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2008 DIGILAW 260 (MAD)

T. Senapathy v. State rep by Inspector of Police

2008-01-25

S.PALANIVELU

body2008
Judgment :- The petitioner is the accused in Crime No.15 of 2005 on the file of the first respondent. He is a Managing partner of the Green Finance & Lakshmi Finance Services, Karur. He is engaged in the business of financing for purchase of new and used vehicles. The second respondent had executed a Hire Purchase loan Agreement with the petitioner in H.P.Loan No.79 on 13.11.2003 for a sum of Rs.28,720/- agreeing to repay the same in 10 equal monthly instalments of Rs.3,750/- each through one Singaravelan, the proprietor of Sri. Mathura Motors, Thottiyam. 2. The second respondent, who lodged the complaint, alleges that he has paid Rs.43,500/-instead of loan amount of Rs.28,720/- and he has paid an excess of Rs.14,780/- in respect of the loan amount in 10 equal instalments; that even then the accused has delayed in returning back the R.C.Book and other connected documents signed by the complainant, and that the accused has issued threats to the complainant with the help of his hirelings in collecting the unlawful profiteering amount from the complainant. 3. On receipt of a complaint, the first respondent registered a case in Cr.No.15 of 2005 under Sections 3 and 4 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, herein after referred to as "Act". 4. On behalf of the first respondent, the learned Government Advocate (Criminal Side) submitted that the investigation is pending as against the petitioner. 5. The learned counsel for the petitioner Mr. G.R. Swaminathan, would submit that the complaint was lodged at the instigation of the third respondent, who is also impleaded in the petition. 6. The learned counsel for the petitioner produced a document bearing an endorsement inked by the second respondent on 28.01.2005 in the presence of two witnesses in which it is mentioned that on 28.01.2005 he received the R.C.Book and other connected documents. The above said endorsement has been made on the reverse of the accounts maintained for the transactions with the second respondent. 7. The learned counsel for the petitioner would strenuously contend that by no stretch of imagination, the alleged dealings of the petitioner could be brought under the purview of Act and at the most it could only be construed as service charge received by the Financier for the use of goods which was purchased out of the funds provided by the Financier. It is his further argument that it is not at all a loan as defined either in the Money Lenders Act or in the Act aforesaid so as to bring the individual concerned under the penal statutes. This Court sees considerable force in the said contention in view of authoritative judicial pronouncements in this regard. 8. In support of his contention, he placed reliance on the decision reported in AIR 1996 Supreme Court 1178 (V 53 228) (SUNDARAM FINANCE LTD., VS. THE STATE OF KERALA AND ANOTHER RESPONDNETS). wherein it is stated that the person who is engaged in hire purchase business is rendering Mercantile Service, to his customers and it is misnomer to state that the above said person is a "Money lender". The relevant portion culled out in paragraph 4 reads as follows: "Simonds, J., in Transport and General Credit Corporation Ltd., V. Mogan, (1939) 2 ALL ER 17 at p.28, said that "It must be remembered that hire-purchase agreements now play a very large part in the commercial and social life of the community, and the financing of those hire purchase agreements is an enormous business, both in the city of London and elsewhere. It appears to me that the financiers and the dealers co-operate in the common venture of making feasible the whole business of hire-purchase agreements, which is now for good or for evil, a necessary part of our social life. To regard one party to that common venture, which is now a recognized mercantile service, as carrying on the business of a money-lender is, as I have said before, an abuse of language". 9. From the above said decision it comes to light that towards the mercantile services, the charges are being obtained by the Financier which could be in no way be construed as interest to loan. 10. In support of his contention, he also placed reliance upon another decision reported in (2001) 7 Supreme Court Cases 417 (CHARANJIT SINGH CHADHA AND OTHERS VS. SUDHIR MEHRA) wherein it is explained after referring to catena of earlier decisions on this subject that the difference between the cash price and hire purchase price, is not the interest but represents a sum which is allowed to discharge the purchase price of goods. SUDHIR MEHRA) wherein it is explained after referring to catena of earlier decisions on this subject that the difference between the cash price and hire purchase price, is not the interest but represents a sum which is allowed to discharge the purchase price of goods. The relevant portion of the ruling reads as follows: "Under hire-purchase agreement, the hirer is simply paying for the use of the goods and for the option to purchase them. The finance charge, representing the difference between the cash price and the hire-purchase price, is not interest but represents a sum which the hirer has to pay for the privilege of being allowed to discharge the purchase price of goods by instalments." 11. It is a well settled principle that a sum which is being received by the Financing Officer in a hire purchase business is not at all "loan" defined under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. In this context it is pertinent to extract Section 2 of the Tamilnadu Prohibition of Charging Exorbitant Interest Act, 2003, which reads as follows: "2. In this context it is pertinent to extract Section 2 of the Tamilnadu Prohibition of Charging Exorbitant Interest Act, 2003, which reads as follows: "2. Definitions:- In this Act, unless the context otherwise requires.- (1) "daily vatti" means interest on daily basis which will work out to an interest rate more than that fixed by the Government under Section 7 of the Money-lenders Act; (2) "debtor" means a person who receives loan for exorbitant interest; (3) "exorbitant interest" means and includes daily vatti, hourly vatti, kandhu vatti, meter vatti and thandal; (4) "hourly vatti" means interest on hourly basis which will work out to an interest rate more than that fixed by the Government under Section 7 of the Money-lenders Act; (5) "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; (6) "loan" means an advance of money for daily vatti, hourly vatti, kandhu vatti, meter vatti or thandal; (7) "meter 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, for every day on the loan amount not paid within the stipulated time; (8) "Money-lenders Act" means the Tamil Nadu Money-lenders Act, 1957 (Tamil Nadu Act XXVI of 1957); (9) "thandal" means interest which will work out to an interest rate more than that fixed by the Government under Section 7 of the Money-lenders Act which is to be collected daily along with the part of the loan amount. 12. Following the dictum laid down in the decisions aforestated, it is held that the difference in the hire purchase price and the cash price could in no way be termed to be "interest" which is defined in Section 2 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and it is only the charges received by the petitioner towards mercantile services. The learned counsel for the petitioner also submitted that the petitioner would have no more claim as against the second respondent and it is recorded. 13. For the foregoing reasons, no offence could be made out against the petitioner under the provisions of the Act and hence the First Information Report in Cr.No.15 of 2005 is liable to be quashed. 14. In fine, the petition is allowed. 13. For the foregoing reasons, no offence could be made out against the petitioner under the provisions of the Act and hence the First Information Report in Cr.No.15 of 2005 is liable to be quashed. 14. In fine, the petition is allowed. The second respondent is at liberty to prefer any claim in accordance with law.