Madras High Court
S.Sekar vs M/S. P.C.Choudhary And Sons on 17 October, 2025
CRP. No.4695 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17-10-2025
CORAM
THE HONOURABLE MR.JUSTICE P.B. BALAJI
CRP No. 4695 of 2024
1. S.Sekar
S/o.Seethapathy (late), No.B-901,
K.G.Signature City, 200 Ft By pass
Road, Adayalampattu, Vanagaram,
Chennai - 600 095.
Petitioner(s)
Vs
1. M/s. P.C.Choudhary And Sons
Rep. by its Kartha Mr.Padamchand
Choudhary, Gaurav Vara, No.32
New Avadi Road, Kilpauk, Chennai
- 600 010.
Respondent(s)
For Petitioner(s): Mr.S.Kamadevan
For Respondent(s): M/s. M. Kempraj
ORDER
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The matter was mentioned at the request of the learned counsel for
the petitioner. The learned counsel for parties requested for copy of the
order dated 14.08.2025 to be marked to the Principal District Judge,
Tiruvallur, since the directions have been given in paragraph 23 of the
order.
2. Hence, Registry is directed to incorporate in the “To” portion at
page No.13 that the copy also to be marked to the Principal District
Judge, Tiruvallur and issue fresh order copy after making necessary
corrections.
17-10-2025
Kv
To
1. The IX Assistant Judge,
City Civil Court, Chennai.
2. The Principal District Judge, Thiruvallur.
P.B.BALAJI J.
kv
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17.10.2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on:04.08.2025 Pronounced on:14.08.2025
CORAM
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THE HONOURABLE MR.JUSTICE P.B.BALAJI
S.Sekar
Petitioner
Vs
M/s.P.C.Choudhary & Sons,
Rep by its Kartha
Mr.Padamchand Choudhary
“Gaurav Vara”, No.32, New Avadi Road,
Kilpauk, Chennai – 600 010.
Respondent
PRAYER: This Civil Revision Petition is filed under Article 227 of the
Constitution of India, to revise the fair order and decreetal orders passed
in O.P. No.2 of 2022 dated 25.10.2024 on the file of the IX Assistant
Judge, City Civil Court and the Special Court designated under the Tamil
Nadu Prohibition of charging Exorbitant Interest Act, 2003.
For Petitioner : Mr.S.Kamadevan
For Respondent : Mr.M.Kempraj
**********
ORDER
A borrower who filed O.P.No.2 of 2022 under Sections 3, 5, 8 and
12 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act,
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2003 is the revision petitioner. Aggrieved by dismissal of the said original
petition, he has preferred the present revision petition.
2. I have heard Mr.S.Kamadevan, learned counsel for the revision
petitioner and Mr.M.Kempraj, learned counsel for the respondent. I have
also gone through the records and the decisions on which reliance has
been placed on by the learned counsel on either side.
3. The learned counsel for the petitioner, Mr.S.Kamadevan would
state that for recovering a mortgage loan of Rs.75 lakhs and the
respondent being a money lender, there is a clear bar for the respondent
from charging exorbitant interest and in terms of the provisions of the
Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and
The Tamilnadu Money Lenders Act,1957 the interest would have to be
calculated only at 9% per annum.
4. The learned counsel would rely on a memo of calculation and
contend that if the interest is calculated in terms of Section 7 of the Tamil
Nadu Money Lenders Act, 1957, the respondent being a secured creditor
is entitled to only 9 % simple interest and after giving credit to payments
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made by the revision petitioner, only a sum of Rs.14,73,750/- is due and
payable towards interest and adding the principal sum of Rs.75 lakhs, a
sum of Rs.89,73,750/- alone is due and payable. The learned counsel for
the petitioner would also state that the petitioner is willing to pay the said
amount within a period of two months, without seeking any extension of
time.
5. The learned counsel for the Petitioner places reliance on the
decision of this Court in A. Ganesa Nadar v. Jayalakshmi and others,
reported in 2009 (6) CTC 181, where this Court held that, in a suit based
on a mortgage deed, applying Section 2(8) of the Tamil Nadu Money
Lenders Act, a person who does money lending business would be
amenable to the provisions of the Act and being a secured loan covered
by a mortgage, interest cannot be claimed in excess of 9% per annum
and further held that the interest charged can only be simple interest.
6. In E. Velu v. P. Abusa and another, in C.S.No.469 of 2019 by a
judgment and decree dated 11.03.2024, this Court referring to Section 3
of Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 held
that insofar as any secured loan, interest cannot exceed 9% p.a., simple
interest.
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7. In T. Rajeshwari v. Dharmar, in A.S.No. 285 of 2021 by a
judgment dated 31.03.2022, this Court held that the mortgage deed fixing
24% per annum interest is very excessive, and beyond the maximum
interest that can be charged for a secured loan and applying Section 7 of
the Money Lenders Act and G.O.M.S. No.406 Co-operation dated
05.07.1979 held that, being a loan availed and secured by mortgaging the
suit property, the maximum interest that can be charged is 9% per annum.
8.Per contra, the learned counsel appearing for the respondent,
Mr.Kempraj, would submit that the petitioner approached the respondent
for availing a loan stating that he intended to improve his business under
the name and style of 'M/s.Balaji Bricks Industries'. The loan amount was
released by way of a negotiable instrument, viz., Cheque dated
10.07.2017. The petitioner had agreed to repay the said amount in 30
equal monthly installments. According to Mr.Kempraj, the mortgage of
the property was only as a collateral security for the borrowing.
9. The learned counsel would further contend that the petitioner
was a chronic defaulter in payment of the installments and it is the
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specific contention of the learned counsel Mr.Kempraj, that the
provisions of the Money Lenders Act will not apply to the facts of the
present case and the Original Petition itself is not maintainable and would
state that the petitioner has to file a suit invoking the provisions of the
Code of Civil Procedure and not invoking the provisions Tamil Nadu
Prohibition of Charging Exorbitant Interest Act, 2003, which is not even
applicable to the facts of the present case.
10. The learned counsel would further state that the borrowing is
covered by MOD and being a contract between the parties, the respondent
is well within his right to seek for giving effect to contractual terms
between the parties. It is also contended that the respondent is not a
money lender as defined under the Tamil Nadu Money Lenders Act and
the borrowing was only through NEFT/ Cheque transactions. Referring to
the objects of the Tamil Nadu Prohibition of Charging Exorbitant Interest
Act, 2003, the learned counsel would further state that the Act was
brought about only to safeguard helpless and poor borrowers from money
lenders who charged exorbitant rates of interest by way of kandu vatti,
etc. He would also state that even in terms of Section 2(6)(vi) of the
Money Lenders Act, 1957, any negotiable instrument above the value of
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Rs.10,000/- will not attract the provisions of the Money Lenders Act and
therefore even from this angle when admittedly the cheque was for a sum
of Rs.75 lakhs, the provisions of the Money Lenders Act cannot be
invoked.
11. It is also brought to my notice that the respondent has filed a
suit in O.S.No.141 of 2024 against the revision petitioner as well as
Balaji Bricks Industries for which the loan was availed of. He would also
point out to the fact that the petitioner has filed a memo in the said suit
stating that the said concern Balaji Bricks Industries was closed in the
year 2011, but while so, the borrowing was only by the said Balaji Bricks
Industries in the year 2017 and the cheque was issued only in the name of
the Company and not the individual. Further, there is also a mention
about the said payment in the name of Balaji Bricks Industries, even in
the mortgage deed as well.
12. It is also the contention of the respondent that Section 138
proceedings have been initiated under the Negotiable Instruments Act in
respect of dishonoured cheques and the petitioner has also been
convicted. It is therefore contended that the petitioner cannot claim relief
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under two Acts which are not even applicable to the facts of the present
case.
13. The learned counsel would also state that the Trial Court has
rightly found that the petitioner cannot be entitled to any relief since he is
liable to pay interest at the contractual rate and the order passed by the
Trial Court does not warrant any interference in revision.
14. The learned counsel for the respondent places reliance on the
decision of this Court in Indiabulls Financial Services Limited and
another vs Jubilee Plots and Housing Private Limited and others in
(2010) 02 MAD CK 0015, where this Court referring to Section 2(6)(vi),
definition of loan, held that only charging of exorbitant interest by way of
daily vatti, hourly vatti, meter vatti and thandal are falling within the
ambit of the definition of loan under the said Act 2003 and an advance
based on a negotiable instrument exceeding Rs.10,000/-, would not fall
under the definition of loan and proceeded to hold that the Court had
entertained the petition under Section 5(1) and 8 of Tamil Nadu
Prohibition of Charging Exorbitant Interest Act, 2003 without any
jurisdiction.
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15. In the Manager, Shriram City Union Finance Ltd and
another vs G.Gopalakrishnan, in CRP (PD) No.2846 of 2018, this Court
referring to Section 2(1)(k) of the Tamil Nadu Money Lenders Act and
also 2(6)(v)(vi) held that even under provisions of Tamil Nadu Money
Lenders Act, an advance based on a negotiable instrument exceeding
Rs.10,000/- would not fall within the definition of loan and in a case
where a money lender advances money based on a negotiable instrument
exceeding Rs.10,000/-, then he would not qualify to be a person referred
to in Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant
Interest Act 2003.
16. In Sri Kalpatharu Financiers vs V. Natarajan, reported in
(2012) 02 MAD CK 0035, the Hon'ble Division Bench of this Court again
referring to Section2(6)(vi) of the Tamil Nadu Money Lenders Act, 1957
and noticing the objects of Act 38 of 2003, held that a person referred to
in Section 2(8) of the Money Lenders Act would not be a person defined
under the Act, if the loan is based on a negotiable instrument exceeding
Rs.10,000/- and held that provisions of both the Acts would not apply to
the facts of the case.
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17. In Sridhar vs State represented by Inspector of Police and
another in Crl.OP.Nos.19170,19174 & 19222 of 2020 dated 25.10.2022,
this Court again reiterated that the object of Act 38 of 2003 is only to
prohibit charging of exorbitant interest by a person defined under the Act
and when such “ a person” does not fall within the definition under
Section 2(8), then relief cannot be sought under these two Acts.
18. In S.Mohan Kumar vs State and another in Crl.OP.No. 6118
of 2017 dated 01.02.2022, this Court again held that to apply provisions
of Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant
Interest Act, 2003 the prosecution should be able to show that the accused
have collected exorbitant interest by way of daily interest, hourly interest,
kandu vatti, meter vatti, thandal, etc and when the loan or advance was on
the basis of a negotiable instrument exceeding Rs.10,000/- then the two
enactments would not even apply.
19. In N. Ramamurthy vs V. M. Chandrasekaran in
Crl.OP.No.30923 of 2013 dated 27.06.2018, this Court referring to the
earlier decisions on this point and referred herein above by me, held that
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the purpose of the Government fixing a cap on the interest would have to
be understood in the context of definition of “person” in Section 3 of
Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 which
conspicuously omits to define “money lender”. Finding that the suit was
filed for recovery of money based on negotiable instrument exceeding
Rs.10,000/-, this Court held that the transaction would not come within
the purview of Act 38 of 2003.
20. In Karthikeyan and others vs The Inspector of Police and
another in Crl.OP. (MD) No.10086 of 2019 dated 06.07.2023, this Court
again reiterated that in respect of an advance made on the basis of
negotiable instrument exceeding Rs.10,000/-, then it would not come
within the purview of the Act 38 of 2003.
21. Keeping the ratio laid down by our Courts and discussed herein
above in mind, firstly, I am able to notice that the transaction between the
parties is a loan transaction. The loan has been disbursed by the
respondent by way of a negotiable instrument for a sum of Rs.75 lakhs
which is far in excess of the amount of Rs.10,000/- that is stated in the
Act. As held by this Court in several of the decisions discussed herein
above, the object of the Act 38 of 2003 is only to protect innocent and
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helpless poor persons who are being taken for a ride by the money
lenders and by charging exorbitant interest, under the guise of daily
interest, hourly interest, kandu vatti, meter vatti, thandal, etc. Consciously
the legislature has fixed a cap of only Rs.10,000/- in respect of an
advance, for the provisions of the Act to apply. This is clearly in line with
the objects of the Act, to protect innocent and poor people who are
forced to borrow small amounts of money, but made to suffer at the hands
of greedy creditors who charge ransom rates of interest.
22. Secondly, it is also noticed that already a suit has been filed
based on the collateral security, viz., the mortgage deed executed by the
respondent. If at all the petitioner has any grievance with regard to the
rate of interest, then it is open to the petitioner only to contest all these
issues in the pending suit. Order 34 of the CPC is a complete code by
itself, taking care of the interest of not only the mortgagors but also
mortgagees. Therefore when the said suit is pending, it is not open to the
petitioners to have invoked provisions of Sections 3, 5, 8 and 12 of the
Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and
filed an Original Petition seeking relief under the Act, which is not even
applicable to the petitioner.
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23. The Trial Court has rightly found that the plea of charging
exorbitant interest cannot be raised by the petitioner by resorting to
provisions of Act 38 of 2003. I do not find any infirmity or perversity in
the findings of the Trial Court, warranting interference under Article 227
of the constitution of India. Accordingly, this Civil Revision Petition is
dismissed. It is always open to the petitioner to canvass all his rights in
the pending suit which is admittedly filed under Order 34 of CPC and is
pending. The learned counsel for the petitioner would state that pending
the suit in O.S. No.No.141 of 2024 on the file of Principal District Judge,
Thiruvallur, pleadings are completed in the said suit and the party shall
cooperate for expeditious trial and the learned Principal District Judge,
Thiruvallur, shall dispose of the suit on merits in accordance with law on
or before 31.12.2025, without being influenced by the observations that
have been made in this revision. No costs.
14.08.2025
rkp
Index : Yes
Internet : Yes
To:
The IX Assistant Judge,
City Civil Court, Chennai.
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P.B.BALAJI, J.,
rkp
Pre-delivery order in
14.08.2025
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