Allowed

Muthoot Finance Ltd. v. State of Karnataka

Karnataka HC2 Jun 2022CRL.P/3980/2012

Case brief

AI extract

What is this about?

The High Court of Karnataka allowed four criminal petitions filed by Non Banking Financial Companies (NBFCs) to quash FIRs registered against them. Relying on the Supreme Court's decision in Nedumpilli Finance Company Ltd, the court held that state Money Lenders and Pawn Brokers Acts do not apply to RBI-regulated non-banking financial institutions, rendering the FIRs without authority of law.

What did the court decide?

The Criminal petitions are allowed. The impugned First Information Report in Cr.No.0214/2011 is quashed.

Muthoot Finance Ltd. Vs State of Karnataka — Money Laundering | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 02^ND DAY OF JUNE, 2022

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BEFORE

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THE HON'BLE MR.JUSTICE HEMANT CHANDANGOUDAR

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CRIMINAL PETITION NO.5778 OF 2011 C/W. CRIMINAL PETITION NOS.3979/2012, 3980/2012 AND 3981/2012

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IN CRL.P.NO.5778/2011:

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BETWEEN:

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SRI VENKATESH N. AGED ABOUT 32 YEARS SON OF SHRI NARAYANA BRANCH MANAGER

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FEDBANK FINANCIAL SERVICES LIMITED 1^ST BLOCK, FIRST FLOOR, DOOR NO.259 10^TH CROSS, 1^ST N BLOCK, RAJAJI NAGAR BANGALORE – 560 010

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...PETITIONER

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(BY SRI KIRAN J., ADVOCATE)

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AND:

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STATE BY SUBRAMANYANAGAR POLICE STATION

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MALLESHWARAM SUB-DIVISION BANGALORE

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OFFICE OF THE REGISTRAR OF MONEY LENDERS, CHITS & CO-OPERATION NORTH ZONE

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NO.146, 3^RD MAIN, MARGOSA ROAD

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8^TH CROSS, MALLESHWARAM BANGALORE – 560 003

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…RESPONDENTS

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(BY SRI S. VISHWA MURTHY, HCGP)

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THIS CRIMINAL PETITION IS FILED U/S 482 CR.P.C PRAYING TO QUASH THE FIRST INFORMATION REPORT (ANNEXURE-A) BEARING CRIME NO.0214/11 ON 04.10.2011 ON THE FILE OF THE RESPONDENT NO.1.

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IN CRL.P.NO.3979/2012:

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BETWEEN:

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T.B.PRABHU S/O. T.C. BASAPPA AGED ABOUT 59 YEARS HAVING OFFICE AT MUTHOOT FINANCE LIMITED NO.30, PRAGATHI MENSION D.V.G. ROAD, BASAVANAGUDI BANGALORE CITY KARNATAKA – 560 004

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GEORGE ALEXANDER MUTHOOT MANAGING DIRECTOR S/O. M.G.GEORGE MUTHOOT AGED ABOUT 55 YEARS HAVING OFFICE AT MUTHOOT FINANCE LIMITED NO.30, PRAGATHI MENSION D.V.G. ROAD, BASAVANAGUDI BANGALORE CITY KARNATAKA – 560 004

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...PETITIONERS

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(BY SRI KIRAN J., ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY BASAVANAGUDI POLICE STATION BASAVANAGUDI

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REGISTRAR CO-OPERATIVE SOCIETY DEPARTMENT NO.146, 3^RD MAIN, 8^TH CROSS MARGOSA ROAD, MALLESHWARAM BANGALORE, KARNATAKA – 560 003 REPRESENTED BY M.S.DAS

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…RESPONDENTS (BY SRI S. VISHWA MURTHY, HCGP)

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THIS CRIMINAL PETITION IS FILED U/S 482 CR.P.C PRAYING TO QUASH THE FIRST INFORMATION REPORT IN CRIME NO.0164 OF 2012 ON THE FILE OF 2^ND ADDL. CMM COURT, NRUPATUNGA ROAD, BANGALORE CITY REGISTERED IN BASAVANAGUDI POLICE STATION, BANGALORE CITY BY THE RESPONDENT AGAINST PETITIONER COMPANY (ANNEXURE-A) AND ETC.

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IN CRL.P.NO.3980/2012:

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BETWEEN:

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MUTHOOT FINANCE LTD. MADHUGIRI BRANCH MADHURIGI, TUMKUR ROAD MADHUGIRI TOWN,KARNATAKA REPRESENTED BY ITS BRANCH MANAGER ASHOK RAO D.J. S/O. JATTOJI RAO AGED ABOUT 27 YEARS (BY SRI KIRAN J., ADVOCATE)

...PETITIONER

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STATE OF KARNATAKA REPRESENTED BY SUB-INSPECTOR OF POLICE MADHURIGI, TUMKUR ROAD MADHUGIRI TOWN KARNATAKA

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ASSISTANT REGISTRAR CO-OPERATIVE SOCIETY DEPARTMENT MADHURIGI SUB DIVISION MADHUGIRI REPRESENTED BY G. THIPPESWAMY …RESPONDENTS

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(BY SRI S. VISHWA MURTHY, HCGP)

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THIS CRIMINAL PETITION IS FILED U/S 482 CR.P.C PRAYING TO QUASH THE FIRST INFORMATION REPORT IN CRIME NO.0070 OF 2012 DATED 17.05.2012 ON THE FILE OF THE ADDL. CIVIL JUDGE (JR.DN.) & JMFC COURT, MADHUGIRI, TUMKUR DISTRICT PURSUANT TO THE COMPLAINT DATED 17.05.2012 REGISTERED IN POLICE STATION MADHUGIRI, TUMKUR DISTRICT BY THE RESPONDENT AGAINST PETITION (ANNEXURE-A) AND ETC.

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IN CRL.P.NO.3981/2012:

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BETWEEN:

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CHANDRASHEKHAR A. S/O. DHARANAPPA INDRA AGED ABOUT 59 YEARS HAVING OFFICE AT MUTHOOT FINANCE LIMITED M ROAD, CHANNARAYAPATNA

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HASSAN TOWN, HASSAN KARNATAKA

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...PETITIONER

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(BY SRI KIRAN J., ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY

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CHANNARAYAPATNA CIRCLE POLICE STATION CHANNARAYAPATNA CIRCLE HASSAN, KARNATAKA

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ASSISTANT REGISTRAR CO-OPERATIVE SOCIETY DEPARTMENT KUVEMPUNAGAR HASSAN, KARNATAKA REPRESENTED BY SUNIL V.

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…RESPONDENTS (BY SRI S. VISHWA MURTHY, HCGP)

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THIS CRIMINAL PETITION IS FILED U/S 482 CR.P.C PRAYING TO QUASH THE FIRST INFORMATION REPORT FILED IN 0253 OF 2012 DATED 11.06.2012 ON THE FILE OF THE PRL. CIVIL JUDGE (JR.DIVISION) AND JMFC COURT, CHANNARAYAPATNA, HASSAN DISTRICT PURSUANT TO THE COMPLAINT DATED 07.06.2012 REGISTERED IN CHANNARAYAPATNA P.S. COMPLAINT AGAINST THE PETITIONER (ANNEXURE-A) AND ETC.

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THESE PETITIONS ARE COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioners herein who are all non banking financial companies registered with Reserve Bank of India, are challenging the FIR registered against them for the offences punishable under Section 18 of Pawn Brokers Act, 1961, Section 4 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, Section 39 of Money Lenders Act, 1961, Section 3 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, Section 40 of Karnataka Money Lenders Act, Section 20 of Pawn Brokers Act.

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Since the issues involved in all the petitions are similar, they are taken together and disposed of by common order

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Shri Kiran J, learned counsel appearing for the petitioner submits that the Hon’ble Supreme Court in the case of Nedumpilli Finance Company Limited vs. State of Kerala and others, reported in 2022 SCC OnLine SC 588 has held that the provisions of Kerala Money Lenders Act 1958 and Gujarat Money Lenders Act, 2011 which are in pari materia with the provisions of the aforesaid Acts, has

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held that the said Acts have no application to non banking financial companies registered under Reserve Bank of India Act and regulated by the Reserve Bank of India.

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On the other hand, learned HCGP submits that the petitioners having committed the aforesaid offences under the provisions of the said Act, the registration of the FIR against the petitioners by the police is tenable and the same does not warrant any interference by this Court.

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I have considered the submissions made by the learned counsel appearing for the parties.

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In the case of Nedumpilli Finance Company Limited before the apex Court, it was held that the provisions of the Kerala Act and Gujarat Act are in addition to the provisions of Chapter – IIIB of the Reserve Bank of India Act. The Hon’ble Supreme Court by referring to Section 45 Q Chapter IIIB of the RBI Act which specifies that the provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained

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in any other law for the time being in force or any instrument having effect by virtue of any such law“has held that the Kerala Act and Gujarat Act will have no application to non banking financial registered under the RBI Act and regulated by the RBI.

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In view of the ratio enunciated by the Hon’ble Apex Court in the case of Nedumpilli Finance Company Limited supra, the provisions of the aforesaid Act which are invoked against the petitioners in the impugned FIR which are in paramateria with the provisions contained in Kerala Act and Gujarat Act, the registration of FIR is held to be one without authority of law.

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Accordingly, proceeds to pass the following:

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ORDER

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The Criminal petitions are allowed.

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The impugned First Information Report in Cr.No.0214/2011 registered by Subramanyanagar Police Station is hereby quashed.

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Sd/JUDGE

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