- 1 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ CRIMINAL PETITION NO.1085 OF 2019 BETWEEN: VASUDEV KOTHARI S/O. NARAYANA AGED ABOUT 46 YEARS R/O. TALAGUPPA POST AND VILLAGE SAGAR TALUK-577 401 SHIVAMOGGA DISTRICT &PETITIONER (BY SRI UMESH MOOLIMANI, ADVOCATE FOR; SRI S. V. PRAKASH, ADVOCATE) AND: 1. STATE OF KARNATAKA BY SAGAR RURAL POLICE SAGAR-577 401 SHIVAMOGGA DISTRICT REPRESENTED BY STATE PUBLIC PROSECUTOR HIGH COURT OF KARNATAKA HIGH COURT BUILDING BENGALURU-560 001 2. KEERTHI KUMAR SUB-INSPECTOR OF POLICE JOG POLICE STATION JOG, SAGAR TALUK-577 401 SHIVAMOGGA DISTRICT &RESPONDENTS (BY SRI M.R. PATIL, HCGP, FOR R-1; R-2 IS SERVED AND UNREPRESENTED) Digitally signed by HEMALATHA J Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C PRAYING TO QUASH THE PROCEEDINGS LAUNCHED AGAINST THE PETITIONER IN C.C.NO.673/2016 (CR.NO.425/2015) (POLICE CRIME NO.283/2015 FOR THE ALLEGED OFFENCE PUNISHABLE UNDER SECTIONS 5, 38 AND 39 OF KARNATAKA MONEY LENDERS ACT, 1961 AND SECTIONS 3 AND 4 OF KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT, 2004 AND SECTION 420 OF IPC, PENDING ON THE FILE OF THE LEARNED ADDITIONAL J.M.F.C., SAGAR AND AWARD THE COST OF THESE PROCEEDINGS. THIS CRIMINAL PETITION IS COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioner has challenged the charge sheet filed by the respondent No.1 in C.C. No.673/2016 on the file of the Additional Civil Judge (Jr. Dn.) and JMFC - 1 Court, Sagara and the order dated 19.10.2016 taking cognizance for the offence punishable under Section 420 of Indian Penal Code, 1860 (henceforth referred to as 'IPC' for short), Sections 5, 38, 39 of the Karnataka Money Lenders Act, 1961 (henceforth referred to - 3 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 as 'Act, 1961' for short) and Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (henceforth referred to as 'Act, 2004' for short). 2. The petitioner, a money lender licensed under the provisions of the Act, 1961 has filed this petition challenging the registration of the case against him on the complaint of respondent No.2. The respondent No.2 has alleged that an anonymous complaint was received by him stating that the petitioner was indulging in money-lending activities, charging exorbitant interest and obtaining unconscionable documents, thereby cheating the general public. Based on the said anonymous complaint, respondent No.2 sought an order of search and seizure in the house of the petitioner. The Court granted permission, pursuant to which the house of the petitioner was searched and certain documents were seized. 3. Based on the same, respondent No.1 registered Cr.No.283/2015 for the offences punishable under Section 420 of IPC, Sections 5, 38, 39 of the Act, 1961 and Sections 3 and 4 of the Act, 2004. Thereafter, investigation was conducted and - 4 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 a charge sheet was filed in C.C. No.673/2016. The Trial Court took cognizance of the aforesaid offences and issued process. 4. The petitioner being aggrieved by the same is before this Court. 5. (i) The learned counsel for the petitioner submits that the petitioner is a registered money lender holding a licence duly issued by the office of the Deputy Registrar of Co- operative Societies and Registrar of Moneylenders, Shivamogga. The said licence was in force from 01.04.2013 to 31.03.2018 and is thereafter renewed for the period 01.04.2018 to 31.03.2023. He therefore, contends that the petitioner cannot be accused of an offence punishable under Section 5 of the Act, 1961. He further contends that the petitioner has not indulged in any act punishable under Sections 38 and 39 of the Act, 1961, as he had not molested any defaulter or borrower during the process of recovery of money. He therefore contends that the Trial Court without application of mind, has cursorily taken cognizance of the offences punishable under Sections 5, 38 and 39 of the Act, 1961. - 5 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 (ii) He also contends that there is no material to justify the allegation that the petitioner has charged exorbitant interest from his borrowers. He contends that the Act, 2004 itself provides a mechanism under Section 5 of the Act, 2004 whereby any person aggrieved by the act of a money lender charging exorbitant interest to appear before the jurisdictional Court and deposit the principal amount together with interest at such rate as specified by the State Government. It is thus contended that no case has been registered against the petitioner till date under the said Act and therefore, the petitioner could not have been proceeded against for the offence punishable under Sections 3 and 4 of the Act, 2004. (iii) In so far as Section 420 of IPC is concerned, he contends that no person has made any allegation that the petitioner had induced him to part with documents and thereby cheated him and therefore an offence under Section 420 of IPC is not made out. Besides this, he contends that when the allegations relate to offences under a special enactment, the respondents were not justified in invoking Section 420 of IPC. Therefore, he contends that the impugned charge sheet as well - 6 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 as the order taking cognizance is an abuse of the process of law and of the Court and is liable to be quashed. He also contends that the Trial Court without even perusing the material placed along with the charge sheet, has cursorily taken cognizance. He contends that if the Trial Court had applied its mind to the materials placed before it, it would not have taken cognizance. 6. The learned HCGP on the other hand submits that several powers of attorney were recovered from the house of the petitioner. Apart from this, several on demand promissory notes and consideration receipts, which were blank but signed, were also recovered. He therefore, contends that the petitioner was in the habit of filling up the consideration receipts and promissory notes so as to charge exorbitant interest from the borrowers. Therefore, he contends that the charge sheet filed against the petitioner for the aforesaid offences is just and proper. 7. I have considered submissions of the learned counsel for the petitioner and the learned HCGP for the respondents. - 7 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 8. The criminal process was initiated against the petitioner based on the documents seized during a search of his house by respondent No.2. The search yielded certain documents such as, blank promissory notes and consideration receipts, some of which were duly signed by the parties while some of which were signed by the parties on revenue stamps. The respondent No.2 also seized certain cheques and general powers of attorney executed in favour of the petitioner. Based on the same, respondent No.2 informed respondent No.1 that the petitioner had committed offences punishable under Section 420 of IPC and under Sections 5, 38, 39 of the Act, 1961 and Sections 3 and 4 of the Act of 2004. 9. However, a perusal of the charge sheet and the materials produced along with it would disclose that there is not even a mention as to who allegedly paid exorbitant interest to the petitioner. There is also no mention of the petitioner having molested any borrower at the time of recovery of dues so as to attract an offence under Section 38 of the Act, 1961. There is also no material to justify the commission of an offence under Section 39 of the Act, 1961. - 8 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 10. Insofar as Sections 3 and 4 of the Act, 2004 are concerned, as rightly contended by the learned counsel for the petitioner that the Act itself makes provision for depositing the amount due along with interest at such rates as specified by the State Government before the Court. If any person is aggrieved by any act of the petitioner charging exorbitant interest, the Act itself provides a mechanism. Therefore, even assuming that the petitioner has indulged in charging exorbitant interest, that per se would not constitute an offence. 11. In so far as the invocation of Section 420 of IPC is concerned, when the petitioner holds a licence to carry on money-lending business, any violation would fall within the contours of the Act, 2004 and therefore, invocation of Section 420 of IPC is wholly misplaced. It is unfortunate that the Trial Court without even looking into material placed on record, has taken cognizance of the offence punishable under Section 420 of IPC and under Sections 5, 38 and 39 of the Act, 1961 and the Act, 2004. Therefore, the impugned charge sheet filed by the respondent No.1 and the order taking cognizance by the Trial Court dated 19.10.2016 is liable to be quashed. - 9 - HC-KAR NC: 2026:KHC:12891 CRL.P No. 1085 of 2019 12. Accordingly this petition is allowed. The charge sheet filed by respondent No.1 in C.C. No.673/2016 on the file of Additional Civil Judge (Jr.Dn.) and JMFC-I Court, Sagara, Shivamogga and the order dated 19.10.2016 passed by the Trial Court taking cognizance of the offences punishable under Section 420 of IPC, Sections 5, 38, 39 of the Act, 1961 and Sections 3 and 4 of the Act, 2004 is quashed. Sd/- (R. NATARAJ) JUDGE HJ List No.: 1 Sl No.: 32