Negotiable Instruments Act, 1881
Section 138—Dishonour of cheque—Legally enforceable debt—Order of conviction passed by the trial court set aside by the Appellate Court and affirmed by the High Court—Appeal—Cheque was issued as a consequence of failure to pay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue—A discrepancy apropos the rate of interest, whether it be 1.8%, 2.4% or 3% per month was not sufficient to disbelieve the claim of appellant—Though the respondent before the trial court had contended that there was no loan transaction between the parties, but still, before the Appellate Court, by way of additional evidence, he marked receipts to show the re-payment of loan—Neither in the pronotes nor in the statements of accounts, the principal amount has been disputed and amount arrived at, as reflected in the cheque whether it is in respect of 1.8% interest or 3% interest per month cannot be given undue importance for the reason that pronotes indicated that under normal circumstances, when there would be repayment by the respondent, the rate would be 1.8% per month but in the event of non-repayment, how much interest by way of an added burden would lie on the respondent has not been satisfied—If the rate of interest of 3% instead of 1.8% per month has been added on the principal amount and the amount in the cheques reflects the same, it cannot be said that the cheques were not for repayment of principal amount—When the respondent does not dispute that he has handed over the cheques or signed on them, it was incumbent upon him, the moment he claims the amount(s) were repaid to the appellant to have either taken back the cheques or instructed the bank concerned to not honour the concerned cheques—Closure of bank accounts within a few weeks of issuance of cheques raises serious questions about the conduct and intent of the respondent—Trial court has meticulously gone into each and every issue while holding in favour of appellant—Appellate Court and High Court have only gone by scrutiny of the interest amount mentioned on the pronote and effected in the statement of accounts of the appellant and the evidence produced before the Appellate Court by the respondent to indicate that some repayment(s) was/were made—Such findings of the Appellate Court and the High Court are erroneous and cannot be sustained—Appellate Court’s order as also the impugned judgment of High Court are set aside and order of the trial court stands restored with certain modifications.
[Paras 15 & 16]
Section 138—Dishonour of cheque—Loan transaction—Rate of interest on loan amount not in conformity with Tamil Nadu Prohibition of Charging Exorbitant Interest Act—Order of conviction passed by the trial court set aside by the Appellate Court and affirmed by the High Court—Appeal—Reasoning given by the Appellate Court, having taken note of the Tamil Nadu Act, fails to appreciate that going by what has been written on the pronote i.e., 1.8% per month would lead to the interest being 21.6% per annum, which also is above the cap of 12% per annum prescribed in the Tamil Nadu Act—If the parties amongst themselves, agreed to a rate which is not in conformity with the Tamil Nadu Act, it was for the respondent to raise an objection or move the appropriate forum for getting the same corrected/taken care of, so that the interest rate did not exceed 1% per month but having agreed to a rate of 1.8% per month, the subsequent amount of interest calculated @ 3% per month does not have much force for it was upon the respondent to challenge the rate of interest—Respondent also cannot be said to be a layman, and being a subscriber to a chit-fund company, he is expected to be aware of the laws and also of what is beneficial for him—Having issued the pronotes, he cannot now take a plea in these collateral proceedings under the NI Act to contend that the rate of interest was more than what was permissible under the Tamil Nadu Act—Appellate Court’s order as also the impugned judgment of High Court are set aside and order of the trial court stands restored with certain modifications.
[Para 17]