Allowed

Sri N Kumar v. State of Karnataka

Karnataka HC10 Oct 2023CRL.P/6903/2022

Case brief

AI extract

What is this about?

The court allowed four criminal petitions filed under Section 482 Cr.P.C. seeking quashing of proceedings against petitioners accused of lending money without a license and charging exorbitant interest. The proceedings were quashed due to police conducting a raid and seizing documents without registering a case first, violating Section 5 of the Interest Act and Section 15 of the Karnataka Money Le

What did the court decide?

The criminal petitions are allowed. The proceedings in C.C.No.261/2016, C.C.No.262/2016, C.C.No.259/2016, and C.C.No.3024/2020 stand quashed. Seized documents to be returned.

Sri N Kumar Vs State of Karnataka — Money Laundering | Karnataka HC (2023)

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR

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CRIMINAL PETITION NO. 6903 OF 2022 C/W CRIMINAL PETITION NO. 6792 OF 2022 CRIMINAL PETITION NO. 6914 OF 2022 CRIMINAL PETITION NO. 8485 OF 2022

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IN CRL.P NO.6903/2022

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BETWEEN:

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SRI. N. KUMAR, S/O AUTO NAGESH, AGED ABOUT 43 YEARS, R/AT 16^TH WARD, JANATHA COLONY, GUNDLUPET TALUK, CHAMARAJANAGAR - 571 313.

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…PETITIONER

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Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA

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(BY SRI. S. RUPESH KUMAR, ADVOCATE)

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AND:

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STATE OF KARNATAKA, BY GUNDLUPET POLICE STATION, CHAMARAJANAGAR DISTRICT, REPRESENTED BY THE LEARNED STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BENGALURU.

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SRI. B. PRAMODKUMAR, CIRCLE INSPECTOR, GUNDLUPET POLICE STATION, CHAMARAJANAGAR - 571 313.

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…RESPONDENTS

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2 - NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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(BY SMT. M.M WAHEEDA, HCGP)

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THIS CRL.P IS FILED U/S.482 OF CR.P.C PRAYING TO QUASH THE PROCEEDINGS PENDING BEFORE THE LEARNED PRL. CIVIL JUDGE AND JMFC, GUNDLUPET IN C.C.NO.262/2016 AS PER ANNEXURE-C.

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IN CRL.P NO.6792/2022

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BETWEEN:

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SRI. SUNIL KUMAR, S/O AUTO NAGESH, AGED ABOUT 37 YEARS, R/AT 17^TH WARD, JANATHA COLONY, GUNDLUPET TALUK, CHAMARAJANAGAR - 571 313.

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…PETITIONER

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(BY SRI. S. RUPESH KUMAR, ADVOCATE)

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AND:

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STATE OF KARNATAKA, BY GUNDLUPET POLICE STATION, CHAMARAJANAGAR DISTRICT, REPRESENTED BY THE LEARNED STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BENGALURU - 01.

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SRI. B. PRAMODKUMAR, CIRCLE INSPECTOR, GUNDLUPET POLICE STATION, CHAMARAJANAGAR - 571 313.

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…RESPONDENTS

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(BY SMT. M.M WAHEEDA, HCGP)

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THIS CRL.P IS FILED U/S.482 OF CR.P.C PRAYING TO QUASH THE PROCEEDINGS PENDING BEFORE THE LEARNED PRL. CIVIL JUDGE AND JMFC, GUNDLUPET IN C.C.NO.259/2016 AS PER ANNEXURE-C.

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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IN CRL.P NO.6914/2022

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BETWEEN:

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SRI. N. MURTHY @ GABBU, S/O NANJUNDA NAYAK, AGED ABOUT 38 YEARS, R/AT NO.13^TH WARD, GARDEN STREET, GUNDLUPET TALUK, CHAMARAJANAGAR - 571 313.

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…PETITIONER

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(BY SRI. S. RUPESH KUMAR, ADVOCATE)

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AND:

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STATE OF KARNATAKA, BY GUNDLUPET POLICE STATION, CHAMARAJANAGAR DISTRICT, REPRESENTED BY THE LEARNED STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BENGALURU.

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SRI. B. PRAMODKUMAR, CIRCLE INSPECTOR, GUNDLUPET POLICE STATION, CHAMARAJANAGAR - 571 313.

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…RESPONDENTS

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(BY SMT. M.M WAHEEDA, HCGP)

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THIS CRL.P IS FILED U/S.482 OF CR.P.C PRAYING TO QUASH THE PROCEEDINGS PENDING BEFORE THE LEARNED PRL. CIVIL JUDGE AND JMFC, GUNDLUPET IN C.C.NO.261/2016 AS PER ANNEXURE-C.

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IN CRL.P NO.8485/2022

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BETWEEN:

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SRI. NAGARAJA @ AUTO NAGA, S/O MUNIVENKATAPPA, AGED ABOUT 68 YEARS, R/AT NO.412, 6^TH CROSS, 6^TH MAIN,

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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GOKULA 1^ST STAGE, 2^ND PHASE, YASHAWANTHPURA, BENGALURU - 560 022.

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…PETITIONER

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(BY SRI. S. RUPESH KUMAR, ADVOCATE)

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AND:

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STATE OF KARNATAKA, BY YASHWANTHAPURA POLICE STATION, BENGALURU, REPRESENTED BY THE LEARNED STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BENGALURU - 01

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SRI. JAYAKUMAR ANGADI, PC. 9566 YASHWANTHAPURA, POLICE STATION, BENGALURU CITY - 560 022.

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…RESPONDENTS

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(BY SMT. M.M WAHEEDA, HCGP)

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THIS CRL.P IS FILED U/S.482 OF CR.P.C PRAYING TO QUASH THE PROCEEDINGS PENDING BEFORE LEARNED XXIV ADDITIONAL CMM COURT AT BENGALURU IN C.C.NO.3024/2020 AS PER ANNEXURE-C.

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THESE PETITIONS, COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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Since the issues involved in all these petitions are similar they are taken up together, heard and disposed of by a common order.

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The petitioners in all these petitions are sought to be prosecuted for offences punishable under Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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Act, 2004 ('the Interest Act' for short) and Sections 37 and 38 of the Karnataka Money Lenders Act, 1961.

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The case of the prosecution is that the petitioners are in the business of lending money to the public without obtaining the licence and are charging exorbitant interest on the money lent.

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Heard the learned counsel appearing for the parties.

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The issue involved in this petition was examined by a Coordinate Bench of this Court in W.P.No.29499/2017, wherein at paragraph 10 to 13 has held as follows:

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"10. On plain reading of the records it indicates that on the basis of the information given by the Assistant Police Commissioner, the Police Inspector of Cottonpet police station secured pancha witnesses and he has searched the house of accused Nos.1 and 2 without registration of the case as contemplated under Section 154 of Cr.P.C. Even as could be seen from Section 15 of the Karnataka Money-Lenders Act, 1961, it is the Registrar, Assistant Registrar or any Officer authorized by the State Government are permitted to verify, whether any money lending business has been carried out in accordance with the provisions of the said Act and they are permitted to enter the premises of money lender or any person who in his own has to carry on business of money lending calling upon him to

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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produce any records or documents relating to such business or every such money lender or the person shall allow such inspection and produce such record or document. Hence, the said Section itself clarifies that it is the statutory authority to call for any records or documents from any money lenders or any person for the purpose of verification.

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11. Under the circumstances, the Police Inspector is not having any authority to come and search the said premises and even the Assistant Commissioner of Police is not having any authority to issue search warrant. This preposition of law also came up before a Co-ordinate Bench of this Court in Rasquinha v. State of Karnataka [(1975) 2 Kar.L.J. 75] held as under:

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“Karnataka Moneylenders Act, 1961, S.15─Issue of search warrant.

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Sec.15 confers power on the statutory authority to call for any record or document from any moneylender or any person for the purpose of verifying whether the business of money lending is carried on in accordance with the provisions of the Act.

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The section does not provide as to what the statutory authority should do if there is any disobedience to the demand for record. It is clear from the provision of the section that it does not authorize the Registrar, Asst. Registrar or Officer so authorized to issue search warrant to search or seize any document belonging to the moneylender or any other person.”

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7 - NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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12. Even as could be seen from the records, though no complaint has been lodged by any aggrieved debtor to the jurisdictional Court as per Section 5 of the Interest Act, the persons claim to have been charged with exorbitant interest have to approach the jurisdictional Court under Section 5 of the Interest Act and seek redressal of the grievance. When the said Act provides that it is only aggrieved person who can file the complaint under Section 5 of the Interest Act and no such complaint is pending, under such circumstances, the proceedings initiated by the police vitiates the entire proceedings and it is in violation of Section 5 of the Interest Act.

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13. On going through the entire materials produced and the law that depicts that there is abuse of process of law by the respondent police in following the above said procedure and that they have made search without registering the case, I am of the considered opinion that the petitioners have made out case so as to quash the proceedings.

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In that light, the petition is allowed . The first information report in Crime No.98/2017 registered by Cottonpet police station for the offences punishable under Sections 40, 38 and 39 of the Karnataka MoneyLenders Act, 1961, Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 and

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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Section 420 r/w Section 34 of Indian Penal Code, 1860 pending on the file of XLV Additional Chief Metropolitan Magistrate, Bengaluru are hereby quashed. Whatever the documents and cheques which are so seized by drawing the mahazar, the same may be returned to the petitioners-accused on proper identification and acknowledgement.

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Insofar as prayer Nos.2 and 3 are concerned, they are disposed of as not necessary. In view of disposal of the petition, I.A.Nos.1 and 2 of 2019 do not survive for consideration and the same are disposed of."

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In the instant case, the Police inspector without registering the case at the first instance has conducted the raid and the same is impermissible in view of the specific provisions contained in Section 5 of the Interest Act, wherein, it states that the persons aggrieved have to approach the jurisdictional Court under Section 5 of the Interest Act and seek redressal of the grievance. Therefore, when the said Act provides that is only aggrieved person, who can file the complaint under Section 5 of the Interest Act and no such complaint is pending, under such circumstances, the proceedings initiated by the Police, vitiates the entire proceedings and it is a violation of Section 5 of the Interest Act.

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Section 15 of the Karnataka Money Lenders Act, 1961 confers power on the statutory authority to call for record a document from any money lender for the purpose of verifying

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NC: 2023:KHC:36770 CRL.P No. 6903 of 2022 C/W CRL.P No. 6792 of 2022 CRL.P No. 6914 of 2022 CRL.P No. 8485 of 2022

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whether the business of money lending is carried on in accordance with provisions of the Act. Therefore, the conduct of the raid and seizure of the documents of the petitioners by the police is in violation of Section 15 of the Karnataka Money Lenders Act, 1961 and Section 154 of the Cr.P.C., since the offences alleged against the petitioners are cognizable. Therefore, the continuation of criminal proceedings would be an abuse of the process of law. Accordingly, the following:

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ORDER

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a. The criminal petitions are allowed.

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b. The proceedings in C.C.No.261/2016, C.C.No.262/2016, C.C.No.259/2016, pending before the learned Principal Civil Judge and JMFC, Gundlupet and C.C.No.3024/2020, pending before the learned XXIV Additional CMM Court, Bengaluru stands quashed.

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Sd/JUDGE

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JY List No.: 1 Sl No.: 2 CT:SNN

Sri N Kumar v. State of Karnataka

Case brief

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Sri N Kumar v. State of Karnataka

Case brief

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