section (2) of that section;

(o) the form of an application under section 38; and

(p) the manner in which an application under section 39 shall be made.

Section 45. Bengal Act VII of 1933 not to apply to loans to which this Act applies

The ¹⁸* * * Money-Lenders Act, 1933, shall not apply to any loan to which this Act applies nor to any transaction connected with such loan.

1.Throughout this Act, the words “Bangladesh”, “Government”, “Taka” and “Principal Registrar” were substituted for the words “East Pakistan” or “Pakistan”, “Provincial Government”, “rupees” or “rupee” and “Provincial Registrar” respectively by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

2.The word “Bengal” was omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

3.Clause (3) was omitted by section 2 and the First Schedule of the East Pakistan Repealing and Amending Ordinance, 1960 (East Pakistan Ordinance No. XXVIII of 1960)

4.The words, comma and figure “Co-operative Societies Act, 1912 or the Bengal” were omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

5.The word “Parliament” was substituted for the words “the Provincial Legislature” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

6.Clause (7) was substituted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

7.The words “the Government” was substituted for the words “the Central Government or any Provincial Government” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

8.The word “or” was added at the end of paragraph (iii) and thereafter a new paragraph (iv) was added by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

9.The words “Supreme Court” were substituted for the words “High Court of East Pakistan” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

10.Clause (18) was omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

11.The words, comma and figure “the Bangladesh Bank Order, 1972” were substituted for the words “the State Bank of Pakistan Act, 1956” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

12.The word “Parliament” was substituted for the words “the Provincial Legislature” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

13.Clause (a) was omitted by the First Schedule of the East Pakistan Repealing and Amending Ordinance, 1960 (East Pakistan Ordinance No. XXVIII of 1960)

14.The word “Bengal” was omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

15.The words “High Court Division” were substituted for the words “High Court” by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

16.Sub-section (2A) was inserted by section 3 of the Bengal Money-Lenders (Amendment) Ordinance, 1969 (Ordinance No. VIII of 1969)

17.The word “Bengal” was omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)

18.The word “Bengal” was omitted by section 3 and the Second Schedule of the Bangladesh Laws (Revision And Declaration) Act, 1973 (Act No. VIII of 1973)