Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Mad) 3962

IN THE HIGH COURT OF JUDICATURE AT MADRAS
P. VELMURUGAN, J.
B. Vinayak Nilesh - Appellant
Versus
Rakesh Harlalka - Respondent
Civil Suit (Comm.Div) No. 94 of 2021
Decided on : 03-01-2025

Advocates:
Advocate Appeared:
For the Appellant :Mr. P.R. Raman, Senior Advocate assisted by Mr. Anupam Raghuraman
For the Respondent: Mr. M. Santhanaraman

Plaintiffs are bound by the contractual interest of 27% per annum as per mortgage deeds and have not proven excess payments or that defendants are money lenders under the Tamil Nadu Money Lenders Act.

Headnote:(A) Tamil Nadu Money Lenders Act, 1957 - Sections 2(8) and 7(1) - Commercial Division Suit seeking declaration of defendants as money lenders, redemption of mortgage, and excess payments - Plaintiffs claimed that lenders charged excessive interest contrary to Tamil Nadu Act; defendants contended the plaintiffs are bound by mortgage agreements - The court finding that the interest charged at 27% was known and accepted by the plaintiffs, ruled plaintiffs did not prove lenders were subject to the Act or that payments exceeded contractual obligations, dismissing the suit. (Paras 1, 30, 61, 63)

(B) Burden of proof in mortgage agreements - Court clarified that parties are bound by contractual terms once executed and registered. Plaintiffs failed to prove that interest was levied illegally or excessive amounts paid; thus defendants retain rights to mortgage under law. (Paras 51, 63)

(C) Legal admissions impacting claims - Parties must adhere to stipulated agreements and cannot deviate from documented terms. Admission of outstanding balances in communications undermined plaintiffs' claims regarding excess payments. (Paras 41, 50)

Table of Content
1. plaintiffs seek declaration of defendants as money lenders. (Para 1)
2. plaintiffs allege borrowed amounts and significant repayments. (Para 2 , 3 , 4)
3. plaintiffs claim second mortgage deed is void. (Para 5 , 6)
4. defendants responded denying allegations and justifying interest rates. (Para 7)
5. defendants assert original loan terms and deny excess charges. (Para 8 , 9 , 10 , 11 , 12)
6. experts and audits reveal transactional discrepancies. (Para 13 , 14 , 15 , 16)
7. plaintiffs’ financial behavior contradicted their claims. (Para 17 , 18)
8. court’s review of legal definitions and provisions under tamil nadu law. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25)
9. court identifies plaintiffs' admissions weakening their position. (Para 26 , 27 , 28)
10. defendants justified maintenance of higher interest charges. (Para 29 , 30 , 31)
11. validity of mortgage deeds in question examined. (Para 32 , 33)
12. court's decision confirms lawful identification of loan amounts. (Para 34 , 35 , 36)
13. court addresses issues of evidence and admissions. (Para 37 , 38 , 39 , 40)
14. plaintiffs fail to establish that defendants are money lenders. (Para 41 , 42 , 43)
15. conclusion: plaintiffs' claims unsupported by evidence. (Para 44 , 45 , 46)
16. final observations on the dismissal of the suit. (Para 47 , 48 , 49 , 50)

JUDGMENT :

P. VELMURUGAN, J.

The Plaintiffs have come forward with this Commercial Division Suit praying for the following reliefs:-

(a) To grant a decree for declaration that the defendants are "money lenders" as defined under Section 2 (8) of Tamil Nadu Money Lenders Act, 1957 and are entitled to charge only upto 9% per annum simple interest on the money borrowed by the plaintiffs under Simple Mortgage Deed, dated 16.04.2012.

(b) To grant a decree for redemption of mortgage against the defendants 1 to 3, with consequential direction to return all the original title deeds of Schedule 'A' property, viz., Original Settlement Deed dated 15.12.2008 bearing document No.2446/2008 along with patta and revenue records as well as all the cheques mentioned in the Schedule 'B' issued by the first plaintiff.

(c) To direct the defendants jointly and severally to pay the plaintiffs a sum of Rs.1,91,67,279/- along with interest at the rate of 9% per annum from this date to till realisation for the excess amount paid by the first plaintiff on the mortgage deed dated 16.04.2012.

(d) to grant a decree for declaration that Mortgage Deed dated 13.03.2020, registered as Document No. 722 of 2020 at Sub-Registrar Office, T. Nagar, Chennai - 600 017, executed between the plaintiffs and defendants to be null and void, being sham and nominal and not supported by consideration (e) decree for permanent injunction, restraining the defendants or their men, agents from presenting for encashment of the cheques issued by the plaintiffs, and given as security to the defendants 1 to 3, in pursuance of the mortgage deed, dated 16.04.2012, as detailed and set out in the schedule hereunder, and (f) to direct the defendants to pay the costs of the suit.

2. The case of the plaintiff, as could be unfolded from the plaint as well as the amended plaint are as under:-

The plaintiff states that they are in the business of construction for the last few decades and subsequently they have also entered into the field of automotive component business for the past few years prior to the filing of the plaint. According to plaintiff, for the purpose of meeting the urgent business expenditure, they were in need of funds and on 16.04.2012, one of the common friend introduced the plaintiffs to the first defendant, who is a money lender. The plaintiffs requested the first defendant to extend them financial assistance and after deliberations, the first defendant paid a sum of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs Only) by way of cheque from the bank account of the first defendant as well as third parties to the transaction namely the defendants 4, 5 and 8. On receipt of such amou