One Or Two Instances Of Advancing Loan Alone Insufficient To Establish Running Of Money Lending Business: Kerala HC
The Kerala High Court quashed a case registered under Kerala Money-Lenders Act, 1958 and clarified that in order to establish running of money lending business, one or two instances of advancing loan alone are insufficient.
Unless the prosecution records show that there are umpteen numbers of loan given by the offender for exorbitant interest, prima facie, none of the offences would attract, the court said.
The accused persons approached the High Court seeking quashing of the proceedings on the ground that they were absolutely innocent of the allegations of running an illegal money lending business.
The Single-Judge Bench of Justice A. Badharudeen asserted, “In order to say that a person is doing money lending business, the prosecution shall collect materials for the same, otherwise no offence of money lending said to have been committed, prima facie.”
Advocate M.S.Breez represented the Petitioners while Senior Public Prosecutor Renjit George represented the Respondents.
The Prosecution alleged that the accused committed offences punishable under Sections 447 and 506(i) r/w Section 34 of the Indian Penal Code, 1860 as well as under Sections 17 and 18 of the Kerala Money-Lenders Act, 1958 and Section 3 of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012. It was alleged that the first accused, who did not have any licence under the Act, 1958, gave Rs.6 Lakh to the de facto complainant and her husband on undertaking to pay Rs.36,000 towards interest for the said sum after obtaining blank cheque leaves of the de facto complainant and her husband. Thereafter, the third accused threatened the husband of the de facto complainant over phone that a case would be filed against them, if Rs.3 Lakh with interest would not be repaid. Later, the first accused went to the house of the de facto complainant and threatened them and demanded repayment of Rs.3 Lakh with interest.
It was the case of the other two accused persons that the they got arrayed as accused, since they are first petitioner's brother and wife. It was submitted that the first petitioner is not a money lender and he has never run money lending business, for which licence is made mandatory under Section 3 of the Act, 1958.It was also submitted that since the first petitioner was entitled to get back the money he had given as loan, the demand for the same would not attract the said offences and therefore, the quashment, as sought for, is liable to succeed.
The Bench noticed the specific allegation that the 1st petitioner runs a money lending business without a licence. “The prosecution materials even remotely do not suggest, prima facie that the 1st petitioner had a money lending business”, it said.
It was further noted that the 1st petitioner had given Rs.6 Lakh as loan to the de facto complainant and her husband after getting security documents. Thereafter, when the said sum was demanded on the premise of default in repayment, this crime was registered. As per the Bench, the prosecution materials in no way suggested that the 1st petitioner either runs money lending business or that he had given loan for any exorbitant interest. In fact, those allegations are confined to the oral version of the de facto complainant and her husband, who are defaulters of the loan, admittedly borrowed from the 1st accused.
“Law does not say that a mere giving of hand loan on one or two occasions, even though after obtaining some surety documents, could be couched under the caption ‘money lending’. In order to establish running of money lending business, one or two instances of advancing loan alone are insufficient. If such a proposition is laid, it is difficult for the people to get hand loans in cases of emergency and nobody would extend their helping hands, afraid of the penal consequences hidden in the Act of 1958 and Act of 2012”, the Bench explained.
According to the High Court, unless the prosecution records show that there are umpteen numbers of loan given by the offender for exorbitant interest, prima facie, none of the offences would attract.
“In the instant case, none of the offences are made out, prima facie, and therefore, quashment as sought for, is liable to succeed”, the Bench held and further directed, “All further proceedings in C.C.No.1797/2017 on the files of the Judicial First Class Magistrate Court-I, Aluva, arose out of Crime No. 3099/2017 of Aluva East Police Station, Ernakulam, against the petitioners herein, stand quashed.”
Cause Title: Manoj George & Ors. v. State Of Kerala & Ors. [Neutral Citation: 2024:KER:90233]
Appearance:
Petitioners: Advocate M.S.Breez
Respondents: Senior Public Prosecutor Renjit George