The present invention provides a modular drilling assembly having a module for contactless power and data transfer over a nonconductive gap between rotating and non-rotating members of a steering module. The gap usually application data contains a non-conductive fluid, such as drilling fluid, or oil for operating hydraulic devices in the down-hole tool. The down-hole tool in one embodiment is a modular drilling assembly wherein a drive shaft is rotated by a down-hole motor to rotate a drill bit attached to the bottom end of the drive shaft. Generally, there are two main sections on mud motor which are bearing section and power section. The power section generally includes a housing which houses a motor stator within which a motor rotor is rotationally mounted. The power section converts hydraulic energy into rotational energy by reverse application of the Moineau pump principle. The stator has a plurality of helical lobes which define a corresponding number of helical cavities. The rotor has a plurality of lobes which number one fewer than the stator lobes and which define a corresponding plurality of helical cavities. Generally, the greater the number of lobes on the rotor and stator, the greater the torque generated by the motor. Fewer lobes will generate less torque but will permit the rotor to rotate at a higher speed. Based on torque and rotate speed, determine the optimum power can be produced by power section configurations.