IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF AUGUST 2019 BEFORE THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION No.5745/2017 BETWEEN:
1. M/S GOLDEN GATE PROPERTIES LTD A COMPANY INCORPORATED UNDER THE COMPANIES ACT 1956 HAVING ITS REGISTERED OFFICE AT NO.820, 8O FEET ROAD, 8TH BLOCK, KORAMANGALA BENGALURU-560 095, REPRESENTED BY ITS DIRECTOR SRI SANJAY RAJ 2. SRI C.D SANJAY RAJ DIRECTOR AND CEO M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK KORAMANGALA, BENGALURU-560 095 3. SRI K PRATHAP FORMER DIRECTOR, M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK KORAMANGALA, BENGALURU-560 PRESENTLY RESIDING AT 8-2-703/4/P, ST NO.2, AVENUE 1, NEAR KERALA AYURVEDIC LANE ROAD NO.12, BANJARA HILLS, HYDERABAD-500034 4. SRI ANIL KUMAR BAJAJ INDEPENDENT DIRECTOR, M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK, KORAMANGALA, BENGALURU-560 095 5. SRI KARUNAKARAN KRISHNAN DIRECTOR, M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK, KORAMANGALA, BENGALURU-560 095 6. SRI VENKATA SATCHIDANANDA BHANU MURTHY PANGANAMULA FORMER DIRECTOR, M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK, KORAMANGALA, BENGALURU-560 095.
PRESENTLY RESIDING AT NO.203, RATNANIDHI RESIDENCY, BAPUJINAGAR HMT NAGAR NACHARAM, HYDERABAD-500076 7. SMT DEVAKI SOWMYA FORMER DIRECTOR, M/S GOLDEN GATE PROPERTIES LTD., HAVING ITS REGISTERED OFFICE AT NO.820, 80 FEET ROAD, 8TH BLOCK, KORAMANGALA, BENGALURU-560 095 PRESENTLY RESIDING AT 115/FT/D/403, FORTUNE TOWERS MADHAPUR, HYDERABAD-500081 ... PETITIONERS (BY SRI TOMY SEBASTIAN, SR.ADV. FOR MS.RENY SEBASTIAN, ADV. ) AND:
SRI JAYARAM SON OF RANGAPPA, AGED ABOUT 48 YEARS, RESIDING AT NO.306, MAGADI ROAD, NORTH MUDDAYANAPALYA, BENGALURU-560 091 ... RESPONDENT (BY SRI. K SUMAN, ADV.) THIS CRL.P FILED U/S.482 CR.P.C PRAYING TO QUASH THE CRIMINAL PROCEEDINGS IN C.C.NO.409/2017 INCLUDING THE ORDER DATED 05.01.2017 ON THE FILE OF 13th ACMM, BANGALORE.
THIS CRIMINAL PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER Heard Sri Tomy Sebastian, learned Sr.Counsel appearing for petitioners and Sri K.Suman, learned counsel for respondent.
2. The petitioners are aggrieved by the registration of criminal proceedings against them in CC No.409/2017 for the alleged offence under Section 138 of the NI Act.
3. Respondent herein filed a private complaint under Section 200 of the Code of Criminal Procedure contending that he was the owner of three properties comprised in Sy.No.44 and 42 of Gubbalalu Village, Uttarahalli Hobli, Bangalore South Taluk measuring 3 acres 6 guntas, 1 acre 4 guntas and 30 guntas respectively. In respect of these properties he had executed a Deed of Confirmation dated 16.8.2006 in favour of first accused-Company represented by the third accused as its Director and the said deed of confirmation was registered in the office of the Sub- registrar, Kengeri, Bengaluru. The consideration was fixed at Rs.27,76,95,000/-. In that connection, towards payment of the balance amount, the accused persons issued two cheques bearing No.184618, for a sum of Rs.15,58,21,000/- and No.184619 for a sum of Rs.5,93,74,000/- duly signed by second accused as the Managing Director in favour of the complainant drawn on Central Bank of India, Jayanagar Branch, Bangalore. The said cheques having been dishonoured for the reason, `no such account’, respondent issued legal notice dated 14.11.2016 calling upon the accused to pay to the complainant a total sum of Rs.21,51,95,000/- without prejudice to the right of the complainant to proceed against them for the offences of cheating including that of winding up the first accused-Company. Learned Magistrate recorded the sworn statement of the complainant and issued summons to the petitioners.
4. Learned Sr.Counsel for the petitioners submits that the Confirmation Deed referred to by the complainant does not disclose any exchange of consideration between the parties. The obligations arising under three unregistered deeds were duly complied with by making payments as hereinbelow:
Sl.No. Cheque No. Cheque Date Amount Rs.
Sy.N.42(30guntas) 5. Other than the above transactions, there was no other debt or liability payable by the petitioners herein to the respondents. Under the said circumstances, the prosecution of the petitioners is wholly illegal and abuse of process of Court. Further, learned Sr.Counsel pointed out that in so far as petitioner Nos. 4 to 6 are concerned, except alleging that all of them were Directors of accused Company, no other material is available on record to show that accused nos. 4 to 7 were actually involved in the aforesaid transactions or were in charge of or responsible for of the affairs of the Company as such, prosecution of accused nos. 4 to 7 is legally unsustainable.
6. Refuting the above contentions, the learned counsel for respondent Sri.K.Suman emphasized that the averments made in the petition clearly disclose that petitioners 4 to 7 were the Directors of accused No.1 – Company at the relevant point of time and they were having knowledge of the transaction and therefore, all the petitioners are liable to answer the charge under Section 138 of Negotiable Instruments Act.
7. Insofar as contention regarding existence or subsistence of debt or liability is concerned, the learned counsel submitted that the averments made in the complaint and the documents produced along with the complaint would clearly disclose that the cheques in question were admittedly issued in respect of the above transactions. These cheques are attached with legal presumption which could be rebutted by the petitioners by adducing rebuttal evidence in the course of trial. Therefore, the contention of the learned Sr. Counsel cannot be considered as a ground to quash the proceedings. Accordingly, he prayed for dismissal of the petition.
8. On considering the rival contentions and the documents produced along with the complaint, I find that the averments made in the complaint as well as the contents of the document produced in support thereof prima facie manifest that the cheques in question were issued by accused no.1- company in respect of the property transactions between accused no.1 and the complainant. Whether the entire liability undertaken by accused no.1 in respect of this transaction has been discharged or not is a matter for consideration only during trial and the same cannot be a ground to quash the proceedings. Thus, the contention urged by the learned Sr.Counsel for the petitioners that there was no subsisting debt or liability in respect of which the dishonored cheques were issued cannot be accepted.
9. Insofar as the prosecution initiated against petitioner nos.4 to 7 is concerned, the averments made in the complaint and the material on record do not disclose that petitioner nos.4 to 7 were involved in the aforesaid transaction or that they were responsible to accused no.1- company or in-charge of the affairs of the company. The averments made in the complaint clearly go to show that the transaction was entered by accused no.1- company. The company was represented by the Managing Director – accused no.2. Cheques in question were signed by accused no.2. As per Section 138 of NI Act, the prosecution for dis-honour of cheque could be initiated and could be proceeded only against the drawer of the cheque and in case of offence by the company by virtue of Section 141 of the Act every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly; But in the case on hand, in the absence of clear material to show that petitioner nos.4 to 7 were actually involved in the management of affairs of the Company and were in the know of transaction, I am of the opinion that merely on the ground that they were the directors of accused no.1- company at the relevant point of time, does not furnish a cause of action to proceed against them for the alleged offence under Section 138 of NI Act.
10. In the aforesaid facts and circumstances, prosecution of petitioner nos. 4 to 7, in my view, being contrary to the provision of Sections 138 and 141 of the NI Act cannot be sustained and the same is liable to be quashed.
11. Accordingly, the petition is allowed in-part. The petition filed by petitioner nos. 1 to 3 is dismissed. Petition filed by accused nos. 4, 5, 6 and 7 is allowed. The prosecution launched against accused nos. 4, 5, 6 and 7 CC No.409/2017 and order dated 5.1.2017 on the file of 13th ACMM, Bangalore to this extent is quashed.
Sd/- JUDGE Sk/- CT-HR