2010 ALL MR (Cri) JOURNAL 253
(KARNATAKA HIGH COURT)
ARALI NAGARAJ, J.
Pebble Bay Developers Pvt. Ltd. & Anr.Vs.H. V. Gowthama
Criminal Petition Nos.889 to 898 of 2010
20th April, 2010
Petitioner Counsel: BALAJI SRINIVASAN
Respondent Counsel: RAVI B. NAIK,H. M. SIDDHARTH, M. S. CHANDRAMOULI
Negotiable Instruments Act (1881) S.138 - Criminal P.C. (1973), S.482 - Quashing of proceedings - Inherent jurisdiction - Complaint about dishonour of cheques - Prima facie case made out in allegations made by complainant - Proceedings in complaint case cannot be quashed merely on basis of pleadings in respective suits filed by both complainant and accused against each other - Both civil and criminal proceedings would be maintainable in respect of the same transaction in such a case. (Para 15)
Anil Kumar Parolia Vs. Md. Shafique Khan, 1997 ALL MR (Cri) JOURNAL 28=1997 Crl.L.J. 717 [Para 10]
K. Ashoka Vs. N. L. Chandrashekar, (2009)2 SCC (Cri) 730 [Para 11]
Suryalakshmi Cotton Milts Ltd. Vs. Rajvir Industries Limited, 2008 ALL MR (Cri) 1422 (S.C.)=(2008)13 SCC 678 [Para 14]
Central Rank of India Vs. Saxons Farms, 1999 ALL MR (Cri) 1853 (S.C.)=(1999)8 SCC 22 1 [Para 16]
Rainbow Colour Lab Vs. State of M.P., (2000)2 SCC 385 [Para 16]
State of Punjab Vs. Ganpat Raj, AIR 2006 SC 3089 [Para PARA16]
Kunstocom Electronics (I) Pvt. Ltd. Vs. Gilt Pack Ltd., 2002 ALL MR (Cri) 899 (S.C.)=(2002)2 SCC 383 [Para 16]
R. Kalyani Vs. Janak C. Mehta, (2009)1 SCC 516 [Para PARA16]
State of Haryana Vs. Bhajan Lal, 1992 Supp (1) SCC 335 [Para PARA16]
Krishna Janardhan Bhat Vs. Dattatraya G. Hedge, 2008 ALL MR (Cri) 1164 (S.C.)=(2008)4 SCC 54 [Para 16]
B. Indramma Vs. Sri Eshwar, 2009 ALL MR (Cri) JOURNAL 366=ILR 2009 Kar. 2331 [Para 16]
Sri A. Viswanatha Pai Vs. Sri Vivekanand S. Bhat, ILR 2009 Kar. 171 [Para PARA16]
Kumar Exports Vs. Sharma Carpets, 2009 ALL MR (Cri) 239 (S.C.)=ILR 2009 Kar 1633 [Para 16]
-All these Criminal Petition Nos.889 to 898 of 2010 are filed under Section 482, Cr.P.C. by the same petitioners-accused against the same respondent-complainant, seeking the same relief of quashing the entire proceedings in the respective Criminal Cases pending on the file of the learned XVI ACMM, Bangalore (hereinafter referred to as the 'Trial Court' for short). The nature of the transactions between the parties, the nature of the impugned order passed by the Trial Court in each of the said cases issuing process against the petitioners-accused, and also the offence for which process has been issued by the Trial Court against them are all same. Therefore all these petitions are disposed of by this common order.
2. Though all these petitions are listed for admission, having regard to the nature of the impugned orders and the reliefs sought for, they are taken for final disposal and arguments of Sri Balaji Srinivas, the learned Counsel for the petitioners in all these petitions and Sri Ravi B. Naik, the learned Senior Counsel and Sri Siddarth H.M., the learned Counsel, for the respondent-complainant in Crl. P. Nos.889 and 890 of 2010 and Sri H. S. Chandramouli, the learned Counsel for the respondent-complainant in all other petitions are heard. Perused the entire averments in the complaint filed by the respondent-complainant in each of the said cases before the Trial Court, which are identical, except the amount of cheque involved in C. C. No.32097109, in respect whereof, Crl.P. No.889/2010 is filed. Also perused the relevant documents placed on record by both the sides.
3. The facts constituting the case of the complainant as to the presentation of the cheques in the respective cases by the complainant and their dishonour, for the reason that there was direction by the accused to the Bank concerned to 'stop payment of the cheques' in question; issuing of statutory notice by the complainant to the accused, receipt of the said notice by the accused and the date of receipt of the same, reply notice given by the accused to the complainant in response to the said statutory notice; are all same and not in dispute.
(a) The complainant has been a Chartered Accountant. He has been rendering professional services in finance management and accounting. The 1st accused is a private limited - Company registered under Indian Companies Act, 1956. Its head office is at Mumbai and branch office at Bangalore. The 2nd, 3rd and 4th accused are in-charge of all the day to day affairs of the company in the matter of conduct of its business. The 5th accused is an investor in the 1st accused-Company holding its major shares.
(b) In the year 2006, accused Nos.2 to 4 approached the United Estates in connection with their project known as 'Pebble Bay'. The complainant has been an Escrow agent. The complainant has been nominated as Escrow agent for the said United Estates and the 1st accused-Company. The said United Estates is represented by its Proprietor Sri Santhosh Kumar C, who is a Real Estate Consultant and Adviser.
(c) As requested by the 1st accused-Company, the United Estates rendered its professional expertise and services to the 1st accused in respect of the said project, which involved finance and services of very high magnitude. As a result of the services rendered by Sri Santosh Kumar, the Proprietor of the said United Estates, the 1st accused-Company was able to procure the property required for the construction of 'pebble bay' comprising of 369 apartments.
(d) In the year 2007, the 1st accused-Company again approached the United Estates seeking its services in the sale of the apartments exclusively in 'pebble bay'. As desired by accused Nos.2 to 4, the United Estates entered into a Service Agreement with them in the name and on behalf of the 1st accused-Company for rendering its services. Under the said agreement, the said United Estates was entitled for financial payment for the services rendered to the 1st accused-Company. Thus the 1st accused-Company came to be liable to pay to the said United Estates a total sum of ' 11,95,18,812/- (Rupees eleven crores ninety five lakhs eighteen thousand eight hundred and twelve) only towards the services rendered and invoices raised. It also became liable to pay another sum of ' 10,37,502/- to the complainant being the amount payable to him through United Estates for handling the transactions as an Escrow.
(e) The 1st accused-company deliberately failed to make the payments to United Estates. Ultimately the 1st accused-Company agreed to issue cheques in favour of complainant, being Escrow agent, on the condition that the said cheques be held by him till 31.3.2009 and thereafter the cheques would be presented by the complainant himself across the bank counter for realization of the amount therein and he would deduct from the said amount towards his professional fee and pay the remaining amount to the United Estates towards liability of the 1st accused-Company to the said United Estates. Accordingly, the accused issued as many as nine cheques each for a sum of ' one crore and tenth cheque for ' 3,05,56,314/-. Thus ten cheques were issued to the complainant by the accused for total sum of ' 12,05,56,314/- towards payment of the amount due to the said United Estates, which was agreed to be paid through the complainant.
(f) All the said cheques were issued, in favour of the complainant on Standard Chartered Bank, Mumbai Branch for the said total sum of ' 12,05,56,314/-. The said cheques were sent to the complainant by the accused along with covering letter dated 12.1.2009 clearly stating therein that the said cheque would not be revoked for whatever reason.
(g) The complainant presented the said cheques to the Bank for their encashment. All the said cheques came to be returned to the complainant with an endorsement as 'stop payment'. The said endorsement is dated 20.5.2009.
(h) After receipt of the said endorsement from the Bank. the complainant got issued to all the accused Nos.1 to 5 statutory notice dated 12.6.2009 and the same was sent to each of the said accused under registered post acknowledgement due, speed post and under certificate of posting, calling upon them to pay the amount under respective cheques totally amounting to ' 12,05,56,314/-.
(i) After the receipt of the said notice, the accused sent a reply on 23.6.2009 taking un-tenable grounds. Besides this, the accused filed a suit in O.S. No.26532/2009 before the Civil Court, Mayohall, seeking a direction to the complainant to return the said cheques.
(j) Since all the said cheques that were issued by the accused towards discharge of their liability came to be bounced, the accused committed the offence under Section 138 of Negotiable Instruments Act in respect of each cheque. Therefore, the complainant proceeded to initiate proceedings against all the accused Nos.1 to 5 by filing separate criminal case in respect of each of the said cheques.
5. The petitioner Nos.1 and 2 herein are respectively accused Nos.1 and 2 in the respective Criminal Cases before the Trial Court. In all these petitions filed under Section 482, Cr.P.C., the petitioners - accused have sought for quashing of the entire proceedings in all the respective criminal cases. Sri Balaji Srinivasan, the learned counsel for the petitioners - accused strongly contends that there are several discrepancies between the averments made in the complaint and the fact in the statutory notice issued by the complainant to each of the accused Nos.1 to 5 in respect of dishonour of the said cheques and the Trial Court, without looking into the same, mechanically passed the order issuing process against these petitioners-accused and also accused Nos.3 to 5 for the offence under Section 138, N.I. Act and hence all the further proceedings in all the said criminal cases deserve to be quashed. He further contends that immediately on receipt of the statutory notice issued by the complainant, the accused have filed their civil suit against the complainant seeking a direction to the complainant to return to the accused all the said cheques and therefore till the rights of the parties are determined by the civil Court in the said civil suit. the Trial Court ought not to have taken cognizance of the said offence and it ought not to have issued process against the accused for the same and hence for this reason also the further proceedings in all the said Criminal Cases deserve to be quashed. He further contends that the complainant has also filed a civil suit for recovery of the amounts under the said cheques and the liability of the petitioners - accused to pay to the complainant the amounts under the said cheques is questioned in the said suit and therefore till the said question is to be decided by the Civil Court, the Criminal Court ought not to have taken cognizance of the said offence and issued process against the petitioners - accused and other accused. Hence, for this reason also the entire proceedings in the respective criminal cases deserve to be set aside.
6. Per contra, Sri Ravi B. Naik, the learned Senior Counsel appearing for the respondent - complainant in Crl. P. Nos.889 and 890 of 2010 and Sri. H. S. Chandramouli, the learned counsel appearing for the respondent-complainant in all other eight criminal petitions together contend very strongly that what is to be seen by this Court in a petition under Section 482, Cr.P.C. seeking quashing of the criminal proceedings is : 'whether the averments made in the complaint constitute the ingredients of offence under Section 138, N.I. Act but not the defence of the accused and therefore the proceedings in all the said criminal cases before Court cannot be quashed by this Court in exercise of inherent power under Section 482, Cr.P.C. They also contend that the same transactions may give rise to a party a right to institute a civil suit in a civil Court and also a right to initiate criminal proceedings before a criminal Court against the other party and therefore mere pendency of the civil suit in respect of the same transaction would not be a ground to prevent the complainant from proceeding against the accused for the offence under Section 138, N.I. Act.
7. On careful reading of the averments in the complaint filed by the complainant in each of the ten criminal cases, which are identical, it could be seen that the complainant has alleged therein as to the existence of legally enforceable debt/liability payable to him by the accused, issuing of the said cheques by the accused towards discharge of the said debt/liability, presentation of all the said cheques within the period of limitation, dishonour of the said cheques for the reason that the banker was directed by the accused to stop the payment, issuing of statutory notice to the accused consequent upon the said dishonour, receipt of the said statutory notice by the accused and giving reply to the same, accused No.1 being the Company and other accused being responsible to and in-charge of all the day to day affairs of the Company in the matter of conduct of its business. Thus, it is clear that all the said averments constitute all the ingredients of the offence under Section 138, of N.I. Act as against accused Nos.1 to 5.
8. Besides the above, copy of the letter dated 12.1.2009 addressed by Aditya Raheja, the Director of the 1st accused-Company, (who is the 2nd petitioner herein and accused No.2 before the Trial Court), annexed to the complaint, is produced by the petitioners themselves and the same is at Annexure-E. On perusal of the contents of the said letter, it could be seen that the accused No.2 sent to the complainant ten cheques (the details of cheque numbers, date and amounts are shown in it) for a total sum of ' 12,05,56,314/-. The relevant contents of the said letter read as under:
"Please find enclosed below cheques all dated 12.01.2009, towards your fee of ' 2,05,56,314/- (Rupees twelve crores five lakhs fifty six thousand three hundred and fourteen only) with respect to M/s. Pebble Bay Developers Pvt. Ltd. assignment in your favour (Gautama). In any circumstances, I will not revoke the below cheques issued towards your fee."
9. Thus, it is clear from the above contents of the said letter that the 1st accused-Company was due to the complainant the said amount and therefore it issued the said cheques towards payment of the said amount and sent the same to the complainant along with the said letter with an undertaking that the said cheques would not be revoked. However, during his arguments, Sri Balaji Srinivasan, the learned counsel for the petitioners in these petitions furnished a copy of another letter dated 12.1.2009 said to have been addressed by the 2nd petitioners herein (A2) to the complainant Sri Gautama. It is stated in the said letter that if the events stated in the said letter did not happen by 31.4.2009, (which date is totally incorrect because there can never by 31st day in the month of April) the said cheques should be returned immediately by the complainant to the 1st accused - Company. Referring to this letter, Sri Balaji Srinivasan, the learned counsel for the petitioners, strongly contends that the said cheques were not issued by the accused towards payment of the said amount, but they were issued as security with a condition that they should be held by the complainant till 31.4.2009 (which date new appears in the calendar) and should be returned to the accused on not happening of the events stated in the said letter and therefore the Trial Court committed error in issuing process against the petitioners - accused. The receipt of this letter is strongly denied by the complainant. Besides this, no material is produced on record, in these petitioners, to show that the said letter was received by the complainant. Further, the contents of the said letter, even if true and correct, constitute the defence of the accused, which could not be considered at the time of issuing process against the accused and cannot also be considered in these petitions under Section 482, Cr.P.C. seeking quashing of the proceedings in the said criminal cases.
10. In support of his contentions that during the pendency of the civil litigation between the parties, the proceedings before the criminal Court in respect of the same transactions, which are involved in the civil litigation, shall have to be stayed till the civil Court determines the rights of the parties in respect of the said transactions, Sri Balaji Srinivasan, the learned counsel for the petitioners - accused has placed reliance on the decision of the Calcutta High Court in the case of Anil Kumar Parolia Vs. Md. Shafique Khan, reported in 1997 Cri.L.J. 717 : [1997 ALL MR (Cri) JOURNAL 28]. In the said case, the Calcutta High Court has observed at paragraph No.9 as under:
"9. Giving anxious consideration to the facts and circumstances of the case, I am of the opinion that although there is nothing to quash the criminal proceeding at this stage, it is all the more essential that the criminal proceeding should be stayed till the decision of the civil suit. It is not a question of playing dishonour of cheque on the ground of insufficiency of fund or that the amount exceeds the arrangement but it is a case in which the liability of the parties is to be determined first and it is to be ascertained whether the transport company made any neglect in the matter of storage of the materials alleged to have been entrusted by the petitioner's company to them and in the event of such a finding whether there was any loss sustained by the petitioner's company and if so, the extent of the said loss. Obviously, this is a question to be decided within the purview of the civil proceeding since the scope of a criminal proceeding under S.138, N.I. Act is very much limited and these questions cannot be of within its purview. It is true, that the criminal proceeding was instituted a couple of months before the institution of the civil suit but as per submission of the learned Advocate for the petitioner which is not disputed by the learned Advocate for O.P. No.1, summons were revived by the petitioner and his company, at least after the institution of the civil suit. The matter in dispute can be settled only by a Civil Court and as such the criminal proceeding, which would from the very nature of the offence in question does not touch the actual dispute should remain stay. This Court is not unmindful to the fact that the criminal proceedings are seldom stayed till the decision of a civil suit over the self-same matter but having regard to the facts and circumstances which in my opinion is a compelling circumstance when for ends of justice there is no way out but to stay the criminal proceeding till disposal of the civil suit."
11. As to the exercise of inherent powers by the High Court under Section 482, Cr.P.C. in quashing the criminal proceedings, the Hon'ble Supreme Court has observed in the case of K. Ashoka Vs. N. L. Chandrashekar and others, reported in (2009)2 SCC (Cri) 730 at para No.14 as under:
"14. It is now a well-settled principle of law that the High Court in exercise of its inherent jurisdiction under Section 482 of the Code may quash a criminal proceeding inter alia in the event the allegations made in the complaint petition even if they are taken at their face value and accepted in their entirety does not disclose commission of a cognizable offence. Some of the principles which would be attracted for invoking the said jurisdiction have been laid down in Indian Oil Corpn. Vs. NEPC India Ltd. are : (SCC p.748, para 12) :
"(i) A complaint can be quashed where the allegations made in the complaint, even if they are taken at their face value and accepted in their entirety, do not prima facie constitute any offence or make out the case alleged against the accused.
For this purpose, the complaint has to be examined as a whole, but without examining the merits of the allegations. Neither a detailed inquiry nor a meticulous analysis of the material nor an assessment of the reliability or genuineness of the allegations in the complaint. is warranted while examining prayer tor quashing of a complaint.
(ii) A complaint may also be quashed where it is a clear abuse of the process of the Court, as when the criminal proceeding is found to have been initiated with mala fides/malice for wreaking vengeance or to cause harm, or where the allegations are absurd and inherently improbable.
(iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The Dower should be used sparingly and with abundant caution.
(iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts, which are absolutely necessarv for making out the offence.
(v) A given set of facts may make out : (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding. the mere fact that the complaint relates to a commercial transaction or breach of contract. for which a civil remedy is available or has been availed. is not by itself a ground to quash the criminal proceedings. The test is whether the allegations in the complaint disclose a criminal offence or not."
[Emphasis supplied by me]
12. Following the above observations of the Hon'ble Supreme Court, I am of the considered opinion that the entire allegations in the complaint in each of the said ten criminal cases, as extracted supra, taken at their face value and accepted in their entirety, prima facie constitute the case against the petitioners - accused for the offence under Section 138, N.I. Act and, therefore, merely for the reason that the civil suits are pending between the parties in respect of the same transactions, the entire proceedings in the said criminal case cannot be quashed by this Court in exercise of its inherent power under Section 482, Cr.P.C..
13. Sri Balajl brinivasan, the learned counsel for the petitioners contends that the learned ACMM committed an error in issuing process against accused Nos.3 to 5, who are in no way concerned to the 1st accused-Company and therefore the proceedings against them cannot be allowed to be continued. This contention cannot be accepted for the reasons that the said accused Nos.3 to 5 have not approached this Court challenging the correctness of the impugned order passed by the learned ACMM issuing process against them and that the complainant has averred in his statutory notice issued to all the accused and also in his complaint that all the accused Nos.2 to 5 are responsible for the day to day affairs of the company in the matter of conduct of its business but the for the day to day affairs of the company in the matter of conduct of its business but the petitioners herein, who have sent their reply to the said notice, have not traversed the said averments.
14. Learned counsel for the petitioners, placing reliance on the decision of the Hon'ble Supreme Court in the case of Suryalakshmi Cotton Milts Limited Vs. Rajvir Industries Limited and others, reported in (2008)13 SCC 678 : [2008 ALL MR (Cri) 1422 (S.C.)], strongly contends that the contents of the written statement filed by the complainant herein in the original suit filed by the petitioners herein against him seeking direction of the civil Court that he shall return to the accused all the ten cheques in question issued to him by the accused. are inconsistent with the averments made by him in the present complainant and therefore the proceedings against the petitioners in the instant case deserve to be quashed. The Hon'ble Supreme Court has observed at paragraph No.22 of its judgment in the said case as under:
"22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of unimpeachable character should not be taken into consideration at any cost for the purpose of finding out as to whether continuance of the criminal proceedings would amount to an abuse of process of Court or that the complaint petition is filed for causing mere harassment to the accused. While we are not oblivious of the fact that although a large number of disputes should ordinarily be determined only by the civil, Courts, but criminal cases are filed only for achieving the ultimate goal, namely, to force the accused to pay the amount due to the complainant immediately. The Courts on the one hand should not encourage such a practice; but, on the other cannot also travel beyond its jurisdiction to interfere with the proceeding which is otherwise genuine. The Courts cannot lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable." [Emphasis supplied by me]
15. As observed above by the Hon'ble Supreme Court, though the High Court may consider, while dealing with a petition under Section 482, Cr.P.C., any document of unimpeachable character that may be produced by the petitioners-accused, the pleadings such as plaint, written statement, cannot be taken to be the documents of 'unimpeachable character' inasmuch as, the averments in the pleadings are subject to proof. Therefore, though the complainant and the accused have filed their respective civil suits against each other, I am not inclined to consider, for the purpose of the present petitions, their pleadings in their said suits. Further observations of the Hon'ble Supreme Court in the said case that both the civil and criminal proceedings in respect of the same transactions would be maintainable, support the case of the respondent-complainant herein but not that of the petitioners-accused.
i) (1999)8 SCC 221 : [1999 ALL MR (Cri) 1853 (S.C.)] (Central Rank of India and another Vs. Saxons Farms and others).
ii) (2000)2 SCC 385 (Rainbow Colour Lab and another Vs. State of M.P. and others).
iii) AIR 2006 SC 3089 (State of Punjab & Ors. Vs. Ganpat Raj).
iv) (2002)2 SCC 383 : [2002 ALL MR (Cri) 899 (S.C.)] (Kunstocom Electronics (I) Pvt. Ltd. Vs. Gilt Pack Ltd. and another).
v) (2009)1 SCC 516 (R. Kalyani Vs. Janak C. Mehta and others)
vi) 1992 Supp (1) SCC 335 (State of Haryana and others Vs. Bhajan Lal and others).
vii) (2008)4 SCC 54 : [2008 ALL MR (Cri) 1164 (S.C.)] ( Krishna Janardhan Bhat Vs. Dattatraya G. Hedge).
viii) ILR 2009 Kar. 2331 : [2009 ALL MR (Cri) JOURNAL 366] (B. Indramma Vs. Sri Eshwar).
ix) ILR 2009 Kar. 171 (Sri A. Viswanatha Pai Vs. Sri Vivekanand S. Bhat).
x) ILR 2009 Kar 1633 : [2009 ALL MR (Cri) 239 (S.C.)] (Kumar Exports Vs. Sharma Carpets).
Suffice it to say that the above decisions are all not relevant for the purpose of disposal of these petitions. Therefore, I am not inclined to discuss each of the said decisions in detail. For the reasons aforesaid, I pass the following :
ORDER All the Crl.P. Nos.889 to 898 of 2010 are hereby dismissed as being devoid of merits. No order as to costs. Original of this order shall be placed in Crl.P. No.889/2010 and a copy thereof in each of other Crl.P. Nos.890 to 898 of 2010. A copy of this order also be sent forthwith to the Court or me learned XVI ACMM, Bangalore, for information and compliance.