Accused sought quashing of Section 138 NI Act proceedings over two dishonoured cheques issued under an MOU for settlement on resignation as director. Court held the MOU recorded legal liability and the dispute attracted Section 138; not purely civil. Petition dismissed.
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NC: 2024:KHC:4703 WP No. 10797 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE K.NATARAJAN
WRIT PETITION NO. 10797 OF 2022 (GM-RES)
BETWEEN:
Digitally signed by AASEEFA PARVEEN Location: HIGH COURT OF KARNATAKA
…PETITIONERS
(BY SRI. HARIKRISHNA S. HOLLA, ADVOCATE)
AND:
SRI B.N. RAMACHANDRA REDDY S/O LATE V NARAYANAPPA AGED ABOUT 47 YEARS R/AT NO.2, KITES CLOSE BRADLEY STOKE BRISTOL BS320BY UNITED KINGDOM REP BY HIS GPA HOLDER
MR. B. N. NAGARAJA, S/O LATE V NARAYANAPPA AGED ABOUT 53 YEARS NO.2, 6TH CROSS, DHANALAKSHMI LAYOUT, VIRUPAKSHAPURA BANGALORE - 560 097.
…RESPONDENT
(BY SRI. P.M. NARAYANA SWAMY, ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 226 OF CONSTITUTION OF INDIA READ WITH SECTION 482 OF CODE OF CRIMINAL PROCEDURE PRAYING TO QUASH THE PROCEEDINGS IN C.CNO.494/2021 BEFORE THE XV ACMM COURT, BANGALORE ANNEXURE-F AS ILLEGAL.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
This Writ Petition is filed by the petitioners/accused under Article 226 of the Constitution of India read with Section 482 of Cr.P.C. for quashing of criminal proceedings in C.C.No.494/2021 pending on the file of the XV ACMM Court, Bengaluru, arising out of PCR No.10322/2020 filed by the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the N.I. Act' for short).
NC: 2024:KHC:4703 WP No. 10797 of 2022
petitioners and the learned counsel for the respondent.
proceedings is abuse of process of law and liable to be quashed.
NC: 2024:KHC:4703 WP No. 10797 of 2022
Directors and he has invested huge amount in the Company. Subsequently, the respondent said to be stay in abroad, he unable to participate in the business and hence he wants to relieve from the business and resigned from the post and the MOU was executed between the parties on 13.01.2018. In the said MOU, there was a mention of amount payable to the respondent amounting to Rs.2,30,00,000/-. Out of which, the loan amount obtained by the respondent was deduced for Rs.85,00,000/and remaining amount payable by the petitioner was Rs.1,45,00,000/- towards the settlement of the respondent from the business. Accordingly, Sl.No.2 and 3 of the MOU is mentioned as under:
"2. The first party herein has issued a signed and post-dated cheque to the second party herein, for Rs.82,00,000/- (Rupees Eighty Two Lakhs Only), bearing cheque No.794797 dated 15.01.2020, drawn on State Bank of India., Papareddy Palya, Nagarbhavi, Bengaluru - 560 072.
NC: 2024:KHC:4703 WP No. 10797 of 2022
State Bank of India, Papareddy Palya, Nagarbhavi, Bengaluru - 560 072."
NC: 2024:KHC:4703 WP No. 10797 of 2022
Accordingly, this petition is liable to be dismissed and it is
dismissed.
Sd/JUDGE
DN/AP
1 issue framed by the court
Whether criminal proceedings under Section 138 NI Act should be quashed where cheques were issued pursuant to an MOU settling a business dispute between directors.
4 provisions across 3 enactments
M/s. Origin D-Fab Pvt Ltd
Sri. Padmaraju G.
Sri B.N. Ramachandra Reddy
K.Natarajan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
