Karnataka High Court
S. Sundar Rao vs State Of Karnataka on 7 March, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2025:KHC:9788
CRL.P No. 14175 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF MARCH, 2025
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CRIMINAL PETITION NO. 14175 OF 2024
BETWEEN:
S. SUNDAR RAO
AGED ABOUT 42 YEARS
S/O SUSEELA BAI
NO.40/1, SHRADHANANDA BHAVAN ROAD
FOOD STREET, V.V. PURAM
BASAVANAGUDI
BANGALORE - 560 004
...PETITIONER
(BY SRI. B R VISWANATH, ADVOCATE)
AND:
1. STATE OF KARNATAKA
REP. BY CCB (EOW) SQUAD
CHAMARAJPET P.S
CHICKPET DIVISION
Digitally signed BENGALURU -01
by NAGAVENI
REP BY SPP OFFICE
Location: High
Court of HIGH COURT BUILDING
Karnataka HIGH COURT OF KARNATAKA
BENGALURU - 560 001
2. HASAN PASHA.M.D
AGE ABOUT 45 YEARS
S/O ISMAIL
NO.79, 4TH CROSS
TIPPUNAGAR
BENGALURU - 560 018
...RESPONDENTS
(BY SRI. B.N. JAGADEESHA, ADDL. SPP A/W
SMT. K.P. YASHODHA, HCGP FOR R1)
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CRL.P No. 14175 of 2024
THIS CRL.P IS FILED U/S.482 (FILED U/S.528 BNSS) CR.P.C
PRAYING TO QUASH THE FIR IN CR.NO.224/2023 THE COMPLAINT
POLICE I.E CHAMARAJAPETE P.S. CHICKPET SUB DIVISION
BENGALURU HAVE REGISTERED THE CASE AGAINST THE ACCUSED
FOR THE OFFENCE P/U/S 38,39 KML ACT 1961 U/S 4 OF KARNATAKA
PREVENTION OF CHARGING EXORBITANT INTEREST ACT 2004 AND
SEC.420,384,504,506 R/W 34 OF IPC, 24TH A.C.M.M COURT
BENGALURU CITY WHICH ARE PRODUCED AS ANNEXURE-A AND ETC.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA
ORAL ORDER
Heard the learned counsel Sri.B.R. Viswanath, appearing
for the petitioner and the learned Additional State Public
Prosecutor Sri.B.N.Jagadeesha, along with Smt.K.P. Yashodha,
learned High Court Government Pleader, appearing for
respondent No.1.
2. The petitioner is before this Court seeking the
following prayer:
"(i) The Petitioner named above, most humbly pray
that this Hon'ble Court be pleased to Quash the
FIR in Cr.No.224/2023. The Complaint Police
i.e. Chamarajapete Police Station, Chickpet
Sub-Division, Bengaluru have registered the
case against the accused for offences
punishable Under Section under Sections 38,
39 KML Act 1961, U/S 4 of Karnataka
Prevention of Charging Exorbitant Interest Act
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2004 and U/S. 420, 384, 504, 506 R/W 34 IPC,
24th ACMM Court, Bengaluru City which are
produced as ANNEXURE - A, in the interest of
Justice.
(ii) Kindly pass any other order/s as the Hon'ble
Court deems fit in the circumstances of the
case in the interest of justice."
3. This Court, in Crl.P.No.12287/2023 qua the
co-accused has quashed the proceedings. The petitioner being
co-accused is entitled to the same relief that is granted to the
other accused. This Court, has held as follows:
"3. Learned counsel appearing for the petitioner would
submit that the issue in the lis is akin to what is decided by
this Court in Crl.P.No.15 of 2020, disposed on 29th June
2022, wherein this Court held as follows:
"The issue in the lis stands covered by the judgment
rendered by the Co-ordinate Bench in plethora of cases.
One of which is appended to the petition,
Crl.P.No.10038/2017 disposed on 16.04.2018, wherein
the Co-ordinate Bench considering the very provision of
law and the very offences, has held as follows:
"2. A complaint came to be lodged by the 2nd
respondent before 1st respondent Police alleging that
petitioner has been carrying on money lending
business and towards security of the loan advance,
petitioner is taking original documents of the
vehicles, title deed of immovable properties, blank
cheques, blank promissory notes and also charging
exorbitant interest ranging from 15% to 30% and
threatening the borrowers of dire consequences if
they do not repay the amount with interest. It was
further alleged that 2nd respondent on the directions
issued by Assistant Commissioner of Police, had
inspected the business premises of the petitioner and
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found that credit le information he had received was
true and thereby petitioner had committed the
offences punishable under Sections 41 and 38 of
Karnataka Money Lenders Act, 1961 and offences
punishable under Sections 4, 5 and 39 of Karnataka
Prohibition of Charging Exorbitant Interest Act, 2004.
For quashing of the said proceedings, petitioner is
before this Court.
3. It is the contention of Sri.S.V.Prakash,
learned counsel appearing for the petitioner that
allegations made in the complaint do not attract
Sections 41 and 38 of Karnataka Money Lenders Act,
1961 and there is no complaint lodged by any debtor
about charging of exorbitant interest and there being
no compliance of provisions contemplated under
Section 5 of the Karnataka Prohibition of Charging
Exorbitant Interest Act, 2004, proceedings initiated
against the petitioner is liable to be quashed. He
would also draw the attention of the Court to the
judgment rendered by the Co-ordinate Bench of this
Court by Criminal Petition No.102091/2015 disposed
of on 17.12.2015 and the judgment rendered on
22.06.2017 in Criminal Petition No.101569/2015 and
connected matters, contending that under similar
circumstances, Co-ordinate Benches had heid that
seizure of the documents and the complainants who
had entered the premises were not authorized
persons and as such, the proceedings cannot be
continued. Hence, he prays for petition being
allowed.
4. Per contra, learned SPP-II would defend the
proceedings initiated against the petitioner and prays
for dismissal of the petition.
5. Having heard the learned advocates
appearing for the parties and on perusal of the case
papers, it would clearly disclose that on 23.03.2017,
1st respondent on the strength of complaint lodged
by the 2nd respondent had entered the business
premises of the petitioner and found that on
verification of the records, petitioner was charging
exorbitant interest from borrower and had also been
intimidating them. The 1st respondent police officials
have also searched the residential premises of the
petitioner. The Co-ordinate Bench of this Court while
examining similar plea has held it is only authorized
officers who are empowered to enter the premises, to
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inspect and to seize the documents as contemplated
under Section 15 of the Act. The authorized officers
are Registrar and Assistant Registrar or any other
persons authorized by the State Government in that
behalf. In the absence of any material to show that
police officer who entered the business/residential
premises of the petitioner were authorized by the
State Government, it cannot be said that persons,
who had entered the premises, were authorized or in
other words, such inspection can be held as having
been conducted by authorized persons. Hence, the
very entry into the premises of the petitioner by the
1st respondent and its officials not being in
accordance with mandatory provision of Section 15 of
Karnataka Money Lenders Act, 1961, proceedings
initiated pursuant to it would be illegal.
5. Perusal of the allegations made in the
complaint would also disclose that jurisdictional
Assistant Commissioner of Police had received
credible information about petitioner carrying on
business of money lending by charging exorbitant
interest and as such, based on said information,
Police Inspector of Kamakshipalya police station had
searched the business premises as well as the
residential premises of the petitioner and found that
there has been violation of the provisions of the
Karnataka Prohibition of Charging Exorbitant Interest
Act, 2004. As such, he is said to have seized certain
documents from the said premises. Undisputedly,
petitioner is possessing a Money Lending License
issued by the competent authority, which is valid for
the period of 01.04.2016 to 31.03.2021 (Annexure
G). The records on hand would also disclose that
without there being any written complaint from the
debtor or borrower, on 23.03.2017 at about 9.00
a.m. 1st respondent - police have raided the house of
petitioner and the complaint lodged by 2nd
respondent came to be registered by 1st respondent
in Crime No.142/2017 at about 8.15 p.m. by which
time the raid had already been conducted and
documents had already been seized. This would
clearly disclose that even according to the police,
cognizable offence bad been committed by the
petitioner and registering the FIR immediately after
receiving all such information regarding commission
of cognizable offence, the jurisdictional police have
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investigated and proceeded with, which is contrary to
mandatory requirement of the provisions of Cr.P.C.
In fact, by order dated 22.06.2017 passed in
Crl.P.No.101569/2016 & connected matters has held:
"9. The Hon'ble Apex Court also made it clear in
the case of Lalita Kumari vs. Government of Uttar
Pradesh and others that in case of receipt of
information regarding cognizable offence and as
per Section 154(1) of Cr.P.C., registration of the
FIR at the earliest point of time i.e., immediately
after receipt of such information, is general rule.
But in these matters, though such information
regarding commission of cognizable offence is
said to have been received by the Police, even
then, there is no registration of the FIR
immediately after the receipt of such information
and even there is no material produced by the
prosecution in these cases that they have entered
atleast the information received, in the diaries
kept in the said Police Stations and what is the
said information, no documents are produced
before the Court. Therefore, the mandatory
requirement of Section 154(1) of Cr.P.C. is not
followed by the Police before proceeding to the
spot on the basis of the said information.
It is also further held that remedy available to
an aggrieved person is to approach the jurisdictional
Court by filing a petition under Section 5 of the
Exorbitant Interest Act, 2004, and seek redressal of
their grievance and they cannot approach the
jurisdictional police for redressal of their grievances
or initiation of proceedings on the basis of such
complaint would be contrary to provisions of Section
5 of the Act. This Court in Criminal petition
No.102091/2015 disposed of on 17.12.2015 had
quashed the proceedings for having not complied
with Section 5 of Karnataka Prohibition of Charging
Exorbitant Interest Act, 2004. It was held:
"7. I have perused the grounds urged in the
petition and also the documents produced by the
learned counsel for the petitioner in support of his
case. Looking to the allegations made in the
complaint, the offences alleged are under
Karnataka Prohibition of Charging Exorbitant
Interest Act, 2004 i.e., under Sections 3 and 4.
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When that is so, the procedure contemplated
under Section 5 of the said Act is to be followed.
Section 5 of the said Act reads as follows:
"5. Deposit of money and presentation of
petition to Court and the procedure thereof.-
(1) A debtor may deposit the money due
in respect of a loan received by him from any
person together with interest at the rate fixed
by the State Government under section 28 of
the Karnataka Money Lenders Act, 1961 into
the Court having jurisdiction, along with a
petition to record that the amount deposited
is in full or part, satisfaction of the loan
including the interest therefore, as the case
may be.
(2) The Court shall, on receipt of a petition
under sub-section(1), refer a copy of the
petition to the person mentioned in the
petition, directing him to give his replies
within a period of fifteen days as may be
granted by the Court. The Court may, after
due inquiry and after considering the versions
of both the parties, pass orders recording the
satisfaction of the loan, and interest therefor
in full or in part, as the case may be."
7. In the instant case also, there has been no such
complaint to the jurisdictional Court by the borrowers
alleging that petitioner had charged exorbitant interest as
stated in the complaint. Thus, initiation of the prosecution
against the petitioner on the basis of Police report is illegal.
Records would clearly disclose that registration of the
complaint by respondent No.2 is without taking recourse
Section 5 of the Exorbitant Interest Act, 2004, and such
further proceedings would be illegal.
Hence, I proceed to pass the following:
ORDER
(i) Criminal Petition is hereby allowed.
(ii) Proceedings initiated against the petitioner by
Kamakshipalya police by station in Crime
No.142/2017 pending on the file of the 5th Additional
Chief Metropolitan Magistrate, Bengaluru, is hereby
quashed.
(iii) However, respondents would be at liberty proceed
against petitioner in accordance with law namely as
per the mandate of Karnataka Money Lenders Act,
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1961 and The Karnataka Prohibition of Charging
Exorbitant Interest Act, 2004 and take appropriate
steps against petitioner in the manner known to
law."
In the light of the issue being covered on all its fours by the
judgment rendered by this Court as afore-quoted and that
the position in law is also not disputed by the learned High
Court Government Pleader representing the State, I deem it
appropriate to quash the proceedings on the same terms."
4. In the light of the order passed by this Court
(supra) and for the reasons aforementioned, the following:
ORDER
(i) The Criminal Petition is allowed;
(ii) The impugned Crime No.224/2023, registered by
the first respondent, now pending before the 24th
ACMM, Court, Bengaluru City, qua the petitioner,
stands quashed.
Sd/-
______________________
JUSTICE M.NAGAPRASANNA
KG
