Levy of 30% interest by film financiers not usurious, says Madras High Court
The Madras High Court has refused to accept the argument of actor Vishal Krishna Reddy that the levy of interest at the rate of 30% per annum by financiers in the film industry was usurious and against the provisions of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003.
Justice P.T. Asha also found the actor to have made false averments on oath in a case related to the repayment of ₹30.05 crore with 30% interest from February 16, 2021, and rejected his claim of having signed the loan agreement with Lyca Productions Private Limited in 2019 without reading its contents.
The judge decreed a suit filed by Lyca Productions in 2021 for recovering the entire loan liablity with interest. Finding the actor to have not been forthcoming with his bank statement and not attempting to discharge even a part of the loan amount, the judge also imposed costs on him.
Senior counsel V. Raghavachari, representing Lyca Productions, told the court that Mr. Vishal had originally taken a loan of ₹21.29 crore from Anbuchezhian of Gopuram Films for making a movie titled Marudhu in 2016. Since the actor could not discharge the liability, Lyca had taken over the loan.
After settling the entire amount to Gopuram Films in different tranches, Lyca made Mr. Vishal sign an agreement on September 29, 2019, agreeing to repay the loan amount with interest before December 31, 2020. However, since he did not honour the agreement, the present civil suit was filed in 2021.
Refuting the claim made by Lyca, the actor denied having taken a loan of ₹21.29 crore either from Gopuram Films or Lyca Productions. He said, Marudhu was produced by Gopuram Films and and hence, the question of taking a loan would not arise at all when he had only acted in the movie for remuneration.
He also claimed to have had a financial dealing only for a sum of ₹12 crore with Gopuram Films and said that he had signed the 'one-sided' agreement with Lyca in 2019 without reading all of the clauses because he had reposed total trust upon the production company and did not expect any foul play.
He also argued that the interest rate of 30% demanded by Lyca was usurious and exorbitant. On the other hand, Mr. Raghavachari told the court that 30% was the standard rate of interest levied by film financiers because they give away crores of rupees in loan, and that Gopuram Films had also charged 30%
After recording their submissions, Justice Asha recalled that the High Court had in Indiabulls Financial Services Limited versus Jubilee Plots and Housing Private Limited (2010) refused to interefere with the 33% interest rate, and held that it would not be violative of the provisions of the 2003 Act.
Then, the court had categorically stated that the 2003 Act was intended to protect gullible people who borrow small amounts of loan and get slapped with usurious interest rates and not for mammoth loan transactions carried out for huge sums under the Negotiable Instruments Act of 1881.
'In the instant case, the defendant (Mr. Vishal) has signed the dotted lines agreeing to pay interest at 30% p.a... After having promised the plaintiff (Lyca) that the amount would be repaid with interest at 30% p.a., the defendant is now attempting to renege on his agreement,' Justice Asha concluded.
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The Hindu
15 hours ago
- The Hindu
Levy of 30% interest by film financiers not usurious, says Madras High Court
The Madras High Court has refused to accept the argument of actor Vishal Krishna Reddy that the levy of interest at the rate of 30% per annum by financiers in the film industry was usurious and against the provisions of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003. Justice P.T. Asha also found the actor to have made false averments on oath in a case related to the repayment of ₹30.05 crore with 30% interest from February 16, 2021, and rejected his claim of having signed the loan agreement with Lyca Productions Private Limited in 2019 without reading its contents. The judge decreed a suit filed by Lyca Productions in 2021 for recovering the entire loan liablity with interest. Finding the actor to have not been forthcoming with his bank statement and not attempting to discharge even a part of the loan amount, the judge also imposed costs on him. Senior counsel V. Raghavachari, representing Lyca Productions, told the court that Mr. Vishal had originally taken a loan of ₹21.29 crore from Anbuchezhian of Gopuram Films for making a movie titled Marudhu in 2016. Since the actor could not discharge the liability, Lyca had taken over the loan. After settling the entire amount to Gopuram Films in different tranches, Lyca made Mr. Vishal sign an agreement on September 29, 2019, agreeing to repay the loan amount with interest before December 31, 2020. However, since he did not honour the agreement, the present civil suit was filed in 2021. Refuting the claim made by Lyca, the actor denied having taken a loan of ₹21.29 crore either from Gopuram Films or Lyca Productions. He said, Marudhu was produced by Gopuram Films and and hence, the question of taking a loan would not arise at all when he had only acted in the movie for remuneration. He also claimed to have had a financial dealing only for a sum of ₹12 crore with Gopuram Films and said that he had signed the 'one-sided' agreement with Lyca in 2019 without reading all of the clauses because he had reposed total trust upon the production company and did not expect any foul play. He also argued that the interest rate of 30% demanded by Lyca was usurious and exorbitant. On the other hand, Mr. Raghavachari told the court that 30% was the standard rate of interest levied by film financiers because they give away crores of rupees in loan, and that Gopuram Films had also charged 30% After recording their submissions, Justice Asha recalled that the High Court had in Indiabulls Financial Services Limited versus Jubilee Plots and Housing Private Limited (2010) refused to interefere with the 33% interest rate, and held that it would not be violative of the provisions of the 2003 Act. Then, the court had categorically stated that the 2003 Act was intended to protect gullible people who borrow small amounts of loan and get slapped with usurious interest rates and not for mammoth loan transactions carried out for huge sums under the Negotiable Instruments Act of 1881. 'In the instant case, the defendant (Mr. Vishal) has signed the dotted lines agreeing to pay interest at 30% p.a... After having promised the plaintiff (Lyca) that the amount would be repaid with interest at 30% p.a., the defendant is now attempting to renege on his agreement,' Justice Asha concluded.
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