Civil Court’s adjudication on title and transaction nature binds authorities under the Money Lending Act.

Respondent No. 5 alleged that in 2003, he borrowed ₹20,000 from the Petitioner (an alleged unlicensed money-lender) at 10% monthly interest, executing a nominal sale-deed of agricultural land as security.

Authorities under the Maharashtra Money Lending (Regulation) Act, 2014 ("2014 Act") conducted an enquiry, found 35 similar transactions, and declared the 21/04/2003 sale-deed illegal, ordering the return of property to Respondent No. 5.

Simultaneously, the Petitioner had previously secured a perpetual injunction from a Civil Court (RCS No. 69/2008) based on the same sale-deed.

In that suit, the Civil Court expressly rejected Respondent No. 5’s defense that the deed was a sham/security for a loan, finding the Petitioner to be the sole owner.

The Petitioner challenged the authorities' orders via this Writ Petition after a revision was dismissed as non-maintainable.

The court primarily applied the principle that a Civil Court's adjudication on title and the nature of a document is binding on statutory authorities, as established in Bhanudas @ Suryabhan v. State of Maharashtra (2023).

It relied on the doctrine of res judicata regarding findings of title in injunction suits per Anathula Sudhakar v. P. Buchi Reddy (2008).

It further interpreted Sections 2(3), 2(9), 2(13), and 2(14) of the Maharashtra Money Lending (Regulation) Act, 2014, which define "business of money lending," "interest," and "loan," establishing that an advance without interest does not constitute a "loan" or "money lending."

The Court reasoned that once a Civil Court determines a transaction is an absolute sale and not a mortgage/security, statutory authorities cannot record a contradictory opinion.

Applying Anathula Sudhakar, the High Court held the Civil Court’s finding on title in the prior injunction suit operated as res judicata because the Petitioner's possession was based solely on that title.

Factually, the Court found Respondent No. 5’s claim of a loan "unbelievable" because he suppressed a prior registered agreement of sale from 2002 and failed to plead the astronomical 10% monthly interest in the original civil suit.

Legally, the Court held that since "interest" is an essential ingredient of a "loan" under Section 2 of the 2014 Act, and since the interest claim was an afterthought, the authorities lacked jurisdiction to invoke Section 18 to cancel the sale-deed.

Regarding the alternate remedy, the Court held that where orders are passed without jurisdiction or in defiance of Civil Court decrees, the High Court must intervene under Article 226/227 to prevent "utter confusion."

The Court quashed and set aside the orders dated 31/05/2024, 09/11/2022, and 23/06/2022 passed by Respondents 2, 3, and 4.

The Writ Petition was allowed, and the Petitioner’s title under the sale-deed was upheld.