Justice G.R. Swaminathan and Justice V. Lakshmi Narayanan Admitted the case challenging the Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Act, 2025*

*Justice G.R. Swaminathan and Justice V. Lakshmi Narayanan Admitted the case challenging the Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Act, 2025*

The Hon’ble Madras High Court today admitted the Writ Petition filed by the Madras Hire Purchase Association and its Members challenging the constitutional validity of the Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Act, 2025.
The Division Bench comprising Justice G.R. Swaminathan and Justice V. Lakshmi Narayanan was pleased to admit the case at the admission stage, and ordered notice after the Learned Counsel *Mr. S.R. Sundar representing the Petitioners* appraised the Court that the petition raises substantial questions of constitutional and regulatory importance affecting the financial sector in Tamil Nadu.
The challenge primarily raises important issues relating to:
• Legislative competence of the State Legislature vis-a-vis RBI regulated NBFCs
• Repugnancy with Central enactments including the RBI Act, 1934
• Criminalization of recovery mechanisms and enforcement rights of the financiers
• Vagueness and ambiguity surrounding the term “coercive action”
• Excessive penal and enforcement provisions affecting lawful financiers
The matter is expected to have wide ramifications for registered financiers, lending institutions and stakeholders across the financial sector, particularly in relation to recovery practices, regulatory overlap and the balance between borrower protection and lawful financial enforcement mechanisms.