Facts: Ashok Commercial Enterprises filed a suit against Hubtown Limited for recovery of money based on dishonoured cheques and promissory notes. Hubtown Limited (the defendant) filed an application under Order VII Rule 11(d) of the Civil Procedure Code (CPC) seeking rejection of the plaint, arguing that the suit was barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014, as the plaintiff was allegedly engaged in money lending without a valid license. The defendant contended that the plaintiff advanced loans at interest rates up to 36% per annum, and the suit was an abuse of judicial process.
Procedural Posture: This is an interim application filed by the defendant in a commercial suit, seeking rejection of the plaint under Order VII Rule 11(d) of the CPC. The High Court of Bombay is considering whether the plaint should be rejected at the threshold.
Issue: Can the plaint be rejected under Order VII Rule 11(d) of the CPC, based on the argument that the suit is barred by Section 13 of the Maharashtra Money Lending (Regulation) Act, 2014, because the plaintiff is an unregistered money lender, or does the exception under Section 2(13)(j) of the Act apply, thus making the suit maintainable?
Holding: The High Court rejected the interim application, holding that it cannot be ascertained at the preliminary stage whether the money advanced by the plaintiff falls under the definition of 'loan' under Section 2(13) of the Maharashtra Money Lending (Regulation) Act, 2014, and therefore, the plaint cannot be rejected at the threshold under Order VII Rule 11 of the CPC.
Reasoning: The Court reasoned that a detailed examination of evidence is required to determine whether the plaintiff is engaged in the business of money lending and whether the transactions fall under the definition of 'loan' as per the Act. The Court relied on the Division Bench decision in Deepak Raheja, which held that merely advancing money does not ipso facto make a party a money lender, and the onus of proving that the plaintiff carries on the business of money lending is on the defendant. The Court also noted that the power to reject a plaint is a drastic measure and must be exercised strictly in accordance with the conditions under Order VII Rule 11 of the CPC. The Court emphasized that without a loan, as defined in the Maharashtra Money Lending (Regulation) Act, 2014, being involved, there is no bar on any court to pass a decree.