Gujarat High Court
Shriram Transport Finance Co. Ltd vs State Of Gujarat & on 11 February, 2013
Author: S.G.Shah
Bench: S.G.Shah
SHRIRAM TRANSPORT FINANCE CO. LTD.....Applicant(s)V/SSTATE OF GUJARAT R/CR.MA/15243/2008 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION NO. 15243 of 2008 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE S.G.SHAH ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ SHRIRAM TRANSPORT FINANCE CO. LTD.....Applicant(s) Versus STATE OF GUJARAT & 1....Respondent(s) ================================================================ Appearance: MR AR GUPTA, ADVOCATE for the Applicant(s) No. 1 MR.N.J.SHAH, ADDITIONAL PUBLIC PROSECUTOR for the Respondent(s) No. 1 RULE SERVED for the Respondent(s) No. 2 ================================================================ CORAM: HONOURABLE MR.JUSTICE S.G.SHAH Date : 11/02/2013 ORAL JUDGMENT
1. The applicant is a limited company incorporated as a Non Banking Financial Company. It has prayed to quash and set-aside the orders and proceedings of Criminal Case No.289 of 2008 pending before Metropolitan Magistrate, Ahmedabad, under the provision of Bombay Money Lenders Act, 1946. Such criminal case was initiated on a complaint being preferred by respondents herein.
2. On 11th August, 2009, this Court has granted ad-interim relief, and thereby, further proceedings of above referred Criminal Case No.289 of 2008 before the Metropolitant Magistrate, Ahmedabad, was stayed. Vide order dated 10.02.2010, while admitting the matter and when Rule was issued, such interim-relief was extended which is continue till date.
3. Heard learned advocate Mr.A.R.Gupta for the applicant and learned Additional Public Prosecutor Mr.N.J.Shah for the respondent-State.
4. The issue arises in the present case has been decided by the Division Bench of this Court in the case of Radhe Estate Developers Versus Mehta Integrated Finance Co.Ltd. and Others, reported in 2012(1)GLR 14 whereby decision in the case of Sundram Finance Limited (SFL) and Others Verus State of Gujarat and Another, reported in 2006(2) G.L.H. 362 as well as decision in the case of Sundaram Finance Limited Versus Assistant Registrar, reported in 2010(0) GLHEL-HC 223109 are practically confirmed. The sum and substance of above cited cases is clear that in absence of any notification under Section 2[10][v], Non Banking Finance Companies are not covered by definition of money-lenders and thus the State Government or its authorities have no jurisdiction to take any regulatory measure or penal measures under the Bombay Money Lenders Act, 1946 against such Non Banking Finance Companies. In all above cited cases, similar complaints filed by the present respondents against the applicants in such cases were quashed by the High Court. It is to be noted that when all the complaints by the present respondents-complainant against all such Non Banking Financial Companies under the Act was quashed by the High Court in different proceedings, the Government has came out with enacting a new Act in place of Bombay Money Lenders Act, 1946, in the form of Gujarat Money Lenders Act, 2011. It seems that in such new enactment, some provisions were made which otherwise nullifies the decision in the above referred cases, whereby it is held that State Government has got authority against the Non Banking Financial Company under the Money Lenders Act, by inserting provisions which are otherwise covered and governed under Chapter IIIB of the Reserve Bank of India Act. It appears that such judgment in the case of Sundram Finance Limited Versus State of Gujarat, reported in 2012(0) GLHEL-HC 228021 = 2012 JX (Guj) 825 dated 6th September,2012, declared such part of Gujarat Money Lenders Act as unconstitutional which is probably not challenged before the Supreme Court.
5. Therefore, practically factual details in the present case is not much material. It has been clear from the record as well as from the submission of learned advocate Mr.A.R.Gupta that the applicant is carrying out the activities as a Non Banking Financial Company as necessary license has been already granted to it by the Reserve Bank of India under the provisions of Reserve Bank of India Act, 1934, which override other statutes, and therefore, the applicant could not have been prosecuted under the Bombay Money Lenders Act, 1946, since provisions of such State Act are not applicable to Non Banking Financial Companies in view of provisions of Chapter IIIB of the Reserve Bank of India.
6. It is not disputed that the applicant company is engaged in the business of financing commercial vehicles and for that purpose, only they are financing loan, they cannot be termed as Money Lender in view of the terminology and definition used in the State Act. It is also not disputed that necessary documents to prove above fact; viz. Certificate of Incorporation of as a Company (Annexure-A) and Certificate of Registration with Reserve Bank of India (Annexure-B); are produced on record.
7. It is also not disputed that the petition is mainly for quashing the complaint filed by the present respondents for the breach of certain sections of Bombay Money Lenders Act, 1946. The applicant has also produced all other relevant information and documents on record to confirm that they do not fall within the meaning of Money Lenders as per the State Act and in view of the binding judgment by the Division Bench, reported in 2012(1) GLR 14, respondents have no authority to initiate criminal proceedings against them. Considering the above facts and circumstances of the case, prim-facie, it is established that Reserve Bank of India has full control over the N.B.F.Cs and can take regulatory measures, and in an appropriate cases, it can take penal action like winding-up, etc. in the interest of its customers, namely, the depositors. State Government has not issued any Notification under Section 2(10)(v) with regard to any banking financial or any institution, such as N.B.F.Cs. bringing it within the meaning of money lender as defined under Section 2(10) of the Money Lenders Act. It has already been held that except the companies mentioned thereunder and referred to above, companies incorporated under the Companies Act, 1956, do not come within the definition of money lender as defined under Section 2(10)(iiia) read with Section 2(4) of the Money Lenders Act All companies as defined under Section 2(4) of the Money Lenders Act now come with within the meaning of company for the purpose of Section 45-I(aa) of the R.B.I. Act Chapter IIIB of the Reserve Bank of India Act occupied the field with regard to control, penal, action etc. against those companies, and thereby, the State Law, namely, the Money Lenders Act, 1946, cannot transgress on the field occupied by the law of parliament. In view of Section 45-Q of the R.B.I. Act, provisions of Chapter IIIB of the R.B.I. Act shall have overriding effect on the Bombay Money Lenders Act, 1946. in absence of any notification under Section 2(10)(v), Non Banking Financial Companies are not covered by the definition of money lenders and thus, the State Government or its authorities have no jurisdiction to take any regulatory measures or penal measures under the Bombay Money Lenders Act, 1946.
8. In view of above facts and circumstances, since the present case falls within the ambit of old Act i.e. Bombay Money Lenders Act, 1946, wherein there was a provision that State Government may issue notification under Section 2(10)(v) to bring any Non Banking Financial Company or any institution within the definition of Money Lenders. What is required to be examined at this stage is existence of such notification, if any, issued by the State Government at the relevant time so as to bring present applicant or any such Non Banking Financial Company within the ambit of such State Act. For the purpose, time was granted to this respondents-Complainant to verify the existence of any notification and to produce the same on record. Though repeatedly time was granted and as submitted by learned Additional Public Prosecutor Mr.N.J.Shah though he had repeatedly called for the copy of such notification, respondents have failed to file such notification on record. It is also clear and obvious that said decision is dated 26th April,2011, wherein also present respondents are complainant, and therefore, they are aware about necessity of such notification if any for prosecuting Non Banking Financial Company. In the present case, the State Government has failed to produce any notification u/Sec.2(10)(v) with regard to any banking financial or any institution, such as N.B.F.Cs., bringing it within the meaning of `money-lender' as defined u/Sec.2(10) of the Money-Lenders Act. It has already been held by the Division Bench in above case that except the companies mentioned thereunder and referred to above, companies incorporated under the Indian Companies Act, 1956, do not come within the definition of `money-lender' as defined u/Sec.2(10)(iiia) r.w. Sec.2(4) of the Money-Lenders Act. Therefore, when State Government has not issued any notification u/Sec.2(10)(v) of the Money Lenders Act bringing banking financial or any institution within the definition of money-lender'; a `company' as defined under sub-Sec.(4) of Sec.2 of the Money-Lenders Act, which includes a `company' under Indian Companies Act, 1913, though comes within the definition of `money-lender' under sub-Section (10) of Sec.2 of the Money-Lenders Act, such company, in view of such company incorporated under the Indian Companies Act, 1913, having now come within the definition of `company'/`existing company' u/Sec.3 of the Companies Act, 1956, r.w. Section 45-I(aa) of the Reserve Bank of India Act, 1934, which defines `company'; all companies, i.e. companies under the Indian Companies Act, 1886, Indian Companies Act, 1866, Indian Companies Act, 1882, Indian Companies Act, 1913, Indian Companies Act, 1956, as also the companies formed and registered under any Act in force before Indian Companies Act, 1866, including the companies formed pursuant to an Act of Parliament of the United Kingdom or the company formed by Royal Charter or Letters Patent or the company formed by an Act of the Legislature of a British Possession, now come within the meaning of `company' as defined u/Sec.45-I of the Reserve Bank of India Act, 1934 in view of Chapter IIIB of the Reserve Bank of India Act, 1934. Therefore, we hold that Chapter IIIB of the Reserve Bank of India Act occupy the filed with regard to control, penal action, etc., against those companies, and thereby the State law, namely, the Money-Lenders Act, 1946, cannot transgress on the field occupied by the law of Parliament. In view of Sec.45Q of the R.B.I. Act, provisions of Chapter IIIB of the R.B.I. Act shall have overriding effect on the Bombay Money Lenders Act, 1946.
Thus in absence of any notification u/Sec.2(10)(v), Non-Banking Financial Companies are not covered by the definition of `money-lenders', and thus, the State Government or its authorities have no jurisdiction to take any regulatory measure or penal measures under the Bombay Money-Lenders Act, 1946.
9. In view of above facts and circumstances of the case, when complainant is not in a position to explain that how Non Banking Financial Company covered under the Bombay Money Lenders Act, 1946, and when they failed to produce notification, if any, as required to bring such Companies including the present applicant within the ambit definition Money Lenders , it is difficult to allow the respondents to continue with such criminal proceeding and Penal Proceeding against the present applicant who is entitled to the benefit of the cited case which confirms that State Authority cannot initiate criminal and penal proceedings against such companies, since the same is controlled by the provision of the Reserve Bank of India.
10. Therefore, application is require to be allowed as prayed for and the same is allowed. Thereby, the proceedings initiated by the respondents by way of Criminal Case No.289 of 2008 which is pending before the Metropolitan Magistrate, Ahmedabad, under the provisions of the Bombay Money Lenders Act, 1946, wherein process is issued by the learned Trial Judge is hereby quashed and set-aside. Rule is made absolute.
(S.G.SHAH, J.) Girish Page 9 of 9