Allowed

Sri Chandran v. State of Karnataka

Karnataka HC17 Nov 2023CRL.P/7927/2021

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed criminal proceedings against the petitioner under Sections 38 and 39 of the Karnataka Money Lenders Act, 1961 and Section 506 IPC. The court held that the evidence was insufficient to prove the petitioner was engaged in the money lending business without a license.

What did the court decide?

Criminal proceedings in C.C.No.3693/2019 for offences under Sections 38 and 39 of Karnataka Money Lenders Act and Section 506 IPC were quashed.

Sri Chandran Vs State of Karnataka — Cheque Dishonour | Karnataka HC (2023)

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1 - NC: 2023:KHC:41144 CRL.P No. 7927 of 2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 17^TH DAY OF NOVEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE R. NATARAJ CRIMINAL PETITION NO.7927 OF 2021

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BETWEEN:

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SRI. CHANDRAN S/O. M.P. VASU, AGED ABOUT 57 YEARS R/AT. 'SRI SAIKRIPA', DOOR NO.25-21-1339/4 WET WELL NO.7, JEPPU BAPPAL, MANGALURU-575 002

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…PETITIONER

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(BY SMT. HALEEMA AMEEN, ADVOCATE)

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AND:

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Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA

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STATE OF KARNATAKA MANGALURU CITY POLICE STATION, REPRESENTED BY STATE PUBLIC PROSECUTOR, HIGH COURT BUILDINGS, BENGALURU-560 009

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MOHAMMED SHAREEF @ S. SHAREEF S/O. S. ABOOBACKER MAJOR, R/AT HOUSE NO.3-15(1), ALIFA COTTAGE, RENJADY ROAD DERALAKATTE POST, MANGALURU TALUK-575 018.

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…RESPONDENTS

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(BY SMT. WAHEEDA M.M., HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NO.1;

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SRI. TALEKANA RADHAKRISHNASHETTY, ADVOCATE FOR RESPONDENT NO.2)

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2 - NC: 2023:KHC:41144 CRL.P No. 7927 of 2021

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THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.3693/2019 FOR THE OFFENCE PUNISHABLE UNDER SECTIONS 38, 39 OF KARNATAKA MONEY LENDERS ACT AND SECTION 506, 34 OF IPC PENDING ON THE FILE OF J.M.F.C.-II COURT, MANGALURU.

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

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ORDER

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The petitioner has challenged the prosecution initiated against him in C.C.No.3693/2019 pending consideration before JMFC II Court, Mangaluru for the offences punishable under Sections 38 and 39 of the Karnataka Money Lenders Act, 1961 and Section 506 read with 34 of Indian Penal Code, 1860 (henceforth referred to as 'IPC' for short).

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The petitioner initiated prosecution of the respondent No.2 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (henceforth referred to as 'N.I. Act' for short) in C.C.No.1146/2016 before the JMFC (V Court), Mangaluru D.K., on 28.10.2016. The respondent No.2, prior to the complaint under Section 138 of N.I. Act, informed the respondent No.1 about commission of cognizable offence by the petitioner, contending that during 2012, his vehicle met with an accident, and therefore he was in need of money to get

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the vehicle repaired. Consequently, he approached Western Exchange at Milagris Mension, Hampanakatte, Mangaluru which was run by the petitioner herein, for a hand loan and passed on a cheque drawn from the joint account of he and his wife. He alleged that the petitioner also obtained five cheques of Mr. Aboobakkar Siddik as security for the loan of Rs.2,00,000/advanced to him. He alleged that out of the said sum of Rs.2,00,000/-, the petitioner had deducted Rs.60,000/towards interest. He also alleged that he was required to repay the loan of Rs.2,00,000/- within six months. However, even after repayment of the loan, the petitioner failed to return the cheques and other documents. Based on this, the respondent No.1 registered Cr.No.206/2016 for the offence punishable under Sections 38 and 39 of Karnataka Money Lenders Act, 1961 and under Section 506 read with Section 34 of IPC and took up investigation.

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After detailed investigation, the respondent No.1 filed a 'B' report stating that the dispute was civil in nature and that a case for prosecution of the respondent No.2 under Section 138 of N.I. Act was pending consideration. The respondent No.2 objected to the 'B' report and the Trial Court

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NC: 2023:KHC:41144 CRL.P No. 7927 of 2021

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based on the objections, rejected the 'B' report and recorded the statement of the respondent No.1 who marked Exs.P1 to P4. The Trial Court after noticing the evidence, took cognizance of the offence of Sections 38 and 39 of Karnataka Money Lenders Act, 1961 and Section 506 read with Section 34 of IPC and issued process. Being aggrieved by the same, the petitioner is before this Court.

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The learned counsel for the petitioner submits that

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the proceedings initiated against the respondent No.2 under Section 138 of N.I. Act, ended in conviction and respondent No.2 was not able to demonstrate that the petitioner was a money lender. She further submitted that even in the enquiry conducted by the Magistrate before issuing summons, there was no allegation that the petitioner was conducting any business in money lending. She submits that respondent No.2 in his chief-examination marked Ex.P1, a complaint lodged by him on 28.09.2016, Ex.P2 which was the FIR registered in Cr.No.206/2016, Ex.P3 was the authenticated copy of a register

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to show that cheque book was issued in favour of respondent No.2 by MCC bank, Kankanady Branch, Mangaluru and Ex.P4 was the statement of account of respondent No.2. She

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therefore submits that except these documents, there is no mention that the petitioner was a money lender.

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Learned counsel for the respondent No.2 on the other hand submitted that in the proceedings initiated under Section 138 of the N.I. Act, the petitioner admitted that he was running the business in the name and style of Western Union. He submitted that this Western Union was an entity, which was carrying on business in money lending and was operated by the petitioner. Therefore, there was sufficient evidence before the Trial Court to take cognizance that the petitioner was lending money without obtaining appropriate licence and therefore, an offence under Sections 38 and 39 of the Karnataka Money Lenders Act, 1961 was committed.

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I have considered the submission of learned counsel for the petitioner and learned counsel for the respondent No.1 and 2.

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The information furnished by the respondent No.2 before the respondent No.1 on 28.09.2016 merely discloses that the respondent No.2 had visited the "Western Money Exchange" situate at Milagris Mension, Milagris, Mangaluru City,

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where he met the petitioner and requested for a hand loan and that the petitioner agreed to pay a sum of Rs.2,00,000/- and deducted a sum of Rs.60,000/- towards interest payable. There is not even a whisper that the petitioner was doing money lending business without obtaining appropriate licence. Even in C.C.No.1146/2016 filed by the petitioner under Section 138 of N.I. Act, no evidence was extracted from the petitioner to indicate that the petitioner was into money lending business.

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The jurisdictional police who were investigating Cr.No.206/2016 filed a 'B' report on the ground that the proceedings to prosecute the respondent No.2 for the offence under Section 138 of N.I. Act was pending and that this case was civil in nature. When the Trial Court rejected the 'B' report, it must have been on the basis of some justification, but was on the basis of objection raised by the respondent No.2 that the petitioner had committed offences under Sections 38 and 39 of the Karnataka Money Lenders Act, 1961 and under Section 506 read with Section 34 of IPC.

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For immediate reference Sections 38 and 39 Karnataka Money Lenders Act, 1961 is extracted below:

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" 38. Penalty for molestation.- Whoever molests, or abets the molestation of, a debtor for the recovery of a debt due by him to a creditor shall, on conviction, be punished with imprisonment which may extend to six months or with fine which may extend to [five thousand] rupees or with both.

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Explanation .-For the purposes of this section, a person who, with intent to cause another person to abstain from doing any act which he has a right to do or to do any act which he has a right to abstain from doing.-

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(a) obstructs or uses violence to or intimidates such other person, or

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(b) persistently follows such other person from place to place or interferes with any property owned or used by him or deprives him of, or hinders him in, the use of any such property, or

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(c) loiters at or near a house or other place where such other person resides or works, or carries on business, or happens to be, or

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(d) does any act calculated to annoy or intimidate such other person or the members of his family, or

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(e) moves or acts in a manner which causes or is calculated to cause alarm or danger to the person or property of such other person, shall be deemed to molest such other person:

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Provided that a person who goes to the house or place referred to in clause (c) in order merely to obtain or communicate information shall not be deemed be molest.

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39. General provision regarding penalties .Whoever fails to comply with or acts in contravention of any provision of this Act, shall, if no specific penalty has been provided for in this Act, on conviction, be punished-

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(a) for the first offence with simple imprisonment which may extend to [three months] or with fine which may extend to [one thousand] rupees or with both, and

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(b) for the second or subsequent offence with imprisonment which may extend to six months or with fine [which may extend to two thousand rupees] or with both."

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NC: 2023:KHC:41144 CRL.P No. 7927 of 2021

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A perusal of the aforesaid provision, makes it clear that if a person is involved in "business of money lending then he must have obtained the licence in accordance with the provisions of Karnataka Money Lenders Act, 1961." In the case on hand, except the self severing statement of respondent No.2 that the petitioner was doing money lending business, there is not even a shred of evidence to indicate that the petitioner had involved himself in the said business by advancing loan to various persons.

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In that view of the matter, the evidence adduced by the respondent No.2, at the enquiry before the Magistrate was not sufficient for the Magistrate to take cognizance for the offence punishable under Sections 38 and 39 of the Karnataka Money Lenders, Act, 1961.

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Be that as it may, the prosecution initiated by the petitioner against the respondent No.2 for the offence punishable under Section 138 of N.I. Act has ended in a conviction of respondent No.2. Therefore, the prosecution of the petitioner for offences under Sections 38 and 39 of the

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NC: 2023:KHC:41144 CRL.P No. 7927 of 2021

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Karnataka Money Lenders, Act, 1961 was not warranted and justified.

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In that view of the matter, this petition is allowed and the impugned prosecution of the petitioner in C.C.No.3693/2019 (Cr.No.206/2016) pending consideration before the JMFC II Court, Mangaluru, for the offences punishable under Sections 38 and 39 of Karnataka Money Lenders Act, 1961 and Section 506 read with Section 34 of IPC is quashed.

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Sd/JUDGE

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List No.: 1 Sl No.: 37

Sri Chandran v. State of Karnataka

Case brief

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Sri Chandran v. State of Karnataka

Case brief

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