2. Heard learned counsel for the petitioner and learned
3. A perusal of the material on record will indicate that the
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
4. In an identical circumstances, in the case of the
2. THE SECRETARY
DEPARTMENT OF CO-OPERATIVE SOCIETY
(MONEY LENDING)
M.S. BUILDING,
BANGALORE -560 001.
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
3. THE REGISTRAR OF CO-OPERATIVE SOCIETY/
MONEY LENDERS
NO 1, ALIASKAR ROAD
BANGALORE - 560052.
4. THE DEPUTY REGISTRAR OF MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD
BANGALORE - 560 003.
5. THE ASSISTANT REGISTRAR OF
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD
BANGALORE-560 003.
6. DIRECTOR GENERAL OF POLICE
POLICE HEAD QUARTERS
NRUPATHUNGA ROAD
BANGALORE - 560001.
7. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB, FORT
MUMBAI, BY ITS GOVERNOR.
...RESPONDENTS
(BY SRI M VINOD KUMAR, AGA FOR R1-R6
SMT. RASHMI SUBRAMANYA, ADV. FOR R7)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARE THAT CHAPTER IIIB OF THE RESERVE BANK OF
INDIA ACT OCCUPY THE FIELD WITH REGARD TO CONTROL,
PENAL ACTION ETC., AGAINST THE PETITIONER COMPANY,
AND THAT THE PROVISIONS OF CHAPTER IIIB OF THE R.B.I.
ACT SHALL HAVE OVERRIDING EFFECT ON THE STATE
LAWS, NAMELY THE KARNATAKA MONEY LENDERS ACT,
1961 AND KARNATAKA PROHIBITION OF CHARGING
EXORBITANT INTEREST ACT 2004, OR IN THE ALTERNATIVE
DECLARE THAT THE "KARNATAKA PROHIBITION OF
CHARGING EXORBITANT INTEREST ACT, 2004" AND
"KARNATAKA MONEY LENDER ACT 1961" IS NOT
APPLICABLE TO THE PETITIONER.
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
BETWEEN:
SHRIRAM TRANSPORT FINANCE CO. LTD.,
HAVING ITS REGIONAL OFFICE
AT 29/A, K H ROAD
BANGALORE-27
REPTD. BY ITS ASSISTANT MANAGER/
GPA HOLDER
SRI MADHUSHEHAN MANVI
...PETITIONER
(BY SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W
SRI DEVIPRASAD SHETTY, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY LENDING)
BANGALORE.
2. THE REGISTRAR OF GENERAL OF
MONEY-LENDERS
ALIASKAR ROAD
BANGALORE-52.
3. THE DEPUTY REGISTRAR &
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD, BANGALORE-3.
4. THE ASSISTANT REGISTRAR &
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD, BANGALORE-3.
5. THE SUB INSPECTOR & POLICE (LAW & ORDER)
WILSON GARDEN POLICE STATION
BANGALORE.
6. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
FORT MUMBAI
BY ITS GOVERNOR.
7. A.S.T. ARASU
AGED ABOUT 61 YEARS
S/O. SRI A.M. SEEYALAM
No.35/B,2ND CROSS
60 FT ROAD
MAHAGANAPATHI NAGAR
RAJAJINAGAR
BANGALORE.
8. R. KRISHNAN
AGED ABOUT 60 YEARS
S/O. SRI D RAMEGOWDA
No.82, II MAIN
EESHWARINAGAR
BSK III STAGE
BANGALORE
9. K.B. GOPALAKRISHAN
AGED ABOUT 40 YEARS
S/O. SRI BOMMALINGAIAH
CHIKKABIDARAKALLU
REDDY KATTE ROAD
NAGASANDRA POST
BANGALORE.
10. B.K. PUTTASWAMY
AGED ABOUT 53 YEARS
S/O. SRI KULLEGOWDA
No.108/1, I MAIN
2ND CROSS, RISHIKESH NAGAR
HOSAKEREHALLI
BSK III STAGE
BANGALORE.
...RESPONDENTS
(BY SRI. M. VINOD KUMAR, AGA FOR R1-R5
SMT. RASHMI SUBRAMANYA FOR R-6
RESPONDENTS 7 TO 10 IMPLEADED V/O DT. 25.01.2012.
SMT. LAKSHMI S HOLLA, ADV. FOR R7-10)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARE THAT THE PROVISIONS OF "KARNATAKA MONEY
LENDERS ACT 1961" & THE PROVISIONS OF "KARNATAKA
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
PROHIBITION OF CHARGING EXORBITANT INTEREST ACT
2004" AS BEING NOT APPLICABLE TO THE NBFC THAT IS
THE PETITIONER REGISTERED UNDER CHA.IIIB OF THE RBI
ACT AND ETC.
BETWEEN:
CHOLAMANDALAM INVESTMENT
& FINANCE CO LTD
HAVING ITS OFFICE AT
NO. 28/1, KENSINGTON ROAD,
OPP. GURUDWARA,
NEAR ALSOOR LAKE,
BANGALORE- 560 042
REP. BY ITS CONSTITUTED ATTORNEY
SRI NAVEEN N D.
...PETITIONER
(BY SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W
SRI DAYANAND S PATIL, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY- LENDING)
VIDHANA SOUDHA
BANGALORE- 560001.
2. THE REGISTRAR GENERAL
OF MONEY-LENDERS
NO.1, ALIASKAR ROAD
BANGALORE- 560052.
3. THE JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES
(LEGAL SECTOR)
OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES
NO.1, ALIASKAR ROAD
BANGALORE- 560052.
4. THE ASSISTANT REGISTRAR
OF MONEY-LENDERS
OFFICE OF THE ASSISTANT REGISTRAR
OF CO-OPERATIVE SOCIETIES
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
& MONEY LENDERS
TUMAKUR SUB-DIVISION
NEAR TOWN HALL CIRCLE
GANDHINAGAR
TUMAKUR- 572101.
5. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB
FORT. MUMBAI
BY ITS GOVERNOR.
...RESPONDENTS
(BY SRI M VINOD KUMAR, AGA FOR R1-R4
SMT. RASHMI SUBRAMANYA, ADV. FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARE THAT THE PROVISIONS OF THE "KARNATAKA
MONEY LENDERS ACT, 1961" AND THE "KARNATAKA
PROHIBITION OF CHARGING EXORBITANT INTEREST ACT,
2004" AS BEING NOT APPLICABLE TO THE PETITIONER
WHICH IS AN NBFC, REGISTERED UNDER CHAPTER III-B OF
THE RBI ACT AND ETC.
BETWEEN:
INDIA INFOLINE FINANCE LIMITED
(FORMERLY KNOWN AS INDIA
INFOLINE INVESTMENT
SERVICES LIMITED)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT INDIA INFOLINE HOUSE
SUN INFOTECH PARK ROAD
NO.16, PLOT NO, B -23 MIDC
THANE INDUSTRIAL ESTATE
WAGLE ESTATE, THANE-400604.
ALSO HAVING IT REGIONAL OFFICE AT
NO.31/9, KRIMSON SQUARE
HOSUR ROAD, ABOVE VISHAL MART
BANGALORE
REP. BY ITS AREA OPERATING OFFICER
MR. KIRAN M.
...PETITIONER
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
(BY SRI RAGHURAM CADAMBI, ADV.)
AND:
1. STATE OF KARNATAKA
REPT. BY ITS FINANCE SECRETARY
VIDHANA SOUDHA
DR. AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE ASSISTANT REGISTRAR
OFFICE OF THE ASSISTANT REGISTRAR
BANGALORE NORTH DIVISION
NO.146, THIRD MAIN ROAD
8TH CROSS, MARGOSA ROAD
MALLESHWARAM
BANGALORE-560003.
3. REGISTRAR OF MONEY-LENDERS
BANGALORE NORTH, KARNATAKA
NO.1, ALI ASKER ROAD
BANGALORE-560052.
4. JOINT REGISTRAR
CO-OPERATION DEPARTMENT (LEGAL CELL)
NO.1, ALI ASKER ROAD
BANGALORE-560052.
5. RESERVE BANK OF INDIA
HAVING ITS OFFICE AT
NRUPATHUNGA ROAD
BANGALORE-560001.
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R4
SMT. RASHMI SUBRAMANYA, ADV. FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARE THAT THE ACTIONS OF THE R2 TO R4 IN
SEEKING TO BRING THE PETITIONER UNDER THE
PROVISIONS OF THE KARNATAKA MONEY LENDERS ACT
1961 & THE KARNATAKA PROHIBITION OF CHARGING
EXORBITANT INTEREST ACT 2004, ARE ILLEGAL,
UNCONSTITUTIONAL & VIOLATIVE OF THE RESERVE BANK
OF INDIA ACT 1934 AND ETC.
- 10 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
BETWEEN:
FED BANK FINANCIAL SERVICES LIMITED
HAVING ITS CORPORATE OFFICE AT C-6
5TH FLOOR, C WING, LAXMI TOWERS
BANDRA KURLA COMPLEX
BANDRA (EAST), MUMBAI-400051.
HAVING ITS BRANCH AT 1ST BLOCK
FIRST FLOOR, DOOR NO.259
10TH CROSS, 1ST N BLOCK
RAJAJI NAGAR, BANGALORE-560010
REP. BY ITS STATE HEAD- SALES
SRI SANAL CH.
...PETITIONER
(BY SRI SHASHI KIRAN SHETTY, SR.COUNSEL
A/W SMT. LATHA SHETTY, ADV.)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS
CHIEF SECRETARY
VIDHANA SOUDHA
BANGALORE-560001.
2. REGISTRAR OF MONEY LENDERS
CHIT AND CO- OPERATION
NORTH ZONE
NO.146, 3RD MAIN
MARGOSA ROAD, 8TH CROSS
MALLESHWARAM
BANGALORE-560003.
3. THE SECRETARY
CO-OPERATIVE SOCIETY DEPARTMENT
VIKAS SOUDHA
BANGALORE.
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R3)
- 11 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARING THAT THE PETITIONER COMPANY IS SOLELY
GOVERNED BY RESERVE BANK OF INDIA; DECLARE THAT
KARNATAKA MONEY LANDERS ACT 1961, KARNATAKA
PAWN BROKERS ACT, 1961, KARNATAKA PROHIBITION OF
CHARGING EXORBITANT INTEREST ACT 2004 IS NOT
APPLICATION TO THE PETITIONER COMPANY AND ETC.
BETWEEN:
M/S. SKS MICRO FINANCE LTD.,
A COMPANY INCORPORATED UNDER THE
INDIAN COMPANIES ACT
HAVING ITS REGISTERED OFFICE AT
ASHOKA RAGHUPATHI CHAMBERS
OPP: SHOPPERS STOP
BEGUMPET, HYDERABAD-500 016.
AND ITS OFFICE AT R.O.NO.C121
OPP. SBI 3RD CROSS
EAST OF NGEF, KASTURI NAGAR
BANGALORE-560 043
REP. BY ITS STATE HEAD
AWANISH KUMAT.
NEW ADDRESS:
3RD FLOOR, MY HOME TYCOON
BLOCK-A, 6-3-1192
KUNDANBAGH
BEGUMPET
HYDERABAD-500016
ANDRA PRADESH.
...PETITIONER
(BY SRI SANTHOSH, ADV.)
AND:
1. STATE OF KARNATAKA
REP. BY ITS SECRETARY TO THE
DEPARTMENT OF CO-OPERATION
M S BUILDING,
BANGALORE-560 001.
- 12 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
2. THE SPECIAL OFFICER AND
JOINT SECRETARY
GOVERNMENT OF KARNATAKA
DEPARTMENT OF CO-OPERATION
M S BUIDLING
BANGALORE-560001.
3. THE REGISTRAR OF CO-OPERATIVE SOCIETIES
NO.1, ALIASKAR
BANGALORE-560 052.
4. THE DEPUTY REGISTRAR
OF CO-OPERATIVE SOCIETIES
TUMUKR DISTRICT
TUMKUR.
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE IMPUGNED ORDERS, NAMELY THE ORDER
PASSED BY THE R2 DATED 05.01.2012, AS PER ANN-A & THE
ORDER PASSED BY THE R4, DATED 30.03.2012, AS PER
ANN-B.
BETWEEN:
M/S. RELIANCE CAPITAL LIMITED
REGISTERED OFFICE AT H-BLOCK
FIRST FLOOR, DHIRUBHAI AMBANI
KNOWLEDGE CITY
KOPERKHIARANE
NAVI MUMBAI-400710.
HAVING ITS REGIONAL OFFICE AT
NO.37, BRAHMANANDA COURT
3RD FLOOR, LALBAGH ROAD
BANGALORE
REPT. BY ITS BRANCH COLLECTION
MANAGER MR.HARISH.
...PETITIONER
(BY SMT. K.B.SREEDEVI, ADV.)
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NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
AND:
1. THE STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
MULTISTORIED BUILDING
DR. AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE ASSISTANT REGISTRAR OF MONEY
LENDING
CENTRAL ZONE CIRCLE
NO.146, 8TH CROSS
MARGOOSA ROAD
MALLESHWARAM
BANGALORE-560003.
...RESPONDENTS
(BY SMT. A.R. SHARADAMBA, AGA FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE SHOW CAUSE NOTICE DATED 17.04.2012 AT
ANNX-J ISSUED BY THE R2 AND ALL OTHER PROCEEDINGS
PURSUANT THERETO AND DECLARE THAT THE
PROVISIONS OF THE KARNATAKA MONEY LENDING AND
PAWN BROKERS ACT 1961 IS NOT APPLICABLE TO THE
PETITIONER COMPANY.
BETWEEN:
MUTHOOT FINANCE LTD.,
HAVING ITS OFFICE AT 84/3,
HENNUR MAIN ROAD,
ST.THOMAS TOWN POST,
LINGARAJAPURAM
BANGALORE- 560084
REPRESENTED BY ITS
REGIONAL MANAGER
MR. ASHOK KUMAR
AGED ABOUT 64 YEARS. ...PETITIONER
(BY SRI SHASHI KIRAN SHETTY, SR.COUNSEL A/W
SMT. LATHA SHETTY, ADV.)
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NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
AND:
1. STATE OF KARNATAKA
REPT. BY ITS CHIEF SECRETARY
VIDHANA SOUDHA,
BANGALORE 560001.
2. FINANCE DEPARTMENT AND TAXES
VIDHANA SOUDHA
BANGALORE.
REPT. BY ITS SECRETARY.
3. CO-OPERATIVE SOCIETY DEPARTMENT
VIKAS SOUDHA
BANGALORE
REPT. BY ITS SECRETARY.
4. REGISTRAR OF MONEY LENDERS
BANGALORE URBAN DISTRICT
BANGALORE- 3.
...RESPONDENTS
(BY SMT. A.R.SHARADAMBA, AGA FOR R1-R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
DECLARE THAT THE PETITIONER COMPANY IS SOLELY
GOVERNED BY RESERVE BANK OF INDIA; DECLARE THAT
KARNATAKA PROHIBITION OF CHARGING EXORBITANT
INTEREST ACT 2004 IS NOT APPLICABLE TO THE
PETITIONER COMPANY.
BETWEEN:
1. KOSAMMATTAM FINANCE LTD.,
HAVING ITS REGISTERED
OFFICE AT MKC BUILDING
KOTTAYAM - 1, KERALA
REPT. BY ITS MANAGING DIRECTOR.
2. KOSAMMATTAM FINANCE LTD.,
33/3, 1ST FLOOR, MVR BUILDING
NEAR INDIAN ACADEMY COLLEGE
HENNUR CROSS, BENGALURU
REPRESENTED BY ITS
REGIONAL MANAGER
SRI K KUMARASWAMY
S/O LATE K KEMPE GOWDA
- 15 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
AGED ABOUT 61 YEARS.
...PETITIONERS
(BY SRI. SHIVARUDRAPPA SHETKAR, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY-LENDING)
BANGALORE- 560052.
2. THE REGISTRAR GENERAL
OF MONEY-LENDERS
ALIASKAR ROAD
BANGALORE- 560052.
3. THE DEPUTY REGISTRAR &
MONEY-LENDERS
SOUTH DIVISION
GMC BANK BUILDING
PAMPAMAHAKAVI ROAD
CHAMARAJPETE
BANGALORE-18.
4. THE ASSISTANT REGISTRAR
& MONEY-LENDERS
SOUTH DIVISION
GMC BANK BUILDING
PAMPAMAHAKAVI ROAD
CHAMARAJPETE
BANGALORE- 18.
5. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB, FORT
MUMBAI -400005
BY ITS GOVERNOR.
...RESPONDENTS
(BY SMT A.R.SHARADAMBA, AGA FOR R1-R4
R5 ARE SERVED)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226
OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT THE PROVISIONS OF 'KARNATAKA PROHIBITION OF
CHARGING EXORBITANT INTEREST ACT, 2004 AS BEING
- 16 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
NOT APPLICABLE TO THE NBFC THAT IS THE PETITIONER
REGISTERED UNDER CHAPTER III B OF THE RBI ACT. AND
ETC.
THESE PETITIONS COMING ON FOR ORDERS THIS
DAY, THE COURT MADE THE FOLLOWING:-
COMMON ORDER
Heard Sri Jayakumar S. Patil and Sri Shashi Kiran
Shetty, learned Senior Counsels along with Sri B.
Ravishankar, Sri Deviprasad Shetty, Sri Dayanand S. Patil, Sri
S.R. Hegde, Sri C.K. Nandakumar, Sri M.S. Varadarajan, Sri Jai
M. Patil, Sri Shivarudrappa Shetkar, learned counsels for the
petitioners, Sri M. Vinod Kumar, learned Additional Government
Advocate for respondents 1 to 6, Smt Rashmi Subramanya,
learned counsel for the 7th respondent. Perused the writ petitions
papers.
2. It is submitted that in all these writ petitions,
petitioners/Non-Banking Financial Companies (for short 'the
NBFCs') registered under the Reserve Bank of India Act, 1934,
(for short 'the RBI Act') and regulated by RBI are before this
Court praying for a declaration to declare that the State
Enactments i.e., the Karnataka Prohibition of Charging Exorbitant
Interest Act, 2004 (for short 'the 2004 Act'), and the Karnataka
Money-Lenders Act, 1961 (for short 'the 1961 Act'), are not
applicable to the petitioners and also to quash the consequential
orders.
3. Learned Senior Counsels Sri.Jayakumar S. Patil and Sri.
Shashi Kiran Shetty on behalf of the petitioners contend that both
the State enactments under challenge in these petitions are
against the legislative competence of the State Government.
Since the petitioners' NBFCs are registered and functioning under
the RBI Act, falls under the ambit of 1956 Act. Further, it is
- 17 -
NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
submitted that Reserve Bank of India is the regulatory body for the
petitioners' NBFCs and the State Acts such as Karnataka Money-
Lenders Act, 1961 and Karnataka Prohibition of Charging
Exorbitant Interest Act, 2004 are State enactments under Entry 30
of List-II of Schedule VII of the Constitution of India, are not
applicable to petitioners. The petitioners are covered by the 1956
Act enacted by the Parliament under Entry 43 of List-I of Schedule
VII. Provisions of 1956 Act has made it clear that it would have
overriding effect in respect of any inconsistencies therewith
contained in any other law.
4. Learned Senior Counsel would submit that the question of
law raised in these writ petitions were the subject matter of Civil
Appeal No.5233/2012 [Nedumpilli Finance Company Limited
V/s. State of Kerala and Others] before the Hon'ble Apex Court.
The Hon'ble Apex Court was examining the question as to
whether Non-Banking Financial Companies regulated by Reserve
Bank of India in terms of the provisions of Chapter III-B of RBI Act,
can also be regulated by the State Governments such as Kerala
Money Lenders Act, 1958 and Gujarat Money Lenders Act, 2011.
While answering the said question, the Hon'ble Apex Court has
made it clear that the State Enactments would have no application
to NBFCs, which are registered under the 1934 Act. It is further
submitted that both the above State Acts, which are under
challenge are enacted by the State Government in exercise of
their powers under Entry 30 of List-II of Schedule VII of
Constitution of India. It is submitted that State has no power to
regulate the functions of NBFCs which are registered under the
Reserve Bank of India Act. Therefore, they pray to declare both
the Acts under challenge as not applicable to the petitioners'
NBFCs.
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NC: 2025:KHC:8121
CRL.P NO.1151 OF 2025
5. On hearing the learned Senior Counsel for the petitioners
as well as learned counsel for the respondents, I am of the view,
that question raised in the present writ petitions is covered by the
principles and decision of the Hon'ble Apex Court in the above
stated C.A.No.5233/2012. As stated above, the question before
the Hon'ble Apex Court was whether NBFCs regulated by the
Reserve Bank of India can also be regulated by State enactments.
While answering the above said question, the Hon'ble Apex Court
at paragraphs 6.11, 8, 8.4 and 11, has held as follows:
"6.11 The above scheme of Chapter III-B of the RBI
Act shows that the power of intervention available for
the RBI over NBFCs, is from the cradle to the grave.
In other words, no NBFC can carry on business
without being registered under the Act and a NBFC
which takes birth with the registration under the Act
is liable to be wound up at the instance of the RBI.
The entire life of a NBFC from the womb to the tomb
is also regulated and monitored by RBI.
8. As indicated by the Constitution Bench in Deep
Chand (supra), a law may be valid when made, but
a shadow may be cast on it by supervening
constitutional inconsistency or supervening
existing statutory inconsistency. Assuming that the
Kerala Act was valid in its application to NBFCs when
it was made, on the ground that the business of
money lending is traceable to Entry 30 of List II, it has
to give way for the parliamentary enactment. The
moment the Parliament stepped in to codify the
law relating to registration and regulation of
NBFCs, by inserting certain provisions in Chapter
III-B of the RBI Act, the same would cast a shadow
on the applicability (even assuming it is
applicable) of the provisions of the Kerala Act to
NBFCs registered under the RBI Act and regulated
by RBI.
8.4 In UCO Bank and Another vs. Dipak Debbarma
and Others8, a sale Notification issued under the
Securitisation Act was challenged on the ground that
it constituted an infraction of Tripura Land Revenue
and Land Reforms Act, 1960. This Court found that
the Securitisation Act is traceable to Entry-45 of List-I
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CRL.P NO.1151 OF 2025
and the Tripura Act is traceable to Entries 18 and 45
of the State List. After referring to the Constitution
Bench decision in State of West Bengal and Others
vs. Committee for Protection of Democratic
Rights, West Bengal and Others9 and other
decisions, this Court held that the Securitisation Act,
being a Parliamentary legislation is the dominant
legislation. To come to the said conclusion, this Court
referred to the non-obstante clause in Article 246(1).
11 In view of the above, we are of the considered
opinion that the Kerala Act and Gujarat Act will have
no application to NBFCs registered under the RBI Act
and regulated by RBI. Therefore, all the appeals filed
by NBFCs against the judgment of the Kerala High
Court are allowed. Likewise the appeals filed by the
State of Gujarat against the judgment of the Gujarat
High Court are dismissed."
6. Following the dictum of the Hon'ble Apex Court in
NEDUMPILLI FINANCE COMPANY LIMITED (supra), writ
petitions are allowed and it is declared that State Enactments i.e.,
Karnataka Money-Lenders Act, 1961 and the Karnataka
Prohibition of Charging Exorbitant Interest Act, 2004, are not
applicable to the petitioners/NBFCs registered under the 1934 Act
and regulated by Reserve Bank of India. Accordingly,
(i) In W.P.No.18597/2012 - Annexure-G bearing
No.DRBC/ML/DOORU/44/2011-12 dated 08.05.2012 and
Annexure-H letter bearing No.NML/YMC/258/2011-12
dated 11.05.2012;
(ii) In W.P.No.47108/2011 - Annexure-F bearing No.DRB-
C/ML/DOORU/20/2011-12 dated 29.09.2011 and the
entire proceedings in Crime No.0272/2011 including the
FIR Annexure-G dated 28.11.2011;
(iii) In W.P.No.3208/2012 - Order Annexure-G bearing
No.AR-32/LEVADEVI/CR.94/2011-12 dated 21.01.2012
and Annexure-H letter bearing No.NML/YMC/ /2011-12
dated 21.01.2012;
(iv) In W.P.No.7508/2012 - Order Annexure-L bearing
No.NML/YMC/128/2011-12 dated 29.10.2011 and
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CRL.P NO.1151 OF 2025
Annexure-H letter bearing No.NML/YMC/109/2011-12
dated 29.09.2011;
(v) In W.P.No.11891/2012 - Order Annexure-A bearing No.C0
10 CML 2010 dated 05.01.2012 and letter Annexure-B
bearing No.DRT:LEVADEV/SKSMICRO:CR178/201-12
dated 30.03.2012;
(vi) In W.P.No.15215/2012 - Order Annexure-J bearing
No.ARB-45(C)/ML/PB/ITARE/ 682/ 2011-12 dated
17.04.2012;
(vii) IN W.P.No.11658/2015 - Order Annexure-F bearing
No.DRB-S/NML/P.N./04/2014-15 dated 17.11.2014, are
quashed."
5. A perusal of material on record will indicate that the
petitioner herein is identically and similarly situated to the
petitioners in the aforesaid petitions in which, the Co-ordinate
Bench of this Court, quashed the impugned proceedings, and
consequently by applying / invoking the doctrine of parity, I am of
the considered opinion that the impugned proceedings against the
petitioner herein deserves to be quashed..
6. In the result, I pass the following:
ORDER
1) Criminal Petition is allowed;
2) The impugned F.I.R. in Crime No.144/2012
registered by the Tarikere Town Police Station,
Chikkamagaluru against the petitioner for the
offences punishable under Sections 3 and 4 of the
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Karnataka Prohibition of Charging Exorbitant
Interest Act, 2004 and Section 420 of the Indian
Penal Code pending on the file of the Principal
Civil Judge (Sr.Dn.) and CJM Court, Tarikere is
hereby quashed.
Sd/-
(S.R.KRISHNA KUMAR)
JUDGE
ARK
