Allowed

Shivanand Shambulingayah Hiremath v. the State of Karnataka

Karnataka HC12 Sept 2022CRL.P/100984/2017

Case brief

AI extract

What is this about?

The High Court allowed a Criminal Petition seeking quashing of criminal proceedings against the petitioner for alleged offences under the Karnataka Prohibition of Charging Exorbitant Interest Act and Karnataka Money Lenders Act. The Court held that the trial court erred in directing police registration instead of following the specific statutory procedures for debt verification contemplated in the

What did the court decide?

The entire proceedings pertaining to Crime No.31/2017 for offences under the Prohibition of Charging Exorbitant Interest Act and Money Lenders Act are quashed.

Shivanand Shambulingayah Hiremath Vs the… — Contract and Commercial Disputes | Karnataka HC (2022)

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CRL.P No. 100984 of 2017

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 12^TH DAY OF SEPTEMBER, 2022

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BEFORE

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THE HON'BLE MS. JUSTICE J.M.KHAZI

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CRIMINAL PETITION NO. 100984 OF 2017 (482-)

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BETWEEN: SHIVANAND SHAMBULINGAYYA HIREMATH AGE: 35 YEARS, OCC: AGRICULTURE, R/O: RABAKAVI, TQ: JAMKHANDI, DIST: BAGALKOTE.

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…PETITIONER

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(BY SRI. MANOJ BIKKANNAVAR, ADV., FOR SRI. ANAND.R.KOLLI, ADVOCATE) AND:

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THE STATE OF KARNATAKA, REP. BY ITS SPP, HIGH COURT OF KARNATAKA, DHARWAD BENCH, DHARWAD, (THROUGH PSI, TERDAL POLICE STATION, TQ: JAMKHANDI, DIST: BAGALKOTE).

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…RESPONDENT

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ANNAPURNA CHINNAPPA DANDAGAL

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Digitally signed by ANNAPURNA CHINNAPPA DANDAGAL Location: HIGH COURT OF KARNATAKA, DHARWAD BENCH, DHARWAD.

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(BY SMT. GIRIJA S HIREMATH, HCGP)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., SEEKING TO QUASH THE ENTIRE PROCEEDINGS PERTAINING TO CRIME NO. 31 OF 2017 REGISTERED BEFORE TERDAL POLICE STATION TQ: JAMKHANDI, DIST: BAGALKOT FOR AN OFFENCE PUNISHABLE UNDER SECTION 3 AND 4 OF KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT 2004 AND SEC. 37 AND 38 AND 39 OF KARNATAKA MONEY

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CRL.P No. 100984 of 2017

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LENDERS ACT 1961 THERE BY ALLOWING THE CRIMINAL PETITION, IN SO FAR AS PETITIONER IS CONCERNED.

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THIS CRIMINAL PETITION COMING ON FOR HEARING, THIS DAY, COURT PASSED THE FOLLOWING:

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ORDER

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Being aggrieved by registering of case in Crime No.31/2017 for the offences punishable under sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (for short “Prohibition of Charging Exorbitant Interest Act”) and sections 37 and 38 of the Karnataka Money Lenders Act, 1961 (for short “Money Lenders Act”), at the instance of trial Court in O.S.No.70/2016 on the file of the Civil Judge and JMFC, Banahatti while disposing of the said suit, petitioner, who is arraigned as accused has filed this petition under Section 482 of Cr.P.C.

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It is the case of the petitioner that his friend Imtiyaz Suleman Lengre borrowed Rs.25,000/- from him. When he failed to repay the same, he filed a suit in O.S.No.70/2016 for recovery of the same. Though the Trial Court decreed the suit to pay a sum of Rs.25,000/- with

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CRL.P No. 100984 of 2017

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interest @6% per annum, it directed the SHO, Terdal Police Station, to register a criminal case against the petitioner under the provisions of Money Lenders Act and Prohibition of Charging Exorbitant Interest Act and to submit a report. On the said direction, the SHO Terdal has registered the case in Crime No.31/2017 for the offences punishable under sections 3 and 4 of the Prohibition of Charging Exorbitant Interest Act and sections 37 and 38 of the Money Lenders Act. In fact, against the said judgment and decree in O.S.No.70/2016, petitioner has filed R.A.No.7/2017 and obtained stay order.

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The respondent has appeared through HCGP.

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During the course of arguments, learned counsel

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for the petitioner submits that the Trial Court has erred in exercising suo-moto powers directing respondent-police to register a criminal case against the petitioner. Section 15 of the Money Lenders Act contemplates the procedure wherein the Registrar is having powers to enquire into the matter. Similarly, Section 5 of the Prohibition of Charging Exorbitant Interest Act, also requires a debtor to approach the Court by filing a necessary petition. In view of the same, the Trial

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CRL.P No. 100984 of 2017

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Court has erred in bypassing the said procedure and directing the police to register case and hence, prays to allow the petition.

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Heard the arguments and perused the records.

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It is an undisputed fact that the respondent-police

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have registered a case against the petitioner only based on the direction given by the Trial Court. Alleging that defendant i.e. one Imtiyaz Suleman Lengre has borrowed a sum of Rs.25,000/from him, the petitioner has filed O.S.No.70/2016 for recovery of the said amount with interest @ 18% per annum. The Trial Court though accepted the case of the petitioner that defendant has borrowed the said amount, by observing that interest charged is exorbitant, the Trial Court has given direction to the respondent-police to register a case against the petitioner. Against the said judgment and decree, the petitioner has approached the First Appellate Court in R.A.No.7/2017 and secured stay.

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CRL.P No. 100984 of 2017

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Section 15 of the Money Lenders Act deals with the power of authorized officer to require production of records or documents and power of entry, inspection and seizure. It reads as follows:

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"15. Power of authorized officer to require production of records or documents and power of entry, inspection and seizure. - (1) The Registrar, Assistant Registrar or any Officer authorized by the State Government in this behalf may, for the purpose of verifying whether the business of moneylending is carried on in accordance with the provisions of this Act, enter the premises of the money lender or any person who in his opinion is carrying on the business of money-lending and call upon him to produce any record or document relating to such business and every such money lender or person shall allow such inspection and produce such record or document.

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(2) The Registrar, Assistant Registrar or the other officer referred to in sub-section (1) may, for the purposes of the said sub-section, search the premises and seize any record and document as may be necessary. The record or document seized shall be retained only for such period as may be necessary for the purposes of examination, prosecution or other legal action:

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CRL.P No. 100984 of 2017

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Provided that the provisions of sections 100 and 102 of the Code of Criminal Procedure, 1973 (Central Act 2 of 1974) shall, so far as may be, apply to such search and seizure:

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Provided further that for every record or document seized, appropriate acknowledgement shall be given to the person from whose custody it is seized.

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(3) The Registrar, Assistant Registrar or the other officer referred to in sub-section (1) shall also have power to summon and examine the money lender or any person who in his opinion is in a position to furnish relevant information.”

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Similarly, Section 5 of the Prohibition of Charging Exorbitant Interest Act enables a debtor to approach the court with a petition with prayer to examine whether the repayment of the amount made by him is in full or part, satisfaction of the loan including the interest thereof. On receipt of such petition, the Court is required to issue notice to the person concerned calling upon him to give reply. Section 5 reads as under:

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"5. Deposit of money and presentation of petition to court and the procedure thereof. - (1) A debtor may deposit the money due in respect of a

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CRL.P No. 100984 of 2017

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loan received by him from any person together with interest at the rate fixed by the State Government under section 28 of the Karnataka Money Lenders Act, 1961 into the Court having jurisdiction, along with a petition to record that the amount deposited is in full or part, satisfaction of the loan including the interest therefor, as the case may be.

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(2) The Court shall, on receipt of a petition under subsection (1), refer a copy of the petition to the person mentioned in the petition, directing him to give his replies within a period of fifteen days as may be granted by the Court. The Court may, after due inquiry and after considering the versions of both the parties, pass orders recording the satisfaction of the loan and interest therefor in full or in part, as the case may be."

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Perusal of these provisions make it evident that specific procedure is contemplated to proceed under the respective Acts. When a specific procedure is provided, bypassing the same and registering a criminal case against the petitioner is illegal and improper. Had the Trial Court come to the conclusion that the transaction of petitioner is contrary to these provisions, it could have directed the concerned authorities to look into the matter, rather than

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CRL.P No. 100984 of 2017

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directing the respondent-police to register a criminal case against the petitioner. Therefore, I hold that the continuation of the said proceedings would amount to abuse of process of the Court and as such, the petition is required to be allowed. Accordingly, I pass the following:

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ORDER

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The petition is allowed.

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The entire proceedings pertaining to crime No.31/2017 of Terdal Police Station, Jamakhandi Taluk, Bagalkot District, for offence punishable under sections 3 and 4 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 and Sec. 37, 38 and 39 of Karnataka Money Lenders Act, 1961, is hereby quashed.

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In view of disposal of the matter, pending interlocutory applications, if any, do not survive for consideration and are disposed of accordingly.

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Sd/-

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JUDGE

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YAN

Shivanand Shambulingayah Hiremath v. the State of Karnataka

Case brief

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Shivanand Shambulingayah Hiremath v. the State of Karnataka

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