Bombay HC: Civil Court Order To Prevail Over Findings Recorded By Authorities Under Maharashtra Money-Lending (Regulation) Act

  In the present case, cognizance is taken by theDistrict Registrar (Money Lending) of a complaint filed by Respondent No. 5. Whether Respondent No. 5 could have filed such a complaint is the moot question. He had already invoked jurisdiction of Civil Court seeking adjudication of the nature of transaction and his Suit was pending. Firstly, he therefore could not have simultaneously invoked jurisdiction of District Registrar (Money Lending) under the Act of 2014 for same cause of action. He did so by suppressing filing of Civil Suit, which fact was brought on record by Petitioner. In my opinion therefore the District Registrar (Money Lending) could not have entertained the complaint of Respondent No. 5 once his attention was invited to pendency of Civil Suit arising out of same cause of action. Secondly and more importantly, by the time the proceedings came up for final decision before the District Registrar (Money Lending), the Civil Suit was decided holding that the transaction was that of sale. Therefore the District Registrar (Money Lending)could not have assumed the transaction as that of mortgage. Unless District Registrar (Money Lending) comes to a conclusion that the property came in possession of a moneylender by way of security for loan, he cannot exercise power of restoration of property under Section 18(2). One the transaction was declared as a sale by the Civil Court, District Registrar (Money Lending)could not have exercised jurisdiction under Section 18 of the Act of 2014. This is because unless transaction is treated as a mortgage and unless a satisfaction is recorded that property was offered as a security towards loan, District Registrar (Money Lending)cannot undertake proceedings for restoration. In my view therefore, the order passed by the District Registrar (Money Lending) is wholly without jurisdiction. {Para 20}

34. Since the Civil Court has already determined the nature of the transaction, the order passed by the Civil Court would prevail over the findings recorded by the authorities exercising powers under the Act of 2014. The said authorities may come to an independent conclusion as to whether the petitioner is engaged in the business of money lending or not. However, once the nature of the document is determined by the Civil Court and the same is held to a transaction of absolute sale, it is no longer open for such authorities to record a contradictory opinion to the effect that the transaction was a

mortgage and the land was offered by way of security. The orders passed by the authorities exercising powers under the Act of 2014 must therefore yield to the judgment and order delivered by the Civil Court. Consequently, the orders passed by those authorities are rendered illegal and deserve to be set aside. Even though, the orders passed by the authorities exercising powers under the Act of 2014 are being set aside, respondent no.5 is not entirely remediless. As observed hereinabove, he has already filed an Appeal in the District Court challenging the judgment and order dated 30.10.2015 passed in Special Civil Suit No.20/2012. He will be entitled to pursue the said remedy. In the event, respondent no.5 succeeds in the appeal and the transaction is held to mortgage by way of conditional sale, he would obviously be entitled to the relief of reconveyance of the land in his favour. All questions in that regard are left open. It is specifically clarified that, I have not gone into the merits of issue as to the nature of transaction in question and the District Court would be free to arrive at its own conclusion without being influenced, in any manner, by any of the observations made in the present order.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

 J WRIT PETITION NO.6581 OF 2022;

Bhanudas @ Suryabhan Vs State of Maharashtra

Coram:  SANDEEP V. MARNE

Dated:15.11.2022 

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When offence of carrying on money lending business is not proved?

In view of the above evidence adduced by the prosecution, I am of the view that the prosecution has failed to establish by cogent and convincing evidence that the petitioner was carrying on money lending business. The oral evidence adduced is discrepant in nature. There is no clinching documentary evidence in support of the prosecution case in order to attract the ingredients of the offence under section 19 of the 1939 Act which, inter alia, requires that the money-lender must be carrying on business without being registered as a money lender. The petitioner has not disputed that he was not a registered money lender but he has denied the prosecution case that he was carrying any money lending business. The word "business" denotes a continuous and systematic exercise of activity with essential characteristic of profit motive. It is a transaction or a course of dealings between two persons not for sport or pleasure. One or two stray incidents of advancing loan to the needy persons cannot be termed as "business". Therefore, in absence of any specific materials that the petitioner was continuously lending money to different persons with an object of profit making, the ingredients of the offence under section 19 of the 1939 Act are not attracted.

IN THE HIGH COURT OF ORISSA AT CUTTACK

Criminal Revision No. 215 of 2001

Decided On: 01.12.2016

 Suryanarayan Behera

Vs.

Ganesh Majhi and Ors.

Hon'ble Judges/Coram:

S.K. Sahoo, J.

Citation: 2017 CRLJ 641 Orissa

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Whether court can provide assistance for recovery of unaccounted money?

We have heard the learned Counsel for the parties. In our view the trial Court was absolutely right. The 1st Respondent is a money lender. He has admitted that he earned Rs. 30,000/- from money lending business. As a money lender he is statutorily bound, by virtue of Section 9 of the Kerala Money Lenders Act, 1958, to maintain books of accounts. His statement that he has not maintained the records which could be produced in Court is very significant. That statement coupled with the further statement that both the parties had agreed that these were to be unaccounted transactions required the Court to draw an adverse inference against him. of course under Section 118 of the Negotiable Instruments Act the Court is to presume that a negotiable instrument has been executed for consideration. However, in this case it has been established that there were chit fund transactions between the parties. It is also established that in respect of those chit fund transactions a sum of approximately Rs. 25,000/- was due and payable. It is established that that amount was not paid. It is an admitted position that No. suit was filed for recovery of that amount. Further having seen the suit promissory notes, as well as the other promissory notes, we are in agreement with the trial Court that all of them appear to have been got executed on the same day. All of them are in same hand writing and in the same ink. It is impossible to believe that over a period of two years the same pen could have been continued to be used. It is thus clear that these documents were got executed at the time that the chit fund transactions were being entered into by the parties. This rebuts the presumption that any consideration had flown under these transactions. In these circumstances it was absolutely necessary for the 1st Respondent to produce his books of accounts particularly as he has admitted that he was doing money lending business.

13. There is any reason also why the impugned judgment cannot be upheld. According to the 1st Respondent these transactions were to be unaccounted transactions. According to the 1st Respondent, all these amounts are paid in cash. If these are unaccounted transactions then they are illegal transactions. No. court can come to the aid of the party in an illegal transaction. It is settled law that in such cases the loss must be allowed to lie where it falls. In this case as these are unaccounted transactions, the Court could not have lent its hands and passed a decree. For these reasons also the suit was required to be dismissed.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 4101-4102 of 1998

Decided On: 31.03.2004

 G. Pankajakshi Amma and Ors.
Vs.
 Mathai Mathew (D) thr. L.Rs. and Anr.

Coram:
S.N. Variava and H.K. Sema, JJ.

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When defence of money lending transaction will not be applicable in case of cheque dishonour case?

The question precisely turns upon the interpretation
of Section 2(l)(a) of the Act of 2001. The learned Magistrate 
has relied upon the decision of this Court in the case of Kedar
Ramakant Kakodkar (supra), in order to hold that the words
in Section 2(l)(a) has widened the scope of activity of lending
of finance, so as to include within its sweep each and every
activity of such lending. Section 14 of the Act of 2001 lays
down that no decree shall be passed in any suit under the Act,
unless, the Court is satisfied that at the time, when the loan or
any part thereof, to which the suit relates was advanced, the
money lender held a valid license and if, the Court is satisfied
that the money lender did not hold a valid license, it shall
dismiss the suit. In the case of Kedar Ramakant Kakodkar
(supra), the order challenged was the one of rejection of plaint
under Order VII Rule 11 of the Code of Civil Procedure. The
suit was filed for recovery of the sum advanced to the
defendant under a loan agreement. The Civil Court in that
case had concluded that the averments in the plaint do not
bring out the fact that the plaintiff was a money lender, within
the meaning of Section 2(l) of the Money Lenders' Act. This
Court after examining the provisions of a cognate legislation,
namely, the Bombay Money Lenders' Act 1946 held thus in
paragraph 16:-
“16. Consequently, the plaint which refers
not to a single act of giving a loan, but
several such acts in absence of any specific
pleadings regarding the nature or object of
the business carried on by the plaintiff
purports to clothe the plaintiff with an
occupation or pursuit of lending finances, an
activity in which he purports to be active.”
It can thus be seen that in the case of Kedar
Ramakant Kakodkar (supra), the Court was concerned with
a matter, where there were multiple transactions.
 In the case of M/s Armstrong Builders and
Developers (supra), this Court was considering an appeal
against acquittal, under Section 138 of the N.I. Act, as in the
present case. In that case also, there was a solitary
transaction. This Court specifically interpreted, the term
“activity”, as appearing in Section 2(l)(a) of the Act of 2001
and held thus in paragraph 8 of the judgment:
“8. The complainant was also cross
examined on the aspect of money lending.
In fact in the cross examination of the
complainant it was impliedly admitted that
the amount which was advanced to the 
accused was not connected with the
business of the accused, the complainant's
business being that of a builder and
developer. The complainant had
categorically stated that he was not a money
lender nor did he have license to lend
money. Picking up the expression from para
3 of the complaint, that the complainant had
given a loan to the accused, learned Counsel
on behalf of the accused, submits that such
a loan was not recoverable in the light of the
provisions of the Goa Money Lenders Act,
2001. The learned Counsel on behalf of the
accused has particularly referred to the
expression activity in sub-clause (a) of
Clause (l) of Section 2 of the said Act and
has submitted that even a single loan would
come within the purview of the expression
"activity" appearing in the said sub-clause(a)
of Clause (l) of Section 2 of the Act. Apart
from the denial by the complainant that he
is the money lender, the accused produced
no evidence to bring on record to show that
the complainant was carrying on business of
money lending or any activity of lending of
any finance. The expression "activity" is not
defined under the said Act and the ordinary
dictionary meaning as per Black's Law
Dictionary activity is an occupation or 
pursuit in which a person is active, and, as
per Oxford English Dictionary, it is the
condition in which things are happening or
being done. In other words, the very subject
of activity suggests continuity and therefore
a single act of giving a loan would not come
within the definition of sub clause(a) of
clause(l) of Section 2 of the said Act. In this
context, reference to the case of Rotakonda
Raghu Naidu Vs. Kolla S. Prasad (2004
(4) Crimes 295) could be made. The learned
Single Judge of the Andhra Pradesh High
Court referring to another decision of the
Division Bench of that Court observed that
"money lender" envisages only those
persons whose regular business is to
advance monies and not those who advance
monies casually. A solitary instance of giving
a loan does not make a person a money
lender. That being the position, the
provisions of the Goa Money Lenders Act,
2001 would be of no assistance to the case
of the accused.”
IN THE HIGH COURT OF BOMBAY AT GOA
CRIMINAL APPEAL NO. 24 OF 2013
Mrs. Sulekhabai Yeshwantrao Chowghule,

Versus
Shaik Vahid Jahangir alias Shaik Vaid,

 CORAM:- C. V. BHADANG, J.

 PRONOUNCED ON:- 7thAUGUST, 2015
Citation;2015 CRLJ 4824 Bom

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