While observing that it is the duty of the bar to enlighten and educate the bench on the correct legal position, the Madras High Court has directed the Registry to place the papers before the Chief Justice to consider constituting a Larger Bench to decide the correctness of the ruling in Sri Kalpatharu Financiers case.

The High Court was considering an appeal suit filed under Section 96 CPC read with Order 41 Rule 1 CPC, to set aside the judgment on the file of the Principal District Judge.

The Division Bench of Justice G.R.Swaminathan and Justice M. Jothiraman said, “Lordships are aware'', ''as your Lordships already know'' etc., are words of courtesy and politeness. They may be at times right but definitely not always. It is the duty of the bar to enlighten and educate the bench on the correct legal position.”

“We direct the Registry to place the papers before the Hon'ble Chief Justice to consider constituting a Larger Bench to decide if Sri Kalpatharu Financiers was correctly decided”, it ordered.

Advocate S. Srinivasa Raghavan represented the Appellant while Advocate V.R. Shanmuganathan represented the Respondent.

Factual Background

In this civil matter, one of the questions that was projected for consideration was the rate of interest chargeable. It was held by the High Court that since the suit transaction fell within the scope of the term “loan” occurring in Section 2(6) of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, the provisions of the said Act would apply. It was further held that the decision rendered in Indiabulls Financial Services Ltd v Jubilee Plots and Housing Pvt Ltd. (2010) was not good law. Indiabulls had held that the provisions of the 2003 Act will not apply if the loan had been advanced on the strength of a negotiable instrument (such as pro-note) for a sum exceeding Rs.10,000.

Reasoning

It was brought to the Court’s notice that a Division Bench in the decision reported in Sri Kalpatharu Financiers v. Natarajan (2012) had endorsed the Indiabulls decision. “Counsel on either side failed to bring this to our notice”, the Bench said.

The Bench also highlighted that the bar must enlighten and educate the bench on the correct legal position. The Bench was of the view that when the counsel for the appellant relied on A.M.Gopalan vs M.Sivaram (2022), the counsel for the respondent ought to have submitted that A.M. Gopalan (Supra) is a single bench decision and that it runs contrary to the Division Bench decision in Sri Kalpatharu Financiers (Supra). “In fact, the counsel for the appellant ought to have check if A.M.Gopalan was really good law”, it remarked.

Thus, in light of the fact that the Bench was made aware of the decision in Sri Kalpatharu Financiers Case, the Bench suo motu suspended the operation of its earlier judgment. The Court also suggested that the issue regarding the correctness of Sri Kalpatharu Financiers case be placed before a Larger Bench.

Cause Title: K. Vasantha v. S. Kalyani (Case No.: A.S.(MD)NO.102 of 2024)

Appearance

Appellant: Advocate S. Srinivasa Raghavan

Respondent: Advocate V.R. Shanmuganathan

Click here to read/download Order







Madras High CourtJustice G.R. SwaminathanJustice M. Jothiraman

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.