State legislation prohibiting exorbitant interest does not apply to transactions governed by the Negotiable Instruments Act, 1881, as the latter falls under central legislative domain. Civil courts lack inherent powers to suo motu review or suspend their final judgments once signed.

JUDGMENT N.SATHISH KUMAR, J.

1.The Hon’ble Chief Justice vide administrative order dated 10.03.2026 has constituted this Full Bench, as the learned Division Bench by order dated 17.06.2025 has doubted the correctness of the decision of another Division Bench of this Court in Sri Kalpatharu Financiers Vs. Natarajan reported in (2012) 4 MLJ 187 and referred this matter to the Hon’ble Chief Justice to constitute a Larger Bench.

2.The issue arises is as to whether ‘the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003’ [for short ‘2003 Act’] will apply to the loans advanced on the strength of the negotiable instruments if the loan amount exceeds a sum of Rs.10,000/-.

3.Earlier in Indiabulls Financial Services Limited Vs. M/s.Jubilee Plots and Housing Private Limited reported in 2010-2-L.W. 75, the learned Single Judge has held that the 2003 Act will not be applicable to the loan exceeding Rs.10,000/- advanced on the basis of the negotiable instrument. The said judgment of the learned single Judge was overruled by the Division Bench of this court in a decision in A.S. (MD)No.102 of 2024, wherein the Division Bench has held that the said Indiabulls case may not be a correct law since the provision requires purposive interpretation and not a mere literal interpretation as done in the Indiabulls case. The Division Bench, in fact, had allowed the appeal partly vide judgment dated 29.04.2025 and scaled down the interest. Subsequently, on coming to know about the decision of a coordinate Division Bench in Sri Kalpatharu Financiers Vs. V.Natarajan reported in (2012) 4 MLJ 187, which affirms the decision in Indiabulls case, the Division Bench vide order dated 17.06.2025 suo motu suspended its own judgment and decree dated 29.04.2025 and referred the matter to the Larger Bench. However, while making the reference, the Division Bench had not gone into the validity of the said decision, since the other Division Bench in Sri Kalpatharu Financiers case has confirmed the view taken by the learned Single Judge in Indiabulls case and this Division Bench took the view that the Indiabulls case was not a correct law and therefore, referred the matter to the Hon’ble Chief Justice to constitute a Larger Bench to decide if Sri Kalpatharu Financiers case was correctly decided.

4.Since the Full Bench was constituted by the Hon’ble Chief Justice and as no specific question of law has been raised by the Division Bench to the Full Bench, this Full Bench thought it fit to frame the following questions to be decided in the reference:

‘(i)Whether the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 is applicable to all loans advanced under the Negotiable Instruments Act, 1881? and

(ii)Whether the said Act applicable to other loans arising out of different contractual arrangements?’

5.This Full Bench heard Mr.J.Bharathan, learned counsel for Mr.A.K.Amaravel Pandian, learned counsel for appellant and Mr.V.R.Shanmuganathan, learned counsel for the respondent as also Mr.T.S.R.Venkatramana, learned senior counsel, Mr.Sharath Chandran, Mr.P.Ganapathi Subramanian, Mr.B.Sankara Narayanan and Mr.Naveen Kumar Moorthi, learned counsel who have assisted t