Madras High Court
Muthoot Finance Pvt Ltd vs K.S.Ramasamy on 21 February, 2014
Author: N.Kirubakaran
Bench: N.Kirubakaran
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED:21.02.2014 CORAM THE HONOURABLE Mr. JUSTICE N.KIRUBAKARAN C.R.P.(NPD).MD.No.347 of 2014 & 348 of 2014 and M.P.Nos.1 & 1 of 2014 and Caveat Petition Nos.2490 and 2481 of 2013 Muthoot Finance Pvt Ltd., Represented by its Branch Manager, R.Thilagam, D/o.Ramamoorthy, Woraiyur Branch, Big Sowrastra Street, Woraiyur, Trichy. ... Petitioner in CRP.347/2014 Muthoot Finance Pvt Ltd., Represented by its Branch Manager, Tamilmani, W/o.Madavan, Chathram Branch, Trichirappalli. ... Petitioner in CRP.348/2014 Vs K.S.Ramasamy ... Respondent in both CRPs Prayer: Petitions filed under Article 227 of the Constitution of India, against the order dated 31.10.2013 in E.I.O.P.Nos.1 & 2 of 2013 passed by the Principal District Judge, Tiruchirapalli. !For Petitioner : Mr.S.Muthukrishnan ^For Respondent : Mr.A.Saravanan :COMMON ORDER
The above Revisions have been filed against the common order dated 31.10.2013 passed in the petitions filed by the respondent seeking direction to deposit the principal amount with simple interest from the date of borrowing and for redeeming the jewels from the revision petitioner.
2.The petitioner is a Finance Company doing financial business of lending money on pledge of jewels. On 16.12.2011, the respondent pledged 9 items of jewelery and borrowed money from Woriyur Branch. Again on 03.11.2011, the respondent pledged jewel and borrowed a sum of Rs.8,00,500/- and the interest payable is 26% per annum and the penal interest will be levied in case of any delayed payment.
3.Questioning the charging of the heavy interest, the respondent filed E.I.O.P.No.1 of 2013 before the Principal District Judge, Tiruchirappalli contending that he is entitled to the benefits under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act. The said proceedings were initiated after the petitioner sent notice stating that the pledged jewels would be auctioned on 25.06.2013 claiming interest at 36% per annum. Therefore, the petitioner filed E.I.O.P.No.1 of 2013. The petitioner borrowed another loan from the same Finance Company in Chathram on 13.12.2011 by pledging jewels to the tune of Rs.4,24,400/-. Since Rs.6,00,000/- was claimed by the petitioner, the respondent/borrower filed E.I.O.P.No.2 of 2013 claiming benefit under the Act. Meanwhile, the respondent filed O.S.Nos.237/2013, 238/2013 and 239/2013 before the II Additional Sub Court, Tiruchirappalli. The said Court directed the respondent to pay interest at 12% per annum for the loan availed by him on or before 01.08.2013 and granted stay of the auction of this jewels till the disposal of the suit.
4.The petitioner contended before the Court that it is not a money lender or pawn broker and the petitioner is a non financial company regularised by the Companies Act guided and governed by Reserve Bank of India and the petitioner itself is empowered to fix the rate of interest.
5.After hearing both the parties and considering their contentions, the Principal District Judge allowed the petitions with a direction to deposit the principal amount along with simple interest and to redeem the jewelery by the respondent. The said common order is being challenged before this Court.
6.Heard Mr.S.Muthukrishnan, learned counsel appearing for the petitioner, who would submit that the R.B.I. Guidelines, which are all statutory in force, are only applicable to the petitioner finance and therefore, the order passed by the District Courts are liable to be set aside.
7.Mr.A.Saravanan, learned counsel appearing for the Caveator would submit that the order passed by the District Court is based on law and need not be set aside.
8.It is an admitted fact that the respondent pledged, on two occasions, his jewels and borrowed loan from the petitioner Company. It is the contention of the respondent that the petitioner finance is claiming exorbitant interest at the rate of 26% per annum and therefore, the respondent is entitled to the benefits under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 38/2003.
9.Under Section 5 of the Act, the Debtor is entitled to deposit the money due in respect of the loan received from the finance together with interest at the rate fixed by under Section 7 of the Money Lenders Act into the Court having jurisdiction, the respondent argued. As per Section 7 of the Money Lenders Act, no money lender shall charge interest on any loan at a rate which exceeds such rate as the Government may, by notification, fix from time to time. The Notification published in Tamil Nadu Government Gazette Extraordinary to Part II Section 2 dated 06.07.1979 speaks about 9% simple interest. Reserve Bank of India also fixed at the rate of interest chargeable under Section 7 of the Money Lenders Act at 9%. When the Notification speaks about 9% simple interest, the petitioner cannot unilaterally charge more interest. According to the respondent, the petitioner is charging interest at the rate of 26%. If it is so, it is definitely hit by Section 7 of the Money Lenders Act. Taking into consideration non disputing of the calculation memo filed by the respondent/borrower, the respondent was permitted to deposit the principal amount borrowed by him with simple interest at 9% per annum from the date of borrowing. On such deposit, the respondent was permitted to redeem the jewel.
10.The said common order passed by the District Court is as per the Act. The Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 38/2003 was brought for giving relief to the poor borrowers, who are victimised by the lenders, by charging exorbitant interest. If any person comes to the Court under Section 5 of the Act, he is entitled to the reliefs, provided the said borrower deposits the principal amount and the 9% simple interest as per the existing Notification. Applying the correct law and also the Government Notification properly, the District Court rightly granted relief to the respondent and it cannot be found fault with. It is not as if the petitioner was directed to return the jewels without payment. The principal amount and the amount payable allowed rate of interest is also to be deposited by the borrower and therefore, no prejudice is also caused to the petitioner. This Court cannot help the persons like the petitioners who are charging exorbitant interest from the poor victims/borrowers in violation of the Special Act. Hence, the Revisions fail.
11.In the result, the Civil Revision Petitions are dismissed. No costs. Consequently, connected miscellaneous petitions are closed.
21.02.2014
Index : Yes / No
Internet : Yes / No
gsr/Sgl
To
The Principal District Judge,
Tiruchirapalli.
N.KIRUBAKARAN, J.
gsr/Sgl
C.R.P.(NPD).MD.No.347 & 348
of 2014
21.02.2014