Sri Kalpatharu Financiers vs V. Natarajan

G.M. Akbar Ali, J.—The present appeal filed u/s 96 C.P.C. as against the judgment and decree made in O.S. No. 552 of 2004 dated

3.3.2009 on the file of the learned I Additional District Judge, Coimbatore. The plaintiff is the appellant. The appeal is preferred against the

judgment and decree of the learned I Additional District Judge, Coimbatore dismissing a money suit. The brief case of the plaintiff/appellant is as

follows:

The appellant is a partnership firm engaged in the business of accepting deposits, financing and conducting chits and related other business.

There are 7 partners. The respondent is engaged in real estate business and he used to borrow money from the appellant for his urgent business

and family expenses from the year 1995 onwards. Towards his urgent family and business commitment, the respondent requested a loan in the

second week of March 1996 and also in the first week of November 1997. The appellant advanced a sum of Rs. 30,00,000/- on 27.3.1996 and

Another sum of Rs. 10,00,000/- on 8.11.1997 and the respondent executed promissory note in favour of the appellant agreeing to repay the

amount with interest at the rate of Rs. 3.30 per hundred per month.

The respondent had also received the said sum after signing the payment receipts. The respondent was irregular in payment of interest and

committed default. The respondent executed letters dated 31.3.1998 and 31.3.1999 confirming the balance representing the principal and interest.

The respondent had also executed a power of attorney dated 7.12.1999 authorising one of the partners for the sale of five vacant sites situated

at Tiruppur and adjust the sale proceeds towards the arrears of interest. Subsequently, on the instruction of the respondent, the five vacant sites

were sold for a sum of Rs. 8,00,000/- and were credited towards the interest on the account of the respondent.

As on 18.8.2001, the respondent had paid interest for the loan of Rs. 30,00,000/- till 23.10.1998 and has paid the interest towards the second

loan of Rs. 10,00,000/- till 24.2.1998 and a receipt was issued on 18.8.2001 and the respondent had also put his signature on the receipts

acknowledging the payment of interest.

Thereafter, the respondent did not pay the balance amount. The respondent issued a cheque for Rs. 84,00,000/- dated 1.10.2001 towards the

liability of the principal and interest which accrued till 30.9.2001. As instructed by the respondent, the cheque was presented for collection on

1.10.2001. The cheque was returned unpaid with remarks ""funds insufficient"". Therefore, a statutory notice under the provisions of the Negotiable

Instruments Act was issued and the respondent failed to comply with the demand. However, he sent a reply containing false and imaginary

allegations. Therefore, criminal proceedings was initiated against the respondent and the learned Judicial Magistrate No. 1, Tiruppur convicted the

respondent for dishonour of cheque. However,, the respondent preferred an appeal and the said appeal was allowed; and the respondent was

acquitted from the charges. Again, the appellant has preferred an appeal against the acquittal before this Court and the same is pending before this

Court in A.S. No. 939 of 2004.

The respondent pleaded discharge of liability and alleged that the cheque was issued only as security. Therefore, a legal notice was issued on

22.7.2004 calling upon him to pay the amount under the promissory note. The respondent sent a reply dated 1.8.2004. As per the books of

accounts, which is kept in the regular course of business, the respondent is liable to pay a sum of Rs. 1,01,19,065/-. Though the respondent

agreed to pay interest at Rs. 3.30 per hundred per month, the interest is restricted only to Rs. 2/-.

Till 1999-2000, the appellant has been adopting mercantile system of accounting. Now the appellant is adopting cash system of accounting. The

suit is also not barred by limitation as the respondent acknowledged his liability by executing balance confirmation letter and also issued a cheque

for Rs. 84,00,000/-which was dishonoured. Therefore, the suit is filed for recovery for a sum of Rs. 1,01,19,065/-and the interest at 24% p.a.

The suit was resisted by the respondent by filing a detailed written statement. The sum and substance of the stand taken by the respondent is as

follows:

The respondent denied borrowing a sum of Rs. 30,00,000/- on 27.3.1996 and a sum of Rs. 10 lakhs on 8.11.1997. The execution of

promissory notes and allegation that it was agreed to pay interest at the rate of Rs. 3.30 per month per hundred were also denied. Signing of any

receipts for payment and payment of money either towards the principal or towards interest were also denied.

The respondent had stated that the entire amount of principal borrowed in the year 1994 and 1995 along with interest had been paid back and

nothing was due and payable. According to the respondent, the appellant had obtained blank promissory notes, vouchers, papers, blank non-

judicial stamp papers and blank cheques and that the appellant has fabricated the documents.

It is also alleged that the appellant had fraudulently obtained power of attorney and had sold the properties and enriched himself. He has also

denied that the sale consideration was only 8,00,000/-. The properties were worth more than Rs. 50,00,000/-. He has also denied payment of

interest upto 23.10.1998 and on 24.2.1998 and also execution of the receipt dated 18.8.2001.

Issuance of cheque representing the principal and interest for a sum of 84,00,000/- was also denied. The respondent has also stated that

claiming interest at ? 3.30 per hundred per month is opposed to the provisions of Tamil Nadu Prohibition of Charging Exorbitant Interest Act

2003.

The accounting system of the plaintiff was also denied by the respondent stating that it was only a self serving statement. Therefore, there was a

total denial of borrowing and execution of various documents.

When the parties went for a trial before the learned I Additional District Judge, Coimbatore, the appellant examined 4 witnesses and produced

documents Exhibit A-1 to A-47. The respondent was examined as D.W. 1 and he has produced Exhibit B-1 which is the judgment of the

appellate Court in Criminal Appeal No. 145 of 2004.

On the basis of the oral and documentary evidence, the trial Court found that there was no proper accounts maintained by the appellant and

the pronotes were not valid and genuine and therefore, the appellant had failed to prove the case and dismissed the suit. Aggrieved by which, the

appellant is before this Court.

Mr. R. Subramaniam, the learned counsel for the appellant submitted that the suit is based on a loan advanced on a promissory note and on

the accounts maintained towards the liability of such loan. The learned counsel pointed out that the specific case of the appellant is that the

respondent obtained loan for his family expenses and also for business commitment on 27.3.1996 for a sum of Rs. 30,00,000/-and executed a

pronote agreeing to repay the amount with interest and also a sum of Rs. 10,00,000/- by executing a pronote on 8.11.1997.

The learned counsel pointed out that the agreed interest payable was Rs. 3.30 per hundred per month and the respondent has been

periodically paying the same till 18.8.2001. Thereafter, he failed to repay. The learned counsel pointed out that the respondent had also executed a

power of attorney dated 7.12.1999 authorising one of the partners of the appellant firm for the sale of properties belonging to the respondent and

appropriate the sale proceeds against the loan account.

The learned counsel also pointed out that the respondent had issued a cheque for a sum of Rs. 84,00,000/- on 1.10.2001 which was

dishonoured. The respondent had executed letter of confirmation. Since the amount borrowed by the respondent is due and payable, the present

suit was filed.

The learned counsel pointed out that the execution of the pronote was proved by the holder and the receipt of the same was also produced by

production of the receipts and the subsequent payment of interests was also proved. The learned counsel pointed out that through a power of

attorney, the respondent had allowed the appellant to sell the property which belonged to him and appropriate the sale proceeds.

The learned counsel pointed out that once execution of pronote and receipt of sale consideration is proved the burden is upon the respondent

to prove either discharge or non execution of the documents. The learned counsel also pointed out that signatures are admitted in the confirmation

letter dated 18.8.2001 and the suit was filed on 13.8.2004 within limitation and the trial Court has erred in not appreciating the above evidence.

The learned counsel further pointed out that though the respondent had agreed to repay the loan at the interest of Rs. 3.30 per hundred per

month and also paid the same, in the suit the appellant has restricted the interest at 24% p.a. Therefore, the trial Court is wrong in dismissing the

suit on a pronote.

He also pointed out that the provisions of Tamil Nadu Money Lenders Act 1957 will not be applicable to the appellant.

The learned counsel also relied on the following case laws:

K. Mani Vs. Elumalai,

Indiabulls Financial Services Limited and Another Vs. Jubilee Plots and Housing Private Limited and Others,

Janak Dulari Devi and Another Vs. Kapildeo Rai and Another,

Malar Finance Corporation Vs. G. Rathinam and Others,

Assistant Director of Inspection Investigation Vs. Kum. A.B. Shanthi,

On the contrary, Mr. G. Ethirajalu, the learned counsel for the respondent submitted that the suit is frivolous and has been filed only to harass

the respondent by using the blank papers, blank pronotes, blank cheques, blank receipt obtained by the appellant in an earlier transaction of loan

between the appellant and the respondent.

The learned counsel pointed out that the execution of pronote under Exhibit A-4 and A-5 itself is not proved. The learned counsel further

pointed out that Exhibit A-4 is said to have been executed on 27.3.1996 and Exhibit A-5 is said to have been executed on 8.11.1997, whereas

P.W. 2 an attesting witness to the promissory note would state that the respondent had signed in Exhibit A-4 and A-5 on the same day.

The learned counsel for the respondent pointed out that the various receipts for payment of interest were denied by the respondent and they

are all self serving document of the appellant and therefore, the trial Court has correctly appreciated the evidence and dismissed the suit as the

appellant had fabricated all the documents to fasten the liability on the respondent.

The learned counsel pointed out that execution of power of attorney would not go to show that the respondent had agreed the loan transaction

and the said power of attorney has not been produced before the Court.

The learned counsel further pointed out that the alleged issuing of a cheque for Rs. 84,00,000/- was not executed for a legally enforceable debt

and the appellate Court has correctly appreciated the evidence of the respondent and has set aside the conviction of the trial Court in the

proceedings under the provisions of NI act.

The learned counsel pointed out that the suit is also barred under the provision of Tamil Nadu charging of exorbitant interest Act.

The learned counsel also relied on the following case laws:

K.G. Premshanker Vs. Inspector of Police and Another,

Syed Askari Hadi Ali Augustine Imam and Another Vs. State (Delhi Admn.) and Another,

M.S. Narayana Menon @ Mani Vs. State of Kerala and Another,

We have considered the submissions made on either side and perused the materials available on record.

The appellant has filed M.P. No. 1 of 2009 to receive additional documents.

The learned counsel for the appellant submitted that the Day Book will be produced only to substantiate that the ledger contains the correct

entries and the learned trial Judge has not appreciated that the ledgers are the actual books of accounts but has commented that the day book has

not been produced.

The learned counsel for the respondent objected to the marking of the day book as it requires examination of the witnesses to admit the

document.

Heard both sides. Order 41 Rule 27 reads as follows:

Production of additional evidence in Appellate Court:

(1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if

(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or

(aa) the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within

his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or

to

(b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other

substantial cause, the Appellate Court may allow such evidence or document to be produced, or witness to be examined.

(2) Wherever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission.

Unless the three conditions namely, notwithstanding the exercise of due diligence, such evidence was not within his knowledge; even after the

exercise of due diligence such evidence could not be produced by him at the time of trial and such evidence are so necessary for the Court to

arrive at a correct decision, are fulfilled, the additional documents cannot be received at the appellate stage.

Since the ledger will reflect only the entries from the day book and the ledgers are the books of accounts, it is not necessary to substantiate the

ledger books by filing the day book. Moreover, admission of such day book at this stage will also require additional evidence to prove the entries.

At this stage, the day book is not the necessary document and the available evidence is enough to decide the appeal. Hence, the petition in M.P.

No. 1 of 2009 is dismissed.

The suit is filed on two pronotes. According to the appellants, the respondent has executed Exhibit A-4 pronote on 27.3.1996 and Exhibit A-5

dated 8.11.1997. The former pronote was for Rs. 30 lakhs and latter was for Rs. 10 lakhs.

Further, it is the case of the appellant that the respondent has received such payment under Exhibit P-8 dated 27.3.1996 and under Exhibit P-

9 dated 8.11.1997. According to the appellant, there were payment of interest on various dates vide Exhibit A-35 to 45 and there were

subsequent payments of Rs. 8,00,000/- by virtue of appropriation of sale consideration of the properties on various dates till 19.1.2000 sold under

a power of attorney. The appellant signed a confirmation of balance under Exhibit A-8 and A-9 for the balance as on 31.3.1998 and 31.3.1999.

According to the appellants, the respondent has also issued a cheque dated 1.10.2001 for Rs. 84,00,000/- towards the liability which

bounced and separate criminal proceedings were initiated.

The main case of the appellant is that before the criminal proceedings the respondent had accepted the loan transaction of Rs. 30,00,000/- and

Rs. 10,00,000/- but would take a stand that the loan has been discharged and a cheque was issued only as a security towards such loan and since

the loan has been discharged there is no legally enforceable liability. The statement of the respondent u/s 313(1)(b) of Cr.P.C. is also produced as

A-46. The respondent''s deposition was also marked, as A-47, wherein he had admitted obtaining a loan of Rs. 30,00,000/- in 1996: But he

would state that amount has already been repaid.

According to the appellants, they have proved the execution of A-4 and A-5, A-6 and A-7 and A-8 and A-9. As they have discharged their

burden of execution of the documents, the burden is upon the respondent to prove that he has not obtained such loan and if obtained it has been

discharged. According to the appellants, since the respondent has taken a stand in this proceeding that he had signed in blank papers, the

appellants are entitled to fill the same.

To strengthen his arguments, the learned counsel for the appellant relied on a decision reported in K. Mani v. Elumalai (supra) where a single

judge of this Court held that u/s 20 of NI Act the holder of the promissory note is entitled to fill up the blanks in the promissory note.

The learned counsel relied on a decision reported in Malar Finance Corporation rep by its Managing Partner, Panduranoan (supra), wherein

the learned single Judge of this Court has held as follows:

The defendants had admitted having affixed their signatures in a blank promissory Note. The plaintiff was well within its powers to fill up the

promissory note and on the basis of the completed promissory note, entitled to sue for recovery of money due under the note. The contrary view

expressed by the Courts below cannot at all be sustained

The learned counsel also relied on a decision reported in India bulls Financial Services Limited and Another v. Jubilee Plots and Housing

Private Limited and Others (supra), wherein the learned single Judge of this Court has held as follows:

The phrase ""a person"" referred to in Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act shall be defined with the meaning

assigned to money lenders under the provisions of the Tamil Nadu Money Lenders Act as per Section 12 of the Tamil Nadu Prohibition of

Charging Exorbitant Interest Act, 2003. The Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 conspicuously omits to define the

phrase ''money lender''. Instead, a prohibition of charging exorbitant interest has been imposed on a person who lent loan. The said person as

defined u/s 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 is none other than the money lender as defined under the

provisions of the Tamil Nadu Money Lenders Act, 1957

Countering the arguments the learned counsel for the respondent relied in a decision reported in K.G. Premshankar v. Inspector of Police and

Another (supra) wherein the Apex Court has held as follows:

Held: Sections 40 to 43 of the Evidence Act provide which judgments of Courts of justice are relevant and to what extent. In this context the

following principles emerge (1) the previous judgment which is final can be relied upon as provided under Sections 40 to 43 of the Evidence Act;

(2) in civil suits between the same parties, principle of res judicata may apply; (3) in a criminal case, Section 300 Cr.P.C. makes provision that

once a person is convicted or ac-''quitted, he may not be tried again for the same offence if the conditions mentioned therein are satisfied; (4) if the

criminal case and the civil proceedings are for the same cause, judgment'' of the civil Court would be relevant if conditions of any of Sections 40 to

43 are satisfied, but it cannot be said that the same would be conclusive except as provided in Section 41. Section 41 provides which judgment

would be conclusive proof of what is stated therein

The learned counsel for the respondent also relied on a decision reported in Syed Askari Hadi Ali Augustine Imam and Another v. State (Delhi

Administration) and Another (supra), wherein the Apex Court has held as follows:

In M.S. Sheriff v. State of Madras a Constitution Bench of this Court was seized of a question as to whether a civil suit or a criminal case

should be stayed in the event both are pending; it was opined that the criminal matter should be given precedence. In regard to the possibility of

conflict in decisions, it was held that the law envisages such an eventuality when it expressly refrains from making the decision of one Court binding

on the other or even relevant, except for certain limited purposes, such as sentence or damages. It was held that the only relevant consideration

was the likelihood of embarrassment

The learned counsel further relied on a decision reported in M.S. Narayana Menon alias Mani v. State of Kerala and Another (supra), wherein

the Apex Court has held as follows:

Applying the said definitions of ''proved'' or ''disproved'' to the principle behind Section 118(a) of the Act, the Court shall presume a

negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not

exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to

act upon the supposition, that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence.

Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon

The suit is on a pronote. Initially the burden is upon the appellant/plaintiff to prove the execution of the pronote. Once the execution is proved

or admitted, the passing of consideration is presumed u/s 118 of NI Act but it is a rebuttable presumption. The burden shifts on the respondent to

prove that there is no passing of consideration.

If the executant of the pronote denies such execution, in other words, if there is a total denial, the burden is upon the holder of the instrument to

prove the execution in accordance with law. Execution of any pronote does not require an attesting witness. However, if a witness has signed in the

pronote, the holder and the witness can be examined to prove the execution of pronote and passing of consideration.

If the executant takes a plea that blank pronotes and papers were obtained from him, on proving the execution of the pronote, the burden shifts

on the executant to prove that he had executed only blank papers and there was no passing of consideration.

u/s 20 of Negotiable Instruments Act, the holder in due course is entitled to fill up the blanks in the negotiable instruments. This has been

reiterated in Malar Finance Corporation rep by its Managing Partner, Pandurangan (supra) and Malar Finance Corporation rep by its Managing

Partner, Pandurangan (supra).

The respondent has taken the following defences:

i) the borrowing and execution of documents A-4 and A-5 pronotes, A-6 and A-7 receipts A-8 and A-9 confirmation letters are denied.

ii) the respondent had earlier entered into loan transaction with the appellant which had been discharged and for that transaction, the appellant had

obtained blank pronotes, blank receipts, blank papers, blank cheques etc and they are used in the present suit.

In order to prove the execution of pronote and passing of consideration one of the partners of the appellant was examined and two witnesses

P.Ws. 2 and 3 are also examined. P.Ws. 1 to 3 would speak about the execution of Exhibit A-4 and A-5 and they have also spoken about the

passing of consideration. P.W. 1 would speak about A-6 to A-9, the receipt for passing of consideration. Nothing much has been elicited in the

cross examination to discredit their oral evidence. However, P.W. 2 in his cross examination would state that the respondent signed twice on the

same day.

Couriering such suggestion, the learned counsel for the appellant came up with the explanation that P.W. 2. had stated that the respondent had

signed twice which means signing of Exhibit A-4 and a payment receipt under Exhibit A-6.

As stated earlier, though an attesting witness for a pronote is not necessary, if a promissory note is attested by one or more witness, the

examination of attesting witness is sufficient to prove execution of document and passing of consideration.

In the present case, Exhibits A-6 and A-7 receipts are also proved through P.W. 1. As far as Exhibits A-8 and A-9 are concerned, P.W. 1

would speak about the confirmation and comparing the signatures of Exhibits A-8 and A-9 with the admitted signatures of the respondent which is

found in Exhibit A-46 statement given by the respondent before the Criminal Court and also with Exhibit A-47, the signature in the deposition of

the respondent before the criminal Court, we are convinced that the confirmation letter has also been signed by the respondent.

The learned counsel for the appellant submitted that the respondent has not only executed all these document but has also issued a cheque, a

certified copy of which is also produced under Exhibit P-14. However, the cheque has been the subject matter in C.C. No. 2 of 2002 before the

learned Judicial Magistrate No. 1, Tiruppur in a criminal proceedings u/s 138 of Negotiable Instruments Act.

Before the criminal Court, the respondent would state that the cheque has been issued as a security for the loan transaction between the

parties. The learned counsel for the appellant vehemently contended that there is an admission of obtaining a loan of Rs. 30 lakhs and 10 lakhs by

the respondent before the criminal Court. In Exhibit A-47, the respondent would state that in 1996 he requested the appellant to advance a sum of

Rs. 30,00,000/- as loan and they gave the said amount in four installments. He would further state that while granting such loan, they have also

obtained blank pronotes cheques etc. He has not specifically admitted the obtaining of Rs. 10,00,000/-on 8.11.1997.

The first appellate Court is the last Court on facts. Therefore, consideration of evidence, both oral and documentary are necessary. As stated

earlier, in a case of recovery of money on a pronote, the initial burden is on the plaintiff to prove the execution of the pronote. The appellant has

examined three witnesses and has produced Exhibit A-4 to A-9 for execution of the pronote, passing of consideration and signing of the

confirmation letter. We do not see any infirmities in the oral and documentary evidence.

The learned counsel for the appellant relied on the admission of the respondent before the criminal Court for obtaining a loan of Rs.

30,00,000/- in the year 1996 and execution of promissory notes and cheques.

Section 80 of the Indian Evidence Act deals with presumption of documents produced as record of evidence. The Section reads as follows:

Whenever any document Is produced before any Court, purporting to be a record or memorandum of the evidence, or of any part of evidence,

given by a witness in a judicial proceeding or before any officer authorised by law to take such evidence or to be a statement or confession by any

prisoner or accused person, taken in accordance with law, and purporting to be signed by any judge or magistrate, or by any such officer as

aforesaid, the Court shall presume-that the document is genuine; that the statement is true and that such evidence, statement or confession was duly

taken. Though such admissions in the criminal proceedings are admissible in evidence, the execution of promissory note and execution of the

documents in civil proceedings, has to be independently proved. The line of the argument of the learned counsel for the appellant is that even

assuming that the respondent has signed in blank papers, as admitted in the criminal proceedings, u/s 20 of NI Act the holder is entitled to fill up

the blanks in the promissory note.

Once the execution is proved, the presumption u/s 118 of the Act is to be drawn for passing of consideration. Since the respondent has denied

the execution of the promissory note and the appellant has proved such execution and the presumption is automatic and moreover, the receipts of

the said amount has also been proved. Therefore, the burden shifts on the respondent to prove that he has not executed such documents and has

not received the consideration by rebuttal of evidence. He has failed to discharge his burden.

The learned counsel for the respondent vehemently contended that the entire transaction is void as per the provisions of Prohibition of

Exorbitant Interest Act. The Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003 (hereinafter referred as Act 38 of 2003) is an act to

prohibit the charging of exorbitant interest by any person and matters incidental thereto. The scheme of the Act is to regulate and prohibit the

culture of collecting exorbitant interest in the name of daily vatti, hourly vatti, kandhu vatti, meter vatti and thandal.

Section 3 of the Act reads as follows:

Prohibition of charging exorbitant interest:

No person shall charge exorbitant interest on any loan advanced by him.

Section 4 deals with penalty which reads as follows:

Penalty:- Notwithstanding anything contained in the Money-Lenders Act, whoever contravenes the provisions of Section 3 or molests or abets

the molestation of any debtor for recovery of any loan shall be punishable with imprisonment for a term which may extent to three years and also

with a 1 fine which may extent to thirty thousand rupees.

Therefore, contravention of the provisions of Act 38 of 2003 calls for a penalty u/s 4 subject to the provisions of Money Lenders Act. u/s 2(8)

of the Tamil Nadu Money Lenders Act 1957, ''Money Lender'' means a person whose main or subsidiary occupation is the business of advancing

and realising loans but excludes a bank or a cooperative society.

Section 2(6) defines loan which reads as follows:

loan"" means an advance whether of money or in kind at interest, and includes any transaction which the Court finds in substance to amount to such

an advance, but does not include

(i)....

(ii)...

(iii)...

(iv)...

(v)...

(vi) an advance made on the basis of a negotiable instrument and defined in the Negotiable Instruments Act, 1881 (Central Act No. XXVI of

1881), exceeding rupees (ten thousand);

Therefore, when a loan is on the basis of a Negotiable Instrument viz., a promissory note which exceeds Rs. 10,000/-, it is not covered under

the Money Lenders Act 1957.

In Indiabulls Financial Services Limited and Another v. Jubilee Plots and Housing private Limited and Others (surpa) the learned single Judge

of this Court had an occasion to deal with the provisions of the Exorbitant interest Act 2003, Tamil Nadu money Lenders Act 1957 and has

observed

As per Section 2(6)(vi) of the Tamil Nadu Money Lenders Act, 1957, an advance made on the basis of a negotiable instrument exceeding Rs.

10,000/- would not fall under the definition of loan. Therefore, a money lender, who makes advances on the basis of a negotiable instrument

exceeding Rs. 10,000/- is not ""a person"" referred to in Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. In other

words, a debtor cannot lawfully charge a person viz., a money lender with the act of exorbitant interest when the money lender advanced the loan

on the basis of a negotiable instrument exceeding Rs. 10,000/-

As stated earlier, the object of the Act 38 of 2003 is to prohibit the charging of exorbitant interest by any person. More particularly, it prohibits

a person"" from charging more than 9% simple interest per annum for secured loan and 12% simple interest per annum for unsecured loan

advanced by him and the hourly vatti, daily vatti, meter vatti, kandhu vatti and thandal are thereby prohibited.

As per the provisions of the Money Lenders Act money lender is a person whose main or subsidiary occupation is a business of advancing and

realising loans and an advance made on the basis of the pronote exceeding Rs. 10,000/- will not be covered by the Money Lenders Act.

Therefore ''a person'' referred to in Section 3 of Act 38 of 2003 and the ''money lender'' as referred to in Section 2(8) is not applicable to the

loan transaction between two parties where the loan is on the basis of a Negotiable Instrument viz. a promissory note exceeding Rs. 10,000/-.

Therefore, the provisions of these two acts are not applicable to the case on hand.

Admittedly, the appellant had calculated an exorbitant interest of Rs. 3.30 per hundred per month. Whether he comes under the Money

Lenders Act or under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003 or not, he is not entitled for such an high rate of

interest. However, the appellants have filed a Memo of calculation calculating interest at 24% p.a. and after giving credit to various amount paid by

the respondent the amount payable as on date of filing of the plaint is Rs. 85,43,166.67. However, the appellant has further calculated the interest

from the date of plaint till the date of decree a sum of Rs. 47,76,000/- and arrived at a grand total of Rs. 1,33,19,166.67. In the plaint, a sum of

Rs. 1,01,19,065/- has been claimed with further interest on the same amount at 24% p.a.

The appellant is entitled for interest on the principal viz., Rs. 40,00,000/- at 24% as the transaction is commercial, from the date of advance till

the date of filing of the suit. u/s 34 of the CPC this Court is at liberty to grant interest for the period, from the date of plaint till the date of decree

and from the date of decree till the date of realisation.

Though from the date of plaint till the date of realisation, the Court can or may order 24% interest, in the present case, we are of the

considered view that the plaintiff/appellant is entitled for recovery of only a sum of Rs. 85,43,166.67 as per the memo of calculation which is due

from the date of execution of pronote till filing of the plaint and the plaintiff/appellant is entitled for the interest from the date of plaint till the date of

decree at 12% p.a. on the decree amount of Rs. 85,43,166.67 and thereafter at 6% till the date of realisation. For the reasons stated above, the

appeal is allowed and the judgment and decree made in O.S. No. 552 of 2004 dated 3.3.2009 on the file of the learned I Additional District

Judge, Coimbatore are set aside. The suit O.S. No. 552 of 2004 is decreed for a sum of Rs. 85,43,166.67 with interest at 12% p.a. from the date

of plaint till the date of decree and thereafter at 6% till the date of realisation. No costs. M.P. No. 1 of 2009 is dismissed.