Allowed

K Shiva Rama Rao v. Sycon Construction Pvt. Ltd.

Karnataka HC12 Oct 2023CRL.P/3036/2019

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed the criminal prosecution under Section 138 of the N.I. Act initiated against one petitioner, holding the offence was not against him as he did not draw the cheques. Proceedings against the other petitioner, who drew the cheques, were deemed abated due to his death.

What did the court decide?

The prosecution against petitioner No.1 is quashed; proceedings against petitioner No.2 stand abated due to death.

K Shiva Rama Rao Vs Sycon Construction Pvt. Ltd. — Cheque Dishonour | Karnataka HC (2023)

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1 - NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 12^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE R. NATARAJ CRIMINAL PETITION NO. 3036 OF 2019

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BETWEEN:

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K. SHIVA RAMA RAO S/O KVSR ANJANEYULU, AGED ABOUT 45 YEARS, RESIDING AT NO.4240, ALBANY DR, APARTMENT G311, SAN JOSE, CA-95129-1207 UNITED STATES OF AMERICA REP. BY PA HOLDER KSVN PAVAN KUMAR

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KSVN PAVAN KUMAR S/O KVSR ANJANEYULU, AGED ABOUT 47 YEARS, RESIDING AT NO.16/11/1749, MOOSARAMBAGH, DILSUKHNAGAR HYDERABAD-560036 TELANGANA

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…PETITIONERS

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Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA

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(BY SRI. SAMARTHA S., ADVOCATE)

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AND:

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SYCON CONSTRUCTION PVT. LTD., HAVING ITS REGISTERED OFFICE AT NO.5-B, SYCON POLARIS, 1/58, 8^TH MAIN, BALLARY ROAD, SADASHIVANAGAR BENGALURU-560 080 REPRESENTED BY ITS DIRECTOR ANIL R. BAGALWADI

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…RESPONDENT

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(BY SRI. V. RAMESH BABU, ADVOCATE (ABSENT))

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THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973 PRAYING TO SET ASIDE THE ORDER OF HON'BLE XXVII ADDL. CHIEF METROPOLITAN MAGISTRATE,

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NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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BENGALURU DATED 31.01.2019 IN TAKING COGNIZANCE OF THE COMPLAINT IN C.C.NO.2781/2019 AND ETC.

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THIS PETITION, COMING ON FOR HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioners / accused Nos.1 and 2 in C.C. No.2781/2019 pending trial before the XXVII Additional Chief Metropolitan Magistrate, Bengaluru, (henceforth referred to as ‘the Trial Court’) have filed this petition challenging the prosecution initiated against them by the respondent for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘the N.I. Act’) and the order dated 31.01.2019 passed by the Trial

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Court taking cognizance of the offence under Section 138 of the N.I. Act against the accused.

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The respondent initiated proceedings to prosecute the petitioners for an offence punishable under Section 138 of the N.I. Act. It was the case of the respondent that it had conveyed two villas in the project developed by it, namely, “Sycon Maitri” to the petitioner No.1 in terms of two sale deeds dated 22.03.2018 at a

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3 - NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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cost of Rs.3,40,00,000/- per villa. The respondent claimed that since the sale deeds in respect of the villas were executed even before the works as requested by the petitioners were completed, the respondent had agreed to return a sum of Rs.1,35,00,000/- for each villa to the petitioner No.1 towards security for the additional works. As per Clause 5 of the agreement entered into between them, the petitioner No.1 gave a post-dated cheque bearing No.299770 dated 21.06.2018 drawn on Allahabad Bank, Maruthinagar Branch, Hyderabad, for a sum of Rs.2,70,00,000/-. As per the obligation imposed on the petitioner No.1, he handed over to the respondent two post-dated cheques bearing Nos.299773 and 299774 drawn on Allahabad Bank, Maruthinagar, Hyderabad Branch for Rs.70,00,000/- each towards payment of the additional works as per the specification to be carried out by the respondent. These three cheques were dishonoured due to insufficient funds in the account of the petitioners and therefore, proceedings were initiated by the respondent for prosecution of the petitioners.

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NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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The learned counsel for the petitioners

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contended that the cheques in question were drawn by the petitioner No.2 and not the petitioner No.1 though the sale deeds were executed in the name of the petitioner No.1. He stated that the petitioner No.2 has expired and therefore, the proceedings have abated. Since the prosecution is now continued against the petitioner No.1, who has not issued the cheques in question, the prosecution against the petitioner No.1 is liable to be halted.

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The learned counsel for the respondent has consistently remained absent and therefore, this Court did not have the benefit of his submissions.

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Be that as it may, the documents filed along with the private complaint would disclose that the cheques in question were not issued by the petitioner No.1 but were issued by the petitioner No.2. It may be that the petitioner No.2 was a power of attorney holder of the petitioner No.1. However, in respect of an offence

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NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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punishable under Section 138 of the N.I. Act, the following

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requirements are necessary to launch a prosecution:

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(i) A person must have drawn a cheque on an account maintained by him in a Bank for payment of a certain amount of money to another person from out of that account;

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(ii) The cheque should have been issued for the discharge in whole or in part of any debt or other liability;

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(iii) That the cheque has been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

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(iv) The cheque is returned by the Bank unpaid either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the Bank;

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(v) The payee or the holder in due course of the cheque makes a demand for the

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6 - NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

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(vi) The drawer of the said cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within fifteen days of the receipt of the said notice.

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6. If all the aforementioned ingredients are

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satisfied, then the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the N.I. Act. In the case on hand, the documents placed on record by the petitioners indicate that the petitioner No.2 was the power of attorney holder of the petitioner No.1 and towards discharge of certain liabilities of petitioner No.1, petitioner No.2 had passed on cheques in favour of the respondent and these cheques were dishonoured due to ‘insufficient funds’. In the notice issued by the respondent to the petitioners for demanding

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NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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payment of the amounts covered by the cheques, the respondent specifically indicated that these cheques were drawn by the petitioner No.2 as the power of attorney holder of petitioner No.1. It is, therefore, clear that the petitioner No.2 had issued the cheques in question towards the discharge of the liability of the petitioner No.1. Therefore, it is only the petitioner No.2, who was liable to be prosecuted for the offence punishable under Section 138 of the N.I. Act and not the petitioner No.1 as the petitioner No.1 was not the drawer of the cheque. However, having regard to the fact that the petitioner No.2 has expired during the pendency of the proceedings, the proceedings against the petitioner No.2 has abated. In view of the fact that an offence under Section 138 of the N.I. Act is not made out against the petitioner No.1, the prosecution of the petitioner No.1 is unjustified and would be a wasteful expenditure of judicial time and resources.

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8 - NC: 2023:KHC:37609 CRL.P No. 3036 of 2019

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In that view of the matter, the petition is allowed. The impugned prosecution of the petitioner No.1 – accused No.1 in C.C.No.2781/2019 pending trial before the XXVII Additional Chief Metropolitan Magistrate, Bengaluru, for the offence punishable under Section 138 of the N.I Act is quashed. Consequently, the order dated 31.01.2019 passed by the Trial Court taking cognizance of the offence and directing registration of criminal case in C.C. No.2781/2019 qua the petitioner No.1 is also quashed.

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Since the petitioner No.2 – accused No.2 is reported to be dead, the proceedings against him in C.C. No.2781/2019 before the Trial Court shall stand abated.

Sd/-

JUDGE

sma

List No.: 1 Sl No.: 15

K Shiva Rama Rao v. Sycon Construction Pvt. Ltd.

Case brief

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K Shiva Rama Rao v. Sycon Construction Pvt. Ltd.

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