Civil Court's Determination on Sale-Deed Prevails over Maharashtra Money Lending Act Authorities' Findings
In a landmark judgment, the Bombay High Court, Nagpur Bench, presided by Justice Rohit W. Joshi, has quashed the orders passed by authorities under the Maharashtra Money Lending (Regulation) Act, 2014, which had declared a sale-deed dated 21st April 2003 as an illegal money lending transaction. The judgment was delivered on 6th March 2026 in response to a writ petition filed by Mr. Jitendra Kawarilal Kothari against the State of Maharashtra and others.
The case revolved around a complaint by the respondent, who alleged that Mr. Kothari was operating as an unlicensed money-lender and had coerced him into executing a sale-deed as a security for a loan of Rs. 20,000. The authorities had concluded that the transaction was a guise for money lending, leading to orders for the return of the property to the respondent.
However, Mr. Kothari contested these findings, presenting a prior civil court judgment that had upheld the sale-deed as a genuine transaction, granting him a decree of perpetual injunction. The Bombay High Court upheld this civil court determination, emphasizing that findings by a competent civil court prevail over contrary findings by authorities under the Money Lending Act.
Justice Joshi cited the principles of res judicata, indicating that the civil court’s adjudication on the nature of the transaction is binding and cannot be contradicted by other authorities. The court also noted the lack of evidence regarding interest payments, a crucial factor for identifying a money lending transaction under the Act.
The judgment underscores the supremacy of civil court determinations in property transactions and clarifies the interpretation of "money-lender" and "loan" under the Maharashtra Money Lending (Regulation) Act. The court dismissed objections regarding alternate remedies, asserting the necessity of high court intervention to resolve jurisdictional conflicts and prevent contradictory legal outcomes.
This ruling sets a precedent for similar cases where civil court judgments and administrative findings under the Money Lending Act conflict, reinforcing judicial determinations as paramount in property and lending disputes.
Bottom Line:
Determination by a Civil Court regarding the nature of a transaction prevails over findings by authorities under the Maharashtra Money Lending (Regulation) Act, 2014. Authorities under the Act cannot pass orders contravening adjudication by a competent Civil Court.
Statutory provision(s): Maharashtra Money Lending (Regulation) Act, 2014, Section 18; Res Judicata; Writ Jurisdiction; Interpretation of "money-lender" and "loan".
