[Cites 15, Cited by 0]
Bombay High Court
Jitendra Kawarilal Kothari vs State Of Maha., Ministry Of Co-Op. ... on 6 March, 2026
2026:BHC-NAG:4022
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
WRIT PETITION NO.7051/2025
PETITIONER : Mr. Jitendra Kawarilal Kothari,
Aged 56 years, Occu - Agriculturist,
R/o Sahabanagar Kalamb, Tq. Kalamb,
Dist. Yavatmal.
...VERSUS...
RESPONDENTS : 1. State of Maharashtra, Ministry of
Co-operative Marketing and Textile
Industries, through its Chief Secretary,
Mantralaya, Mumbai.
2. The District Deputy Registrar,
Co-operative Societies, Yavatmal,
Dagadi Building Sahkar Bhawan,
Tahsil Chowk, Yavatmal - 445001.
3. The Divisional Joint Commissioner,
Money Lending and Co-operative
Societies, Amravati Division, Amravati.
4. The Registrar General/Commissioner
of Co-operative Societies, New Central
Building, 2nd Floor, B.J. Road, Pune - 411001.
5. Nana Ramrao Kate,
Aged about 70 years, Occu. Retired
Teacher, R/o Mawalni at Present
Sahkar Apartment, Near Hudkeshwar
Naka, Nagpur.
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Mr. A.G. Baheti and Mr. R.M. Bhangde, Advocates for petitioner
Mr. H.D. Dubey, AGP for respondent Nos.1 to 4
Mr. A.M. Ghare and Mr. Pushkar Ghare, Advocates for respondent No.5
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2
CORAM : ROHIT W. JOSHI, J.
DATE : 06/03/2026
ORAL JUDGMENT :
1. Heard. Rule. Rule made returnable forthwith. Heard finally
with the consent the learned Advocates for the rival parties.
2. The present petition arises out of order passed under
Section 18 of the Maharashtra Money Lending (Regulation) Act, 2014
(for short hereinafter referred to as "Money Lending Act"). The
respondent No.5 had filed proceedings under Section 18 (2) of the
Money Lending Act against the present petitioner, inter alia alleging that
the petitioner is a money-lender, who is engaged in money lending
business, although he does not have licence of money lending under the
said Act. It is alleged that the father of petitioner is his agent. The
respondent No.5 stated that he was in need of money of Rs.20,000/- as
loan for educational purpose of his son and therefore, he had
approached the father of petitioner and obtained loan of Rs.20,000/-
from the petitioner. He states that the loan was agreed to be repaid with
interest @ 10% per month. He has stated that the petitioner had
imposed condition for execution of sale-deed/earnest-note with respect
to agricultural land of respondent No.5 towards security of loan
amount. He has stated that in such circumstances he was compelled to
execute a nominal sale-deed dated 21/04/2003 in favour of the
petitioner. The respondent No.5 contended that although he has
refunded the amount along with interest, the petitioner did not return
the sale-deed to him and rather tried to get the suit property mutated in
his name.
3. On the aforesaid complaint lodged by the respondent No.5,
the respondents-authorities conducted enquiry and arrived at
conclusion that the petitioner had entered into 35 transactions of money
lending under the guise of sale transaction from the year 2003 to 2004.
Based on the aforesaid report and other evidence on record, the
respondent No.2 passed order dated 02/11/2018, holding that
petitioner was engaged in business of money lending without holding
appropriate licence and that the sale transaction in question was a
money lending transaction. The respondent No.2 accordingly declared
the sale-deed dated 21/04/2003 to be illegal and passed an order for
return of the said immovable property to respondent No.5. Aggrieved by
the said order, the petitioner preferred an appeal before the respondent
No.3, which was partly allowed vide order dated 29/06/2020. The
order dated 02/11/2018, passed by the respondent No.2 was quashed
and set aside and the proceeding was remanded to the respondent No.2
for deciding the same afresh by granting opportunity to both sides to
lead evidence, conduct cross-examination of witnesses and advance
arguments in the matter. After the remand, the respondent No.2 once
again passed order dated 23/06/2022, confirming the earlier order
dated 02/11/2018, thereby declaring the sale-deed dated 21/04/2003
as illegal and directing the petitioner to return the property to the
respondent No.5. Appeal preferred by the petitioner came to be
dismissed by the respondent No.3 vide order dated 09/11/2022. The
petitioner thereafter preferred revision before the respondent No.4,
which came to be dismissed vide order dated 31/05/2024 on the
ground that the same was not maintainable.
4. It will be pertinent to mention that initially the petitioner
had filed a petition before this Court being Writ Petition No.7501/2024.
However, there was mistake in the prayer clause in the said petition. As
a consequence of this, the petitioner made a motion to withdraw the
said petition with liberty to file a fresh petition. Vide order dared
29/09/2025, the petitioner was permitted to withdraw the said petition
with liberty to file a fresh petition on the same cause of action.
Accordingly, the present petition is filed, challenging the aforesaid
orders.
5. Mr. Baheti, learned Advocate for the petitioner contends
that petitioner had filed a civil suit being Regular Civil Suit No.69/2008
against the respondent No.5, seeking a decree of perpetual injunction,
restraining him from disturbing his possession over the suit property.
The leaned Advocate contends that the said suit was filed claiming
ownership over the suit property on the basis of sale-deed dated
21/04/2003. It is contended that in the said suit the respondent No.5
raised a defence that the sale-deed was a sham document, which was
created only in order to get security for the alleged loan amount.
Learned Advocate for the petitioner contends that the said contention
was rejected and in view of the sale-deed, the learned Civil Court has
granted decree of perpetual injunction in favour of the present
petitioner. The learned Advocate contends that the authorities under the
Act cannot pass any order in contravention of adjudication of the issue
by a Civil Court of competent jurisdiction. In support of his contention,
learned Advocate has placed reliance on the judgment of this Court in
the case of Bhanudas @ Suryabhan s/o Ramchandra Shinde Vs. State of
Maharashtra and others, reported in 2023 (2) Mh.L.J. 555. Learned
Advocate also draws attention to the order dated 16/12/2009, passed
by the respondent No.2 on a complaint made by the respondent No.5
with respect to the same sale-deed. He points out that the respondent
No.2 had then arrived at a conclusion that the respondent No.5 had
failed to establish his allegation of the sale transaction being a money
lending transaction and accordingly, his complaint was rejected vide
order dated 16/12/2009. Learned Advocate for the petitioner contends
that the impugned order is in contravention of the earlier order, dated
16/12/2009 and therefore, unsustainable.
6. Apart from this, on merits, the learned Advocate contends
that perusal of complaint will demonstrate that the respondent No.5
stated that sale-deed dated 21/04/2003 came to be executed in order to
offer security for alleged loan amount of Rs.20,000/-, however, there is
no explanation by the respondent No.5 with respect to earlier registered
agreement of sale dated 14/03/2002, pursuant to which sale-deed
dated 21/04/20203 is executed.
7. Another contention raised by the learned Advocate for the
petitioner is that in the written statement filed in the civil suit, the
respondent No.5 has not stated that the amount was allegedly borrowed
on interest. He contends that improvisation is made in the complaint
filed before the respondent No.5 and for the first time, after a period of
around 13 years from the date of execution of the sale-deed, it is stated
that amount of Rs.20,000/- was borrowed against interest @ 10% per
month.
8. Mr. Ghare, learned Advocate for the respondent No.5
opposed the petition contending that the respondent Nos.2 and 3 have
concurrently held that the transaction in question was a money lending.
He draws attention to the order and points out that during the year
2003-2004, 35 similar transactions have been noticed by the authorities
and as such, conclusion drawn by the authorities that the sale-deed in
question is also in essence an outcome of money lending transaction is
just and proper. He argues that this Court should not take another view
of the matter, since the findings are supported by voluminous material.
9. As regards the judgment and decree, passed by the learned
Civil Court, the contention is that the suit was not a suit for declaration
of ownership but a suit simplicitor for injunction, in which question of
ownership was not directly and substantially in issue and as such,
jurisdiction of the authorities under the Act to rule on the nature of
transaction will not be ousted, in view of the decree passed in the
aforesaid civil suit and further that the findings recorded in the said suit
will not operate as res judicata. Mr. Ghare places reliance on the
judgment of this Court in the case of Parbata Jija Pote Died through Lrs.
and others Vs. State of Maharashtra, Through its Principal Secretary,
Co-operative, Marketing and Textile Department and others with
connected petitions, reported in 2024 SCC OnLine Bom 5408,
particularly paragraph 11 thereof, in support of his contention. Apart
from this, he also places reliance on the judgment of the Hon'ble
Supreme Court in the case of Anathula Sudhakar Vs. P. Buchi Reddy
(Dead) by Lrs. and others, reported in (2008) 4 Supreme Court Cases
594.
10. With respect to the order dated 16/12/2009, passed by the
respondent No.2, the contention of Mr. Ghare is that the said order is
passed under the erstwhile Bombay Money-Lenders Act, 1946, which is
repealed by the Maharashtra Money Lending (Regulation) Act, 2014.
His submission is that under the said Act, the respondent No.2 was not
vested with authority to cancel or set aside any sale-deed with respect to
immovable property. He contends that the said order will therefore not
be an impediment for holding enquiry into the nature of sale-deed in
question under the New Act.
11. In reply, Mr. Baheti seeks to distinguish the judgment of
this Court in the case of Parbata Jija Pote (supra) by drawing attention
to the fact that in the said case, the civil suit for injunction was pending
and therefore, question of binding efficacy of judgment, delivered by the
Civil Court, did not arise for consideration. As regards judgment in the
case of Anathula Sudhakar (supra), Mr. Baheti draws attention to
paragraph 18 and contends that the question of title was directly and
substantially in issue in the aforesaid civil suit, although the prayer in
the civil suit between the parties is only for injunction.
12. In view of the law laid down in Bhanudas @ Suryabhan
(supra), there cannot be any quarrel with the legal proposition that
when a Civil Court determines the nature of transaction, the judgment
and decree passed by the Civil Court will prevail over any finding
recorded by the authorities, exercising jurisdiction under the Money
Lending Act. It must also be held that once the issue is set at rest by
competent Civil Court, the authorities under the Act cannot pass any
order or record any finding to the contrary. Adjudication by a Civil
Court will be fully binding on the parties as also authorities under the
Act. It will be appropriate to refer to relevant observations of this court
in the aforesaid judgment, which read thus :-
"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."
13. It will also be appropriate to refer to the judgment
delivered by the learned Civil Court in the suit filed by the petitioner.
The petitioner has sought injunction based on title, in view of sale-deed
in his favour. The respondent No.5/defendant raised a contention that
the sale transaction was not only a camouflage and a security for loan.
Said contention is expressly rejected by the learned Civil Court.
Relevant observation of the learned Civil Court in paragraph 11 is
quoted herein below for reference :-
"Therefore, it is proved to my satisfaction that the plaintiff
is the sole owner of the suit land under registered sale-deed
Exhibit- 45."
14. In view of the aforesaid express findings and law laid down
in the case of Bhanudas @ Suryabhan (supra), in the considered
opinion if this Court, the order passed by the respondent No.2,
declaring the sale-deed in question to be a money lending transaction as
also the order passed by the respondent No.3, dismissing the appeal
arising out of the said order, cannot be sustained.
15. The judgment in the case of Parbata Jija Pote (supra)
cannot be followed in the present case, since the suit in the present case
is already decided on merits. It will be pertinent to state that in the said
case, a civil suit for injunction filed by the alleged money-lender was
pending and the issue was as to whether during the pendency of the
said suit, enquiry under Section 18 of the Money Lending Act could be
allowed to continue. This Court has merely held that despite pendency
of civil suit for injunction by the alleged money-lender, enquriy under
Section 18 of the Money Lending Act can independently continue. The
said judgment does not lay down any proposition that judgment by Civil
Court will not be binding on the authorities functioning under the Act
or that the authorities functioning under the Act can record findings
contrary to those recorded by a Civil Court.
16. I am also in agreement with contention of Mr. Baheti that
the question of title was directly and substantially an issue in the civil
suit between the parties. The plaintiff/petitioner claimed decree of
injunction on the basis of title and the prayer was opposed, contending
that the transaction was a money lending transaction. In the case of
Anathula Sudhakar (supra) the Hon'ble Supreme Court, in paragraph
No.18, has observed thus : -
"18. On the other hand, in Sulochana Amma v. Narayanan Nair,
this Court observed that a finding as to title given in an earlier
injunction suit, can operate as res judicata in a subsequent suit for
declaration of title. This was on the premises that in some suits for
injunction where a finding on possession solely depended upon a
finding on the issue of title, it could be said that the issue of title
directly and substantially arose for consideration; and when the
same issue regarding title is put in issue, in a subsequent title suit
between the parties, the decision in the earlier suit for injunction
may operate as res judicata. This Court observed :
"9. Shri Sukumaran further contended that the remedy
of injunction is an equitable relief and in equity, the
doctrine of res judicata cannot be extended to a decree of
a court of limited pecuniary jurisdiction. We find no force
in the contention. It is settled law that in a suit for
injunction when title is in issue for the purpose of
granting injunction, the issue directly and substantially
arises in that suit between the parties. When the same
issue is put in issue in a later suit based on title between
the same parties or their privies in a subsequent suit the
decree in the injunction suit equally operates as res
judicata."
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.
17. Apart from this, perusal of the application, filed by the
respondent No.5 indicates that he had approached the petitioner
through his father in order to borrow amount of Rs.20,000/- and that
the petitioner obtained the sale-deed in question from him as a security
for the aforesaid loan amount.
18. Perusal of application is completely silent with respect to
earlier agreement of sale dated 14/03/2002. The sale-deed dated
21/04/2003 is executed, pursuant to the said agreement dated
14/03/2002. The agreement of sale dated 14/03/2002 is a registered
document. Perusal of the agreement will further demonstrate that out of
the total consideration of Rs.52,000/-, a sum of Rs.45,000/- was paid by
the petitioner to the respondent No.5 on the date of execution of
agreement itself. The contention of the respondent No.5 that he had
borrowed amount of Rs.20,000/- from the petitioner somewhere around
April, 2003 and the petitioner got the sale-deed executed from him
towards security of the loan amount is difficult to accept, in view of the
fact that there is no explanation whatsoever with respect to the earlier
registered agreement dated 14/03/2002. It must also be stated that
sale-deed dated 21/04/2003 is executed after a period of over 13
months from the date of execution of registered agreement of sale dated
14/03/2002.
19. It will also be pertinent to state that in the written
statement filed in the civil suit, the respondent No.5 has not come up
with a contention that amount of Rs.20,000/- was borrowed against
payment of interest. 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. After a period of around 13 years from the date
of sale-deed, the respondent No.5 stated in his application before the
respondent No.2 that amount of Rs.20,000/- was borrowed on interest
@ 10% per month. This statement is also not believable. Rate of interest
pleaded by the respondent No.5 is an astronomical rate. 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.
20. Having regard to the aforesaid, in the considered opinion
of this Court, the version of respondent No.5 with respect to the
transaction being a loan transaction cannot be accepted.
21. The question of interest has a material bearing on the
matter. Section 18 of the Money Lending Act confers jurisdiction on the
District Registrar to pass an order of return of immovable property by
declaring a sale-deed to be invalid, in case where it is found that a
money-lender has obtained possession of immovable property as
security for loan advanced by him during the course of money lending.
Thus, an order declaring sale transaction invalid and delivery of
possession can be passed only when the transaction is one of money
lending transaction. In this regard it will be appropriate to refer to the
definitions of the terms "money-lender", "loan", "interest" and "business
of money-lending", as defined under Sections 2 (14); 2 (13); 2 (9)
and 2 (3) of the Money Lending Act respectively.
22. The term "money-lender" is defined to mean any individual
or other entity, who carries on, 'business of money lending'. The term
"business of money lending" is defined under Section 2 (3) to mean
business of advancing 'loan'. "Loan" is also a term defined to mean an
advance of money at 'interest'. The term "interest" is defined under
Section 2 (9) as any sum claimed by money-lender over and above the
principal amount lent to a borrower. A person can be said to be money-
lender only if he conducts 'business of money lending'. Business of
money lending essentially involves advancement of loan. Any money
advanced without interest does not fall under the definition of term
"loan". Therefore, unless a lender charges interest from a borrower, he
will not fall within the definition of a term "money-lender" under
Section 2 (14) of the Money Lending Act. Perusal of Section 18 will
demonstrate that order of declaration of sale transaction being invalid
and restoration of possession of property sold can be passed only
against a money-lender. Therefore, unless money is advanced by lender
against interest, order under Section 18 of the Money Lending Act
cannot be passed against him.
23. As recorded above, the case of interest set up by the
respondent No.5 is clearly by way of an afterthought and therefore,
unbelievable. In that view of the matter, in the considered opinion of
this Court, the case of interest, which is set up by the respondent No.5
cannot be accepted. If the case of respondent No.5 with respect of
payment of interest is discarded, the order of declaring the sale-deed
invalid and directing delivery of possession to the respondent No.5 will
be without jurisdiction.
24. Even if it is assumed that the petitioner is involved in
business of money lending, as is stated in the report furnished by the
authorities and held by the respondent Nos.2 and 3 in the impugned
orders, it cannot be said that the present transaction is a money lending
transaction since the case of respondent No.5 with respect to stipulation
of interest is unbelievable.
25. As stated above, unless money is advanced against interest,
the transaction cannot be termed to be a money lending transaction and
therefore, order of cancellation of sale transaction and delivery of
possession cannot be passed, even if it is held that the petitioner is
otherwise dealing money lending transactions.
26. The impugned orders passed by other respondent No.2
and 3 are therefore liable to be quashed and set aside, in view of earlier
adjudication to the contrary by the learned Civil Court, the respondent
No.5 has failed to establish that the amount was advanced against
interest and also because the respondent No.5 is completely silent with
respect to execution of registered agreement of sale dated 14/03/2002,
pursuant to which, sale-deed dated 21/04/2003 is executed.
27. It will be pertinent to mention that the learned Advocate
for the respondent No.5 had raised a preliminary objection with respect
to alternate remedy. It is his contention that the petitioner must be
relegated to alternate remedy of filing revision under Section 9 of the
Money Lending Act.
28. The contention with respect to alternate remedy was
rejected since the order passed by the respondent No.2 is without
jurisdiction and also contrary to express adjudication of the issue
involved by a competence Civil Court. It will be pertinent to state that
objection with respect to alternate remedy was also raised in the case of
Bhanudas @ Suryabhan (supra), which was rejected for the following
reasons, recorded in paragraph Nos.26 and 27 :-
"26. A unique situation is thus created in the present case where
the officers exercising powers under the Act of 2014 have
effectively sought to ignore the order passed by the Civil Court
deciding the very same issue. There are two findings about
nature of same document, which would lead to utter confusion.
Provisions of Section 10 (stay of suit) and 11 (res judicata) of
the Code of Civil Procedure are aimed at avoiding conflicting
decisions by two courts. Though said provisions may not strictly
apply to the present situation, the spirit behind those provisions
are required to be borne in mind. A party to a litigation cannot
be permitted to simultaneously exercise parallel remedies before
two courts/authorities by suppressing filing of earlier
proceedings. This Court cannot be a mute spectator to the abuse
of process of law by Respondent No. 5 and turn a blind eye to his
deplorable conduct on the ground that an alternate remedy of
revision is available.
27. Therefore both for the reasons of lack of jurisdiction and
incongruous situation created on account of conflicting orders,
interference by this Court in exercise of jurisdiction under Article
226 and 227 of the Constitution of India would be warranted to
set the things right and to prevent a confusion being created on
account of contradictory orders being passed by the Civil Court
and a statutory authorities. In such circumstances, in my
opinion, this would be a fit case to entertain the present petition,
rather than relegating the petitioner to the remedy of filing
Revision before the Registrar General under the provisions of
Section 9 of the Act of 2014. Accordingly, I reject the preliminary
objection raised on behalf of the State Government as well as
respondent no.5."
29. This Court is in complete agreement with the view expressed
in the said judgment. Preliminary objection with respect to alternate
remedy is, therefore, rejected.
30. In view of the above, Writ Petition is allowed in the following
terms :-
Order dated 31/05/2024, passed by the Registrar
General/Commissioner of Cooperative Societies, respondent No. 4 in
Revision Petition No.74/2022; order dated 09/11/2022, passed by the
Divisional Joint Commissionaire, Money Lending and Co-operative
Societies, Amravati Division, Amravati, respondent No.3 in Appeal
No.11/2022 and order dated 23/06/2022, passed by the District Deputy
Registrar, Co-operative Societies, Yavatmal, respondent No.2 in
Application No.30/2016 are quashed and set aside.
31. Rule is made absolute in the aforesaid terms. No order as
to costs.
(ROHIT W. JOSHI, J.)
Wadkar
Signed by: S.S. Wadkar (SSW)
Designation: PS To Honourable Judge
Date: 11/03/2026 10:24:03
