SRI SUJIES BENEFIT FUNDS LIMITED v. M. JAGANATHUAN, 2024 (SC) 581
Facts: The sole respondent, a subscriber to the appellant's chit fund company, borrowed various loan amounts over two years, accumulating to ₹21,09,000 (including interest) after eight years. The loans were disbursed on multiple dates, including ₹1,50,000 on March 9, 1995, and ₹6,00,000 on December 29, 1995. To partially settle the debt, the respondent issued a cheque for ₹19,00,000 on February 3, 2003. When presented, the cheque was returned due to the account being closed. The complainant issued a statutory notice, which the respondent replied to, denying the debt. Consequently, the complainant filed a case under Section 138 of the Negotiable Instruments Act, 1881. The trial court convicted the respondent, but the appellate court acquitted him, a decision upheld by the High Court. The chit fund company then appealed to the Supreme Court.
Issue: Can a dispute regarding the interest rate of a loan be raised as a defense once the execution of the cheque is admitted?
Observation: The Supreme Court held that once the respondent admitted to issuing a signed cheque with a specific amount, he could not raise disputes about the interest rate as a defense in a Section 138 prosecution. The Court noted that the interest rate dispute was irrelevant since the execution of the cheque was acknowledged. Additionally, the respondent's action of closing the account immediately after issuing the cheque raised suspicion. The Supreme Court reversed the acquittal, ordering the respondent to pay a fine of ₹28,50,000 (1½ times the cheque amount). However, considering the respondent's advanced age (86) and circumstances, the imprisonment sentence was waived, provided the fine was paid within eight months. If defaulted, a one-year simple imprisonment sentence would be enforced.
