The Kerala High Court stated that having just one or two cases of giving loans is not enough to prove that someone is running a money lending business.
The Kerala High Court dismissed a case filed under the Kerala Money-Lenders Act, 1958. The court stated that having one or two instances of lending money is not enough to prove someone is running a money lending business. The prosecution must show that the accused lent money multiple times at high interest rates; otherwise, no charges can be established. The accused argued that they were innocent of the claims of operating an illegal money lending business. Justice A. Badharudeen emphasized that the prosecution needs to gather sufficient evidence to prove money lending activities; otherwise, no offense can be claimed.
Advocate M.S. Breez represented the Petitioners, while Senior Public Prosecutor Renjit George represented the Respondents. The prosecution accused the defendants of violating Sections 447 and 506(i) along with Section 34 of the Indian Penal Code, 1860, as well as Sections 17 and 18 of the Kerala Money-Lenders Act, 1958, and Section 3 of the Kerala Prohibition of Charging Exorbitant Interest Act, 2012. It was claimed that the first accused, lacking a license under the 1958 Act, lent Rs. 6 Lakh to the complainant and her husband, expecting Rs. 36,000 in interest, after taking blank cheques from them. Later, the third accused allegedly threatened the complainant’s husband over the phone, warning that legal action would be taken if Rs. 3 Lakh plus interest was not repaid. Subsequently, the first accused visited the complainant’s home, threatened them, and demanded repayment of Rs. 3 Lakh with interest.
The other two accused individuals were included because they are the brother and wife of the first petitioner. It was argued that the first petitioner is not a money lender and has never operated a money lending business, which requires a license under Section 3 of the Act, 1958. It was also claimed that since the first petitioner was entitled to reclaim the loaned money, the demand for repayment does not constitute the alleged offenses, and thus, the request for dismissal should be granted. The Bench observed the specific claim that the first petitioner runs a money lending business without a license. However, it stated that the prosecution evidence does not even suggest that the first petitioner had a money lending operation.
Additionally, it was noted that the first petitioner lent Rs.6 Lakh to the complainant and her husband after securing documents. When the money was requested due to non-repayment, this case was filed. According to the Bench, the prosecution evidence did not indicate that the first petitioner runs a money lending business or charged excessive interest. The allegations were based solely on the statements of the complainant and her husband, who are acknowledged defaulters of the loan taken from the first accused. The Bench clarified that the law does not classify occasional hand loans, even with security documents, as money lending. To prove that someone is running a money lending business, more than one or two loan instances are needed. If this were not the case, it would discourage people from giving hand loans in emergencies, as they would fear legal repercussions from the Act of 1958 and Act of 2012.
The High Court stated that unless the prosecution can prove there are many loans given by the offender at high interest rates, none of the charges would apply. The court found that in this case, there are no valid charges, so the request to dismiss the case is valid. The court also ordered that all further actions in C.C.No.1797/2017 from the Judicial First Class Magistrate Court-I in Aluva, related to Crime No. 3099/2017 from the Aluva East Police Station, against the petitioners, are to be dismissed.
Cause Title: Manoj George & Ors. v. State Of Kerala & Ors. [Neutral Citation: 2024:KER:90233]
Appearance:
Petitioners: Advocate M.S.Breez
Respondents: Senior Public Prosecutor Renjit George
