Police cannot search money-lender premises without authorization under the Karnataka Money Lenders Act.

The petitioner sought to quash the FIR, charge sheet and proceedings in C.C. No. 1085 of 2016, pending before the Principal Civil Judge and JMFC, Honnali, for alleged offences under Section 39 of the Karnataka Money Lenders Act, 1961, Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, and Section 420 IPC.

He contended that the police lacked authority under Section 15 of the Money Lenders Act to search and seize documents from his office, and that the case originated in a suo motu FIR followed by recording borrowers’ statements and filing a charge sheet.

The petitioner relied on a coordinate-bench decision quashing similar proceedings; the State did not dispute the submission advanced on his behalf.

Whether the criminal proceedings against the petitioner should be quashed where the alleged search and seizure were conducted by police officers who were not shown to be authorised under Section 15 of the Karnataka Money Lenders Act, 1961.

Whether the procedural defects identified in the coordinate-bench decision—including investigation preceding registration of the FIR and the borrowers’ failure to use the statutory procedure under Section 5 of the 2004 Act—applied to the petitioner’s case.

Section 15 of the Karnataka Money Lenders Act, 1961, as applied in the cited coordinate-bench decision, restricts entry into money-lending premises and inspection or seizure of documents to the Registrar, Assistant Registrar, or another person authorised by the State Government; a police officer’s unauthorised entry and seizure are not in accordance with that provision.

Section 5 of the Karnataka Prohibition of Charging Exorbitant Interest Act, 2004, provides a procedure by which a debtor may deposit the loan amount with interest at the prescribed rate in the competent court and petition for the loan’s satisfaction to be recorded.

The Court also relied on the coordinate-bench ruling in Criminal Petition No. 101569 of 2016 and connected petitions, which treated investigation undertaken before registration of the FIR as contrary to the mandatory requirements of the Cr.P.C. and considered the statutory deposit procedure relevant to the borrowers’ allegations.

The petition was brought under Section 482 Cr.P.C., which the Court exercised to quash the proceedings.

The Court held that the coordinate-bench decision addressed materially similar circumstances and that its reasoning applied to this case.

That decision found that police officers who were not shown to be authorised under Section 15 had entered money-lenders’ premises and seized documents, and that the FIR was registered only after substantial investigation had occurred.

It also considered the procedure available to borrowers under Section 5 of the 2004 Act.

Since the State did not dispute the petitioner’s reliance on that decision, the Court concluded that the same legal infirmities warranted quashing the proceedings against him.