Karnataka High Court
Manipal Housing Finance Syndicate Ltd vs State Of Karnataka on 28 July, 2025
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NC: 2025:KHC:29016
WP No. 12654 of 2016
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE R. NATARAJ
WRIT PETITION NO. 12654 OF 2016 (GM-ML/PB)
BETWEEN:
MANIPAL HOUSING FINANCE SYNDICATE LTD.,
(FORMERLY KNOWN AS MANIPAL HOUSING
DEVELOPMENT AND FINANCE COMPANY LIMITED)
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
"MANIPAL HOUSE", MANIPAL,
UDUPI-576104
REPRESENTED BY ITS EXECUTIVE DIRECTOR,
MR. T. SUNIL PAI,
AGED ABOUT 40 YEARS,
...PETITIONER
(BY SRI. SUNIL PAI, ADVOCATE FOR
SMT. ANUPARNA BORDOLOI, ADVOCATE)
AND:
Digitally
signed by
SUMA 1. STATE OF KARNATAKA
Location: REPRESENTED BY ITS SECRETARY,
HIGH
COURT OF CO-OPERATIVE SOCIETY DEPARTMENT
KARNATAKA (MONEY LENDING)
VIDHANA SOUDHA,
BENGALURU-560 001.
2. REGISTRAR GENERAL OF MONEY LENDERS
NO.1, ALI ASKAR ROAD,
BENGALURU-560 052
3. THE ASSISTANT REGISTRAR OF MONEY LENDERS
OFFICE OF THE ASSISTANT REGISTRAR OF
CO-OPERATIVE SOCIETIES,
NO.1, ALI ASKAR ROAD,
BENGALURU-560 052
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WP No. 12654 of 2016
HC-KAR
4. JOINT REGISTER OF CO-OPERATIVE SOCIETY
LEGAL SECTOR,
OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES,
NO.1, ALI ASKAR ROAD,
BENGALURU-560 052
5. NATIONAL HOUSING BANK
HAVING REGISTERED OFFICE AT
CORE 5-A, INDIA HABITAT CENTRE,
LODHI ROAD, NEW DELHI-110003
ALSO HAVING ITS REGIONAL OFFICE AT
NO.2, CAUVERY BHAVAN, F, K.G. ROAD,
BENGALURU-560009
6. RESERVE BANK OF INDIA
CENTRAL OFFICE COB, FORT MUMBAI,
REPRESENTED BY ITS GOVERNOR.
ALSO HAVING ITS OFFICE AT
NRUPATHUNGA ROAD,
BENGALURU-560 001
...RESPONDENTS
(BY SRI. MAHANTESH SHETTAR, ADDITIONAL GOVERNMENT
ADVOCATE FOR RESPONDENT NOS.1 TO 4;
SRI. S.R.HEGDE, ADVOCATE FOR RESPONDENT NO.5;
NOTICE IS SERVED ON RESPONDENT NO.6)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE
PETITIONER HEREWITH IS GOVERNED AND REGULATED BY THE
NATIONAL HOUSING BANK AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN
'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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WP No. 12654 of 2016
HC-KAR
CORAM: HON'BLE MR. JUSTICE R. NATARAJ
ORAL ORDER
In this writ petition, the petitioner has sought for a declaration that the provisions of the Karnataka Money Lenders Act, 1961 (for short, 'the Act, 1961'), the Karnataka Pawn Brokers Act, 1961 and the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (for short, 'the Act, 2004') are not applicable to the petitioner. The petitioner has also sought for a declaration that the act of the respondent in interfering with its business is arbitrary, illegal and without authority of law. It also sought for a direction to the respondents, their agents, their representatives or any person acting on their behalf from interfering with the business carried on by the petitioner. The petitioner has also challenged the letter bearing No.NML/YMC- 1/72/2015-16 dated 19.12.2015 issued by the respondent No.4 rejecting the request of the petitioner for grant of exemption from the applicability of the Act, 1961.
2. The petitioner claims that it is a Public Limited Company and a non-banking Financial Corporation registered with the Reserve Bank of India (for short, 'RBI'). It claimed -4- NC: 2025:KHC:29016 WP No. 12654 of 2016 HC-KAR that its object is to provide long term finance to individuals for acquisition / construction / repairs / renovation of houses. The petitioner contends that in exercise of the powers conferred under Sections 30A and Section 31 of the National Housing Bank Act, 1987 (for short, the 'NHB Act'), the respondent No.5 issued a notification No.NHB.HFC.DIR.9/CMD/2013 dated 06.09.2013 amending certain provisions of the Housing Finance Companies (NHB) Directions, 2010 (henceforth referred to as 'the Principal Directions'). Paragraph 27A of the Principal Directions was amended and paragraph 27A(2) provided that "All housing finance companies shall maintain a LTV ratio not exceeding 60% for loans granted against the collateral of gold jewellery". Later, Paragraph 29(5) was inserted in the Principal Directions which provided that "Every housing finance company shall disclose in their balance sheet the percentage of outstanding loans granted against the collateral of gold jewellery to their outstanding total assets". Moreover, Paragraph 38A was inserted after Pargraph 38 of the Principal Directions which provided that no housing finance company shall grant any loan or advance: (a) against bullion / primary gold and gold coins, and (b) for purchase of gold in any form -5- NC: 2025:KHC:29016 WP No. 12654 of 2016 HC-KAR including primary gold, gold bullion, gold jewellery, gold coins, units of Exchange Traded Funds (ETF) and units of gold mutual fund. The petitioner, therefore, contends that its activities are monitored and governed by the National Housing Bank. The National Housing Bank issued a master Circular No.NHB(ND)/DRS/REG/MC-01/2015 dated 09.09.2015 incorporating the aforesaid Regulations and instructions. The petitioner contends that it has been financing on gold in the State of Karnataka to cater to small and medium level financing requirements for individuals, to help them to raise small term loans. These advances are made as per Paragraphs 27A(2), 29(5) and 38A of the Principal Directions. It contends that as per the guidelines of the National Housing Bank, it can lend up to 75% of their capital employed for housing and the remaining 25% can be deployed by them for other purpose such as mortgage loans, gold loans and other loans. It contends that the rate of interest of the loans advanced by the National Housing Bank Companies depends on the cost of funds and ruling rates that are in force on the basis of the ruling Repurchase Agreement / Option (REPO) rate / policy rate fixed by the RBI. The RBI issued a circular bearing No.RBI/2013-14- -6- NC: 2025:KHC:29016 WP No. 12654 of 2016 HC-KAR 260 dated 16.09.2013. The rates of interest for the gold loans advanced by the Banks and Financial Institutions including Non- Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) are governed by the RBI and are guided by the REPO rate and changes made in the REPO rate by the RBI from time to time. The petitioner contends that it is not governed under the provisions of the Act, 1961 and the Act, 2004. Nonetheless, the petitioner addressed a letter dated 21.08.2015 to respondent No.4 requesting him to exempt it from the provisions of the aforesaid Acts as the petitioner was governed by the NHB Act. The respondent No.4 by his letter dated 19.12.2015, informed the petitioner that they would not grant exemption to the petitioner as other Companies for whom they had granted exemption had violated the guidelines of exemption certificates. The petitioner, is therefore, before this Court seeking for a declaration as mentioned above.
3. Learned counsel for the petitioner submits that the issue whether Non-Banking Financial Companies are governed under the Act, 1961 or Act, 2004 is no longer res integra in view of the judgment of the Hon'ble Apex Court in Civil Appeal No.5233/2012 [Nedumpilli Finance Company Limited v. State of -7- NC: 2025:KHC:29016 WP No. 12654 of 2016 HC-KAR Kerala and Others] which was followed by a coordinate Bench of this Court in W.P. No.18597/2012 and other connected writ petitions (M/s. Manappuram Finance Ltd. v. others - disposed off on 16.06.2022). He, therefore, contends that this writ petition may be disposed of on the same lines.
4. Learned Additional Government Advocate fairly submitted that the issue in this petition is squarely covered on all fours by the judgment of the Hon'ble Apex Court mentioned above as well as the judgment of the coordinate Bench of this Court as stated above.
5. In view of the aforesaid, this writ petition is allowed on similar lines and on the same terms as per the order dated 16.06.2022 passed by a coordinate Bench of this Court in WP No.18597/2012 and connected writ petitions.
Sd/-
(R. NATARAJ) JUDGE SMA / List No.: 1 Sl No.: 58