CR.MA/8010/2008 1/23 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION No. 8010 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the Civil Judge? NO ========================================================= BAGMAR FINANCE LIMITED, & 1 - Applicant(s) Versus STATE OF GUJARAT & 1 - Respondent(s) ========================================================= Appearance : MR SANJAY R GUPTA for Applicant(s) : 1 - 2. MR M.R.MENGDEY, ADDL.PUBLIC PROSECUTOR for Respondent(s) : 1, DS AFF.NOT FILED (N) for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date :16/12/2008 CAV JUDGMENT 1. Rule. Mr.M.R.Mengdey, learned APP waives service of Rule on behalf of the respondent – State. With the consent of the learned Advocates appearing on behalf of the respective parties, this application CR.MA/8010/2008 2/23 JUDGMENT is taken up for final hearing today. 2. By way of this petition, under Section 482 of the Criminal Procedure Code ('Cr.P.C.' for short), the petitioners – original accused have prayed for an appropriate Writ, direction and/or order quashing and setting aside the Criminal Case No.302 of 2008 pending in the Court of learned Metropolitan Magistrate Court No.20, Ahmedabad against the petitioners for the offence under Sections 5, 18, 19, 25 read with section 34 of the Bombay Moneylenders Act, 1946 ('the Act' for short). 3. A criminal complaint / criminal case being 302 of 2008 is filed by the Inspector of the Moneylenders, Ahmedabad in the Court of learned Metropolitan Magistrate, Ahmedabad against the petitioners – original accused for the offences under Sections 5, 18, 19, 25 read with section 34 of the Bombay Moneylenders Act, 1946 alleging inter-alia that the petitioners, more particularly petitioner No.1 has committed offence under Sections 5, 18, 19 and 25(3) of the Act and is doing business of finance without obtaining any license as required under the CR.MA/8010/2008 3/23 JUDGMENT Act. It was further averred that petitioners are engaged in the business of disbursing loan without obtaining license as required under the provisions of the Moneylenders Act and in the said complaint the learned Metropolitan Magistrate took cognizance of the complaint and directed issuance of summons against the petitioners. Hence, present petitioners have preferred present application under Section 482 of the Cr.P.C. to quash and set aside the complaint. 4. Mr.Sanjay Gupta, learned Advocate for the petitioners has vehemently submitted that the petitioners have not committed any offence as alleged under Sections 5, 18, 19 and 25 of the Act. It is submitted that respondent No.2 – original complainant has unilaterally assumed jurisdiction under the Act by holding that the provisions of the Act are applicable to the petitioner No.1- Company and has wrongly recorded the finding that hire-purchase agreement is in fact a loan transaction, therefore, it was obligatory on the part of petitioner No.1- Company to obtain necessary license from the concerned authority under the Act and since CR.MA/8010/2008 4/23 JUDGMENT petitioner No.1 has failed and neglected to keep accounts and furnish accounts in the prescribed form, it has violated the provisions of Sections 5, 18 and 19 of the Act. It is submitted that in the present case, loan was advanced to a trader doing transport business and it cannot be termed as a loan as per the definition of 'loan' under Section 2(9) of the Act. It is further submitted that so far as the allegations in the complaint that petitioner No.1- Company is charging interest exceeding 18% and therefore, has acted in contravention of the provisions of the Act, by holding that petitioner No.1-Company is a 'moneylenders' is concerned, in a given case, if it is found that the loan was given to a trader, in civil proceedings, the Court while passing the decree can limit the interest under Section 23 of the Act. It is further submitted that as per Section 25 of the Act, the State can issue notification limiting the rate of interest. It is submitted that loan to 'trader' is not covered under the Act. It is submitted that in the present case, concerned hirer / trader took financial assistance from petitioner No.1-Company for the purpose of CR.MA/8010/2008 5/23 JUDGMENT transport business and there was agreement entered into between the parties for payment of installments and rate of interest is also specified. Said document is duly signed and executed by the hirer and when he has agreed for paying interest at a particular rate and when all throughout he has paid such monthly installments, it cannot be said that any offence is made out more particularly when such advancement of money cannot be said to be 'loan' as defined under the Act. It is further submitted by Mr.Gupta, learned Advocate for the petitioners that 'hire purchase agreement' cannot be equated with 'loan agreement'. It is further submitted that even procedure as required to be followed under section 200 of the Cr.P.C. are not followed and complainant is not examined on oath and therefore, the learned Magistrate ought not to have taken cognizance. It is submitted that so far as petitioner No.2 is concerned, there is no whisper in the complaint that he was in charge of and responsible for the affairs of the Company at the time when alleged offence is committed. Sum and substance of submission made on behalf of the petitioners is that (i) financial CR.MA/8010/2008 6/23 JUDGMENT assistance / loan to person for purchase of vehicle in the present case for purchase of Rickshaw can be said to be loan to 'trader' and therefore, considering Section 2(18) of the Act same cannot be said to be 'loan' so as to attract provisions of the Act (ii) that hire purchase agreement cannot be equated with loan agreement (iii) there is no verification on oath of the complainant as required under Section 200 of the Cr.P.C. Mr.Gupta, learned Advocate for the petitioners has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Sundaram Finance Ltd. V/s. State of Kerala and Anr. reported in AIR 1966 SC 1178 and decision of the learned Single Judge of this Court dated 20.02.2006 rendered Criminal Misc.Application No.255 of 2001 in support of his above submissions. Relying upon aforesaid decisions and making above submissions, it is requested to quash and set aside the impugned complaints. 5. The petition is opposed by Mr.Mengdey, learned APP appearing on behalf of the respondent- State and original complainant. It is submitted that CR.MA/8010/2008 7/23 JUDGMENT admittedly in the present case, finance / loan is given to a person for purchase of Rickshaw and therefore, same cannot be said to be a loan to a trader and/or for transport business and therefore, same would come within the definition of 'loan' attracting provisions of the Act and therefore, license as required under the provisions of the Act is required and as admittedly the petitioners have not obtained licence, there is clear breach of provisions of the Act. Now so far as the contention on behalf of the petitioners that 'hire purchase agreement' cannot be equated with 'loan agreement', it is submitted that even 'hire purchase agreement' is 'loan agreement' but so far as 'hire purchase agreement' is concerned, there person who has taken loan has agreed to repay loan as per installments mentioned in the said agreement and therefore, it is said 'hire purchase agreement', however, in substance it is 'loan agreement'. Mr.Mengdey, learned APP for the respondents has also relied upon the decision of the Hon'ble Supreme Court in the case of Sundaram Finance Ltd. V/s. State of Kerala and Anr. reported in AIR 1966 SC 1178. CR.MA/8010/2008 8/23 JUDGMENT 6. So far as the submission on behalf of the petitioners that as original complainant is not examined on oath and therefore, learned Magistrate could not have taken cognizance is concerned, it is submitted that section 200 of the Cr.P.C. is very clear and as the complainant is a Government Officer, he was not required to be examined on oath. So far as reliance placed upon decision of the Hon'ble Supreme Curt and this Court referred to herein above is concerned, it is submitted that on facts same are not applicable. It is submitted that in the case before this Court admittedly loan was given for transport business and therefore, considering definition of loan, it was found that provisions of the Moneylenders Act would not be attracted. It is submitted that so far as the present case is concerned, provisions of Moneylenders Act is attracted. Now so far as the submission on behalf of the petitioners that so far as petitioner No.2 is concerned there are no allegations that he was CR.MA/8010/2008 9/23 JUDGMENT incharge of the Company at the relevant time, it is submitted that there are specific averments in the complaint that petitioner no.2 was infact responsible and incharge of the affairs of the Company. It is submitted that those averments are sufficient at this stage and further things are required to be considered at the time of trial on leading proper evidence. Therefore, it is requested to dismiss the present applications. 7. Heard the learned Advocates appearing on behalf of the respective parties. 8. At the outset it is required to be noted that allegations against the petitioners are for contravention of sections 5, 18, 19 and 25(3) of the 'Act'. It is alleged in the complaint that the petitioners are doing business of finance and/or giving loan without obtaining license as required under the provisions of the Act. In the present case, loan / finance has been given to a person for purchasing Rickshaw and hire purchase agreement has been entered into between petitioner No.1 Company and person who has taken loan / finance. Relevant CR.MA/8010/2008 10/23 JUDGMENT provisions of the Act which are relevant are as under: Section 5- Money-lender not to carry on business of money lending except for area under license and except in accordance with terms of license. No money-lender shall carry on the business of money lending except in the area for which he has been granted a license and except in accordance with the terms and conditions of such license. Section 18 – Duty of money lender to keep accounts, and furnish copies. Every money lender shall keep and maintain a cash book and a ledger in such form and in such manner as may be prescribed. (2) Every money lender shall- (a) deliver or cause to be delivered- (i) to the debtor within 30 days from the date on which a loan is made, a statement in any recognized language showing in clear and distinct terms the amount and date of the loan and of its maturity the nature of the security, if any, for the loan, the name and address of the debtor and of the money lender and the rate of interest charged (ii) to the Assistant Registrar, within the said period [a statement containing the particulars referred to in clause (a) (i)] CR.MA/8010/2008 11/23 JUDGMENT (3) No money lender shall receive any payment from a debtor on account of any loan without giving him a plain and complete receipt for the payment. (4) No money lender shall accept from a debtor any article as a pawn, pledge or security for a loan without giving him a plain signed receipt for the same with its description, estimated value, the amount of loan advanced against it and such other particulars as may be prescribed. Section – 19. Delivery of statement of accounts and copies thereof by moneylender. (1) Every moneylender shall deliver or cause to be delivered every year to each of his debtor a legible statement of such debtor's accounts signed by the moneylender or his agent of any amount that may be outstanding against such debtor. The statement shall show: [(i) the amount of principal, the amount of interest and the amount of fees referred to in section 19A, separately, due to the moneylender at the beginning of the year; (ii) the total amount of loan advanced during the year; (iii) the total amount of repayments received during the year; and (iv) the amounts of principal and interest due at the end of the year.] CR.MA/8010/2008 12/23 JUDGMENT The statement shall be signed by the moneylender, or his agent, and shall be in any recognized language. It shall be in such form and shall be supplied to the doctor on or before such date as may be prescribed; The moneylender shall on or before the aforesaid date deliver or cause to be delivered [a statement containing the particulars specified in clauses (i) to (iv)] to the Assistant Registrar. (2) In respect of any particular loan, whether advanced before or after the date on which this Act comes into force, the moneylender shall, on demand in writing being made by the debtor at any time during the period when the loan or any part thereof has not been repaid, and on payment of the prescribed fee supply to the debtor, or if the debtor so requires to any person specified in that behalf in the demand, a statement, in any recognized language, signed by the moneylender or his agent, and containing the relevant particulars specified in sub-section (1). (3) A moneylender shall, on a demand in writing by the debtor and tender of the prescribed sum of expenses, supply a copy of any document relating to a loan made by him or any security thereof to the debtor, or if the debtor so requires to any person CR.MA/8010/2008 13/23 JUDGMENT specified in that behalf in the demand. (4) For the purposes of this section 'year' means year for which the accounts of the moneylender are ordinarily maintained in his own books. Section 25(3) – [If any moneylender or a person advancing a loan specified in sub-clause (g) of clause (9) of section 2 makes an oral or written demand or charges or receives] from a debtor interest at rate exceeding the maximum rate fixed by the [State] Government under sub-section (1), he shall, for the purpose of section 34, be deemed to have contravened the provisions of this Act.] Section 2(2) which defines business of money lending is as under: (2) “business of money lending” means the business of advancing loans whether or not in connection with or in addition to any other business. Section 2(6) which defines interest is as under: (6) “interest” includes any sum by whatsoever name called, in excess of the principal paid or payable to a money lender in consideration of or otherwise in respect of a loan, but does not include any sum CR.MA/8010/2008 14/23 JUDGMENT lawfully charged by a moneylender for or on account of costs, charges or expenses in accordance with the provisions of this Act, or any other law for the time being in force. Section 2(9) defines loan which is as under: “Loan” means an advance at interest * * * * * whereof money or in kind, but does not include - (a) a deposit of money or other property in a Government Post Office Bank or in any other bank or in a company or with a co- operative society ; (b) a loan to, or by, or a deposit with any society or association registered under the Societies Registration Act, 1860, (XXI of 1860) or any other enactment relating to a public, religious or charitable object; (c) a loan advanced by Government or by any local authority authorised by Government ; *[(cc) a loan advanced to a Government servant from a fund, established for the welfare or assistance of Government servants, and which is sanctioned by the State Government;] (d) a loan advanced by a co-operative society; [(d1) an advance made to a subscriber to, or a depositor in, a Provident Fund from the amount standing to his credit in the fund in CR.MA/8010/2008 15/23 JUDGMENT accordance with the rules of the fund; (d2) a loan to or by an insurance company as defined in the Insurance Act, 1938, (VI of 1938)]; (e) a loan to, or by bank ; (f) an advance made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881 (XXVI of 1881), other than a promissory note; [(g) except for the purposes of sections 23 and 25 -- (i) a loan to a trader ; (ii) a loan to a money lender who holds a valid licence ; or (iii) a loan, by a landlord to his tenant for financing of crops or seasonal finance, of not more than Rs.50 per acre of land held by the tenant ; [(iv) a loan advanced to an agricultural labourer by his employer;] Section 2(10) defines money lender which is as under: (10) “money lender' means (i) an individual, or (ii) an undivided Hindu family or(iii) a company, or (iv) an unincorporated body of individuals, who or which – (a) carries on the business of money lending in the [State] or (b) has his or its principal place of such [business in the State and includes a pawn broker but does not include -(i) CR.MA/8010/2008 16/23 JUDGMENT Government, (ii) a local authority (iii) a bank (iv) the Agricultural Refinance Corporation constituted under the Agricultural Refinance Corporation Act, 1963 or (v) any other banking financial or any institution which the State Government may, by notification in the Official Gazette, specify in this behalf]. Section 2(18) defines trader which is as under: (18) 'trader' means a person who in the regular course of business buys and sells goods or other property, whether movable or immovable, and includes- a wholesale or retail merchant, a commission agent, a broker, a manufacturer, a contractor, a factory owner, but does not include an artisan or a person who sells his agricultural produce or cattle or buys agricultural produce or cattle for his use. 9. As per section 5 of the Act, No money-lender shall carry on the business of money lending except in the area for which he has been granted a license and except in accordance with the terms and conditions of such license. On conjoint reading of relevant provisions referred to herein above, business of money lending means business of advancing CR.MA/8010/2008 17/23 JUDGMENT loan whether in cash or in kind. “LOAN” means an advance at interest whether of money or in kind, but does not include – loan to 'TRADER'. 'MONEY LENDER' means (i) an individual, or (ii) an undivided Hindu family or (iii) a company, or (iv) an unincorporated body of individuals, who or which – (a) carries on the business of money lending in the [State] or (b) has his or its principal place of such business in the State. 'TRADER' means a person who in the regular course of business buys and sells goods or other property, whether movable or immovable, and includes- a wholesale or retail merchant, a commission agent, a broker, a manufacturer, a contractor, a factory owner, but does not include an artisan. 10. In the present case, it is the case on behalf of the petitioners that loan has been given to person for purchasing Rickshaw therefore, same is given to 'TRADER'. It is further submitted by Mr.Gupta, learned Advocate appearing for the petitioners that looking to the definition of 'LOAN' and 'TRADER' it cannot be said that while giving finance / loan to person for purchasing Rickshaw CR.MA/8010/2008 18/23 JUDGMENT provisions of Moneylender Act are attracted and therefore, license is not required. Mr.Gupta, learned Advocate for the petitioners has relied upon definition of 'TRADER' by submitting that person who has taken loan / finance for purchasing Rickshaw can be said to be contractor. Therefore, petitioners are not required to obtain any license as required under the Act. Aforesaid submission is required to be rejected outright. Person who has taken loan / finance for purchasing Rickshaw cannot be said to be 'contractor' at all. Such person cannot come within the definition of 'TRADER'. 'Trader' means person who in the regular course of business buys and sells goods or other property, whether movable or immovable and therefore, Rickshaw driver cannot be said to be person who in the regular course of business buys and sells goods or other property, whether movable or immovable. Certainly he cannot be said to be 'contractor'. It is the contention on behalf of the petitioners that when loan is given to person to buy Rickshaw it can be said to be 'loan to trader' and therefore, provisions of the Act would not be be attracted and/or license is not required cannot be CR.MA/8010/2008 19/23 JUDGMENT accepted. Giving finance / loan to a person to purchase Rickshaw can be said to be within the definition of 'LOAN' attracting Section 5 and other relevant provisions of the Act for which license is required. It cannot be disputed that the petitioner no.1 cannot be said to be 'moneylender' within the definition of 'MONEYLENDER' under the Act. It is admitted position that petitioner no.1 has not obtained any license as required under the Act. Therefore, it appears that petitioners have committed breach / contravention of the provisions of the Act for which the petitioners are to be tried. 11. Learned Advocate for the petitioners has relied upon the decision of the Hon'ble Supreme Court in the case of Sundraram Finance Ltd.(supra), however, the said decision would not be helpful to the petitioners as controversy before the Hon'ble Supreme Court was with respect to definition of sale in Section 2(f) of Hire Purchase, Sale of Goods Act and Travanscore – Cochin General Sales Tax Act. 12. Now so far as the reliance placed upon decision of this Court rendered in Criminal CR.MA/8010/2008 20/23 JUDGMENT Misc.Application No.255 of 2001 is concerned, said judgment will not be applicable to the facts of the present case as admittedly in the said case it was found that complainant had taken financial assistance from the Company and said loan was utilized for transport business. Therefore, on facts considering definition of 'TRADER' learned Single Judge found that 'LOAN' given to such person was not 'LOAN' attracting the provisions of the Act which required license. In the present case, as stated above loan / finance is not for transport business and person who has taken loan cannot be said to be 'TRADER' or 'Contractor'. Therefore, the contention on behalf of the petitioners that the petitioners have not committed any offence and/or are required to obtain license under the Act, cannot be accepted. Now so far as the contention on behalf of the petitioners that there is non-compliance of Section 200 of the Cr.P.C. in as much as original complainant is not examined on oath is concerned, same also has no substance. It cannot be disputed that original complainant is a Government Public CR.MA/8010/2008 21/23 JUDGMENT Servant and, therefore, considering Section 200 of the Cr.P.C., when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses, if a public servant acting or purporting to act in the discharge of his official duties or a Court has made the complaint. Under the circumstances, it cannot be said that requirement of Section 200 are not complied with. In the facts and circumstances of the case, it cannot be said that the learned trial Court has committed any error in taking cognizance. So far as the contention on behalf of the petitioners that petitioner no.2 is concerned, impugned complaint deserves to be quashed and set aside as there is no whisper in the complaint that he was in charge and responsible for the affairs of the company at the time when alleged offence was committed is concerned, same has also