Quashed

V P Nandakumar v. State of Karnataka

Karnataka HC8 Jun 2022CRL.P/6713/2013

Case brief

AI extract

What is this about?

The High Court of Karnataka challenged an FIR and criminal proceedings against a non-banking financial company for cheating and charging exorbitant interest. Relying on the Supreme Court's judgment in Nedumpilli Finance, the court held that such Acts do not apply to RBI-registered NBFCs, declared the FIR without authority, and quashed the proceedings.

What did the court decide?

Criminal petition allowed; Impugned proceedings in CC No. 20166/2012 are quashed.

V P Nandakumar 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 8^TH 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.6713 OF 2013

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BETWEEN:

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V P NANDAKUMAR CHAIRMAN, MANAPPURAM FINANCE LTD., MANAPPURAM HOUSE, VALAPAD, TRISSUR KERALA – 680 567. ...PETITIONER

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(BY SRI RAVISHANKAR B, ADVOCATE)

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AND:

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STATE OF KARNATAKA BY INSPECTOR OF POLICE YESHWANTHAPURA POLICE STATION BANGALORE.

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SRI M LIYAKATH ALI KHAN SENIOR INSPECTOR OF CO-OPERATIVE SOCIETIES OFFICE OF ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES NORTH DIVISION BANGALORE NO.146, 3^RD MAIN ROAD, 8^TH CROSS MARGOSA ROAD, MALLESHWARAM BANGALORE–560 003. …RESPONDENTS

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(BY S VISHWAMURTHY, HCGP FOR R-1 R-2 IS SERVED BUT UNREPRESENTED)

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THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE ORDERS DATED 24.9.2012 PASSED BY THE I A.C.M.M., BANGALORE IN CC NO.20166/2012 TAKING COGNIZANCE FOR THE OFFENCE PUNISHABLE UNDER SECTIONS 3, 4 OF KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT, 2004 AND SECTION 420 OF IPC AND ISSUING PROCESS TO PETITIONER HEREIN ANNEXED TO THE PETITION AS ANNEXURE-H AND CONSEQUENTLY QUASH THE ENTIRE PROCEEDINGS IN CC NO.20166/2012 PENDING ON THE FILE OF I A.C.M.M., BANGALORE AND DISCHARGE THE PETITIONER.

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THIS CRIMINAL PETITION IS COMING ON FOR HEARING THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioner herein is non banking financial company registered with Reserve Bank of India, challenging the FIR registered against him for the offences punishable under Sections 3 and 4 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 and Section 420 of IPC.

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The 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

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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 Act, has 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 High Court Government Pleader submits that the petitioner having committed the aforesaid offences under the provisions of the said Act, the registration of the FIR against the petitioner by the police is perfectly legal and the same does not warrant any interference by this Court.

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I have considered the submissions made by

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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

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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 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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i) The Criminal petition is allowed.

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ii) The impugned proceeding in CC

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No.20166/2012 pending on the file of the I Additional Chief Metropolitan Magistrate, Bangalore is hereby quashed.

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