Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query.....!
Analysing the retrieved Case Laws
Scanned Judgements…!
Even if a transaction appears to be a valid agreement, if it facilitates illegal moneylending, it may be deemed invalid or illegal ["HOO WEI MENG vs WONG ZI PING - High Court"], ["YEONG KING HUI vs PARAMESWARAN SUBRAMANIAM - High Court"].
Analysis and Conclusion
In today's fast-paced financial world, lending money might seem like a straightforward way to earn interest. But what happens when you turn it into a business without the proper license? Many individuals and entities ask: give authorities ruling that it is the business of moneylending that is illegal without a license. The answer, backed by Malaysian courts and the Moneylenders Act 1951 (MLA), is clear—it's not just risky; it's typically illegal and renders transactions unenforceable. This post dives into the key rulings, presumptions, and practical implications to help you navigate this complex area.
Disclaimer: This article provides general information based on legal authorities and is not a substitute for professional legal advice. Consult a qualified lawyer for your specific situation.
The MLA is Malaysia's primary legislation regulating moneylending. It doesn't target every loan with interest but specifically the business of moneylending. Courts have ruled that the Act regulates and controls the business of moneylending, not merely the act of lending money with interest LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233.
A moneylender is defined as any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending TRIPLE ZEST TRADING & SUPPLIERS SDN BHD & ORS vs APPLIED BUSINESS TECHNOLOGIES SDN BHD & ANOTHER APP.... - 2023 MarsdenLR 559. The key is business—implying continuity, system, or repetition of transactions, not isolated loans LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233.
Carrying on this business without a license makes the activity illegal. Section 15 of the MLA states that contracts by unlicensed moneylenders are unenforceable TRIPLE ZEST TRADING & SUPPLIERS SDN BHD & ORS vs APPLIED BUSINESS TECHNOLOGIES SDN BHD & ANOTHER APP.... - 2023 MarsdenLR 559LU GIR KUANG vs LLC DEVELOPMENT SDN BHD & ANOR - 2025 MarsdenLR 2435.
One of the strongest tools against unlicensed lenders is the statutory presumption in Section 10OA of the MLA. If a person lends money at interest, it's presumed they are conducting a moneylending business unless proven otherwise LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233TRIPLE ZEST TRADING & SUPPLIERS SDN BHD & ORS vs APPLIED BUSINESS TECHNOLOGIES SDN BHD & ANOTHER APP.... - 2023 MarsdenLR 559.
This shifts the burden to the lender to rebut the claim with evidence. Failure to do so leads courts to conclude illegal moneylending LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233HOO WEI MENG vs WONG ZI PING - 2025 MarsdenLR 1757LU GIR KUANG vs LLC DEVELOPMENT SDN BHD & ANOR - 2025 MarsdenLR 2435. For instance, authorities emphasize that unlicensed moneylenders are presumed to be conducting a business of moneylending, and their transactions are unenforceable and unlawful LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233.
Malaysian courts consistently hold unlicensed moneylending transactions as void under Section 24 of the Contracts Act 1950, which invalidates illegal contracts LU GIR KUANG vs LLC DEVELOPMENT SDN BHD & ANOR - 2025 MarsdenLR 2435. Even attempts to disguise interest as consideration fail, as this undermines public policy and the MLA's intent LUA THIANG POH vs KABIR SINGH JAGIR SINGH & ORS - 2025 MarsdenLR 2022.
In one analysis, the courts deter unlicensed activities by making loans unenforceable, protecting borrowers from exploitative practices LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233. A licensed moneylender can't recover funds from void agreements due to statutory violations, reinforcing public policy against illegality (related context from additional sources on policy enforcement).
Importantly, casual or isolated loans generally fall outside the MLA, provided there's no systematic conduct LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233. For example, a factoring business might not require a license if it's not fundamentally moneylending, as distinguished in cases like LYTE MALAYSIA SDN BHD vs JANWELL PROPERTIES SDN BHD & ORS, where Syariah-compliant factoring was argued separately from moneylending.
However, advertising or holding oneself out as a moneylender triggers regulation, regardless of volume.
While the MLA is Malaysia-specific, similar principles appear elsewhere, underscoring the universal crackdown on unlicensed lending. For instance, under comparable acts, conducting moneylending without a license leads to punishment, as in Section 17 equivalents prohibiting unlicensed business M. M. Yohannan, S/o. Mathai VS State Of Kerala Rep. By Sub Inspector Of Police, (Crime no. 615/2014), Thalassery Police - 2019 Supreme(Ker) 867. Courts have quashed charges only where evidence doesn't support business conduct, like in chit fund searches without proof of moneylending M. M. Yohannan, S/o. Mathai VS State Of Kerala Rep. By Sub Inspector Of Police, (Crime no. 615/2014), Thalassery Police - 2019 Supreme(Ker) 867.
In banking contexts, unlicensed entities accepting deposits or offering interest illegally can't claim legitimacy, even with co-operative status The Gandhigram Agro Based Industrial Co-operative Society Ltd VS Marangattupilly Service Co-operative Bank Ltd - 2018 Supreme(Ker) 1491. These reinforce that licensing is non-negotiable for business operations.
Even in cheque bounce cases tied to loans, courts won't excuse illegality; unlicensed lending doesn't shield from liability under negotiable instruments laws, though acquittals may occur if business isn't proven S. Mukanchand Bothra VS P. Mani - 2015 Supreme(Mad) 1237Hari s/o Shankar Patil VS State of Maharashtra Through the Secretary to the Government, Co-operation Department - 2013 Supreme(Bom) 585.
Businesses like factoring should confirm if activities overlap with moneylending to avoid presumptions LYTE MALAYSIA SDN BHD vs JANWELL PROPERTIES SDN BHD & ORS.
| Aspect | Ruling | Key Authority ||--------|--------|---------------|| Business Definition | Continuity/repetition required LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233 | LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233 || Presumption | Lending at interest = business unless rebutted TRIPLE ZEST TRADING & SUPPLIERS SDN BHD & ORS vs APPLIED BUSINESS TECHNOLOGIES SDN BHD & ANOTHER APP.... - 2023 MarsdenLR 559 | TRIPLE ZEST TRADING & SUPPLIERS SDN BHD & ORS vs APPLIED BUSINESS TECHNOLOGIES SDN BHD & ANOTHER APP.... - 2023 MarsdenLR 559HOO WEI MENG vs WONG ZI PING - 2025 MarsdenLR 1757 || Illegality | Unlicensed = illegal/unenforceable LU GIR KUANG vs LLC DEVELOPMENT SDN BHD & ANOR - 2025 MarsdenLR 2435 | LU GIR KUANG vs LLC DEVELOPMENT SDN BHD & ANOR - 2025 MarsdenLR 2435 || Exceptions | Isolated loans generally exempt LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233 | LEE KUANG GEN vs TAN SRI DATO SERI DR M MAHADEVAN MAHALINGAM & OTHER APPEALS - 2023 MarsdenLR 1233 |
In conclusion, authorities firmly rule that the business of moneylending without a license under the MLA is illegal, with transactions deemed unenforceable and void. This protects borrowers and upholds regulatory intent. If you're considering lending activities, prioritize compliance—ignorance isn't a defense. For tailored guidance, seek legal counsel promptly.
#UnlicensedMoneylending #MoneylendersAct #MalaysiaLaw
D is therefore presumed to be conducting a business of moneylending. [72] D admits that he does not possess any license in relation to moneylending. Accordingly, the loan given by D to P is an illegal moneylending transaction. ... Where "moneylending" is defined to mean: "the lending of money at interest, with or without security, by a moneylender to a borrower". ... which they give the appearance of creating. ... I am satisfied t....
It is important to note that moneylending itself is not illegal, but conducting such activities without a valid license is unlawful. ... [93] In the present case, the transaction exhibits hallmark of illegal moneylending, including the collection of interest without a moneylender's license. ... [87] The Plaintiff not only failed to refute the evidence that interest was charged on the loan, but he also could not produce a valid license#HL_....
As the Plaintiff is essentially conducting a factoring business, it would also appear that it can be carried on without a license because it is not a business that requires a license or approval according to s 8 of the Islamic Financial Services Act 2013. ... [3] The underlying issue raised concerned the nature of the transaction that is evidenced by the Agreement ie whether it is fundamentally a moneylending agreement as contended by the Defendants or a Syariah compliant factoring pr....
[133] Section 2 defines 'moneylending' to mean 'the lending of money at interest, with or without security, by a moneylender to a borrower.' ... It reads as follows: Presumption as to the business of moneylending 10OA. ... The presumption is that it was carrying on the business of moneylending, 'until the contrary is proved'. ... ... Rather, the burden was on the respondent to prove to the contrary that it was not carrying on the business of moneylending#HL....
The intention is to prohibit the business of moneylending without a licence. ... A Loan Agreement can be legal or illegal under the MA 1951. It all depends on facts extraneous to the said loan agreement. [76] What is prohibited by the MA 1951 is not moneylending but the business of moneylending without a licence. ... [79] This is because what is prohibited by the MA 1951 is not moneylending but the business of #HL....
[51] In the present appeal, we are of the considered opinion that a rebuttable presumption that TSM had carried on a moneylending business by granting six (6) cash loans to DC without a moneylender's license has ... or benefit enjoyed from their unlawful moneylending business." ... The presumption is that TSM was carrying on the business of moneylending, "until the contrary is proved". ... The purpose of the MLA is to regulate the business....
As stated by the Federal Court in Detik Ria, the purpose of the MLA 1951 is to deter and disable illegal moneylending agreements. In this instance, both Moneylending Agreements are not illegal. ... Applied Business Technologies Sdn Bhd (supra) which concerned unlicensed moneylending coupled with attempt to conceal the true nature of the transaction. ... The object and purpose of the Moneylenders Act 1951 is to deter and disable illegal Moneylending....
Moneylenders Act 1951 , in carrying on the business of moneylending without a valid moneylending licence. (See paras 9, 10, 12, 14, 20, 22 and 23 of the Statement of Defence). [15] D1 denies that P had handed over a sum of RM65,000 to him in cash. ... [62] As has been pronounced in case law, it is in the public interest for unlicensed moneylenders to be deprived of their illegal principal loan sums, interest and whatever benefit enjoyed from their unlawful moneylending busin....
It has no licence to carry on the business of moneylending. ... "Moneylending" means the lending of money at interest, with or without security, by a moneylender to a borrower. ... or benefit enjoyed from their unlawful moneylending business." ... We are mindful that we are not here dealing with a criminal matter but it goes to show how serious moneylending without licence is in the eyes of the law. ... It does not make every moneylending#....
Therefore, in cases where the presumption of advance does not apply, a plaintiff can establish his equitable interest in the property without relying in any way on the underlying illegal transaction...; and .... ... In that case, Mr Tribe had worked all his life to establish and develop a prosperous business. Upon retirement, he planned to leave the business to his four children in equal parts. ... contract and that this Court should not lend any assistance to give effect to the same ('the striking out ....
Section 17 of the Act provides that, whoever carries on the business of moneylending without a licence or in violation of the conditions of the licence or otherwise than in conformity with the terms and conditions of the licence, shall be punished. Section 3(1) of the Act prohibits conducting of business as a money-lender without a licence obtained under the Act or in contravention of the terms of the licence obtained.
The simple reason that it did not obtain licence in terms of the provisions under Section 22 of the Banking Regulation Act cannot be a licence for such a society to do banking business in derogation of the provisions of the Banking Regulation Act. It is to be noted that engaging in such business without being licenced therefor, itself is illegal and such illegality can never be a shield for its further illegal activities in doing the said business.
Besides this, the Trial Court has held that the appellant is doing money lending business without obtaining any licence and so, it is illegal. If money lending business has been done without any licence, he ought to have been prosecuted in accordance with law and it cannot be a ground for acquittal under Section 138 of the Negotiable Instruments Act. But the above finding of the Trial Court is not correct.
There was no agreement in the course of business of moneylending without a valid licence. The registered document of sale-deed could not be stared wishfully to the detriment of the bonafide purchaser. 13) No case of infraction of Sections 32B or Section 33(1) of the said Act, is accelerated as there is no molestation of any so-called debtor for recovery of debt by the accused/applicants.
For that reason, the Suit was not maintainable in view of the provisions of the Bombay Money Lenders Act, 1946 ("Act of 1946"). Further, the Plaintiff is engaged in money lending business without holding a valid license in that behalf. To support that plea, in Paragraph 1(c) of the Written Statement, Defendants have adverted to the circumstances that would indicate that the Plaintiff has filed several criminal complaints for recovery of outstanding amount against several parties in respect of amounts lent by the Plaintiff to them on heavy rate of interest.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
