Findings Of Civil Court On Nature Of Transaction Bind Authorities Under Maharashtra Money Lending Act: Bombay High Court

The Bombay High Court has held that when a Civil Court of competent jurisdiction has already determined the nature of a transaction between parties, such findings operate as res judicata and are binding on authorities exercising powers under the Maharashtra Money Lending (Regulation) Act, 2014. The Court observed that statutory authorities under the Act cannot record findings contrary to the adjudication of the Civil Court regarding the character of the transaction.Justice Rohit W. Joshi was hearing a writ petition filed challenging orders passed by the District Deputy Registrar, the Divisional Joint Commissioner (Money Lending) and the Registrar General/Commissioner of Co-operative Societies under Section 18 of the Maharashtra Money Lending (Regulation) Act. The authorities had declared a sale deed dated 21 April 2003 to be an illegal money-lending transaction and directed restoration of the agricultural property to the complainant. The petitioner contended that the nature of the transaction had already been adjudicated by a Civil Court in a regular civil suit filed by him seeking a decree of perpetual injunction on the basis of the same sale deed. The Court noted that the question of title had directly and substantially arisen in the civil suit between the parties because the claim for injunction was based on title, and the defence specifically alleged that the document was a camouflage for a loan transaction. The Court referred to the principle that where the grant of an injunction depends upon the determination of title, the issue of title becomes directly and substantially in issue in the suit and findings on that question can operate as res judicata in subsequent proceedings between the same parties. Consequently, the authorities under the Money Lending Act could not record a contradictory finding that the sale deed was merely a security for a loan. “The findings with respect to nature of transaction recorded by the learned Civil Court will operate as res judicata and will be finally binding between the parties. The authorities under the Act cannot record any finding to the contrary. However, the authorities have not taken into consideration the judgment delivered by the learned Civil Court despite the fact that the same was heavily relied upon by the petitioner during the course of hearing,” the Court observed.The Court further highlighted that the complainant's case regarding payment of interest at the rate of 10% per month appeared to be an afterthought and had not even been pleaded in the written statement filed in the civil suit. It observed:“The learned Civil Court has disbelieved the case of defendant/respondent No.5 that the sale-deed in question was a loan transaction on the ground that his pleadings and evidence were silent with respect to interest… It is difficult to believe that the respondent No.5 missed out to plead about the same in the written statement and also did not lead any evidence in this regard in the civil suit.”Accordingly, the orders passed by the authorities under the Money Lending Act were quashed.Case Title: Jitendra Kawarilal Kothari v. State of Maharashtra & Ors. [Writ Petition No. 7051 of 2025]Click Here To Read/Download Order

Findings Of Civil Court On Nature Of Transaction Bind Authorities Under Maharashtra Money Lending Act: Bombay High Court

Saksham Vaishya

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