Case Note & Summary
The High Court of Judicature at Bombay heard an interim application filed by the defendant under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) seeking rejection of the plaint in a commercial suit for recovery of money. The defendant contended that the plaintiff was engaged in unlicensed money lending business and the suit was barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014. The plaintiff claimed to have advanced loans to the defendant from 2011-2012 at interest rates up to 36% per annum, with the amount increasing from approximately Rs. 48 Crores to Rs. 510 Crores, and based the suit on dishonoured cheques and promissory notes. The Court examined whether the transactions qualified as 'loans' under the Act or were excluded as 'advances' under Section 2(13)(j). After analyzing the pleadings and statutory provisions, the Court held that the plaintiff was engaged in money lending business without a license, the transactions involved interest and were based on promissory notes, and thus were not excluded from the definition of 'loan'. Consequently, the suit was barred by Section 13 of the Act, and the plaint was rejected under Order VII Rule 11(d) CPC.
Headnote
The defendant filed an application under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) seeking rejection of the plaint on the ground that the suit was barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014 -- The plaintiff filed a suit for recovery of money based on dishonoured cheques and promissory notes executed by the defendant -- The plaintiff pleaded advancing loans to the defendant from 2011-2012 at interest rates up to 36% per annum, with the loan amount increasing from approximately Rs. 48 Crores to Rs. 510 Crores -- The defendant contended that the plaintiff was engaged in the business of money lending without a mandatory license as required under the Maharashtra Money Lending (Regulation) Act, 2014 -- The defendant argued that Section 13 of the Act bars courts from passing decrees in favour of unregistered money-lenders -- The defendant submitted that the exclusion under Section 2(13)(j) of the Act for 'advances' did not apply since the transactions involved interest and were based on promissory notes -- The Court held that on a meaningful reading of the plaint, the plaintiff was engaged in the business of money lending without a license -- The Court found that the transactions were not mere 'advances' excluded under Section 2(13)(j) but were 'loans' with interest components -- The plaint was rejected under Order VII Rule 11(d) CPC as the suit was barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014
Issue of Consideration
Whether the plaint is liable to be rejected under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) on the ground that the suit is barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014
Final Decision
The Court allowed the defendant's application and rejected the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) -- Held that the suit was barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014 as the plaintiff was engaged in unlicensed money lending business
Law Points
- 2014 -- Definition of 'loan' under Section 2(13) of the Maharashtra Money Lending (Regulation) Act
- 2014 -- Exclusion of advances under Section 2(13)(j) of the Maharashtra Money Lending (Regulation) Act
- 2014 -- Bar to decree for unlicensed money-lenders -- Interpretation of statutory exceptions
- Order VII Rule 11(d) of the Code of Civil Procedure 1908 (CPC)
- Section 13 of the Maharashtra Money Lending (Regulation) Act
