IMPORTANT POINT
The necessity of proving that a person is engaged in money lending as a business and that the interest charged exceeds legal limits to sustain charges under the Kerala Money Lenders Act and the Kerala Prohibition of Charging Exorbitant Interest Act.

ORDER :

(A. Badharudeen, J.) :

This Criminal Miscellaneous Case has been filed under Section 482 of the Code of Criminal Procedure to quash Annexure-II Final Report in Crime No.750/2014 of Keezhvaipur Police Station, now pending as C.C.No.36/2016 on the files of the Judicial First Class Magistrate Court, Thiruvalla. The petitioner herein is the sole accused in the above case.

2. Heard the learned counsel for the petitioner and the learned Public Prosecutor in detail.

3. In this matter, the prosecution alleges commission of offences punishable under Sections 420 and 506(i) of IPC, Section 3 r/w Section 17 of the Kerala Money Lenders Act, 1958 and Section 3 r/w Section 9(a) of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012 (hereinafter referred to as ‘the Act, 2012’ for short).

4. The prosecution allegation is that the accused herein gave chitty loan to the defacto complainant and thereafter demanded exorbitant interest for the same. The further allegation is that the accused, who runs ‘Kailath Chitty Fund’, had collected 16 blank cheques, 16 signed stamp papers and 16 white papers affixed with the revenue stamps towards security for the said chitty transaction amounting to Rs.1 lakh by threat and cheating. On this premise, the prosecution alleges commission of the above said offences by the accused.

5. According to the learned counsel for the petitioner, going by the prosecution records, none of the offences would attract in the facts of this case, and he also argued that on similar facts, the Apex Court as well as this Court quashed similar crimes. The learned counsel for the petitioner has placed decision of the Apex Court dated 28.01.200 in Appeal(Crl) 91/2000 (G.Sagar Suri and Another vs. State of UP and Others).

6. In G.Sagar Suri's case (supra), the allegation was that the finance company gave Rs.50 lakh by means of cheque and the complainant issued two cheques for the repayment of the same, viz., one cheque for Rs.50 lakh and the other cheque was for Rs.86,625/-towards interest. In the said decision, the Apex Court found that the prosecution is clearly an abuse of process of law in a case where the prosecution under Section 138 of the Negotiable Instruments Act already pending against the appellants and the other accused.

7. The learned counsel for the petitioner also placed decision of this Court dated 18.03.2020 in Crl.M.C.No.3090/2015 (Varghese Kurian vs.State of Kerala), where the prosecution alleged commission of offences punishable under Section 420 r/w Section 34 of IPC as well as Section 3 r/w Section 17 of Kerala Money Lenders Act and Section 9(a) of the Act, 2012. In the said case, this Court, after analysing the facts of the case, stated in paragraph Nos.13 and 14 as under:

“13. The contention that the petitioners are moneylenders is also not acceptable because Section 17 of the Kerala Money-Lenders Act will not be attracted in solitary transactions, even if the alleged transaction between the petitioners and the defacto complainant is accepted to be a loan advanced by the petitioners. In a catena of decisions, the Kerala High Court has held that to define a person as a money-lender, it must be proved by the prosecution that he is a person engaged in the business of money-lending as his primary or secondary business.(See Vimal v. State of Kerala and other 2015(1)KLT524) There is not a scintilla of material produced by the prosecution in this regard.

14. In order to attract an offence under the Interest Act, it must be proved that the accused was charging interest at a rate higher than the maximum rate of interest charged by commercial Banks on loans granted by them. It is also pertinent to note that the Interest Act had come into effect only on 27.8.2012 and the alleged transactions between the petitioners and the defacto complainant in the instant case took place in 2003, 2004 and 2006. There is no other material indicating that the petitioners had actually demanded or realised any interest. B