In other words, unlicensed money lenders often evade laws that regulate “money lending businesses” by giving out infrequent or “friendly” loans, the Court observed.
“More often that not, despite repaying the amount actually advanced, the borrower is constrained to pay sometimes double the amount or more, towards interest,” the Court added.
Therefore, it decided that it will examine how such cases could be regulated, so that helpless borrowers are not doomed in debt traps. In cases where such unregulated loans involve huge amounts, tax evasion concerns also arise, the Court further remarked.
“We will regulate such instances and rescue the hapless who happen to borrow loans and then are doomed in debts. In cases where huge amounts involve (amounts) such as ₹50 lakhs as also in crores, besides overreaching of the provisions under money lending laws huge evasion of tax may also (be) involved,” the Court said.
Considering the gravity of the issue, the Court proceeded to suo motu implead the Union of India and the Delhi government as parties to the case to examine the larger issue of unregulated money lending.
Source: Barandbench
