The main legal point established in the judgment is that the provisions of the Negotiable Instruments Act can be enforced even in cases where the accused contests the interest rates based on the prohibition of charging exorbitant interest under other acts.

1. The petitioner herein is the accused in CC.No.331/2008 on the file of the Judicial Magistrate, Palladam, arising out the private complaint filed by the respondent/complainant for proceeding against the accused under Section 138 of Negotiable Instruments Act.

2. The complaint proceeds as if the accused approached the complainant on 10.5.2007 and borrowed Rs.2 lakhs for his family expenses and agreed to pay interest at 24%pa to the complainant and the accused has, on the same date also executed a promissory note for the above amount in favour of the complainant. Thereafter, the accused failed to pay interest for the borrowed amount, which compelled the complainant to demand entire amount with interest on 3.10.2008 on which date, the accused issued a cheque for Rs.2,66,000/- towards discharge of his liability as demanded in the promissory note. When the same was presented for collection, it was returned dishonoured for want of sufficient funds and the accused was informed the same through statutory notice and inspite of the same, he failed to pay the amount, which is the cause of action for filing the present complaint.

3. After having entered appearance, the accused has come forward with this petition to quash the proceedings pending against him in CC.No.331/2008 on the sole ground that as the interest chargeable at 24%pa is prohibited under Section 3 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 (hereinafter shortly referred to as Tamil Nadu Act 38/2003) r/w Section 7 of the Money Lenders Act 1957 and G.O.Ms.No.406 Co-opeation Department dated 5.7.1979, it cannot be enforced in any court of law. It is contended herein that the relevant provisions of law under section 138 of the Negotiable Instruments Act can be attracted only when the accused fails to discharge either in full or in part any legally enforceable liability and as the debt of Rs.2,66,000/- admittedly represents both principal and interest at 24%pa which is exorbitant and objectionable under interest Act, the same cannot be legally enforced against the accused, as such, ingredients for the offence under section 138 are not attracted against the accused.

4. Both the parties for and against the legal objection so advanced herein, cited the following authorities:

On the side of the petitioner:

(i) AIR (39) 1952 Madras 579 (C.N. 537) (Chandra Sreenivasa Rao v. Korrapati Raja Rama Mohana Rao and another) On the side of the respondent:

(i) (Indiabulls Financial Services Limited v. M/s.Jubilee Plots and Housing Pvt. Ltd and others; and

(ii) (Sri Kalpatharu Financiers by its Partner K.Selvaraj v. V.Natarajan.

5. Heard both sides and perused the records.

6. In the case cited on the side of the petitioner, our High Court dealt with the question as to whether amount advanced under a promissory note for the purpose of celebrating a marriage contrary to the provisions of the Child Marriage Restraint Act of 1929, is recoverable. The issue was decided in the light of Sections 10 and 23 of the Indian Contract Act and under the provisions of the Child Marriage Restraint Act. It is held by our High Court that the word 'object' in Section 23 of the Contract Act was not used in the same sense as 'consideration' but was used as distinguished from consideration and means 'purpose or design'. If then the purpose of the parties was to defeat the provisions of the Bankruptcy Law, there can be no doubt that the assignment or transfer would be inoperative under the provisions of Section 6 of the Transfer of Property Act. Our High Court by following other judgments, as referred to in the same judgment, observed that if the object of the transfer of the property is immoral, the transfer is void and there cannot be any conveyance of any interest effected by the transfer. The issue raised therein was appreciated in the light of such principle and was ultimately decided that as the act of a guardian or parent in celebrating the marriage of his minor