IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF FEBRUARY, 2019 BEFORE THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION No.9221 OF 2016 BETWEEN:
1. M/s. Maxworth Realty India Limited, No.22/1, Railway Parallel Road, Neharu Nagara, Bengaluru City – 560 020. Rep. by its CMD K. Kesava.
2. K. Kesava, S/o. Muniyappa, Aged about 47 years, Chairman and Managing Director, M/s. Maxworth Realty India Ltd., No.22/1, Railway Parallel Road, Neharu Nagara, Bengaluru City – 560 020.
3. Smt. Hemalatha, W/o. K. Kesava, Aged about 38 years, M/s. Maxworth Realty India Ltd., No.22/1, Railway Parallel Road, Neharu Nagara, Bengaluru City – 560 020.
4. Sagar Gangaraju Husseramane, Aged about 28 years, M/s. Maxworth Realty India Ltd., No.22/1, Railway Parallel Road, Neharu Nagara, Bengaluru City – 560 020. …Petitioners (By Sri. Vinaya Keethy M., Advocate for Sri. Tulsi K.R., Advocate) AND:
1. The State of Karnataka, By Station House Officer, Indiranagar Police Station, Bengaluru – 560 038.
2. M/s. Religare Finvest Ltd., Sangeetha Tower No.3, 80 Feet Road, Indira Nagar Stage – 1, Near CMH Hospital, Bengaluru – 560 038. Represented by its authorized Signatory Ali Haskar ...Respondents (By Sri. I.S. Pramod Chandra, SPP-II for R1; Sri. K.S. Harish, Advocate for R2) This Criminal Petition is filed under Section 482 of Cr.P.C. praying to quash the FIR registered in Crime No.286/2016 for offences punishable under Sections 506, 34, 468, 474, 471, 420, 415, 463 of Indian Penal Code registered by the respondent Indiranagar Police, pending on the file of the X Addl. Chief Metropolitan Magistrate, Bengaluru at Annexure – B.
This Criminal petition coming on for Admission, this day, the Court made the following:
O R D E R Petitioners have sought to quash the FIR registered against them in Crime No.286/2016 for the offences punishable under Sections 506, 34, 468, 474, 471, 420, 415, 463 of Indian Penal Code.
2. Heard learned counsel for the petitioners and learned SPP-II for respondent No.1 and learned counsel for respondent No.2.
3. Respondent No.2 initiated criminal action against the petitioners by presenting a private complaint under Section 200 of Cr.P.C. The sum and substance of the allegations made against the petitioners is that the petitioners herein availed financial facilities amounting to Rs.7.20 crores for construction purposes. In the complaint it is alleged that the intention of the petitioners was fraudulent from the beginning, as the petitioners represented that the said loan facility is sought for building and development of the project called Maxworth City. But, the accused persons did not build nor commenced the project, instead diverted the funds to different project and the said project is proceeding in full swing and 95% of the flats in the said project are sold by the accused.
4. The learned Magistrate referred the complaint for investigation under Section 156(3) of Cr.P.C and in view of the specific allegations made in the complaint FIR has been registered against the petitioners. At that stage, petitioners have invoked the jurisdiction of this Court under Section 482 of Cr.P.C. to quash the FIR registered against them.
5. The learned counsel for the petitioners submits that the parties are bound by agreement entered into between them at the time of availing loan facilities. The agreement provided for an arbitration clause. In view of the dispute raised by respondent No.2, Arbitration proceedings are initiated against the petitioners and the same are pending before the Arbitrator. During the pendency of the said Arbitration Proceedings, respondent No.2 was not entitled to invoke criminal process. The said criminal action is initiated solely to compel the petitioners to agree to the terms of respondent No.2. Hence, initiation of criminal action is malafide and vexatious. Further, he submits that in the Arbitration Proceedings, respondent No.2 did not take up a plea based on the alleged deception. Under the said circumstances, initiation of criminal action against the petitioners is wholly illegal and an abuse of process of Court and is liable to be quashed at the hands of this Court.
6. Refuting the submissions, the learned counsel for respondent No.2 would submit that the complaint contains specific averments with regard to the siphoning of the funds and diversion of the amounts released to the petitioners. There are also specific allegations with regard to the project on which the petitioners have invested the said amount. Relying on the Circular issued by the Reserve Bank of India in DBR No.CID.BC.22/ 20.16.003/2015-16 dated July 1, 2015, the learned counsel has emphasized that the petitioners herein having committed default in repayment of the loan amount availed by them and having siphoned off the funds meant for construction of a different project, in view of the guidelines issued by the Reserve Bank of India, the respondent No.2 has resorted to take criminal action against the petitioners for the above offences. Hence, there is no malafide in the action initiated against the petitioners.
7. On considering rival submissions, I do not find any merit in the contentions urged by the petitioners seeking quashment of the proceedings. There is no dispute with regard to the fact that the petitioners have availed loan facility of Rs.7.20 crores from respondent No.2. The agreement entered into between the petitioners and respondent No.2 clearly stipulates that the said amount was released for the purpose of construction of the project by name “Maxworth City”. There is specific recital in the said agreement that the said amount has to be utilized only for the purpose for which it is released. But, the circumstances narrated in the complaint clearly indicate that contrary to the terms of the said agreement, the petitioners herein have diverted the funds for different project. The complainant has not only averred about the siphoning off the funds, but has also stated about the place and the project in which the investment has been made by the petitioners. The accusations squarely attract the ingredients of the offences under Section 420 and the allied offences charged against the petitioners. These allegations, in my view, require to be investigated thoroughly especially in the light of the guidelines issued by the Reserve Bank of India and the recommendations made by the Joint Parliamentary Committee as stated in the above circular.
For the above reasons, I do not find any justifiable ground to quash the proceedings. Consequently, the petition is dismissed.
Sd/- JUDGE SV