Hire purchase finance to a trader not treated as money lending; criminal process under the Act was quashed.

A finance company advancing funds under a hire purchase arrangement to a trader for transport business was treated as dealing in a business transaction, not as carrying on money-lending under the Bombay Money Lenders Act, 1946. The statutory definition of "loan" excludes a loan to a trader except for the limited purposes of Sections 23 and 25, which concern recoverable interest and notified interest rates and do not by themselves create criminal liability on these facts. Allegations based on wrong entries in bonds, molestation, and penalties were also found inapplicable because the complaint arose from a contractual hire purchase arrangement and repossession under the agreement. The criminal process was therefore unsustainable and liable to be quashed.

---

---

Issues: Whether a finance company advancing money under a hire purchase arrangement to a trader for transport business could be treated as a money lender under the Bombay Money Lenders Act, 1946, and whether the criminal process issued for alleged violation of that Act was liable to be quashed.

Analysis: The transaction was supported by executed documents describing the loan, instalments and rate of interest, and the complainant had acted on those terms for a substantial period. The advance was made for business purposes to a trader, and the statutory definition of "loan" under Section 2(9) of the Bombay Money Lenders Act, 1946 excludes a loan to a trader except for the limited purposes of Sections 23 and 25. Those provisions concern civil limitation of recoverable interest and State notification fixing interest rates, and do not convert the transaction into an offence in the facts of the case. The alleged provisions relating to wrong entries in bonds, molestation, and penalties were also found inapplicable because the complaint arose out of a contractual hire purchase arrangement and repossession in accordance with the agreement. The process had therefore been issued without a sustainable foundation under the Act.

Conclusion: The complaint process under the Bombay Money Lenders Act, 1946 was unsustainable and the proceedings were liable to be quashed in favour of the applicants.

---