Vehicle finance to individual borrowers treated as a loan under money-lending law; trader exception and NBFC defence failed.

Finance advanced to individual borrowers for purchase of auto rickshaws and motorcycles was treated as a loan under the Bombay Money Lenders Act, 1946 because the borrowers were not shown to be traders carrying on regular buying and selling activity, and the loan-cum-hypothecation documents with instalment repayment supported a lending transaction with interest. The trader exception therefore did not apply. The court also found no basis to treat the applicant as an NBFC or otherwise exempt from the Act, as the pleadings did not establish requisite RBI licensing or statutory exclusion. On that footing, threshold quashing under Section 482 CrPC was refused and the complaint was allowed to proceed.

---

---

Issues: (i) whether finance advanced for purchase of vehicles by individual borrowers fell within the definition of "loan" under the Bombay Money Lenders Act, 1946 or was excluded as a loan to a trader; (ii) whether the complaint was liable to be quashed on the ground that the applicant was a finance company or NBFC outside the Act.

Issue (i): whether finance advanced for purchase of vehicles by individual borrowers fell within the definition of "loan" under the Bombay Money Lenders Act, 1946 or was excluded as a loan to a trader.

Analysis: The transactions disclosed in the complaint showed advances for purchase of auto rickshaws and motorcycles by persons using them for self-employment or personal use. Such borrowers were not shown to be traders carrying on regular business of buying and selling goods or property. The Court distinguished cases where finance was given for transport business to traders and held that the present transactions were not covered by the trader exception. The loan-cum-hypothecation documents, promissory notes and instalment structure also indicated financing by way of loan with interest.

Conclusion: The transactions constituted loans under the Act and were not excluded as loans to traders.

Issue (ii): whether the complaint was liable to be quashed on the ground that the applicant was a finance company or NBFC outside the Act.

Analysis: The pleadings did not establish that the applicant was a non-banking financial company holding the requisite RBI licence or otherwise exempt from the Bombay Money Lenders Act, 1946. The mere fact that the company was registered under the Companies Act, 1956 did not take it outside the Act. In the absence of such foundational averments and in view of the complaint's allegation that no fresh money-lending licence had been issued after withdrawal of the application, interference under Section 482 of the Code of Criminal Procedure, 1973 was not warranted.

Conclusion: The complaint was not liable to be quashed on this ground.

Final Conclusion: The application for quashing was rejected and the criminal complaint was allowed to proceed.

Ratio Decidendi: Finance advanced to individual borrowers for purchase of vehicles, when structured as repayment of principal with interest in instalments, is a loan under the Bombay Money Lenders Act, 1946 unless the borrower is shown to be a trader within the statutory exception; absent proof of NBFC status or statutory exemption, such prosecution cannot be quashed at the threshold.

---