Mere Giving Of Hand Loans On One Or Two Occasions Is Not 'Money Lending Business': Kerala High Court

In the facts of the case, the petitioners were accused of running money lending business and threatening the complainants for repayment.

Justice A. Badharudeen noted that there is no evidence to even prima facie suggest that petitioners run a money-lending business. It stated that unless prosecution proves that petitioners have given loans to large numbers of persons on exorbitant interest, no offences can be made out.

“Law does not say that a mere giving of hand loan on one or two occasions, even though after obtaining some surety documents, could be couched under the caption 'money lending'. In order to establish running of money lending business, one or two instances of advancing loan alone are insufficient. If such a proposition is laid, it is difficult for the people to get hand loans in cases of emergency and nobody would extend their helping hands, afraid of the penal consequences hidden in the Act of 1958 and Act of 2012. This would lead to societal imbalance. In order to say that a person is doing money lending business, the prosecution shall collect materials for the same, otherwise no offence of money lending said to have been committed, prima facie.”

The petitioners are accused of giving rupees 6 lakhs as loan, with an undertaking to repay the amount along with interest, after obtaining blank cheque leaves from them. It is alleged that petitioners threatened the complainant and demanded for repayment with interest.

Crime was registered against petitioners alleging commission of offences punishable under Sections 447 (punishment for criminal trespass) and 506(i) (punishment for criminal intimidation) read with Section 34 (acts done in furtherance of common intention) of the IPC, Sections 17 (penalty for carrying on business without licence or in violation of the conditions of licence), 18 (penalties) of the Kerala Money-Lenders Act, Section 3 (prohibition of charging exorbitant amount) of the Kerala Prohibition of Charging Exorbitant Interest Act.

The petitioners submitted that they do not have a money-lending business and, therefore, no licence was required. They stated that money was given to complainants due to their urgent need for money, and blank cheques were taken to ensure repayment.

The Court observed that there are no evidence to suggest that petitioners own a money lending business or that they advanced money for exorbitant interest to the complainants.

The Court stated that carrying money lending business without proper licence is punishable. The Court further clarified that simply by giving hand loans to persons does not mean that petitioners were running a money lending business.

Court stated, “That is to say, unless the prosecution records show that there are umpteen numbers of loan given by the offender for exorbitant interest, prima facie, none of the offences would attract. In the instant case, none of the offences are made out, prima facie, and therefore, quashment as sought for, is liable to succeed.”

As such, the Court quashed the proceedings against the petitioners.

Counsel for Petitioners: Advocate M S Breez

Counsel for Respondents: Senior Public Prosecutor Renjit George

Case Number: CRL.MC NO. 2948 OF 2023

Case Title: Manoj George v State of Kerala

Citation: 2024 LiveLaw (Ker) 782

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