Madras High Court
The Manager vs G.Gopalakrishnan on 25 April, 2022
Author: C.V.Karthikeyan
Bench: C.V.Karthikeyan
CRP(PD)No.2846 of 2018
and CMP.No.16745 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 25.04.2022
CORAM:
THE HONOURABLE MR.JUSTICE C.V.KARTHIKEYAN
CRP(PD)No.2846 of 2018
and
CMP.No.16745 of 2018
1.The Manager,
Shriram City Union Finance Ltd.,
Kancheepuram.
2.The Shriram City Union Finance Ltd.,
Madras. ...Petitioners
Vs.
G.Gopalakrishnan ...Respondent
Prayer: Civil Revision Petition filed under Article 227 of the Constitution of
India, seeking to strike of the entire proceedings in E.I.O.P.No.57 of 2017
on the file of the District Court – II, Kancheepuram for want of jurisdiction
and also on the ground of abuse of process of law.
For Petitioners : Mr.K.V.Anantha Krishnan
For Respondent : No Appearance
1/17
https://www.mhc.tn.gov.in/judis
CRP(PD)No.2846 of 2018
and CMP.No.16745 of 2018
ORDER
The Civil Revision Petition has been filed by the respondent in E.I.O.P.No.57 of 2017, which is now pending on the file of the District Court - II, Kancheepuram, questioning continuation of such proceedings and seeking intervention of the same under Article 227 of the Constitution of India by this Court.
2.The revision petitioner claimed that they are non-banking financial organisation carrying on business transactions under the guidelines of the Reserve Bank of India. It is stated that they get loan from outside persons and thereafter, in the course their normal business, lend the same to persons or also to industries and they confirm to the guidelines of the Reserve Bank of India and collect interest on such lending at the contractual rates which had been agreed between the parties. It had been claimed that they would not come under the definition of a money lender as stated under Section 2(6) of the Tamil Nadu Money Lenders Act, 1957 and the amount they advanced cannot be also categorized as a loan.
2/17https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018
3.It is claimed that they have to be classified only as a Bank as stipulated under Section 1(k) of the aforementioned Tamil Nadu Money Lenders Act, 1957. In effect, the main crux of the arguments advanced by Mr.K.V.Anandhakrishnan, learned counsel for the revision petitioner is that the revision petitioners are, a Bank as described under Section 1(k) of the Tamil Nadu Money Lenders Act, 1957, since they are a financial or banking institution notified by the Government of Tamil Nadu in its gazette and, the amount which they advanced cannot be categorized as a loan under Section 2(6)(v), since it is an advance made by a person carrying on business, in the regular course of such business. The regular course of the business of the revision petitioner is to lend money. They are governed by the guidelines of the Reserve Bank of India.
4.It is further stated that the petitioners would also not come under the ambit or mischief of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. The amount which they lend, is on contractual basis and therefore, it cannot be categorized as a loan again under Section 2(6) of the 3/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 said Act. Loan under the said Act includes, loan advanced with interest collected on daily basis, on hourly basis and called as kandhu vatti, meter vatti or thandal. It is steneously stated by the learned counsel that the petitioner does not engage themselves in such lending of loans on such interest. The interest which they charge are contractual in nature which is mutually accepted even by the borrower and confirms to the guidelienes of the Reserve Bank of India.
5.In the normal course of business, they appear to have lent money to the respondent herein and it is claimed that during the course of such transaction while obtaining the amount, on 03.01.2014, the respondent had also mortgaged the property of his father. There was on obligation to repay the amount in instalments and having failed to do so, the amount only accrued and it is claimed that a sum of Rs.5,69,454/- was due and payable as on 05.02.2017. This had increased to Rs.6,48,543/- as on 26.07.2017.
6.The respondent herein then, filed E.I.O.P.No.57 of 2017 before the District Court – II at Kancheepuram, taking advantage of Section 5 of 4/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 the Prevention of Extradinory Interest Act, 2003. He further sought permission in I.A.No.1 of 2018 in the said E.I.O.P.No.57 of 2017 to deposit a sum of Rs.1,07,200/- into Court.
7.An order had been passed on 19.06.2018 by the learned District Judge, Kancheepuram permitting the respondent to deposit the said sum of Rs.1,07,200/- in Court deposit. Taking umbrage of that particular order and further assailing the pendency of E.I.O.P.No.57 of 2017 itself, present revision petition has been filed under Article 227 of the Constitution of India to strike out the said E.I.O.P.No.57 of 2017 and also interfere with the order dated 19.06.2018 in I.A.No.1 of 2018.
8.Unfortunately, though the respondent had been served and the name and address of the respondent had been printed in the cause list, there had been no appearance on behalf of the respondent even before my predecessor on 23.12.2021, on 06.01.2022, on 01.02.2022 and also before this Court wherein though fresh notice was directed and served and still again there was no appearance on 11.04.2022 and again on 20.04.2022. I 5/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 hold that it would be extremely inappropriate on the part of this Court to hold over the matter any further.
9.Mr.K.V.Anandhakrishnan, learned counsel for the revision petitioner pointed out the provisions in the two anactments aforementioned above namely, Tamil Nadu Money Lenders Act, 1957 and the Tamilnadu Prohibition of Charging Exorbitant Interest Act, 2003 and asserted that the revision petitioner would not come under the ambit of the aforementioned two enactments. Relevant provisions in the Tamil Nadu Money Lenders Act, 1957 as stated by the learned counsel are Section 2(1)(k), which reads as follows:-
“2(1)(k) - any other financial or banking institution notified in this behalf by the Government in the Tamil Nadu Government Gazette.” and also Section 2(6)(v)(vi), which is as follows:-
“v) an advance made bona fide by any person carrying on business not having for its primary object the lending of money, if such loan is advanced in the regular course of such business;6/17
https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018
vi) an advance made on the basis of negotiable instrument and defined in the Negotiable Instruments Act, 1881 (Central Act 26 of 1881), exceeding rupees (ten) thousand;”
10.With respect to the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, a reference can be made to Section 2(6), which is as follows:-
“(6) “loan” means an advance of money for daily vatti, hourly vatti, kandhu vatti, meter vatti or thandal.”
11.It had been claimed that the petitioner, would not come under the ambit of the said enactment and moreover, if the loan is for more than Rs.10,000/- then, the Act would not apply.
12.The learned counsel also placed very strong reliance on the judgment of a learned Single Judge of this Court in Indiabulls Financial Services Limited Vs. Jubilee Plots and Housing Private Limited reported in 2010 (2) LW 375. The learned Single Judge had an occasion to examine the very same aspects, which are now urged. Relevant paragraphs of the 7/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 said judgment can be extracted, which are as follows:-
“8. The point that arises for determination is whether the loan transaction between the revision petitioners and the respondents would fall under the ambit and scope of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. Various provisions under the Tamil Nadu Money Lenders Act, 2003 would throw light on the issue involved in these petitions. Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 prohibits charging of exorbitant interest. It reads that no person shall charge exorbitant interest on any loan advanced by him.
9.Section 2(6) of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 defines loan as an advance of money for daily vatti, hourly vatti, kandhu vatti, meter vatti or thandal. The term loan has been defined in terms of usurious interest being paid by the victims.
10.Exorbitant interest means and includes daily vatti, hourly vatti, kandhu vatti, meter vatti and thandal as per Section 2(6) of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. It s the admitted case of both the parties that the concept of daily vatti, hourly vatti, meter vatti or thandal would not apply to the subject loan transactions.8/17
https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018
11.Now, we will have to analyse what is kandhu vatti as defined under Section 2(5) of the said Act. Kandhu vatti means an interest which will work out to an interest rate more than that fixed by the Government under Section 7 of the Money Lenders Act.
12.For the purpose of understanding the rate of interest fixed by the Government invoking the provision under Section 7 of the Money Lenders Act, the court has to fall back on the Tamil Nadu Money Lenders Act, 1957. 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 theTamil 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 under Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 is none other than the money lender defined under the provisions of the Tamil Nadu Money Lenders Act, 1957.
13.Money lender means a person whose main or subsidiary occupation is the business of financing and realising 9/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 loans but excludes a bank or a co-operative society. A money lender is a person who is carrying on business of financing and realizing loans. Neither a bank nor a co-operative society is termed as a money lender as per the aforesaid definition found under Section 2(8) of the Tamil Nadu Money Lenders Act, 1957. The definition of money lender referred to above squarely applies to the person referred to in Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003.
14.The meaning as defined to the term 'loan' under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 in terms of usurious interest imposed by the persons cannot be attribute to the term “loans” found under the definition of the phrase money-lender in the Tamil Nadu Money Lenders Act, 1957. To come to a decision as to whether an advance made on the basis of the negotiable instrument exceeding Rs.10,000/- = would cover the term “loan” being advanced by the money lender, the definition of “loan” as defined under Section 2(6) of the Tamil Nadu Money Lenders Act, 1957 will have to be necessarily adverted to by the Court.
15.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 10/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 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/-=. In view of the above, the submission made by the learned Senior Counsel appearing for the respondent that the term “loan” as defined under Section 2(6) of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 will have to be applied to the term 'loan' found under Section 2(6)(vi) of the Tamil Nadu Money Lenders Act, 1957 is not accepted by this Court.
18.In order to obviate the lower middle class people, particularly the salaried servants and wage earners from the exploitation of the money lenders, such provision has been made, it has been declared by this Court in the above decision. In the instant case, crores and crores of rupees had been advanced by the revision petitioners to the respondents. The rate of interest has been reportedly levied only in terms of the contract agreed between the parties. Neither the Tamil Nadu Money Lenders Act, 1957 nor the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 has any application to the loan transactions of 11/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 this nature. Those two acts address the grievance of the gullible public who borrow small loan on usurious interest slapped on them and not for the mammoth loan transactions of the magnitude based on negotiable instruments.
25.In the instant case, it is found that the respondents have presented the petition invoking the provision under Section 5(1) of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 without adhering to the mandatory direction found therein to deposit the amount received by him together with interest. Therefore, even assuming for the sake of argument that the respondents are entitled to invoke the provision of law, the respondents should have deposited the money due in respect of loan with interest. The Trial Court, in the absence of which, should not have entertained the petition presented under the aforesaid provision of law by the respondents.
29.As per Order II Rule 2 of the Code of Civil Procedure, every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. But, where a plaintiff omits to sue a portion of his claim, he shall not afterwards sue in respect fo that portion of the claim so omitted.
34.It is true that under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, there is no provision 12/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 empowering the competent court to grant interim relief. There may be cases where an interim relief would be required to meet the ends of justice. When a competent ourt entertains a petition under Section 5 or under Section 8 or under both the sections, it has got ample power under Section 151 of the Code of Civil Procedure to grant interim relief in order to meet the ends of justice even though there is no specific provision contemplated under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 to grant interim reliefs. Therefore, there is nothing wrong for the competent court to invoke the provision under Section 151 of the Code of Civil Procedure when there is no specific provision under the Special Act to grant any such interim relief. But, in the instant case, the Special Court had entertained a petition under Sections 5 and 8 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 without any jurisdiction. While entertaining the said petition, the Special Court had failed to mandate the respondents to deposit the money due and payable with interest. Under such circumstances, invocation of the inherent powers under Section 151 of the Code of Civil Procedure by the Special Court is totally unjustifiable.”
13.It is also asserted that the terms of the contract between the petitioner and the respondent, contains a reference of arbitration in case 13/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 there are disputes and it is stated by Mr.K.V.Anandhakrishnan, learned counsel for the petitioner that arbitration proceedings had been initiated and therefore, it is extremely inappropriate on the part of the District Court – II, Kancheepuram to have entertained E.I.O.P.No.57 of 2017 and still further grant relief by directing deposit of amount mentioned by the respondent, a sum of Rs.1,07,200/- in I.A.No.1 of 2018.
14.As stated by the learned Single Judge in the aforementioned judgment, the entire proceedings in E.I.O.P.No.57 of 2017 stand vitiated and cannot stand the scrutiny of this Court. The jurisdiction of the Civil Court itself stand ousterd in view of the reference of disputes to arbitration and the respondent can always, either invoke the arbitration by himself or if arbitration proceedings have been initiated by the petitioner herein, seek examination of issues before the Arbitrator.
15.The entire proceedings in E.I.O.P.No.57 of 2017 are per se illegal and this Court will necessarily have to interfere with the same and the same is struck off, exercising power under Article 227 of the 14/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 Constitution of India. Both the parties are given liberty to raise all issues before the Arbitrator.
16.The Civil Revision Petition stands allowed with the above observations. No costs. Consequently, connected miscellaneous petition is closed.
25.04.2022 kkn Index:Yes/No Internet:Yes/No Speaking / Non-speaking order 15/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 C.V.KARTHIKEYAN, J.
KKN To:-
The Principal District Court – II, Kancheepuram.CRP(PD).No.2846 of 2018
and C.M.P.No.16745 of 2018 16/17 https://www.mhc.tn.gov.in/judis CRP(PD)No.2846 of 2018 and CMP.No.16745 of 2018 25.04.2022 17/17 https://www.mhc.tn.gov.in/judis