Partly allowed

M/S Muthoot Finance Ltd. v. State of Karnataka

Karnataka HC29 Aug 2024WP/16445/2023

Case brief

AI extract

What is this about?

Petitioner, a finance company, challenged a police notice under Section 91 CrPC seeking gold ornaments pledged as loan security. Holding no evidence linked the gold to crime proceeds, the High Court quashed the notice but allowed police to demand production with advance notice for investigation.

What did the court decide?

Notice under Section 91 CrPC dated 15.07.2023 quashed; production of gold allowed only with advance notice for investigation.

M/S Muthoot Finance Ltd. Vs State of Karnataka — Banking and Recovery | Karnataka HC (2024)

¶1

¶2

NC: 2024:KHC:34867 WP No. 16445 of 2023

¶3

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶4

DATED THIS THE 29^TH DAY OF AUGUST, 2024

¶5

BEFORE

¶6

THE HON'BLE MR JUSTICE K V ARAVIND

¶7

WRIT PETITION NO. 16445 OF 2023 (GM-POLICE)

¶8

BETWEEN:

¶9

M/S MUTHOOT FINANCE LTD., KOTTARA BRANCH, 1^ST FLOOR SHRI GURU NARAYANA COMPLEX OPP TO INFOSYS KOTTARA JUNCTION MANGALORE 575006 REP. BY ITS ASSISTANT MANAGER, SRI HARISH KUMARA M S/O MAHALINGAPPA R REGISTERED UNDER THE COMPANIES ACT 1956

¶10

…PETITIONER

¶11

(BY SRI VENKATARAMANA K. S., ADVOCATE)

¶12

AND:

¶13

Digitally signed by VALLI MARIMUTHU Location: High Court of Karnataka

¶14

STATE OF KARNATAKA REP. BY ITS HOME SECRETARY HOME SECREATARY, VIDHANA SOUDHA BANGALORE 560001.

¶15

URVA POLICE STATION BY ITS STATION HOUSE OFFICER (PSI) URVA, MANGALORE CITY-575006 REP. BY PUBLIC PROSECUTOR OF HIGH COURT OF KARNATAKA HIGH COURT BUILDINGS BANGALORE 560001. …RESPONDENTS

¶16

(BY SRI S.H. RAGHAVENDRA AGA)

¶17

2 - NC: 2024:KHC:34867 WP No. 16445 of 2023

¶18

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE NOTICE DATED 15/07/2023 PASSED BY R2 VIDE ANNEXURE-F. DIRECTING THE RESPONDENTS NOT TO INTERFERE WITH THE PEACEFUL BUSINESS OF THE PETITIONERS AND COMPANY IN RESPECT OF THE LOAN TRANSACTIONS WHICH IS SUBJECT MATTER OF THIS PETITION.

¶19

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

¶20

CORAM: HON'BLE MR JUSTICE K V ARAVIND

¶21

ORAL ORDER

¶22

This petition questioning the notice issued by

¶23

respondent - police dated 15.07.2023 under Section 91 of Code of Criminal Procedure, 1973.

¶24

The petitioner is a non-banking finance

¶25

company registered under the Companies Act, 1956. The petitioner has extended loan to Sri.Ramachandra S against the pledge of gold ornaments after taking KYC documents. The loan amount is Rs.3,90,436/-. The loan documents viz., gold deposit receipt, demand promissory note, demand promissory note delivery cum letter of waiver and

¶26

3 - NC: 2024:KHC:34867 WP No. 16445 of 2023

¶27

gold ownership certificate are produced at Annexure-A to C.

¶28

The respondent - police have issued impugned notice on the ground that the pledged gold is subject matter of Crime No.60/2023 for the offences under Section 384 and 506 of Indian Penal Code, 1860.

¶29

Mr.Venkataramana K.S., learned counsel for the petitioner submits that the petitioner is in possession of gold ornaments as a pledge for extending credit facilities (gold loan). The petitioner has subjected the borrower to verification and KYC documents. It is further submitted that the production of gold before respondent Police would prejudice petitioner rights.

¶30

Mr.S.H.Raghavendra, learned Additional

¶31

Government Advocate submits that gold ornaments are subjected to investigation in the FIR No.60/2023 for the offences under Section 384 & 506 of IPC. The notice is issued for production of gold ornaments for the purpose of investigation. Learned Additional Government Advocate

¶32

4 - NC: 2024:KHC:34867 WP No. 16445 of 2023

¶33

further submits that once gold ornaments are handed over to the custody of the police authorities, the same will be subjected to the jurisdiction of the competent court and the petitioner would be entitled to seek release of the gold before the competent court by filing necessary application.

¶34

Considered the submissions of the learned

¶35

counsel for the parties.

¶36

The petitioner is engaged in the business of non- banking finance. The petitioner - company has extended gold loan to Sri.Ramachandra S on pledge of the gold ornaments with due verification and KYC documents. The notice at Annexure-F is issued on the basis of the first information report. The respondent - police have no evidence to establish that the subject gold ornaments are proceeds of the crime in FIR No.60/2023.

¶37

However, it is to be noticed that respondent -

¶38

police would be in necessity of the gold ornaments for their further investigation if not for their custody. The

¶39

¶40

NC: 2024:KHC:34867 WP No. 16445 of 2023

¶41

requisition of the gold ornaments for investigation of the

¶42

crime by the police cannot be completely ruled out.

¶43

In the light of the above, the following:

¶44

O R D E R

¶45

(i) The petition is allowed in part.

¶46

(ii) The notice dated 15.07.2023 at Annexure-F is quashed. However, the respondent - police are at liberty to direct the petitioner to produce the gold ornaments in question for investigation with advance notice.

¶47

(iii) The petitioner is directed to produce the gold ornaments before the respondent - police authorities or before any other competent authority as and when directed for investigation/examination.

¶48

(iv) It is needless to observe that the gold produced before the police authorities shall be returned to the petitioner - company immediately after the purpose is served.

¶49

Sd/(K V ARAVIND) JUDGE

¶50

SS/ List No.: 1 Sl No.: 53

M/S Muthoot Finance Ltd. v. State of Karnataka

Case brief

What is this about?

What did the court decide?

M/S Muthoot Finance Ltd. v. State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/S Saravaloka Services Vs the State of Karnataka

Sri Govindaraju Vs Corporation Bank

Smt S Reddamma Vs Corporation Bank

Mr Shivalinga D Vs the State of Karnataka

Smt. Ameena Banu Vs the State of Karnataka

Mr Paul Moteiro Vs M/S Sundaram Bnp Paribas Home Finance Ltd.