M. Andiappa Chettiar and Others vs R. Mohandoss

D. Hariparanthaman, J.—This petition has been filed with a prayer to withdraw the M.L.O.P. No. 111/2009 pending on the file of the

Subordinate Judge, Pudukkottai and transfer the same to the file of the District Judge, Pudukkottai to be tried along with O.S. No. 114 of 2004

pending on the file of the District Judge, Pudukkottai.

The averments made in the affidavit filed in support of this petition are as follows:

One Mr. R. Rengasamy and his wife R. Mahalakshmi borrowed a sum of Rs. 60,000/-on 09.01.1992 on mortgaging the property belonging to

them and executed a registered mortgage in favour of the Petitioners herein. As per the mortgage deed, they agreed to pay interest at 24% per

annum at quarterly rests. But whenever the Petitioners requested the borrowers to pay the amount due, they paid some amount towards interest

and did not pay the entire interest due and principal amount. Hence, the Petitioners herein filed a suit in O.S. No. 114 of 2004 on the file of the

District Judge, Pudukkottai against the said R. Rengasamy and his wife R. Mahalakshmi for recovery of the amount due under the mortgage.

During the pendency of the suit, the first Defendant Mr. R. Rengasamy died and his sons and daughters were impleaded as legal representatives.

The Defendants filed detailed written statement accepting the execution of the mortgage deed, but only disputed the rate of interest. When the suit

was posted for trial, the fifth Defendant namely Mr. R. Mohandoss, who is the son of the borrower Mr. R. Rengasamy filed a petition in M.L.O.P.

No. 111 of 2009 before the Subordinate Judge, Pudukkottai on 20.08.2009 against the Petitioners herein alleging that the Petitioners herein are

claiming exorbitant rate of interest and sought to deposit a sum of Rs. 1,54,290/-to the satisfaction of the loan and interest due and for injunction

restraining the Petitioners herein from adopting coercive steps to recover the amount with exorbitant rate of interest in any other manner

whatsoever. In the said petition, notice was not served on the Petitioners herein. But notice was directed to be served only on the advocate who

was appearing for the Petitioners in the suit. Immediately, the Petitioners appeared through counsel and also filed objections. It is further stated that

the M.L.O.P. No. 111 of 2009 cannot be tried independently and that it depends upon the judgment to be passed in O.S. No. 114 of 2004. The

cause of action for both the suit and M.L.O.P., are one and the same and everything is based upon the mortgage deed, referred to above. The

learned Subordinate Judge is pressurizing the Petitioners herein to argue the M.L.O.P., without even waiting for decision in the suit. It is also stated

that the parties in the suit and the M.L.O.P., are one and the same and the issues to be decided in the suit and M.L.O.P., are one and the same. If

both are decided separately, irreparable loss and hardship would be caused to the Petitioners. Hence, the Petitioners have come up with the

present petition.

The Respondent filed a counter affidavit refuting the allegations made by the Petitioners. It is averred therein that his father and mother had

jointly availed the loan of Rs. 50,000/-by way of a cheque drawn on Indian Overseas Bank from the deceased Adaikammai @ A. Vedambal Achi

and the fifth Petitioner herein on 09.01.1992. But whereas on the contrary, the deceased Adaikammai @ A. Vedambal Achi and the fifth

Petitioner herein had forcibly insisted them to execute the registered mortgage deed for an excess amount of Rs. 60,000/-on 09.01.1992. It is also

alleged that the Petitioners are not in the habit of issuing receipts whenever the interest amount was tendered by the father of the Respondent. As

the Petitioners failed to issue receipts, his father asked for the full settlement at once. While so, the Petitioners herein demanded huge amount with

an exorbitant interest in violation of the Tamil Nadu Money Lenders Act, 1957 and also Tamil Nadu Prohibition of Charging Exorbitant Interest

Act, 2003 (Tamil Nadu Act 38 of 2003). The father of the Respondent approached the Petitioners with some mediators to levy simple interest

instead of compound interest. But the Petitioners declined to act upon and insisted interest to be added once in three months and thereafter to

charge interest thereon. Thereafter, they issued a legal notice claiming an exorbitant interest for the principal amount. On receipt of notice, the

father of the Respondent approached the Petitioners herein for amicable settlement. But the Petitioners refused for amicable settlement. In the

meanwhile, the Petitioners herein filed a suit in O.S. No. 114 of 2004 before the District Judge, Pudukkottai against the father and mother of the

Respondent claiming exorbitant interest of Rs. 8,74,767/-for the principal amount of Rs. 60,000/-only as per the calculation sheet attached with

the plaint. According to the Respondent, it amounts to ""Kandu Vatti"" as per the Act 2003. Having received the suit summons, the father of the

Respondent died due to Heart Attack. The death was due to the shock and mental agony. Thereafter, the Respondent lodged a complaint on

28.01.2008 before the District Collector, Pudukkottai against the Petitioners herein for the claim of an exorbitant interest against the violation of

the Tamil Nadu Money Lenders Act 1957 and also Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and the District Collector,

Pudukkottai was pleased to refer his representation to the Superintendent of Police, Pudukkottai and pursuant to the same, FIR was also

registered in Crime No. 34/2008, under Sections 3 and 4 of the Act 2003 against the Petitioners herein in Thirumayam Police Station, Pudukkottai

District. According to the Respondent, the interest legally chargeable is 9% only for the secured loan as per the Tamil Nadu Money Lenders Act,

1957 and the claim of Rs. 8,74,767/-is an exorbitant interest under Act 38 of 2003. Hence, the Respondent filed a petition in M.L.O.P. No. 111

of 2009 u/s 5(1) of the Act 38 of 2003 before the Subordinate Judge, Pudukkottai, against the Petitioners herein, praying for an order to deposit

an amount of Rs. 1,54,290/-in full satisfaction of the loan amount and interest thereon. It is also stated that the said amount was deposited before

the Subordinate Judge, Pudukkottai. It is further stated that the Petitioners did not file any counter in time as prescribed u/s 5(2) of the Act 38 of

2003 and in pursuant to the same, M.L.O.P. No. 111 of 2009 was decided exparte on 30.09.2009. It is also stated that the said amount of Rs.

1,54,290/-was deposited before the Subordinate Judge, Pudukkottai in full satisfaction of the loan amount. The original petition filed by the

Respondent in M.L.O.P. No. 111 of 2009 u/s 5(1) of the Act 38 of 2003 being under the special enactment and the procedure provided therein is

a summary one, the M.L.O.P. No. 111 of 2009 has to be decided at the earliest before deciding the civil suit in O.S. No. 114 of 2004. It is

further stated that under Act 38 of 2003, the competent court alone can fix the amount payable under a decree. The competent authority under

Act 38 of 2003 has got jurisdiction to fix the amount that is due under the mortgage. There is no question common to be decided in the M.L.O.P.

and the suit and both are different in nature. No common question of facts and law is involved. The intention of the Petitioners herein is only to drag

on the M.L.O.P., proceedings which was already decided exparte. As per the provisions of the Act 38 of 2003, the Court under the Act alone

has got jurisdiction to try the matter and cannot be transferred to another Court.

Heard the submissions made on either side.

The learned Counsel for the Petitioners made submissions based on the averments made in the present petition. According to the Petitioners,

M.L.O.P. No. 111 of 2009 cannot be tried independently. The decision in M.L.O.P. No. 111 of 2009 depends upon the judgment to be passed

in the O.S. No. 114 of 2004. The cause of action for both the suit and M.L.O.P., are one and the same and everything is based upon the

mortgage deed, referred to above. Parties in the suit and M.L.O.P., are one and the same and the issues to be decided in the suit and the

M.L.O.P., are one and the same. If both are decided separately irreparable loss and hardship would be caused to the Petitioners. Hence, the

learned Counsel for the Petitioners sought to allow this petition. The learned Counsel relied on a decision of the Honourable Apex Court in M/s.

Gupte Cardiac Care Centre and Hospital v. Olympic Pharma Care Private Limited reported in 2004 (3) MLJ 153, in support of his submission

made above.

On the other hand, the learned Counsel for the Respondent strenuously contended that the application under Act 38 of 2003 provided for

summary procedure. The Act 38 of 2003 is a special enactment prohibiting the charging of exorbitant interest by any person. The purpose of the

Act itself will be defeated if the M.L.O.P., is decided along with the suit as the suit would take its own course. The learned Counsel relied on

Section 5 of the Act and submitted that the M.L.O.P., could be completed in 15 days. The intention of the legislature could not be defeated. The

learned Counsel further submitted that in the event of transferring the M.L.O.P., to be tried along with the suit, the M.L.O.P., may be decided as a

preliminary issue. According to him, if the M.L.O.P., is decided in favour of the Respondent, then there is nothing to be decided in the suit. In

support of his contention, he relied on the judgments of the Honourble Apex Court in National Institute of Mental Health and Neuro Sciences Vs.

C. Parameshwara, and Nahar Industrial Enterprises Ltd. v. Hong Kong & Shanghai Banking Corporation reported in 2009 (4) CTC 74.

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

It is true that the cause of action for both the suit and M.L.O.P., are one and the same and everything is based upon the mortgage deed.

Likewise, parties in the suit and the M.L.O.P., are one and the same. As per the decision of the Honourable Apex Court relied on by the

Petitioners, it is the best course that both the M.L.O.P., and the suit are tried together.

At the outset, the judgments relied on by the learned Counsel for the Respondent are not applicable to the facts of this case. But, as rightly

contended by the learned Counsel for the Respondent, the purpose of the enactment could not be lost sight of. The objects and reasons leading to

the enactment of the Act 38 of 2003 is stated as follows:

In order to obviate the difficulties experienced by the public at large, falling prey to any person charging exorbitant interest like daily vatti, hourly

vatti, kandhu vatti, meter vatti and thandal, the Government have decided to prohibit lending money for such exorbitant interest and to provide for

stringent punishment therefor and decided to enact a new legislation for the purpose....

That is, the purpose of the Act is to prohibit charging of exorbitant interest by any person and matters incidental thereto.

Section 2(5) of the Act defines ""Kandhu vatti"" and the same is extracted hereunder:

2.(5).""kandhu vatti"" means an interest which will work out to an interest rate more than that fixed by the Government u/s 7 of the Money-lenders

Act.

Section 7 of the Tamil Nadu Money Lenders Act, 1957 stipulates that no money lender shall charge interest on any loan, at a rate exceeding

such rate as the Government may, by notification, fix from time to time. The Government issued an order in G.O. Ms. No. 406, Co-operation,

dated 05.07.1979 fixing maximum simple interest at 9% per annum for secured loan and maximum interest at 12% per annum for un-secured loan

to be charged by money lenders. In this case, we are concerned with the secured loan. According to the Respondent, the Petitioners could not

charge beyond 9% and there is a prohibition under the Tamil Nadu Money Lenders Act to charge beyond 9% interest.

12.""Exorbitant interest"" is defined u/s 2(3) of the Act 38 of 2003 and the same reads as follows:

2.(3) ""exorbitant interest"" means and includes daily vatti, hourly vatti, kandhu vatti, meter vatti and thandal;

According to the Respondent, the Petitioners herein seek to calculate kandhu vatti which is prohibited under Act 38 of 2003. Section 3 of the Act

38 of 2003 prohibits charging of exorbitant interest and the same reads as follows:

Prohibition of charging exorbitant interest. -No person shall charge exorbitant interest on any loan advanced by him.

The relief is provided u/s 5 of the Act 38 of 2003. As per Section 5 of the Act, a debtor could make an application before the competent

Court praying to deposit the money due in respect of loan received by him together with interest at the rate fixed by the Government u/s 7 of the

Money Lenders Act, in full satisfaction of the loan therefor. The Court shall refer a copy of the petition to the person mentioned in the petition and

would direct him to give his version within a period of 15 days. Thereafter, the Court after due enquiry could decide the issue. In this regard,

Section 5 of the Act 38 of 2003 is extracted hereunder:

Deposit of money and presentation of petition to Court and the procedure thereof. -(1) A debtor may deposit the money due in respect of loan

received by him from any person together with interest at the rate fixed by the Government u/s 7 of the Money-lenders Act, into the Court, having

jurisdiction, along with a petition to record that the amount deposited is in full or part satisfaction of the loan including the interest therefor, as the

case may be.

(2) The Court shall, on receipt of a petition under Sub-section (1), refer a copy of the petition to the person mentioned in the petition, directing him

to give his version of the case within a period of fifteen days as may be granted by the Court. The Court may, after due enquiry and after

considering the versions of the parties, pass orders recording the satisfaction of the loan and interest therefor in full or in part, as the case may be.

Therefore, as rightly contended by the learned Counsel for the Respondent, the Act provides for a summary procedure giving relief to the

debtors at the hands of money lenders charging exorbitant interest. According to the Respondent, when the father and mother of the Respondent

received a sum of Rs. 60,000/-only during the year 1992, the Petitioners claimed a sum of Rs. 8,74,767/-by charging 24% interest in the year

2004, that too on the compound interest basis, which is prohibited under Act 38 of 2003. According to the Respondent, the suit took the life of his

father.

As stated above, since the cause of action for both the suit and the M.L.O.P., and the parties being the same, I am of the view that both the

suit and the M.L.O.P., are to be tried together. However, as stated above, the purpose of the Act also should be taken into account while trying

the M.L.O.P., together with suit. If the M.L.O.P., is decided in favour of the Respondent, the suit could be disposed of at the threshold itself.

Hence, while transferring the M.L.O.P. No. 111 of 2009 from the file of the Subordinate Judge, Pudukkottai, a direction is issued to the District

Judge, Pudukkottai to try the issue involved in the M.L.O.P., as a preliminary issue and then he may proceed to try the other issues in the suit, if it

is so required. It is made clear that whatever stated in this order, has no bearing on the merits of the issue.

This petition is ordered accordingly. No costs. Consequently, connected miscellaneous petition is closed.