- 1 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR CRIMINAL PETITION NO. 3299 OF 2025 C/W CRIMINAL PETITION NO. 3315 OF 2025 CRIMINAL PETITION NO. 3322 OF 2025 IN CRL.P No. 3299/2025 BETWEEN: 1. SRI. MANJUNATHA. K S/O KENCHAPPA, AGED ABOUT 44 YEARS R/AT BEHIND MAHALAKSHMI SAWMILL DURGIGUDI, HONNALLI TOWN, DAVANAGERE KARNATAKA. 2. SRI. GIRISH S/O. MARAPPA, AGED ABOUT 47 YEARS, R/AT 11TH CROSS, DRUGIGUDI EXTENSION HONNALI TOWN, DAVANAGERE, KARNATAKA. 3. RAKESHA S/O. MANJAPPA, AGED ABOUT 37 YEARS, R/A. BOMBO BAZAR, HONNALI TOWN, DAVANAGERE, KARNATAKA. …PETITIONERS (BY SRI. CHANDRAKANTH R. PATEL.,ADVOCATE) Digitally signed by R HEMALATHA Location: High Court of Karnataka - 2 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 AND: STATE OF KARNATAKA REPRESENTED BY HONNALLI POLICE, HONNALLI, DAVANGERE, KARNATAKA. …RESPONDENT (BY SRI.M.R PATIL, HCGP) THIS CRL.P IS FILED U/S 482 CR.PC (FILED U/S 528 BNSS) BY THE ADVOCATE FOR THE PETITIONER PRAYING TO QUASH THE INVESTIGATION UNDERTAKEN BY THE 1ST RESPONDENT POLICE PURSUANT TO THE IMPUGNED FIR NO.282/2015 AT ANNEXURE-A AND GRANT COSTS TO THE PETITIONER. IN CRL.P NO. 3315/2025 BETWEEN: SRI. NAGARAJ GALI S/O LATE KENCHAPPA GALI, AGED ABOUT 68 YEARS, R/AT RTD PEO, DODDAKERI, HONNALLI TOWN,DAVANAGERE KARNATAKA. ...PETITIONER (BY SRI. CHANDRAKANTH R. PATEL.,ADVOCATE) AND: STATE OF KARNATAKA, REPRESENTED BY HONNALI, POLICE, HONNALLI, DAVANGERE, KARNATAKA. ...RESPONDENT (BY SRI.M.R PATIL, HCGP) THIS CRL.P IS FILED U/S 482 CR.PC (FILED U/S 528 BNSS) BY THE ADVOCATE FOR THE PETITIONER PRAYING TO QUASH THE INVESTIGATION UNDERTAKEN BY THE 1ST RESPONDENT POLICE PURSUANT TO THE IMPUGNED FIR NO.304/2015 DATED 17.11.2015 AT ANNEXURE-A AND GRANT COSTS TO THE PETITIONER. - 3 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 IN CRL.P NO. 3322/2025 BETWEEN: SRI. SHEKARAPA. O. H. S/O HANUMANTHAPPA, AGED ABOUT 72 YEARS, R/AT DIDAGURU VILLAGE, HONNALLI, DAVANAGERE KARNATAKA. ...PETITIONER (BY SRI. CHANDRAKANTH R. PATEL.,ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY HONNALLI POLICE,HONNALLI, DAVANGERE, KARNATAKA. 2. SUNITHA T W/O THIPPESHAPPA M H AGED ABOUT 35 YEARS DIDAGURU VILLAGE AND POST, HONNALI TALUK, DAVANAGERE TALUK. ...RESPONDENTS (BY SRI.M R PATIL, HCGP) THIS CRL.P IS FILED U/S 482 CR.PC (FILED U/S 528 BNNS) BY THE ADVOCATE FOR THE PETITIONER PRAYING TO QUASH THE INVESTIGATION UNDERTAKEN BY THE 1ST RESPONDENT POLICE PURSUANT TO THE IMPUGNED FIR NO.0366/2018 DATED 14.10.2018 AT ANNEXURE-A. THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR - 4 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 ORAL ORDER Since the issues involved in all these petitions are similar, they are taken up together, heard, and disposed of by a common order. 2. The petitioners in all these petitions are sought to be prosecuted for offences punishable under Section 420 of the Indian Penal Code (IPC), Section 39 of the Karnataka Money Lenders Act, 1961, and Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (in Criminal Petition No. 3299/2025 and Criminal Petition No. 3315/2025); and for offences punishable under Sections 406, 504, and 506 of the IPC, Section 39 of the Karnataka Money Lenders Act, 1961, and Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (in Criminal Petition No. 3322/2025). The petitioners are before this Court seeking the following reliefs: " In Crl.P No.3299 of 2025 (i) call for the records in FIR No. 0282/2015 registered on 21.10.2015 by the Respondent police, which is pending adjudication before the Principle Civil Judge and JMFC at Honnali; (ii) quash the investigation undertaken by the 1st Respondent Police pursuant to the impugned FIR No. 0282/2015 at Annexure - A; (iii) grant costs to the Petitioner; and - 5 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 (iv) pass such other or further orders as this Hon'ble Court may deem fit in the interests of justice. In Crl.P No.3315 of 2025 (i) call for the records in FIR No. 0304/2015 registered on 17.11.2015 by the Respondent police, which is pending adjudication before the Principle Civil Judge and JMFC at Honnali; (ii) quash the investigation undertaken by the 1st Respondent Police pursuant to the impugned FIR No. 0304/2015 dated 17.11.2015 at Annexure - A; (iii) grant costs to the Petitioner; and (iv) pass such other or further orders as this Hon'ble Court may deem fit in the interests of justice. In Crl.P No.3322 of 2025 (i) call for the records in FIR No. 0366/2018 registered on 14.10.2018 by the Respondent police, which is pending adjudication before the Principle Civil Judge and JMFC at Honnali; (ii) quash the investigation undertaken by the 1st Respondent Police pursuant to the impugned FIR No. 0366/2018 dated 14.10.2018 at Annexure - A; (iii) grant costs to the Petitioner; and (iv) pass such other or further orders as this Hon'ble Court may deem fit in the interests of justice. 3. The prosecution alleges that the petitioners are in the business of lending money to the public without obtaining any licence and are charging exorbitant interest on the money lent by taking cheques and mortgage of property as security for repayment of the loan amount. - 6 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 4. Heard the learned counsel for the petitioners and the learned High Court Government Pleader appearing for the respondents. 5. The issue involved in this petition was examined by a Coordinate Bench of this Court in W.P.No.29499/2017, wherein at paragraphs 10 to 13, it was held as follows: “10. On plain reading of the records, it indicates that on the basis of the information given by the Assistant Police Commissioner, the Police Inspector of Cottonpet police station secured pancha witnesses and searched the house of accused Nos. 1 and 2 without registration of the case as contemplated under Section 154 of Cr.P.C. Even as could be seen from Section 15 of the Karnataka Money-Lenders Act, 1961, it is the Registrar, Assistant Registrar or any officer authorized by the State Government who are permitted to verify whether any money lending business has been carried out in accordance with the provisions of the said Act, and they are permitted to enter the premises of the money lender or any person who carries on the business of money lending, calling upon him to produce any records or documents relating to such business. Every such money lender or person shall allow such inspection and produce such record or document. Hence, the said section itself clarifies that it is the statutory authority who can call for any records or documents from any money lenders or any person for the purpose of verification. 11. Under the circumstances, the Police Inspector is not having any authority to come and search the said premises, and even the Assistant Commissioner of Police is not having any authority to issue a search warrant. This proposition of law also came up before - 7 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 a Coordinate Bench of this Court in Rasquinha v. State of Karnataka [(1975) 2 Kar.L.J. 75], which held as under: ’Karnataka Moneylenders Act, 1961, S.15-Issue of search warrant. Sec. 15 confers power on the statutory authority to call for any record or document from any moneylender or any person for the purpose of verifying whether the business of money lending is carried on in accordance with the provisions of the Act. The section does not provide as to what the statutory authority should do if there is any disobedience to the demand for record. It is clear from the provision of the section that it does not authorize the Registrar, Asst. Registrar or Officer so authorized to issue search warrant to search or seize any document belonging to the moneylender or any other person.’ 12. Even as could be seen from the records, though no complaint has been lodged by any aggrieved debtor to the jurisdictional Court as per Section 5 of the Interest Act, the persons claiming to have been charged with exorbitant interest have to approach the jurisdictional Court under Section 5 of the Interest Act and seek redressal of the grievance. When the said Act provides that it is only the aggrieved person who can file the complaint under Section 5 of the Interest Act and no such complaint is pending, under such circumstances, the proceedings initiated by the police vitiate the entire proceedings and it is in violation of Section 5 of the Interest Act. 13. On going through the entire materials produced and the law that depicts that there is abuse of process of law by the respondent police in following the above said procedure and that they have made search without registering the case, I am of the - 8 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 considered opinion that the petitioners have made out a case so as to quash the proceedings." In that light, the petition is allowed. The first information report in Crime No.98/2017 registered by Cottonpet police station for the offences punishable under Sections 40, 38 and 39 of the Karnataka Money-Lenders Act, 1961, Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 and Section 420 r/w Section 34 of Indian Penal Code, 1860 pending on the file of XLV Additional Chief Metropolitan Magistrate, Bengaluru are hereby quashed. Whatever the documents and cheques which are so seized by drawing the mahazar, the same may be returned to the petitioners-accused on proper identification and acknowledgement. Insofar as prayer Nos.2 and 3 are concerned, they are disposed of as not necessary. In view of disposal of the petition, I.A.Nos. 1 and 2 of 2019 do not survive for consideration and the same are disposed of." 6. In the instant case, the Police inspector without registering the case at the first instance has conducted the raid and the same is impermissible in view of the specific provisions contained in Section 5 of the Interest Act, wherein, it states that the persons aggrieved have to approach the jurisdictional Court under Section 5 of the Interest Act and seek redressal of the grievance. Therefore, when the said Act provides that is only aggrieved person, who can file the complaint under Section 5 of the Interest Act and no such complaint is - 9 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 pending, under such circumstances, the proceedings initiated by the Police, vitiates the entire proceedings and it is a violation of Section 5 of the Interest Act. 7. Section 15 of the Karnataka Money Lenders Act, 1961 confers power on the statutory authority to call for record a document from any money lender for the purpose of verifying whether the business of money lending is carried on in accordance with provisions of the Act. Therefore, the conduct of the raid and seizure of the documents of the petitioners by the police is in violation of Section 15 of the Karnataka Money Lenders Act, 1961 and Section 154 of the Cr.P.C., since the offences alleged against the petitioners are cognizable. 8. A perusal of the charge sheet materials would indicate that there is no material to substantiate that the petitioners induced the borrowers to take loan by taking cheques, agreement of sale as security for repayment of the loan with an intention to deceive. In the absence of any essential element to constitute an offence punishable under Sections 79 and 80 of the Karnataka Police Act, the cognizance taken against the petitioners stands vitiated. In such circumstances, the continuation of proceedings would be an abuse of process of law. Accordingly, the following: - 10 - NC: 2025:KHC:11927 CRL.P No. 3299 of 2025 C/W CRL.P No. 3315 of 2025 CRL.P No. 3322 of 2025 ORDER i) The Petitions are allowed. ii) The investigation in FIR.No.282/2015, FIR No.304/2015 and FIR No.366/2018 registered by Honnalli Police Station, pending on the file of learned Prl.Civil Judge and JMFC, Honnali, are hereby quashed. Sd/- (HEMANT CHANDANGOUDAR) JUDGE BK List No.: 2 Sl No.: 5