BIREN VAISHNAV, J.

1. This Criminal Miscellaneous Application has been filed by the applicants – original accused against whom a criminal case being Criminal Case No. 242 of 2008 has been registered in the Court of the Metropolitan Magistrate, Court No.20, Ahmedabad.

2. The Inspector of Money-Lenders has filed such complaint against the accused-Manba Finance Ltd, a company registered under the Companies Act, 1956 for breach of provisions of Sections 5, 18, 19, 25 and 32(1) of the Bombay Money-Lenders Act, 1946. According to the complainant, the accused company was, therefore, liable for prosecution under Sections 32(2) and 34(a) and 34(b) of the Bombay Money Lenders Act 1946. The learned Metropolitan Magistrate Court No.20 issued process vide order dated 20/2/2008.

2.1 According to the version as narrated in the complaint, after serving notice under Section 13(A) of the Bombay Money-Lenders Act, 1946 (hereinafter referred to as “The Act”), the Inspector inspected the Books of Accounts, Loan Accounts and other documents of the accused-Company. On such inspection, it was found that the Company has been registered as a “Company” under the Companies Act of 1956. The Registered Office is at Mumbai and a branch thereof is in Ahmedabad. The Company, according to the complaint advances loan for purchase of Vehicles.

2.2 If the averments in the complaint are perused, it is the case in the complaint that the Company had applied for a license on 4/7/2007 under the Bombay Money-Lenders Act, 1946. However, thereafter on 27/08/2007, the applicant withdrew the application and therefore no fresh license was issued to the Company. The complaint thereafter explains in detail the procedure that the Company undertakes to advance loans to its customers who are prospective vehicle owners. Dealers from whom the customer is to purchase a vehicle are paid a part of the consideration of the price of the vehicle know as Margin Money and for the remaining amount a proposal for Loan is prepared known as the “Proposal for Finance of Motor Vehicle under the Loan Scheme”. A hypothecation agreement is entered into whereby the vehicle's ownership remains with the purchaser, however, the Company has the first charge. Thereafter, a letter of continuity is issued, payment authorisation is made, a security letter is issued and the Registration Book carries a hypothecation in favour of the company. A Promissory Note and post dated cheques towards equal monthly installments are obtained and therefore admittedly the entire transaction is an act of advancing a loan as a money lender by the Company at an interest on the basis of a Promissory Note and therefore the money advanced is a “loan” as defined under Section 2(f) of the Act. Instances have been cited in the complaint where loans have been advanced for the purchase of an auto rickshaw to a person who drives such auto rickshaw as part of his avocation, a customer who has obtained loan for purchase of a Hero Honda Passion Motorcycle for his personal use and a Hero Honda Splendor Bike for his personal use.

2.3 The case in the complaint therefore is that, the company being in the business of money lending, which means the business of advancing loans at an interest exceeding a prescribed rate, as is shown from the narrative of individual accounts as instances of loan transactions, gives out loans not to a trader and therefore there is a breach of the provisions of the Act exposing the company to prosecution under the penal provisions of the Act.

3. Shri Rushabh Shah, learned advocate for the applicant has vehemently contended that the loan advanced by the Company is a “loan” to a “trader” and therefore the same does not come within the purview of definition of “loan” as defined under Section 2(9) of the Act in view of the fact it falls within the exception of sub-clause (g) of clause (9) of Section 2 as a loan to a trader. According to Shri Shah, on the reading of the grounds stated in the petition, it is apparent