A licence, produced at the very start, is what Maharashtra moneylenders who lend against promissory notes must be ready to show in cheque bounce or recovery proceedings, the Supreme Court has observed, while explaining that its May 2026 Mansi Finance ruling did not decide the position under State money-lending laws.
New Delhi: Declining to issue a formal clarification, the Supreme Court has said that its judgment of May 26, 2026 in M/s Mansi Finance (Chennai) Ltd. v. M. Lalitha and Others should not be read as permitting unlicensed moneylenders in Maharashtra to maintain cheque dishonour complaints over loans advanced against promissory notes, since such loans are prohibited and unenforceable under the Maharashtra Money-Lending (Regulation) Act, 2014 [In the matter of: Vyomesh Mahipatray Shah].
A Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria disposed of a miscellaneous application seeking clarification of the May judgment on October 29, 2026. The judgment was authored by Justice Prashant Kumar Mishra.
The threshold rule for Maharashtra
The Bench accepted the distinction between the Tamil Nadu and Maharashtra laws and set out, in these terms, what follows from it for Section 138 of the Negotiable Instruments Act, 1881:
“Such money lending against a promissory note without a licence is prohibited under Section 4 of the Maharashtra Act and such loan is not enforceable under Section 13 of the Maharashtra Act. Consequently, unlike Tamil Nadu, in the State of Maharashtra, such debt is not legally enforceable debt for the purpose of Explanation to Section 138 of the NI Act. In any proceedings filed on dishonour of cheque or recovery proceedings, the money lender in the State of Maharashtra has to produce a licence to satisfy the Court at the threshold.”
The clarification that was not given
The Court, however, declined to issue a formal clarification. It held that any bar under Section 13 of the Maharashtra Act on recovery by an unlicensed moneylender must be examined by the court where the matter is pending, or by a superior court, on its own merits.
“Since the judgment dated 26.05.2026 has not dealt with the provisions of the Tamil Nadu Money-lenders Act, 1957 or the Maharashtra Money-Lending (Regulation) Act, 2014, the clarification, as sought for, is not required and the parties would be at liberty to raise the issue before the concerned Trial Court or the superior Courts.”
With these observations, the application seeking clarification was disposed of.
Why the clarification was sought
The applicant, Vyomesh Mahipatray Shah, apprehended that the Mansi Finance ruling, which restored cheque dishonour proceedings against three accused over loans supported by promissory notes, would be cited by unlicensed moneylenders in Maharashtra to pursue Section 138 complaints. He pointed out that the case arose under the Tamil Nadu Money-Lenders Act, 1957, which excludes advances against negotiable instruments, including promissory notes, from the definition of loan. A debt secured by a promissory note therefore remains legally enforceable in Tamil Nadu.
The Maharashtra law takes a different route. Section 2(13)(j) of the 2014 Act excludes only advances against negotiable instruments other than promissory notes. An advance against a promissory note, even when accompanied by cheques, is therefore a loan under the Maharashtra Act and falls within the prohibition on unlicensed money lending in Section 4.
What the observation changes, and what it does not
Section 138 of the NI Act punishes the dishonour of a cheque only when it was issued to discharge a legally enforceable debt. Whether a loan qualifies depends on the general law, including State money-lending statutes, and those statutes differ. The ruling confirms that a Supreme Court decision under one State’s law does not automatically carry over to another State whose definition of loan is drafted differently.
For Maharashtra, the observation gives accused persons in cheque bounce cases a clear threshold objection where the complainant is an unlicensed moneylender who lent against a promissory note. Trial courts will still decide each plea on its own facts, but complainants can expect to be asked for their licence at the outset.
Case Title: In the matter of: Vyomesh Mahipatray Shah, in M/s Mansi Finance (Chennai) Ltd. v. M. Lalitha and Others [Miscellaneous Application No. 3002 of 2026 in Criminal Appeal No. 2849 of 2026; 2026 INSC 1174]
Bench: Justice Prashant Kumar Mishra and Justice N.V. Anjaria, Supreme Court of India
Date of Judgment: October 29, 2026
Appearances: Senior Advocate Dr. Abhishek Manu Singhvi with AOR Pragya Parijat Singh for the petitioner(s); Senior Advocate Shyam Divan with AOR Lzafeer Ahmad B.F. for the respondent(s)