The Act applies only to transactions strictly governed by its provisions and excludes transactions governed by other Acts.

JUDGMENT

(Prayer: Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Declaration to declare Section 4 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and the Circular dated 07.06.2022 passed by the Director General of Police as unconstitutional and to forbear the respondents from taking coercive action against the members of the petitioner Association/Financers who advance money against Negotiable Instruments Act exceeding Rs.10,000/- and/or against security.)

Munishwar Nath Bhandari, CJ.

1. The writ petition has been filed to challenge the constitutional validity of Section 4 of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 (hereinafter will be referred to as 'the Act of 2003') and also the Memorandum dated 07.06.2022 issued by the Director General of Police, Tamil Nadu.

2. The learned Senior Counsel for the petitioner submits that the Memorandum dated 07.06.2022 has been issued in ignorance of the provisions of the Act of 2003 so also the Tamil Nadu Money- Lenders Act, 1957. In view of the above and as the Memorandum would have serious consequences on those involved in the trade of finance, the writ petition has been filed. It is along with the challenge to the constitutional validity of Section 4 of the Act of 2003 in reference to Section 5 of the Act of 2003. A person borrowing loan cannot be given two remedies, one penal remedy and at the same time, a civil remedy. After arguing the case at length, the learned senior counsel for the petitioner submits that if necessary clarification to the Memorandum dated 07.06.2022 is given, he would not be required to press the writ petition in respect of challenge to the constitutional validity of Section 4 of the Act of 2003 at present, however, keeping the rights reserved to challenge it in subsequent proceedings, if so required.

3. The learned counsel has given reference to the previous judgment of this Court in reference to the prosecution cases under the Act of 2003. Taking the facts of the case into consideration, this Court ruled that the prosecution cannot be allowed under Section 4 of the Act of 2003 and accordingly, an order was passed in favour of the petitioner therein. The present writ petition is, however, filed by the Association and thereby, an individual case has not been cited, but taking note of that fact that the issue remains subject matter of many litigations and judgments therein, the present writ petition has been pressed now in reference to the Memorandum dated 07.06.2022. It is mainly for the reason that the Memorandum may be grossly misused by the police officer by registering cases carrying penal consequences under Section 4 of the Act of 2003 when those cases may not fall under the Act of 2003.

4. While issuing the Memorandum in reference to the Act of 2003, the clarification has not been given restricting its application in reference to any transaction other than referred under the Act of 2003. It is more so when there are many Acts prevalent in the State of Tamil Nadu in regard to the regulation of finances and interest which may be under the Act of 2003, the Money-lenders Act, 1957 and under Central Act, namely, The Negotiable Instruments Act, 1881. If a case falls under the Negotiable Instruments Act, the action cannot be initiated under the Act of 2003 and similarly, if it is governed by the Act of 1957, Section 4 of the Act of 2003 cannot be invoked. The aforesaid has not been clarified in the Memorandum, thus, necessity arose to file the writ petition.

5. We have considered the submissions made by the learned senior counsel for the petitioner and perused the Memorandum under challenge, while allowing the petitioner to take up the issue of constitutional validity of Section 4 of the Act of 2003 in future proceedings, if so required.

6. Since the Memorandum dated 07.06.2022 has been challenged, the same is reproduced hereunder:-

Office of the

Director General of Police/H