High Court of KeralaSingle Judge2021-07-07Quashed; accused discharged

Mohanan v. State of Kerala

Case / Petition Number:Crl.MC No. 12 of 2021

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Ashok Menon
Judgment Date: 2021-07-07
Court Decision / Holding: The Crl.MC is allowed and the entire proceedings in Crime No.80/2018 of Karunagappally Police Station, pending as CC 1258/2019, stand quashed under Section 482 Cr.PC and the petitioner/accused is discharged.
Final Disposition: Quashed; accused discharged

Parties to the Case

Appellants / Petitioners

Mohanan aged 60 years S/O Sadanandan, Sopanam Veed, Puliyoorvanchi North, Thodiyoor, Karunagappally, Kollam District 690 518

Respondents

State of Kerala represented by the Public Prosecutor, High Court of Kerala, Ernakulam
The Station House Officer, Karunagappally Police Station, Kollam District

Legal Representation & Advocates

Counsels for Petitioners

• K. Siju
• Sri. S. Abhilash
• Smt. S. Seetha
• Smt. Anjana Kannath
• Smt. Renuka Venu

Counsels for Respondents

• M.K. Pushpalatha, Public Prosecutor

Case Synopsis & Summary

The petition challenges the order in CC 1258/2019 arising from Crime No. 80/2018 of Karunagappally Police Station. The sole accused, Mohanan, is charged under Section 17 of the Kerala Money Lenders Act, 1958 and under Section 3 read with Section 4 of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012. A final report has been filed and the matter is pending before the Judicial First Class Magistrate, Karunagappally. The petitioner contends that the allegations are unfounded and that he possesses a chit fund licence; he argues that lending money to one or two persons without a licence does not amount to “money lending” as defined under Section 2(7) of the Money Lenders Act, which requires a business of money lending as a commercial activity. The case notes that there is no sufficient material to show exorbitant interest; the material evidence consists of blank signed stamp papers and stamped receipts, which do not prove money-lending as a business. The High Court relies on decisions in Vimal v. State of Kerala, Kurian v. Leelamma Sebastian, Jayachandra Kurup v. State of Kerala, and Ismail CA v. Sakkeer Hussain, holding that lending to acquaintances on a solitary basis does not require a money lending licence. Consequently, the court quashes the proceedings under Section 482 Cr.PC and discharges the accused.

Provisions of Law Cited

Section 17 of the Kerala Money Lenders Act, 1958Section 3 read with Section 4 of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012Section 2(7) of the Money Lenders ActSection 482 Cr.PC

Legal Doctrines & Maxims

Solitary instance of lending to acquaintances does not amount to money lending business requiring licence under Section 2(7) of the Money Lenders Act.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the allegations are unfounded and that he possesses a chit fund licence; lending to one or two persons without a licence does not constitute money lending as defined under Section 2(7) of the Money Lenders Act. He asserts that there is no continuous business of money lending and that there is no proven exorbitant interest. The material consists only of blank stamped papers, stamps, and receipts, which do not establish a money-lending racket. He seeks a Section 482 Cr.PC quashment.

Contentions of Respondents

State contends that the charges, if true, would implicate lending without licence and possible exorbitant interest; the prosecution should be permitted to proceed to determine whether the accused is a money lender and whether the statutory interest regime was violated; however, the court ultimately relies on precedents recognizing that a solitary lending instance to acquaintances does not per se amount to money lending as defined, and thus may not sustain the licence requirement.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
Vimal v. State of Kerala	2015(1) KLT 524	Positive	Held that solitary lending to friends/relatives/acquaintances does not require a money lending licence; lending becomes licensable only if the person engages in the business of money lending as defined in Section 2(7).
Kurian v. Leelamma Sebastian	2015 (4) KLT 476	Positive	Same principle as Vimal; one-off lending does not make the individual a money lender under the Act.
Jayachandra Kurup v. State of Kerala	2018 (3) KLT 455	Positive	Affirms that casual lending to acquaintances without a licensable business does not require a money lending licence.
Ismail CA v. Sakkeer Hussain and Another	2017(2) KHC 861	Positive	Followed to reinforce that lending to a few persons without a licence is not sufficient to prove money-lending as a business.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ASHOK MENON WEDNESDAY, THE 7[TH] DAY OF JULY 2021 / 16TH ASHADHA, 1943 CRL.MC NO. 12 OF 2021** **AGAINST THE ORDER/JUDGMENT IN CC 1258/2019 OF JUDICIAL MAGISTRATE OF FIRST CLASS - I, KARUNAGAPPALLY, KOLLAM PETITIONER/S:** MOHANAN AGED 60 YEARS S/O. SADANANDAN, SOPANAM VEEDU, PULIYOORVANCHI NORTH, THODIYOOR, KARUNAGAPPALLY, KOLLAM DISTRICT 690 518. BY ADVS. K.SIJU SRI.S.ABHILASH SMT.S.SEETHA SMT.ANJANA KANNATH SMT.RENUKA VENU ## **RESPONDENT/S:** 1 STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM 31. 2 THE STATION HOUSE OFFICER, KARUNAGAPPALLY POLICE STATION, KOLLAM DISTRICT 690 518. ## **OTHER PRESENT:** SMT.M.K.PUSHPALATHA, PP THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 07.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Crl.MC 12/2021 2 ## ASHOK MENON, J. ------------------------------------ Crl.MC No.12 of 2021 ------------------------------------Dated this the 7[th] day of July, 2021 ## O R D E R The petitioner is the sole accused in Crime No.80/2018 of Karunagappally Police Station for having allegedly committed offences punishable under Section 17 of the Kerala Money Lenders Act, 1958 and under Section 3 read with Section 4 of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012. Final report has already been filed and is presently pending as CC No.1258/2019 on the files of the Judicial First Class Magistrate's Court, Karunagappally. Crl.MC 12/2021 3 2. The specific allegation against the petitioner is that he is a person who has been involved in money lending business for unlawful gain and moreover, he has also been charging exorbitant interest from persons who had borrowed money from him. He did not have a requisite licence under Section 17 of the Money Lenders Act, and therefore, he is liable to be prosecuted. 3. The petitioner states that the allegations are not true and that he has a licence to conduct a chit fund and he has been conducting chit fund business. The specific allegation is that he had lent money to CWs 4 and 5. Lending of money to one or two persons without licence is not a crime, submits the petitioner. Therefore, the petitioner seeks to quash the entire Crl.MC 12/2021 4 proceedings as against him under Section 482 Cr.PC. 4. Heard the learned counsel appearing for the petitioner and the learned Public Prosecutor. 5. In Vimal v. State of Kerala [2015(1) KLT 524 and in Kurian v. Leelamma Sebastian [2015 (4) KLT 476] as well as in Jayachandra Kurup v. State of Kerala [2018 (3) KLT 455] , it has been held that solitary instance of money lending by a person to his friends, relatives, neighbours or some acquaintances does not require a money lending licence, and the money lending licence is required only if he is a money lender as defined under Section 2(7) of the Money Lenders Act. For that purpose, he has to carry out the business of money lending as a commercial activity. In the instant case, the prosecution case Crl.MC 12/2021 5 itself is that the petitioner is conducting a chit fund business and has lent money to one or two persons, namely CWs 4 and 5 without a licence. In view of the finding of this Court in the aforesaid decisions and the same decisions which have been followed by this Court in Ismail CA v. Sakkeer Hussain and Another [2017(2) KHC 861] , it is held that one or two instances of lending money or loan to acquaintances will not amount to doing business of money lending as is required under Section 2(7) of the Money Lenders Act. Therefore, the person lending money to one or two persons or acquaintances does not amount to money lending, which requires a licence. Therefore, the prosecution against the petitioner for want of a proper licence under Section 17 of the Money Lenders Act is not Crl.MC 12/2021 6 sustainable. 6. The second allegation against the petitioner is that he had been lending money and charging exorbitant interest. Neither CW4 or CW5 has stated that exorbitant interest was charged from them. There is no other material to show that exorbitant interest has been charged by the petitioner from any of his borrowers. The allegation of the prosecution is that certain blank signed stamp papers and stamped receipts were recovered from his office. But that alone may not suffice to indicate that he is a person involved in money lending business. Under the circumstances, I find that the prosecution is not sustainable. In the result, the Crl.MC is allowed and the entire Crl.MC 12/2021 7 proceedings in Crime No.80/2018 of Karunagappally Police Station pending as CC No.1258/2019 on the files of the Judicial First Class Magistrate's Court, Karunagappally stand quashed under Section 482 Cr.PC and the petitioner/accused is discharged. Sd/- ASHOK MENON JUDGE jg Crl.MC 12/2021 8 ## **APPENDIX OF CRL.MC 12/2021** ## PETITIONER ANNEXURE ANNEXURE 1 THE CERTIFIED COPY OF FIR IN CRIME 80/2018 OF KARUNAGAPPALLY POLICE STATION. ANNEXURE 2 THE CERTIFIED COPY OF FINAL REPROT DATED 16.12.2019 IN CRIME NO. 80/2018 OF KARUNAGAPPALLY POLICE STATION.