Case Note & Summary
The appellant, Vividha Urban Co-operative Credit Society Limited, filed a criminal appeal against the acquittal of the accused, Gurudas Krishna Fatrekar, under Section 138 of the Negotiable Instruments Act, 1881. The complainant had granted a loan of Rs.35,000/- to the accused on 22/11/2003, repayable in monthly instalments of Rs.850/- with interest at 16% per annum with quarterly rests. The accused issued a cheque for Rs.30,000/- dated 16/01/2008, which was dishonoured due to insufficient funds. A demand notice was sent and received but not replied. The complainant examined Vishwajeet Gauns, who admitted that the accused had deposited Rs.21,809/- by December 2007, and that the loan agreement provided for interest with quarterly rests, but the complainant had charged interest with monthly rests without intimating the accused. The learned JMFC found that if interest were calculated quarterly, the accused would owe only about Rs.11,000/-, and thus the cheque for Rs.30,000/- was for an amount exceeding the legally enforceable debt. The High Court upheld this view, noting that the complainant could not point to any clause in the loan agreement allowing unilateral revision of interest rests. The court relied on Laximikant D. Naik, Karmali v. Santosh V. Naik (2006 (2) Bom. C.R. (Cri.) 830) and dismissed the appeal, affirming the acquittal.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Legally Enforceable Debt - Section 138 - The complainant society charged interest with monthly rests contrary to the loan agreement which provided for quarterly rests, without intimation to the accused. The cheque amount of Rs.30,000/- exceeded the actual debt of about Rs.11,000/-. Held that the cheque was not for a legally enforceable debt and acquittal was proper (Paras 3-5). B) Loan Agreement - Interest Calculation - Unilateral Change - The loan agreement clause 5 provided for interest with quarterly rests. The complainant changed to monthly rests without informing the accused. Held that such unilateral change cannot bind the borrower and the excess interest claimed is not recoverable (Paras 3-4).
Issue of Consideration
Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 was justified when the cheque amount exceeded the actual debt due due to unilateral change in interest calculation method.
Final Decision
Appeal dismissed. Acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 upheld.
Law Points
- Negotiable Instruments Act
- 1881
- Section 138
- Dishonour of Cheque
- Legally Enforceable Debt
- Excess Amount
- Loan Agreement
- Interest Calculation
- Quarterly Rests
- Monthly Rests
- Notice of Change
