Karnataka High Court
Shriram Transport Finance Co. Ltd vs The State Of Karnataka on 16 June, 2022
Author: S.G. Pandit
Bench: S.G. Pandit
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF JUNE, 2022
BEFORE
THE HON' BLE MR. JUSTICE S.G. PANDIT
W.P.No.18597/2012 (GM-ML/PB)
C/W
W.P.Nos.47108/2011 (GM-RES), 3208/2012 (GM-RES),
7508/2012 (GM-ML/PB), 10835/2012 (GM-RES),
11891/2012 (GM-RES), 15215/2012 (GM-ML/PB)
18932/2012 (GM-RES) AND 11658/2015 (GM-ML/PB)
W.P.No.18597/2012
BETWEEN:
M/S. MANAPPURAM FINANCE LTD.,
FORMERLY KNOWN AS
M/S. MANAPPURAM GENERAL
FINANCE & LEASING LTD.,
REGIONAL OFFICE AT NO.9
2ND FLOOR, 3RD CROSS
ANNIPURA MAIN ROAD
SUDHAMANAGAR, K.H. ROAD
BANGALORE-560027
REPTD. BY ITS REGIONAL MANAGER
(OPERATIONS)
AUTHORIZED SIGNATORY
SRI CHANDRA SEKHARA K.S.
...PETITIONER
(BY SRI B RAVISHANKAR, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS CHIEF SECRETARY
VIDHANA SOUDHA
BANGALORE-560001.
2. THE SECRETARY
DEPARTMENT OF CO-OPERATIVE SOCIETY
(MONEY LENDING)
2
M.S. BUILDING
BANGALORE-560001.
3. THE REGISTRAR OF CO-OPERATIVE SOCIETY/
MONEY LENDERS
NO 1, ALIASKAR ROAD
BANGALORE-560052.
4. THE DEPUTY REGISTRAR OF MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD
BANGALORE-560 003.
5. THE ASSISTANT REGISTRAR OF
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD
BANGALORE-560 003.
6. DIRECTOR GENERAL OF POLICE
POLICE HEAD QUARTERS
NRUPATHUNGA ROAD
BANGALORE-560001.
7. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB, FORT
MUMBAI, BY ITS GOVERNOR.
...RESPONDENTS
(BY SRI M VINOD KUMAR, AGA FOR R1-R6
SMT. RASHMI SUBRAMANYA, ADV. FOR R7)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT CHAPTER IIIB OF THE RESERVE BANK OF INDIA ACT
OCCUPY THE FIELD WITH REGARD TO CONTROL, PENAL
ACTION ETC., AGAINST THE PETITIONER COMPANY, AND THAT
THE PROVISIONS OF CHAPTER IIIB OF THE R.B.I. ACT SHALL
HAVE OVERRIDING EFFECT ON THE STATE LAWS, NAMELY
THE KARNATAKA MONEY LENDERS ACT, 1961 AND KARNATAKA
PROHIBITION OF CHARGING EXORBITANT INTEREST ACT 2004,
OR IN THE ALTERNATIVE DECLARE THAT THE "KARNATAKA
PROHIBITION OF CHARGING EXORBITANT INTEREST ACT,
3
2004" AND "KARNATAKA MONEY LENDER ACT 1961" IS NOT
APPLICABLE TO THE PETITIONER.
W.P.No.47108/2011
BETWEEN:
SHRIRAM TRANSPORT FINANCE CO. LTD.,
HAVING ITS REGIONAL OFFICE
AT 29/A, K H ROAD
BANGALORE-27
REPTD. BY ITS ASSISTANT MANAGER/
GPA HOLDER
SRI MADHUSHEHAN MANVI
...PETITIONER
(BY SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W
SRI DEVIPRASAD SHETTY, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY LENDING)
BANGALORE.
2. THE REGISTRAR OF GENERAL OF
MONEY-LENDERS
ALIASKAR ROAD
BANGALORE-52.
3. THE DEPUTY REGISTRAR &
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD, BANGALORE-3.
4. THE ASSISTANT REGISTRAR &
MONEY LENDERS
CENTRAL DIVISION
NO.146, 8TH CROSS, 3RD MAIN
MARGOSA ROAD, BANGALORE-3.
4
5. THE SUB INSPECTOR & POLICE (LAW & ORDER)
WILSON GARDEN POLICE STATION
BANGALORE.
6. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB
FORT MUMBAI
BY ITS GOVERNOR.
7. A.S.T. ARASU
AGED ABOUT 61 YEARS
S/O. SRI A.M. SEEYALAM
No.35/B,2ND CROSS
60 FT ROAD
MAHAGANAPATHI NAGAR
RAJAJINAGAR
BANGALORE.
8. R. KRISHNAN
AGED ABOUT 60 YEARS
S/O. SRI D RAMEGOWDA
No.82, II MAIN
EESHWARINAGAR
BSK III STAGE
BANGALORE
9. K.B. GOPALAKRISHAN
AGED ABOUT 40 YEARS
S/O. SRI BOMMALINGAIAH
CHIKKABIDARAKALLU
REDDY KATTE ROAD
NAGASANDRA POST
BANGALORE.
10. B.K. PUTTASWAMY
AGED ABOUT 53 YEARS
S/O. SRI KULLEGOWDA
No.108/1, I MAIN
2ND CROSS, RISHIKESH NAGAR
HOSAKEREHALLI
BSK III STAGE
BANGALORE.
...RESPONDENTS
(BY SRI M. VINOD KUMAR, AGA FOR R1-R5
SMT. RASHMI SUBRAMANYA FOR R-6
5
RESPONDENTS 7 TO 10 IMPLEADED V/O DT. 25.01.2012.
SMT. LAKSHMI S HOLLA, ADV. FOR R7-10)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT THE PROVISIONS OF "KARNATAKA MONEY LENDERS ACT
1961" & THE PROVISIONS OF "KARNATAKA PROHIBITION OF
CHARGING EXORBITANT INTEREST ACT 2004" AS BEING NOT
APPLICABLE TO THE NBFC THAT IS THE PETITIONER
REGISTERED UNDER CHA.IIIB OF THE RBI ACT AND ETC.
W.P.NO.3208/2012
BETWEEN:
CHOLAMANDALAM INVESTMENT
& FINANCE CO LTD
HAVING ITS OFFICE AT
NO. 28/1, KENSINGTON ROAD,
OPP. GURUDWARA,
NEAR ALSOOR LAKE,
BANGALORE- 560 042
REP. BY ITS CONSTITUTED ATTORNEY
SRI NAVEEN N D.
...PETITIONER
(BY SRI JAYAKUMAR S PATIL, SR. COUNSEL A/W
SRI DAYANAND S PATIL, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY- LENDING)
VIDHANA SOUDHA
BANGALORE- 560001.
2. THE REGISTRAR GENERAL
OF MONEY-LENDERS
NO.1, ALIASKAR ROAD
BANGALORE- 560052.
3. THE JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES
6
(LEGAL SECTOR)
OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES
NO.1, ALIASKAR ROAD
BANGALORE- 560052.
4. THE ASSISTANT REGISTRAR
OF MONEY-LENDERS
OFFICE OF THE ASSISTANT
REGISTRAR
OF CO-OPERATIVE SOCIETIES
& MONEY LENDERS
TUMAKUR SUB-DIVISION
NEAR TOWN HALL CIRCLE
GANDHINAGAR
TUMAKUR- 572101.
5. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB
FORT. MUMBAI
BY ITS GOVERNOR.
...RESPONDENTS
(BY SRI M VINOD KUMAR, AGA FOR R1-R4
SMT. RASHMI SUBRAMANYA, ADV. FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT THE PROVISIONS OF THE "KARNATAKA MONEY LENDERS
ACT, 1961" AND THE "KARNATAKA PROHIBITION OF CHARGING
EXORBITANT INTEREST ACT, 2004" AS BEING NOT APPLICABLE
TO THE PETITIONER WHICH IS AN NBFC, REGISTERED UNDER
CHAPTER III-B OF THE RBI ACT AND ETC.
W.P.NO.7508/2012
BETWEEN:
INDIA INFOLINE FINANCE LIMITED
(FORMERLY KNOWN AS INDIA
INFOLINE INVESTMENT
SERVICES LIMITED)
A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE
COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
7
AT INDIA INFOLINE HOUSE
SUN INFOTECH PARK ROAD
NO.16, PLOT NO, B -23 MIDC
THANE INDUSTRIAL ESTATE
WAGLE ESTATE, THANE-400604.
ALSO HAVING IT REGIONAL OFFICE AT
NO.31/9, KRIMSON SQUARE
HOSUR ROAD, ABOVE VISHAL MART
BANGALORE
REP. BY ITS AREA OPERATING OFFICER
MR. KIRAN M.
...PETITIONER
(BY SRI RAGHURAM CADAMBI, ADV.)
AND:
1. STATE OF KARNATAKA
REPT. BY ITS FINANCE SECRETARY
VIDHANA SOUDHA
DR. AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE ASSISTANT REGISTRAR
OFFICE OF THE ASSISTANT REGISTRAR
BANGALORE NORTH DIVISION
NO.146, THIRD MAIN ROAD
8TH CROSS, MARGOSA ROAD
MALLESHWARAM
BANGALORE-560003.
3. REGISTRAR OF MONEY-LENDERS
BANGALORE NORTH, KARNATAKA
NO.1, ALI ASKER ROAD
BANGALORE-560052.
4. JOINT REGISTRAR
CO-OPERATION DEPARTMENT (LEGAL CELL)
NO.1, ALI ASKER ROAD
BANGALORE-560052.
5. RESERVE BANK OF INDIA
HAVING ITS OFFICE AT
NRUPATHUNGA ROAD
BANGALORE-560001.
8
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R4
SMT. RASHMI SUBRAMANYA, ADV. FOR R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT THE ACTIONS OF THE R2 TO R4 IN SEEKING TO BRING
THE PETITIONER UNDER THE PROVISIONS OF THE KARNATAKA
MONEY LENDERS ACT 1961 & THE KARNATAKA PROHIBITION
OF CHARGING EXORBITANT INTEREST ACT 2004, ARE
ILLEGAL, UNCONSTITUTIONAL & VIOLATIVE OF THE RESERVE
BANK OF INDIA ACT 1934 AND ETC.
W.P.No.10835/2012
BETWEEN:
FED BANK FINANCIAL SERVICES LIMITED
HAVING ITS CORPORATE OFFICE AT C-6
5TH FLOOR, C WING, LAXMI TOWERS
BANDRA KURLA COMPLEX
BANDRA (EAST), MUMBAI-400051.
HAVING ITS BRANCH AT 1ST BLOCK
FIRST FLOOR, DOOR NO.259
10TH CROSS, 1ST N BLOCK
RAJAJI NAGAR, BANGALORE-560010
REP. BY ITS STATE HEAD- SALES
SRI SANAL CH.
...PETITIONER
(BY SRI SHASHI KIRAN SHETTY, SR.COUNSEL
A/W SMT. LATHA SHETTY, ADV.)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS
CHIEF SECRETARY
VIDHANA SOUDHA
BANGALORE-560001.
2. REGISTRAR OF MONEY LENDERS
CHIT AND CO- OPERATION
NORTH ZONE
NO.146, 3RD MAIN
9
MARGOSA ROAD, 8TH CROSS
MALLESHWARAM
BANGALORE-560003.
3. THE SECRETARY
CO-OPERATIVE SOCIETY
DEPARTMENT
VIKAS SOUDHA
BANGALORE.
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARING
THAT THE PETITIONER COMPANY IS SOLELY GOVERNED BY
RESERVE BANK OF INDIA; DECLARE THAT KARNATAKA MONEY
LANDERS ACT 1961, KARNATAKA PAWN BROKERS ACT, 1961,
KARNATAKA PROHIBITION OF CHARGING EXORBITANT
INTEREST ACT 2004 IS NOT APPLICATION TO THE PETITIONER
COMPANY AND ETC.
W.P.No.11891/2012
BETWEEN:
M/S. SKS MICRO FINANCE LTD.,
A COMPANY INCORPORATED UNDER THE
INDIAN COMPANIES ACT
HAVING ITS REGISTERED OFFICE AT
ASHOKA RAGHUPATHI CHAMBERS
D.NO.1-10-60 TO 62
OPP: SHOPPERS STOP
BEGUMPET, HYDERABAD-500 016.
AND ITS OFFICE AT R.O.NO.C121
OPP. SBI 3RD CROSS
EAST OF NGEF, KASTURI NAGAR
BANGALORE-560 043
REP. BY ITS STATE HEAD
AWANISH KUMAT.
NEW ADDRESS:
3RD FLOOR, MY HOME TYCOON
BLOCK-A, 6-3-1192
KUNDANBAGH
10
BEGUMPET
HYDERABAD-500016
ANDRA PRADESH.
...PETITIONER
(BY SRI SANTHOSH, ADV.)
AND:
1. STATE OF KARNATAKA
REP. BY ITS SECRETARY TO THE
DEPARTMENT OF CO-OPERATION
M S BUILDING,
BANGALORE-560 001.
2. THE SPECIAL OFFICER AND
JOINT SECRETARY
GOVERNMENT OF KARNATAKA
DEPARTMENT OF CO-OPERATION
M S BUIDLING
BANGALORE-560001.
3. THE REGISTRAR OF CO-OPERATIVE
SOCIETIES
NO.1, ALIASKAR
BANGALORE-560 052.
4. THE DEPUTY REGISTRAR
OF CO-OPERATIVE SOCIETIES
TUMUKR DISTRICT
TUMKUR.
...RESPONDENTS
(BY SMT. RASHMI PATEL, HCGP FOR R1-R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE
IMPUGNED ORDERS, NAMELY THE ORDER PASSED BY THE R2
DATED 05.01.2012, AS PER ANN-A & THE ORDER PASSED BY
THE R4, DATED 30.03.2012, AS PER ANN-B.
11
W.P.No.15215/2012
BETWEEN:
M/S. RELIANCE CAPITAL LIMITED
REGISTERED OFFICE AT H-BLOCK
FIRST FLOOR, DHIRUBHAI AMBANI
KNOWLEDGE CITY
KOPERKHIARANE
NAVI MUMBAI-400710.
HAVING ITS REGIONAL OFFICE AT
NO.37, BRAHMANANDA COURT
3RD FLOOR, LALBAGH ROAD
BANGALORE
REPT. BY ITS BRANCH COLLECTION
MANAGER MR.HARISH.
...PETITIONER
(BY SMT. K.B.SREEDEVI, ADV.)
AND:
1. THE STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
MULTISTORIED BUILDING
DR. AMBEDKAR VEEDHI
BANGALORE-560001.
2. THE ASSISTANT REGISTRAR OF MONEY
LENDING
CENTRAL ZONE CIRCLE
NO.146, 8TH CROSS
MARGOOSA ROAD
MALLESHWARAM
BANGALORE-560003.
...RESPONDENTS
(BY SMT. A.R. SHARADAMBA, AGA FOR R1 & R2)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE
SHOW CAUSE NOTICE DATED 17.04.2012 AT ANNX-J ISSUED
BY THE R2 AND ALL OTHER PROCEEDINGS PURSUANT
THERETO AND DECLARE THAT THE PROVISIONS OF THE
12
KARNATAKA MONEY LENDING AND PAWN BROKERS ACT 1961
IS NOT APPLICABLE TO THE PETITIONER COMPANY.
W.P.NO.18932/2012
BETWEEN:
MUTHOOT FINANCE LTD.,
HAVING ITS OFFICE AT 84/3,
HENNUR MAIN ROAD,
ST.THOMAS TOWN POST,
LINGARAJAPURAM
BANGALORE- 560084
REPRESENTED BY ITS
REGIONAL MANAGER
MR. ASHOK KUMAR
AGED ABOUT 64 YEARS. ...PETITIONER
(BY SRI SHASHI KIRAN SHETTY, SR.COUNSEL A/W
SMT. LATHA SHETTY, ADV.)
AND:
1. STATE OF KARNATAKA
REPT. BY ITS CHIEF SECRETARY
VIDHANA SOUDHA
BANGALORE 560001.
2. FINANCE DEPARTMENT AND TAXES
VIDHANA SOUDHA
BANGALORE
REPT. BY ITS SECRETARY.
3. CO-OPERATIVE SOCIETY DEPARTMENT
VIKAS SOUDHA
BANGALORE
REPT. BY ITS SECRETARY.
4. REGISTRAR OF MONEY LENDERS
BANGALORE URBAN DISTRICT
BANGALORE- 3.
...RESPONDENTS
(BY SMT. A.R.SHARADAMBA, AGA FOR R1-R4)
13
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE
THAT THE PETITIONER COMPANY IS SOLELY GOVERNED BY
RESERVE BANK OF INDIA; DECLARE THAT KARNATAKA
PROHIBITION OF CHARGING EXORBITANT INTEREST ACT 2004
IS NOT APPLICABLE TO THE PETITIONER COMPANY.
W.P.NO.11658/2015
BETWEEN:
1. KOSAMMATTAM FINANCE LTD.,
HAVING ITS REGISTERED
OFFICE AT MKC BUILDING
KOTTAYAM - 1, KERALA
REPT. BY ITS MANAGING
DIRECTOR.
2. KOSAMMATTAM FINANCE LTD.,
33/3, 1ST FLOOR, MVR BUILDING
NEAR INDIAN ACADEMY COLLEGE
HENNUR CROSS, BENGALURU
REPRESENTED BY ITS
REGIONAL MANAGER
SRI K KUMARASWAMY
S/O LATE K KEMPE GOWDA
AGED ABOUT 61 YEARS.
...PETITIONERS
(BY SRI. SHIVARUDRAPPA SHETKAR, ADV.)
AND:
1. THE STATE OF KARNATAKA
BY ITS SECRETARY
DEPARTMENT OF CO-OPERATION
(MONEY-LENDING)
BANGALORE- 560052.
2. THE REGISTRAR GENERAL
OF MONEY-LENDERS
ALIASKAR ROAD
BANGALORE- 560052.
14
3. THE DEPUTY REGISTRAR &
MONEY-LENDERS
SOUTH DIVISION
GMC BANK BUILDING
PAMPAMAHAKAVI ROAD
CHAMARAJPETE
BANGALORE-18.
4. THE ASSISTANT REGISTRAR
& MONEY-LENDERS
SOUTH DIVISION
GMC BANK BUILDING
PAMPAMAHAKAVI ROAD
CHAMARAJPETE
BANGALORE- 18.
5. THE RESERVE BANK OF INDIA
CENTRAL OFFICE, COB, FORT
MUMBAI -400005
BY ITS GOVERNOR.
...RESPONDENTS
(BY SMT A.R.SHARADAMBA, AGA FOR R1-R4
R5 ARE SERVED)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO DECLARE THAT
THE PROVISIONS OF 'KARNATAKA PROHIBITION OF CHARGING
EXORBITANT INTEREST ACT, 2004 AS BEING NOT APPLICABLE
TO THE NBFC THAT IS THE PETITIONER REGISTERED UNDER
CHAPTER III B OF THE RBI ACT. AND ETC.
THESE PETITIONS COMING ON FOR ORDERS THIS DAY,
THE COURT MADE THE FOLLOWING:-
COMMON ORDER
Heard Sri Jayakumar S. Patil and Sri Shashi Kiran Shetty, learned Senior Counsels along with Sri B. Ravishankar, Sri Deviprasad Shetty, Sri Dayanand S. Patil, Sri S.R. Hegde, 15 Sri C.K. Nandakumar, Sri M.S. Varadarajan, Sri Jai M. Patil, Sri Shivarudrappa Shetkar, learned counsels for the petitioners, Sri M. Vinod Kumar, learned Additional Government Advocate for respondents 1 to 6, Smt Rashmi Subramanya, learned counsel for the 7th respondent. Perused the writ petitions papers.
2. It is submitted that in all these writ petitions, petitioners/Non-Banking Financial Companies (for short 'the NBFCs') registered under the Reserve Bank of India Act, 1934, (for short 'the RBI Act') and regulated by RBI are before this Court praying for a declaration to declare that the State Enactments i.e., the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 (for short 'the 2004 Act'), and the Karnataka Money- Lenders Act, 1961 (for short 'the 1961 Act'), are not applicable to the petitioners and also to quash the consequential orders.
3. Learned Senior Counsels Sri.Jayakumar S. Patil and Sri. Shashi Kiran Shetty on behalf of the petitioners 16 contend that both the State enactments under challenge in these petitions are against the legislative competence of the State Government. Since the petitioners' NBFCs are registered and functioning under the RBI Act, falls under the ambit of 1956 Act. Further, it is submitted that Reserve Bank of India is the regulatory body for the petitioners' NBFCs and the State Acts such as Karnataka Money-Lenders Act, 1961 and Karnataka Prohibition of Charging Exorbitant Interest Act, 2004 are State enactments under Entry 30 of List-II of Schedule VII of the Constitution of India, are not applicable to petitioners. The petitioners are covered by the 1956 Act enacted by the Parliament under Entry 43 of List-I of Schedule VII. Provisions of 1956 Act has made it clear that it would have overriding effect in respect of any inconsistencies therewith contained in any other law.
4. Learned Senior Counsel would submit that the question of law raised in these writ petitions were the subject matter of Civil Appeal No.5233/2012 17 [Nedumpilli Finance Company Limited V/s. State of Kerala and Others] before the Hon'ble Apex Court. The Hon'ble Apex Court was examining the question as to whether Non-Banking Financial Companies regulated by Reserve Bank of India in terms of the provisions of Chapter III-B of RBI Act, can also be regulated by the State Governments such as Kerala Money Lenders Act, 1958 and Gujarat Money Lenders Act, 2011. While answering the said question, the Hon'ble Apex Court has made it clear that the State Enactments would have no application to NBFCs, which are registered under the 1934 Act. It is further submitted that both the above State Acts, which are under challenge are enacted by the State Government in exercise of their powers under Entry 30 of List-II of Schedule VII of Constitution of India. It is submitted that State has no power to regulate the functions of NBFCs which are registered under the Reserve Bank of India Act. Therefore, they pray to declare both the Acts under challenge as not applicable to the petitioners' NBFCs. 18
5. On hearing the learned Senior Counsel for the petitioners as well as learned counsel for the respondents, I am of the view, that question raised in the present writ petitions is covered by the principles and decision of the Hon'ble Apex Court in the above stated C.A.No.5233/2012. As stated above, the question before the Hon'ble Apex Court was whether NBFCs regulated by the Reserve Bank of India can also be regulated by State enactments. While answering the above said question, the Hon'ble Apex Court at paragraphs 6.11, 8, 8.4 and 11, has held as follows:
"6.11 The above scheme of Chapter III-B of the RBI Act shows that the power of intervention available for the RBI over NBFCs, is from the cradle to the grave. In other words, no NBFC can carry on business without being registered under the Act and a NBFC which takes birth with the registration under the Act is liable to be wound up at the instance of the RBI. The entire life of a NBFC from the womb to the tomb is also regulated and monitored by RBI.
19
8. As indicated by the Constitution Bench in Deep Chand (supra), a law may be valid when made, but a shadow may be cast on it by supervening constitutional inconsistency or supervening existing statutory inconsistency. Assuming that the Kerala Act was valid in its application to NBFCs when it was made, on the ground that the business of money lending is traceable to Entry 30 of List II, it has to give way for the parliamentary enactment. The moment the Parliament stepped in to codify the law relating to registration and regulation of NBFCs, by inserting certain provisions in Chapter III-B of the RBI Act, the same would cast a shadow on the applicability (even assuming it is applicable) of the provisions of the Kerala Act to NBFCs registered under the RBI Act and regulated by RBI.
8.4 In UCO Bank and Another vs. Dipak Debbarma and Others8, a sale Notification issued under the Securitisation Act was challenged on the ground that it constituted an infraction of Tripura Land Revenue and Land Reforms Act, 1960. This Court found 20 that the Securitisation Act is traceable to Entry-45 of List-I and the Tripura Act is traceable to Entries 18 and 45 of the State List. After referring to the Constitution Bench decision in State of West Bengal and Others vs. Committee for Protection of Democratic Rights, West Bengal and Others9 and other decisions, this Court held that the Securitisation Act, being a Parliamentary legislation is the dominant legislation. To come to the said conclusion, this Court referred to the non-obstante clause in Article 246(1).
11 In view of the above, we are of the considered opinion that the Kerala Act and Gujarat Act will have no application to NBFCs registered under the RBI Act and regulated by RBI. Therefore, all the appeals filed by NBFCs against the judgment of the Kerala High Court are allowed. Likewise the appeals filed by the State of Gujarat against the judgment of the Gujarat High Court are dismissed."
6. Following the dictum of the Hon'ble Apex Court in NEDUMPILLI FINANCE COMPANY LIMITED (supra), writ petitions are allowed and it is declared that State 21 Enactments i.e., Karnataka Money-Lenders Act, 1961 and the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, are not applicable to the petitioners/NBFCs registered under the 1934 Act and regulated by Reserve Bank of India. Accordingly,
(i) In W.P.No.18597/2012 - Annexure-G bearing No.DRBC/ML/DOORU/44/2011-12 dated 08.05.2012 and Annexure-H letter bearing No.NML/YMC/258/2011-12 dated 11.05.2012;
(ii) In W.P.No.47108/2011 - Annexure-F bearing No.DRB-C/ML/DOORU/20/2011-12 dated 29.09.2011 and the entire proceedings in Crime No.0272/2011 including the FIR Annexure-G dated 28.11.2011;
(iii) In W.P.No.3208/2012 - Order Annexure-G bearing No.AR-32/LEVADEVI/CR.94/2011- 12 dated 21.01.2012 and Annexure-H letter bearing No.NML/YMC/ /2011-12 dated 21.01.2012;
22
(iv) In W.P.No.7508/2012 - Order Annexure-L bearing No.NML/YMC/128/2011-12 dated 29.10.2011 and Annexure-H letter bearing No.NML/YMC/109/2011-12 dated 29.09.2011;
(v) In W.P.No.11891/2012 - Order Annexure-A
bearing No.C0 10 CML 2010 dated
05.01.2012 and letter Annexure-B bearing No.DRT:LEVADEV/SKSMICRO:CR178/201- 12 dated 30.03.2012;
(vi) In W.P.No.15215/2012 - Order Annexure-J bearing No.ARB-45(C)/ML/PB/ITARE/ 682/ 2011-12 dated 17.04.2012;
(vii) IN W.P.No.11658/2015 - Order Annexure-F bearing No.DRB-S/NML/P.N./04/2014-15 dated 17.11.2014, are quashed.
Sd/-
JUDGE NG*/NC CT:bms