(1) Any person may, during the validity of a licence, file an application to the District Registrar for the cancellation of the licence issued to a money-lender on the ground that such money-lender has been guilty of any act or conduct for which the District Registrar may under section 8, refuse him the grant of a licence. At the time of filing his application, the said person shall deposit such amount not exceeding [five hundred rupees], as the District Registrar may deem fit.
(2) On the receipt of such application and deposit or of a report to that effect from an officer acting under section 16, the District Registrar shall hold an inquiry and if he is satisfied that the money-lender has been guilty of such act or conduct, he may cancel the licence of the money-lender and may also direct the return of the deposit made under sub-section (1).
(3) If in the opinion of the District Registrar an application made under sub-section (1) is frivolous or vexatious, he may, out of the deposit made under sub-section (1), direct to be paid to the money-lender such amount as he deems fit as compensation.