IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF FEBRUARY, 2019 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR WRIT PETITION NO.5814/2019 (GM-RES) BETWEEN:
V.K. MOHAN S/O SRI. KAALA POOJARI AGED ABOUT 56 YEARS R/AT NO.119, 6TH CROSS 1ST MAIN, LPO ROAD SADASHIVA NAGAR RAJMAHAL, GUTTAHALLI BANGALORE - 560 080.
... PETITIONER (BY SRI. HASHMATH PASHA., SR. COUNSEL A/W SRI. RANJAN KUMAR., ADVOCATE) AND:
1. STATE OF KARNATAKA BY VAYALIKAVAL POLICE STATION BENGALURU CITY - 560 040 (REPRESENTED BY LEARNED GOVERNMENT ADVOCATE) HIGH COUR, BANGALORE–560 001.
2. THE ASSISTANT COMMISSIONER OF POLICE, C.C.B (F&M SQUAD) OFFICE AT TCM, ROYAN ROAD BENGALURU CITY - 560 030.
3. MR. GIRI K.C POLICE INSPECTOR (F&M SQUAD) C.C.B. (F&M SQUAD) OFFICE AT TCM ROYAN ROAD BENGALURU CITY - 560 030.
... RESPONDENTS (BY SRI. S. CHANDRASHEKARAIAH., HCGP) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, PRAYING TO QUASH THE FIR REGISTERED IN CRIME NO. 182/2018 ON THE FILE OF THE FIRST RESPONDENT DATED:14.10.2018, VAYYALIKAVALL POLICE, BANGALORE AS PER "ANNEXURE-A" AS AN ABUSE OF PROCESS OF LAW.
THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Heard Sri.Hashmath Pasha, learned Senior Counsel appearing for petitioner and Sri.S.Chandrashekharaiah, learned HCGP appearing for first respondent-State. Perused the records.
2. Second Respondent is said to have received credible information that petitioner was carrying the money lending business and lending money to public by charging exorbitant interest i.e., @ 10% to 20% and thereby causing harassment to the public. Thus, second respondent is said to have directed third respondent to inspect and verify the genuineness of the information. In turn, third respondent visited the house of petitioner and office premises namely, Sri. Balaji Finance and on such enquiry in the surrounding area prepared a suo moto report, which came to be submitted to first respondent on 14.10.2018, upon which first respondent is said to have registered a FIR in Crime No.182/2018 for the offences punishable under Sections 41 and 38 of the Karnataka Money Lenders Act, 1961 (hereinafter referred to as ‘Act’ for short) and Sections 3 and 4 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (hereinafter referred to as ‘Interest Act’ for short) and under Section 420 of IPC.
3. On registration of FIR, second and third respondents have directed first respondent to handover investigation, which is since been taken up by first respondent. Petitioner is said to have obtained anticipatory bail apprehending his arrest.
4. Contending that registration of FIR by second and third respondent, who are not being officers of a police station and they being police officials of Central Crime Branch i.e., CCB police wing, which is not a designated police station were not empowered with the powers of a police officer or a police station and they have no powers to receive the information or verify genuineness and thereafter prepare a suo moto report and submit the same for registering of FIR by first respondent and it would amount to abuse of process of law and would be in violation of Articles 21 and 22 of Constitution of India. Hence, petitioner is seeking for quashing of said proceedings.
5. Sri. Hashmath Pasha, learned Senior Counsel appearing on behalf of petitioner by reiterating grounds urged in the petition would contend that there being no compliance of provisions contemplated under the Interest Act, he prays for proceedings initiated against petitioner being quashed.
6. Per contra, Sri.S.Chandrashekhariaha, learned HCGP appearing for first respondent-State would defend the proceedings initiated against the petitioner and prays for dismissal of the petition.
7. Records on hand would disclose that on the basis of an alleged credible information, raid came to be conducted on the house of petitioner and business establishment and a report came to be prepared by the second respondent, which was forwarded to first respondent and as such FIR in question came to be registered. Coordinate Bench of this Court while examining the plea with regard to who would be the authorised officers empowered to inspect and seize documents as contemplated under Section 15 of the Act, has held that authorised officers as described under the Act alone can conduct inspection and seize the records. Those officers are:- Registrar and Assistant Registrar or any other person authorised by the State Government in that behalf. Thus, in the absence of any material to demonstrate that a police officer who enters the residential or business premises of the accused was authorised by the State Government, it cannot be gainsaid by the prosecution that police officers who had entered the premises and conducted search were authorised to do. In other words, such inspection cannot be held as having been conducted by an authorised person. Thus, very entry into premises of the petitioner by the officials of second and third respondent not being in accordance with the mandate of Section 15 of the Act, continuation of proceedings against petitioner would be illegal.
8. It is not in dispute that petitioner is having a valid licence issued by the statutory authority, which is valid from 01.04.2016 to 31.03.2021-Annexure-C and as already noticed hereinabove records would also disclose that officials of second and third respondent had searched the business as well as residential premises of the petitioner and a report came to be submitted to the first respondent stating thereunder that provisions of Interest Act has been violated by the petitioner. Without there being any written complaint from the debtor or borrower, officials of second and third respondent have conducted search on the house of petitioner as well as his business establishment on 14.10.2008, which was based on the basis of a report submitted by the second respondent to first respondent. FIR in Crime No.182/2018 came to be registered on 14.10.2018 at about 10.15 a.m., by which time raid had already been conducted and documents had been seized. This would clearly indicate that even according to the police cognizable offence had been committed by the petitioner and without registering FIR immediately on receipt of such information regarding commission of a cognizable offence, second and third respondents have investigated into the matter and first respondent had conducted the raid, which is contrary to mandate of Section 154(1) of Cr.P.C. In fact, Coordinate Bench of this Court 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.”
9. It has also been held by the Coordinate Bench that aggrieved person namely, person who claims to have been charged with exorbitant interest, has to approach the jurisdictional Court by filing a petition under Section 5 of the Interest Act and seek redressal of his/her grievance and aggrieved persons would not be entitled to approach jurisdictional police for redressal of their grievances or initiation of proceedings by police on the basis of such complaint would be contrary to provisions of Section 5 of Interest Act. Coordinate Bench in Crl.P.No.102091/2015 disposed of on 17.12.2015 for want of compliance of Section 5 of the Interest Act had quashed the proceedings by holding:
“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. 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 receive 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 therefore in full or in part, as the case may be.”
10. In the instant case also it is noticed that there is no such complaint lodged by the aggrieved debtor to the jurisdictional Court i.e., complaint by the borrowers alleging that petitioner had charged exorbitant interest. Thus, very initiation of prosecution against the petitioner on the basis of a police report is illegal. Records would also clearly disclose that registration of complaint by first respondent is based on a suo moto report and that too, without taking recourse under Section 5 of the Act and as such, continuation of further proceedings against petitioner would be illegal.
Hence, I proceed to pass the following:
ORDER (i) Writ petition is hereby allowed.
(ii) Proceedings initiated against petitioner by Vyalikaval Police Station in Crime No.182/2018 for the offences punishable under Sections 41 and 38 of Karnataka Money Lenders Act, 1961 and Sections 4 and 3 of Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, as well as under Section 420 of IPC, is hereby quashed. Petitioner is acquitted of the said offences.
(iii) However, it is made clear that respondent or the appropriate authority would be at liberty to proceed against the petitioner in accordance with law namely, under the mandate of Karnataka Money Lenders Act, 1961 and Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, if so advised.
(iv) Alleged documents said to have been seized etc., including instruments, if any, seized under a mahazar by respondents, is ordered to be returned by the respondents to petitioner forthwith.
SD/- JUDGE DR