Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(MAD) 15322

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

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

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

The court ruled that the defendants were not money lenders under the Tamil Nadu Money Lenders Act, and the plaintiffs failed to prove their claims regarding excessive interest and the invalidity of the second mortgage deed.

Headnote:(A) Tamil Nadu Money Lenders Act, 1957 - Sections 2(8) and 7(1) - Suit for declaration of defendants as money lenders and for redemption of mortgage - Plaintiffs alleged exorbitant interest of 27% per annum, while defendants claimed contractual rate of 27% is valid - Plaintiffs repaid Rs.3,87,21,482/- against borrowed Rs.1,50,00,000/- - Court found plaintiffs admitted execution of mortgage deeds and liability for payments - Court ruled defendants not money lenders under Act and dismissed suit. (Paras 1, 46, 63)

Facts of the case:
Plaintiffs sought relief against defendants who allegedly charged exorbitant interest on a loan secured by mortgage deeds. They claimed to have repaid significantly more than borrowed but contested the validity of the second mortgage deed, asserting it was without consideration. (Paras 1, 3, 30)

Findings of Court:
The Court found that the plaintiffs admitted the execution of both mortgage deeds and the payments made. It ruled that the defendants were not money lenders under the Tamil Nadu Money Lenders Act and the second mortgage deed was valid. (Paras 61, 63)

Issues: The main issues involved whether the defendants were money lenders under the Tamil Nadu Money Lenders Act, the validity of the interest charged, and the enforceability of the second mortgage deed. (Paras 13, 46)

Ratio Decidendi: The Court held that the plaintiffs failed to prove the defendants were money lenders and that the interest charged was excessive beyond the contractual agreement, thus dismissing the suit. (Paras 63, 64)

Result: Suit dismissed with costs.

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 amount, the plaintiffs executed a simple mortgage deed in favour of the defendants 1 and 3 which was registered as document No. 885 of 2012 in Book No.I on the file of Sub-Registrar, Theyagaraya Nagar. Further the plaintiffs also deposited the original title deeds of the property bearing Flat No.4A, Fourth Floor, New Door No.21, Raja Street, T. Nagar, which is described as one of the properties in the plaint schedule. It is the specific plea of the plaintiffs that in the mortgage deed dated 16.04.2012 there was no reference made to the quantum of amount paid by the defendants 1 to 3, 4, 5 and 8, but it was merely stated that the amount is being paid to the first plaintiff. However, as per the various cheques issued by the defendants 1 to 3, 4, 5 and 8, out of the total sum of Rs.1,50,00,000/-, the defendants 1 to 3 have paid Rs.82,00,000/- and the balance amount to the tune of Rs.68,00,000/- was paid by the defendants 4, 5 and 8 with whom the plaintiffs have no contact or any other contact. Thus, the plaintiffs do not disown their liability to repay the amount of Rs.1,50,00,000/- they borrowed from the first defendant and they have also continued to repay the amount borrowed by them with interest to the defendants 1, 2, 3, 4, 5 and 8. According to the plaintiffs, out of the total loan amount of Rs.1,50,00,000

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2025 Supreme(Online)(MAD) 15322

The court ruled that the defendants were not money lenders under the Tamil Nadu Money Lenders Act, and the plaintiffs failed to prove their claims regarding excessive interest and the invalidity of the second mortgage deed.

Cases Referred (3)