Allowed

Sri Rakshith J Perikal v. the State of Karnataka

Karnataka HC21 Jun 2021WP/16694/2017

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed the FIR and criminal proceedings against the petitioner regarding an allegation of charging exorbitant interest. The court held that the remedy for such violations lies under the specific Act, not through criminal complaints, and viewed the filing as an abuse of process to evade cheque bounce prosecution.

What did the court decide?

The impugned First Information Report in Crime No.165/2014 was quashed, and all further proceedings pursuant thereto were stopped.

Sri Rakshith J Perikal Vs the State of Karnataka — Banking and Recovery | Karnataka HC (2021)

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W.P.No.16694/2017

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 21^ST DAY OF JUNE 2021

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BEFORE

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THE HON’BLE MRS. JUSTICE K.S.MUDAGAL

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WRIT PETITION No.16694/2017 (GM-RES)

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BETWEEN :

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SRI RAKSHITH J.PERIKAL S/O LATE PERIKAL M.JAGANNATH AGED ABOUT 26 YEARS R/AT NO.1875, 31^ST CROSS 9^TH MAIN, BANASHANKARI II STAGE BENGALURU – 560 070 …PETITIONER

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(BY SRI A.L.PREMAKUMAR, ADVOCATE)

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AND :

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THE STATE OF KARNATAKA BY THYAGARAJANAGAR POLICE JAYANAGAR SUB-DIVISION BENGALURU CITY REP. BY THE STATE PUBLIC PROSECUTOR HIGH COURT BUILDING BENGALURU – 560 001

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SRI C.H.RAMAKRISHNA S/O SRI C.H.SELVARAJ AGED ABOUT 25 YEARS OCC: BUSINESSMAN R/AT NO.9/4, 1^ST CROSS 1^ST BLOCK, THYAGARAJANAGAR BENGALURU – 560 028 …RESPONDENTS

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(BY SRI K.S.ABHIJITH, HCGP FOR R1; R2 SERVED)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF CR.P.C. PRAYING TO QUASH THE COMPLAINT DATED 25.11.2014 FILED BY RESPONDENT NO.2 AND FIRST INFORMATION REPORT REGISTERED BY RESPONDENT NO.1 IN CRIME NO.165/2014 FOR THE OFFENCES PUNISHABLE UNDER

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W.P.No.16694/2017

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SECTIONS 384, 506, 34 OF IPC READ WITH SECTIONS 3 AND 4 OF THE KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT, 2004 AND ALL FURTHER PROCEEDINGS PURSUANT THERETO.

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THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT THROUGH VIDEO CONFERENCE MADE THE FOLLOWING:

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O R D E R

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“Whether registration of the first information report in Crime No.165/2014 against the petitioner by Thyagarajanagar Police amounts to abuse of the process of the Court?” is the question involved in this case.

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The petitioner is accused No.4 in Crime No.165/2014 of Thyagarajanagar Police Station. On the basis of complaint of respondent No.2, respondent No.1 registered the said FIR against the petitioner and 9 others for the offences punishable under Sections 384, 506 read with Section 34 of the IPC and Sections 3 and 4 of the Karnataka Prohibition of Charging Exorbitant Interest Act 2004 (‘the Act’ for short).

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It was alleged that accused Nos.1 to 10 lent various loans with exorbitant rate of interest to respondent No.2 for the purpose of running educational institutions etc. It was further alleged that though respondent No.2

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W.P.No.16694/2017

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substantially discharged such loans, the accused compounding the interest at exorbitant rates demanded more money from him. For that purpose, by way of extortion obtained several cheques from him and threatened to prosecute him. It was further alleged that the accused were posing life threats to respondent No.2 and his family members.

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So far as the petitioner it was alleged that respondent No.2 borrowed loan of Rs.1,45,00,000/- and repaid Rs.1,20,00,000/-. It was alleged that despite such repayment, by way of extortion petitioner has obtained six cheques drawn on Vijaya Bank, South End Circle Branch, and threatened to kill him.

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Respondent No.2 though served has remained

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unrepresented.

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Sri K.S.Abhijith, learned HCGP submits that though the first information report is registered in 2014, till filling of this petition in 2017 no charge sheet was filed in the case.

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The petitioner prosecuted respondent No.2 in C.C.No.13112/2016 on the file of XXII Additional Chief

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W.P.No.16694/2017

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Metropolitan Magistrate, Bengaluru in respect of cheque of Rs.50,00,000/-. In that case on trial, learned Magistrate convicted respondent No.2 on 25.03.2017 and sentenced him.

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In respect of another cheque of Rs.25,00,000/the petitioner prosecuted respondent No.2 in C.C.No.10074/2016 on the file of XXII Additional Chief Metropolitan Magistrate, Bengaluru. The learned Magistrate by judgment and order dated 04.02.2017 convicted respondent No.2 for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (‘the NI Act’ for short) and sentenced him to fine of Rs.50,05,000/-.

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The petitioner has produced certified copy of the judgment in C.C.No.10074/2016. The computer output of daily order uploaded on e-website shows that C.C.No.13112/2016 was disposed of on 25.03.2017. The judgment in C.C.No.10074/2016 shows that in the said case, respondent No.2 neither produced copy of the impugned complaint and the first information report nor made out defence of obtaining cheques by way of

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W.P.No.16694/2017

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extortion. The said judgment further shows that though respondent No.2 admitted his signatures on cheque and the cheque pertains to his account did not enter the witness box to rebut the presumption under Sections 118 and 139 of the NI Act nor claimed that the cheques were taken by way of extortion.

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In the impugned complaint his only grievance is that the petitioner has levied exorbitant interest in violation of Sections 3 and 4 of the Act. The Coordinate Bench of this Court in case of Sangamesh Hiremath Vs.

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The State of Karnataka & Anr (Crl.P.No.101215/2015 DD 17.11.2015) has held that, if there is violation of Sections 3 and 4 of the Act, the remedy of the debtor lies under Section 5 of the Act by way of filing petition before the Court and not by registering first information report.

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The above facts and circumstances clearly show that registration of the first information report for the offence punishable under Sections 3 and 4 of the Act was without jurisdiction.

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So far as Sections 384 and 506 read with Section 34 of IPC, the allegations in the complaint could

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have constituted the defence for respondent No.2 in the trial for the offence under Section 138 of the NI Act. But the copy of the judgment in C.C.No.10074/2016 shows that such defence was not raised before the trial Court. The facts narrated above go to show that the complaint was filed only to evade prosecution for the offence punishable under Section 138 of the NI Act.

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In State of Haryana and others vs. Bhajan Lal

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and others¹ , the Hon'ble Supreme Court identified categories of cases in which power could be exercised by the High Court to quash the proceedings invoking Section 482 of Cr.P.C. For the purpose of this case, paras 108(6) and 108(7) are relevant read as follows:

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“108. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent

1 AIR 1992 SC 604

W.P.No.16694/2017

abuse of the process of any Court or otherwise to

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secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should exercised.

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Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.”

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Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.”

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(Emphasis supplied)

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The Hon'ble Supreme Court has held that when

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there is express legal bar engrafted in any of the

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provisions of the concerned Act, institution of the criminal proceedings amounts to abuse of the process of the Court. It was further held that where criminal proceedings is manifestly attended with mala fides due to private or personal grudge, that amounts to abuse of the process of the Court.

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The above narrated facts and circumstances

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show that registration of the first information report for the offences under Sections 3 and 4 of the Act was barred by Section 5 of the said Act. Further the impugned complaint was filed to evade prosecution of the petitioner for the offence under Section 138 of the NI Act. Therefore to prevent abuse of the process of the Court and failure of ends and justice, it is fit case to quash the proceedings. The petition is allowed.

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The impugned first information report in Crime No.165/2014 of Tyagarajanagar Police Station against the petitioner is hereby quashed.

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Sd/JUDGE

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KSR

Sri Rakshith J Perikal v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

Sri Rakshith J Perikal v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

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