IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION NO.4211 OF 2015 BETWEEN:
1. SRI THIMME GOWDA S/O MUDDE GOWDA, AGED ABOUT 69 YEARS, R/O.NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
2. SRI T SURESH GOWDA S/O.SRI.THIMME GOWDA, AGED ABOUT 40 YEARS, R/O.NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
3. SRI PRASANNA GOWDA S/O.SRI.THIMME GOWDA, AGED ABOUT 38 YEARS, R/O.NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
4. SRI RAGHAVENDRA GOWDA S/O.SRI.THIMME GOWDA, AGED ABOUT 36 YEARS, R/O.NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
5. SMT K LEELAVATHI W/O.SRI.THIMME GOWDA, AGED ABOUT 63 YEARS, R/O.NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
6. SRI DASAPPA W/O SINGRAIAH, AGED ABOUT 68 YEARS, RESIDING AT KANCHAGARANAHALLI, BIDADI POST.
7. SRI M N MANJUNATH S/O.NARASIMHASWAMY, AGED ABOUT 59 YEARS, RESIDING MANCHANAYAKANAHALLI, BIDADI POST.
8. M/S SPR DEVELOPERS NO.34/2, DODAMANE, 2ND FLOOR, GANDHINGAR, BANGALORE-560009 REPRESENTED BY ITS M.D.THIMMEGOWDA.
9. SRI SHARATH THIMME GOWDA S/O.SRI.THIMME GOWDA, AGED ABOUT 32 YEARS, RESIDING AT NO.65, VANIVILAS ROAD, BASAVANAGUDI, BANGALORE-560004.
10. G-CORP ESTATES PRIVATE LTD. NO.19/3, DODAMANE, 2ND FLOOR, VITTAL MALLYA ROAD, BANGALORE-560001, REPRESENTED BY ITS M.D.
SRI.SHRATH THIMME GOWDA.
... PETITIONERS (BY SRI: SHARATH N, ADVOCATE) AND:
VIJAYA BANK EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LTD., NO.999A, 1ST FLOOR, MSRS NAGARA, BILEKAHALLI, BANGALORE-560076.
REPRESENTED BY SRI.RAMAKANTH SHETTY.
… RESPONDENT (BY SRI: K.SHASHI KIRAN SHETTY, SENIOR COUNSEL) ---
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO QUASH THE COMPLAINT IN C.C.NO.18594/2014 ON THE FILE OF 26TH A.C.M.M., BANGALORE AS PER ANNEXURE-E.
THIS CRL.P COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R Petitioners have sought to quash the proceedings initiated against them for dishonour of the cheque under section 138 of Negotiable Instruments Act (“N.I. Act” for short).
Heard the learned counsel for the petitioners and the learned Senior Counsel appearing for the respondent.
2. Learned counsel for the petitioners submits that the cheque in question was admittedly issued by the Company namely Petitioner No.10/accused No.10 G-Corp Estates Private Ltd., of which petitioner No.9/accused No.9 was the Managing Director. Petitioner No.8/accused No.8 is the Developer with whom the respondent had entered into a Memorandum of Undertaking to form a layout in the land belonging to petitioner Nos.1 to 7/accused Nos.1 to 7. Therefore, prosecution of the petitioners namely accused Nos.1 to 10 for the alleged dishonour of the cheque is opposed to the provision of section 138 of N.I. Act and therefore, is an abuse of process of court and is liable to be quashed under section 482 Cr.P.C.
3. Refuting the submission, learned Senior Counsel appearing for the respondent submits that the cheque in question was issued pursuant to the settlement arrived at between the petitioners and the respondent in arbitration proceedings in CMP.No.94/2012 on the file of this court. Under the said agreement, all the petitioners namely accused Nos.1 to 10 have taken upon the liability to discharge the debt reflected in the cheque and therefore, on account of the dishonour of the said cheque for “stop payment”, all the petitioners are liable to answer the charge under section 138 of N.I. Act.
4. There can be no dispute with regard to the general proposition of law that a proceeding under section 138 could be initiated only against the drawer of the cheque except in cases covered under Section 141 of N.I. Act. But, in the instant case, the cheque in question having been issued by the petitioners pursuant to the settlement arrived at between them before this court in CMP.No.94/2012 in terms of clause No.4 of the aforesaid settlement, in my view, all the petitioners are liable for prosecution for the alleged dishonour of the cheque.
5. Clause No.4 of the aforesaid agreement reads as under:
(4). The aforesaid amount of Rs.185 Crores (Rupees One Hundred and Eightyfive Crores) shall be paid by the Respondents to the Petitioner through cheques drawn in the name of the Petitioner in the following manner:
(a) On or before 10.4.2013 : Rs.5,00,00,000/-
(Rupees Five Crores only) (b) Through a PDC cheque payable on 20.5.2013 : Rs.10,00,00,000/-
(Rupees Ten Crores only) (c) Through a PDC cheque payable on 20.7.2013 : Rs.10,00,00,000/-
(Rupees Ten Crores only) (d) On or before 31.12.2013 : Rs.20,00,00,000/-
(Rupees Twenty Crores only) (e) On or before 10.4.2014 : Rs.35,00,00,000/-
(Rupees Thirtyfive Crores only) (thereby totaling a sum of Rs.80,00,00,000/- (Rupees Eighty Crores only) The Respondents undertake that the aforesaid cheques shall be honoured on presentation, failing which the liability in respect thereof shall be deemed to be admitted and the Petitioner shall be entitled to initiate appropriate proceedings under Law in this behalf against the Respondents.
(f) Respondents shall be liable and agree to pay interest on the principal amount of Rs.86,00,00,000/- (Rupees Eight Six Crores only) at the rate of 13.5% per annum from 01.4.2013 till date of full payment on reducing balance. However, notwithstanding the schedule of payments referred to in clause 4 above, if the Respondents pay a total sum of Rs.80,00,00,000/- (Rupees Eighty Crores only) to the Petitioner on or before 10.4.2014, the interest payable by the Respondents on the aforesaid principal amount of Rs.86,00,00,000/- (Rupees Eighty Six Crores only) shall stand reduced to 13% per annum.
6. The above terms of settlement make it abundantly clear that the petitioners have taken up the liability in respect of the cheques issued towards repayment of Rs.185 Crores. Therefore, petitioners cannot seek to escape from their liability on the ground that they are not the signatories to the aforesaid cheque. Moreover, the cheque in question having been dishonoured for “stop payment” it could be presumed that the petitioners had a reason to countermand the encashment thereof. Learned counsel for the petitioners also submits that there are justifiable grounds for the petitioners to “stop payment” of the said cheque on account of failure of the parties to perform their respective part of the agreement. This could be a valid defence to rebut the presumption attached to the cheque, but cannot be a reason to quash the proceedings. On the other hand, since all the petitioners have undertaken that cheques issued pursuant to aforesaid settlement would be honoured failing which would take upon them the consequences arising therefrom, all the petitioners are liable for the dishonour of the said cheque. The decision of the Hon’ble Supreme Court relied on by the learned counsel for the petitioners in P.J. AGRO TECH LIMITED & Ors. vs. WATER BASE LIMITED is not applicable to the facts of this case. The said decision is rendered in the light of the specific provisions contained in section 138 of N.I. Act where the drawer of the cheque is liable to be proceeded with, but in the instant case, the factual situation indicates that the cheque in question was issued pursuant to the settlement as stated supra. Therefore, I do not find any justifiable grounds to quash the proceedings.
Accordingly, the petition is dismissed.
Sd/- JUDGE Bss