Non-rounded loan: Legal tangle for lender

Published: 19th August 2013 09:30 AM  |   Last Updated: 19th August 2013 09:30 AM   |  A+A-

Next time you lend money to someone, ensure that the sum loaned is a rounded figure. Else, you could end up fighting a needlessly lengthy and frustrating legal battle like N Jebarathinam of a village in Tirunelveli.

Jebarathinam had loaned Rs 74,800 to one R Ramar. Later, Ramar issued a cheque which bounced. Following this, Jebarathinam dragged him to court seeking action under the Negotiable Instruments Act.

To his shock, the Special Judicial Magistrate-cum-Principal District Munsif at Tirunelveli dismissed his complaint. The magistrate cited two reasons for throwing the complaint out.

The first was that the amount in the cheque was not a rounded figure. The magistrate’s reasoning was that Jebarathinam had accused Ramar of borrowing Rs 74,800 for his family expenses but usually people borrowed only rounded sum like Rs 5,000 or Rs 10,000. Hence, he surmised that it was improbable for someone to borrow a figure like Rs 74,800.

The magistrate’s second conclusion was that the cheque had certain alterations. It appeared that in figures only Rs 4,800 was entered. Therefore, the court inferred that the number ‘7’ was incorporated before the figure Rs 4,800 and dismissed the complaint.

Jebarathinam filed an appeal in the Madras High Court (Madurai Bench) challenging the trial court verdict. Justice A Armughaswamy rejected the first theory of the trial court, saying:  “Merely because the amount lent and mentioned in the cheque is not a rounded figure, it cannot be stated that such an amount would not have been given by the complainant or borrowed by the accused and for that amount, the cheque in question would not have been issued.” 

The judge further punctured the second theory by pointing out that an examination of the cheque leaf clearly showed that in the words column the amount has clearly been mentioned as “Rupees Seventy four thousand eight hundred only.” There is no alteration at all.  If at all, as held by the trial court number ‘7’ has been added before Rs 4,800/-, definitely there would have been a correction in the amounts mentioned “in words” also. “But there is no such alteration as held by the trial court,” Justice Arumughaswamy said.

 “Further, if really the accused issued the cheque for Rs 4,800/- only, then he would have started with capital letter ‘F’ in words column, but he has started with capital letter ‘S’ in words column,” he pointed out.

The case was remitted back to the trial court with a direction to proceed with the other defence, if any, available to the accused.


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