“Madras High Court’s Madurai Bench Quashes Criminal Proceedings: Vague Allegations of Exorbitant Interest and Non-Public Intimidation Fail to Constitute Offense Under Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003”

Court’s Decision: The Madurai Bench of the Madras High Court quashed the criminal proceedings against the petitioner (Accused No.5) in C.C.No.228 of 2019, observing that the allegations made by the respondent did not constitute offenses under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, or under the relevant sections of the IPC. The Court concluded that continuing the proceedings would be an abuse of process of law.

Facts: The second respondent filed a complaint against the petitioner and other accused, alleging they demanded excessive interest on a loan and threatened the respondent and his family. This led to the registration of an FIR against five accused persons under Crime No.307 of 2017. The petitioner, later charged as Accused No.5, sought to quash the proceedings, challenging the allegations as vague and insufficient for criminal prosecution.

Issues:

1. Whether the allegations of charging exorbitant interest constitute an offense under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003.
2. Whether the accusations of intimidation and abuse satisfy the criteria for offenses under Sections 506(2) and 294(b) of the IPC.

Petitioner’s Arguments: The petitioner argued that the allegations were baseless and did not constitute a prima facie case under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. Additionally, he claimed that the assertions of abuse and intimidation were unsupported and did not satisfy the requirements under the IPC sections cited.

Respondent’s Arguments: The second respondent alleged that the petitioner and others demanded excessive interest on the loan and threatened him, constituting harassment under the relevant state act and the IPC.

Analysis of the Law: The Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, is intended to prevent the charging of high-interest rates by moneylenders. Under Section 5(1) of the Act, debtors are required to deposit the principal amount with interest fixed by the government to seek relief. The Court noted that without this deposit, complaints of exorbitant interest lack legal foundation.

Precedent Analysis: The Court referenced its earlier ruling in Crl.O.P.No.4877 of 2018, which emphasized that accusations of exorbitant interest must be substantiated by the debtor’s compliance with Section 5(1) of the Act. This precedent reinforced the need for deposit compliance before complaints could proceed under the Act.

Court’s Reasoning: The Court observed that the allegations made by the second respondent were vague, with no specific evidence to substantiate claims of exorbitant interest under the Act. Moreover, the Court found no basis for charges under Sections 506(2) and 294(b) of the IPC, as the alleged abuse did not occur in a public place, and the intimidation claims lacked sufficient detail.

Conclusion: The Court held that the criminal proceedings against the petitioner were unwarranted, as the complaint failed to meet the statutory requirements for offenses under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act and the IPC. Consequently, the proceedings were quashed.

Implications: This ruling emphasizes the need for complainants to adhere strictly to statutory provisions, such as depositing principal amounts with interest, when filing complaints under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act. It also underscores the importance of substantiating accusations of intimidation and abuse under the IPC with concrete evidence, particularly when public occurrences are alleged.

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