Amendments in Karnataka Money Lenders Act, 1961 and the Karnataka Pawn Brokers Act, 1961 are constitutionally valid : SC

The Point out of Karnataka & Ors. V The Karnataka Pawn Brokers Assn. & Ors.

CIVIL Charm NO. 5793 OF 2008

Determined ON 15/03/2018

A two-choose bench of the Apex Court, headed by Justices MADAN B. LOKUR and DEEPAK GUPTA, established apart the judgment of the Substantial Court of the Karnataka.

The situation was that The Point out of Karnataka enacted the Karnataka Dollars Loan providers Act, 1961 ( M.L. Act) with a perspective to control and regulate the transactions of dollars lending in the Point out and at the same time enacted the Karnataka Pawn Brokers Act, 1961 ( P.B Act) to control and regulate the business of pawn brokers. The only change is that a pawn broker is authorized to take precious content like gold, gold ornaments etcetera. as pledge for safety of the payment. In the yr 1985, amendments have been brought out to both of those the Functions. Section 7-A & 7-B have been launched in the M.L. Act and corresponding Sections 4-A & 4-B have been launched in the P.B. Act. These amendments offered that the folks desirous of acquiring a licence had to deposit a safety and the charge of safety was mounted slab-wise in relation to the extent of business carried on by the licensee.

A huge range of pawn brokers and dollars loan companies challenged these amendments. A Division Bench of the Karnataka Substantial Court in Manakchand Motilal vs. Point out of Karnataka upheld the validity of these amendments. The Division Bench relying upon the judgment of the Supreme Court in Jagdamba Paper Industries (P) Ltd. vs. Haryana Point out Energy Board held that the dollars loan companies / pawn brokers have been entitled to fascination on the safety deposits at the prevailing charge of fascination payable by the scheduled banking institutions on a mounted deposit for a period of time of just one yr. The Point out Governing administration was also directed to make good policies in this behalf.

No attractiveness was filed by the Point out of Karnataka towards this judgment. Having said that, the dollars loan companies and pawn brokers filed an SLP which was dismissed. Thereafter the Point out framed specified policies pursuant to the instructions of the Division Bench of the Karnataka Substantial Court. These Policies have been also challenged by the dollars loan companies/pawn brokers.

The affiliation of pawn brokers and dollars loan companies filed writ petitions in the Substantial Court of Karnataka challenging the constitutional validity of these amendments. The learned Solitary Judge dismissed the writ petitions but was authorized by the Division Bench and these amendments have been held to be constitutionally legitimate.

This was even further challenged in the Supreme Court by way of Distinctive Go away Petition exactly where appeals have been partly authorized, the judgment of the Substantial Court of the Karnataka was established apart and pending apps have been disposed of.

It was even further observed that:

  • Section 7-A & 7-B of the M.L. Act and 4-A & 4-B of the P.B. Act have been held legitimate from the date of their enactment
  • That the provisions earning these amendments retrospective from 1985 are unlawful and invalid.

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Palak Arora

Palak Arora

I am a woman with exclusive mixture of text and law who can play with text and sections of unique acts. So I can notify you tales and can defend you, if you break any law.

Palak Arora

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