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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Patel, J.
Base Industries Group - Appellant
Versus
Base Industries Group - Respondent
Chamber Summons No. 488 of 2018; Commercial Execution Application No. 63 of 2017; Suit No. 119 of 2016
Decided On : 22-07-2018
Money Lending - Consent Decree - Bombay Money Lenders Act - Sections 2, 5, 10 - The court dismissed the Chamber Summons filed by the Judgment Debtor seeking to set aside the Consent Decree dated 16th February 2016. The court held that the decree was not a nullity and could not be set aside based on the provisions of the Bombay Money Lenders Act. The court emphasized that not every loan is automatically a money-lending transaction and that the burden of proof lies with the defendant to show that the transaction is forbidden by the Money Lenders Act. The court also noted that the business of money-lending requires systematic, regular, repetitive, and continuous activity, and must generate an appreciable revenue. The court further clarified that a loan recovery action is not barred merely because there is a loan, and the plaintiff is not required to show that his suit is not barred by the Money Lenders Act.
Fact of the Case:
The suit was filed for decree in favor of the Plaintiffs for specific amounts. Consent Terms were filed, and a Consent Decree was taken by the parties. The Defendants undertook to pay the decretal amount to the Plaintiffs within a specified time. However, the cheques issued by the Defendants were dishonored, leading to the Plaintiffs putting the Consent Decree in execution. The Defendants repeatedly made undertakings to the Court to pay the decretal debt but failed to comply with them.
Finding of the Court:
The court found that the Consent Decree was not a nullity and could not be set aside based on the provisions of the Bombay Money Lenders Act. The court emphasized that not every loan is automatically a money-lending transaction and that the burden of proof lies with the defendant to show that the transaction is forbidden by the Money Lenders Act. The court also clarified that a loan recovery action is not barred merely because there is a loan, and the plaintiff is not required to show that his suit is not barred by the Money Lenders Act. The court dismissed the Chamber Summons and discharged the Show Cause Notice. The court also waived the Sheriff's poundage entirely and raised the attachment until an actual withdrawal is allowed to the Decree Holder.
Issues: The main issue was whether the Consent Decree could be set aside based on the provisions of the Bombay Money Lenders Act. The court also addressed the question of whether the business of money-lending requires systematic, regular, repetitive, and continuous activity, and must generate an appreciable revenue.
Ratio Decidendi: The court held that not every loan is automatically a money-lending transaction and that the burden of proof lies with the defendant to show that the transaction is forbidden by the Money Lenders Act. The court emphasized that the business of money-lending requires systematic, regular, repetitive, and continuous activity, and must generate an appreciable revenue. The court further clarified that a loan recovery action is not barred merely because there is a loan, and the plaintiff is not required to show that his suit is not barred by the Money Lenders Act.
Final Decision: The Chamber Summons was dismissed, and the Show Cause Notice was discharged. The court also waived the Sheriff's poundage entirely and raised the attachment until an actual withdrawal is allowed to the Decree Holder. The court also stayed the operation of the order for a period of four weeks.
JUDGMENT
G.S. Patel, J. - This Chamber Summons is filed by the original Judgment Debtor No.2 for the following reliefs:
"(a) That the Defendant No. 2 be relieved of all the undertakings and may be allowed to withdraw all the statements made before this Hon''ble Court which are recorded in Exhibits - "F" to "J".
(b) That the orders dated 16th February 2018 and 22nd February 2018 may be recalled and/or modified and the Defendant Nos. 1 and 2 be heard on the present Chamber Summons without depositing of Rs. 4,75,00,000/- (Rupees Four Crores and Seventy Five Lakhs only) in this Hon''ble Court.
(c) That it be declared that the Consent Decree dated 16th February 2016 passed by this Hon''ble Court is a nullity and incapable of being executed against the Defendant Nos. 1 and 2.
(d) That the Commercial Execution Application No. 63 of 2018 taken out by the Plaintiffs/Decree Holders to execute the Consent Decree dated 16th February 2016 be dismissed.
(e) That the Plaintiffs be ordered and directed to refund the said amount of Rs. 2,56,77,688/- (Rupees Two Crores Fifty Six Lakhs Seventy Seven Thousand Six Hundred and Eighty Eight only) to the Defendant Nos. 1 and 2.
(f) That the Plaintiffs/Decree Holders be permanently restrained by an order and injunction of this Hon''ble Court from relying upon and/or taking any further steps pursuant to the Consent Decree dated 16th February 2016.
(g) That it be declared that the Plaintiffs do not have any right of any nature of whatsoever in the film viz. "Phir Hera Pheri-3".
2. In essence, the application is to set aside the Consent Decree dated 16th February 2016. This is the wording of prayer clause (c). The submission by Mr Vashi, shortly stated, is that the Consent Decree is a nullity and cannot be executed against Defendants Nos. 1 and 2.
3. I have heard Mr Vashi for the Applicant, the 2nd Judgment Debtor at length. I also heard Mr Purohit and Mr Mookhi for the Decree Holder. Having considered their submissions carefully, I am unable to accept the sole submission advanced by Mr Vashi that the decree must be held to be a nullity because it is hit by the provisions of the Bombay Money Lenders Act. I have, for the reasons that follow, dismissed the Chamber Summons.
4. Before I turn to the rival submissions in detail, a brief factual background is necessary. The suit was originally filed for decree in favour of 1st Plaintiff in the amount of Rs. 74,10,000/- as per the particulars of the claim Exhibit "K" to the Plaint; in favour of the 2nd Plaintiff in the amount of Rs. 1,71,00,000/- as per the particulars of the claim, Exhibit "L" to the Plaint; and in favour of the 3rd Plaintiff for an amount of Rs. 2,25,86,250/- as per the particulars of the claim, Exhibit "M" to the Plaint. The second prayer sought a declaration that the Plaintiffs have a lien and charge on two films, ''Welcome Back'' and ''Hera Pheri 3'' produced by Defendants Nos. 1 and 2.
5. On 16th February 2016, Consent Terms were filed in the suit and the parties took a Consent Decree. A copy of the Consent Terms is at Exhibit "D" at page 31. In this, Defendants Nos. 1 and 2 submitted to a Decree in the following manner:
"2. Decree against Defendant Nos. 1 and 2 and in favour of:
(a) Plaintiff No. 1 for sum of Rs. 65,00,000/- (Rupees Sixty Five Lakhs only) with interest thereon at the rate of 15% per annum from 1st June 2015 till payment and/or realization of the decretal amount;
(b) Plaintiff No. 2 for sum of Rs. 1,50,00,000/- (Rupees One Crore Fifty Lakhs only) with interest thereon at the rate of 15% per annum from 1st June 2015 till payment and/or realization of the decretal amount.
(c) Plaintiff No. 3 of sum of Rs. 1,98,12,500/- (Rupees One Crore Ninety Eight Lakhs Twelve Thousand Five Hundred only) with interest thereon at the rate of 15% per annum from 1st June 2015 till payment and/or realization of the decretal amount."
6. Clause (3) of these Consent Terms contained the following undertakings:
"3. Defendant Nos. 1 and 2 undertake t
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