Quashed

Sri. Sathish Kumar. N v. the State of Karnataka

Karnataka HC11 Dec 2023CRL.P/6767/2018

Case brief

AI extract

What is this about?

Criminal Petition under Section 482 CrPC filed to quash an FIR and charge sheet under Section 420 IPC. The petition alleged a dispute regarding employment, salary, and equity in a company that was later dissolved. The single-judge bench held that the matter was a civil dispute, the company was not an accused, and the claim must be pursued via insolvency proceedings.

What did the court decide?

The petitions allowing the prosecution of the petitioner in C.C. No.23759/2014 for the offence punishable under Section 420 of the Indian Penal Code, 1860.

Sri. Sathish Kumar. N Vs the State of Karnataka — Cheque Dishonour | Karnataka HC (2023)

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1 - NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 11^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE R. NATARAJ CRIMINAL PETITION NO. 6767 OF 2018

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BETWEEN:

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SRI. SATHISH KUMAR. N S/O. NARASIMHA JAVAREGOWDA, AGED ABOUT 44 YEARS, OCCUPATION: CONSULTANT, NOW R/AT NO.498, 1^ST FLOOR, 7^TH CROSS, PRAGATHIPURA, KANAKAPURA MAIN ROAD, BANASHANKARI, BANGALORE-560060.

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…PETITIONER

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(BY SRI. S. VIVEKANANDA, ADVOCATE)

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AND:

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Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA

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THE STATE OF KARNATAKA BY MADIVALA POLICE STATION, BANGALORE, REPRESENTED BY STATE PUBLIC PROSECUTOR, HIGH COURT BUILDING, BANGALORE-560001.

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SRI. VINOD KUMAR AGARSALA S/O. K.C. THAMPAN, MAJOR IN AGE, NO.18, 3^RD E CROSS, 18^TH MAIN, BTM 2^ND STAGE, BANGALORE-560068.

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…RESPONDENTS (BY SMT. WAHEEDA M.M., HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NO.1;

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SRI. M. PARTHA, ADVOCATE FOR RESPONDENT NO.2 - ABSENT)

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2 - NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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THIS CRL.P IS FILED UNDER SECTION 482 OF THE CODE OF CRIMINAL PROCEDURE, 1973 PRAYING TO QUASH THE FIR IN CRIME NO.599/2009 AND CHARGE SHEET IN CRIME NO.599/2009 NOW IN C.C.NO.23759/2014 OF MADIVALA POLICE STATION, BANGALORE FOR THE OFFENCE PUNISHABLE UNDER SECTION 420 OF THE INDIAN PENAL CODE, 1860 PENDING BEFORE THE COURT OF THE VI ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, AT BENGALURU.

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

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ORDER

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The petitioner has challenged the prosecution

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launched against him in C.C. No.23759/2014 for the offence punishable under Section 420 of the Indian Penal Code, 1860 (for short, ‘IPC’) which was initially pending before the VI Additional Chief Metropolitan Magistrate, Bengaluru (henceforth referred to as the ‘Trial Court’) and presently pending trial before the XXXII Additional Chief Metropolitan Magistrate, Bengaluru.

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The respondent No.2 filed a private complaint alleging that he was the Managing Director of M/s.WINGS2i IT Solutions Private Limited situate at No.18, 3^rd E Cross, 18^th Main, BTM Layout, II Stage, Bengaluru, and that he was earlier working at GLOPORE IM Services Private Limited as a founding member and

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3 - NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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head of Consulting and Training Services. He alleged that in the year 2006, the petitioner approached him and offered him a position of Head Professional services in the Company where the petitioner was the Managing Director and that he would make him one of the partners of the said Company. The petitioner offered the salary of Rs.28,80,000/- per annum consequent to which the respondent No.2 agreed to join the said Company and did so on 02.10.2006. An employment agreement was entered into by him with the petitioner during April 2007. The respondent No.2 claimed that the petitioner offered him to become one of the equity share holders and requested him to pay Rs.6,50,000/- towards the value of the equity shares. Consequent thereto, respondent No.2 deposited a sum of Rs.5,99,000/- in the name of the Company, where the petitioner was the Managing Director and also paid a sum of Rs.51,000/- against the cost of a laptop which was purchased by him and given to the Company, where the petitioner was the Managing Director. The respondent No.2 alleged that despite the repeated

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4 - NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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requests to allot the equity shares, the petitioner neither allotted the shares to the tune of Rs.6,50,000/- nor returned the money. Even a major portion of the salary payable to the respondent No.2 was retained under the pretext that the same would be converted into equity shares as per the employees stock option mentioned in the

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employment agreement totaling to a sum of Rs.21,00,000/- between 01.04.2007 and 31.12.2008. He further alleged that the petitioner during September 2007, had taken a loan of Rs.1,52,066/- from the respondent No.2 for a down payment to buy a Honda City car in the name of the Company where the petitioner was Managing Director. The respondent No.2 claimed that the attitude of the petitioner was changing and therefore, he was forced to resign from the Company on 21.09.2008. When the respondent No.2 requested the petitioner to settle the dues, the petitioner promised to allow the respondent No.2 to keep the car and to adjust the amount due to respondent No.2 against the loan balance of the car. Respondent No.2 further claimed that the petitioner did

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NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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not settle the dues payable to him and therefore, he was constrained to initiate prosecution of the petitioner.

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The Trial Court in terms of the order dated 18.06.2009, referred the case for investigation to the Station House Officer, Madivala and report under Section 156(3) of the Code of Criminal Procedure, 1973 (for short, ‘Cr.P.C’). The respondent No.1 after conducting an investigation filed a charge sheet against the petitioner - accused for the offence punishable under Section 420 of IPC. The Trial Court took cognizance of the said offence against the accused and ordered registration of criminal case, which was numbered as C.C. No.23759/2014 and issued process to them. The petitioner is, therefore, before this Court challenging the registration of FIR in Crime No.599/2009 and the charge sheet in C.C. No.23759/2014.

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The learned counsel for the petitioner submits that the prosecution launched against him is liable to be quashed on more than one ground namely, (i) that a

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6 - NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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reading of the private complaint discloses that all payments made by the respondent No.2 was to the Company and the Company was not arrayed as an accused and (ii) that the Company, namely, GLOPORE IM Services Private Limited was dissolved by an order of the National Company Law Tribunal (for short, ‘the Tribunal’), Bengaluru Bench, and a Resolution Professional was appointed in terms of the order dated 18.12.2019. He, therefore, submits that the prosecution launched against the petitioner is liable to be quashed as the respondent No.2 has to make his claim before the Resolution Professional appointed by the Tribunal and establish his claim before it. He submits that the respondent No.2 has given a criminal flavour to a civil dispute and therefore, the prosecution against the petitioner is liable to be quashed.

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Learned counsel for the respondent No.2 has remained absent and therefore, this Court did not have the advantage of his submissions.

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NC: 2023:KHC:44965 CRL.P No. 6767 of 2018

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Now that the Company where the respondent No.2 had made investment is dissolved, respondent No.2 being an unsecured creditor has to stand in the queue and wait for resolution of his claim by the Tribunal. He certainly cannot initiate a criminal prosecution of the petitioner on the grounds mentioned in the private complaint. In addition, the Company is not arraigned as accused by the respondent No.1 or the respondent No.2. In that view of the matter, the prosecution of the petitioner has to fail and deserves to be quashed.

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Consequently, the petition is allowed. The prosecution of the petitioner in C.C. No.23759/2014 pending trial before the XXXII Additional Chief Metropolitan Magistrate, Bengaluru, for the offence punishable under Section 420 of the Indian Penal Code, 1860 is quashed.

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Sd/JUDGE

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SMA

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List No.: 1 Sl No.: 31

Sri. Sathish Kumar. N v. the State of Karnataka

Case brief

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Sri. Sathish Kumar. N v. the State of Karnataka

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