Sri N Vijayraj Vs the State of Karnataka by

THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN CR.NO.94/2022 PENDING BEFORE THE HONBLE III ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY, FOR THE ALLEGED OFFENCES P/U/S.406, 420, 504, 506 AND 34 OF IPC.

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THIS PETITION, COMING ON FOR FRESH MATTERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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ORAL ORDER

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This petition is filed by the petitioners - accused Nos.1 and 2 seeking quashing of the proceedings pending in Crime No.94/2022 for the offences punishable under Sections 406, 420, 504, 506 and 34 of IPC on the file of

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the 3^rd Additional Chief Metropolitan Magistrate,

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Bengaluru.

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2. Learned counsel for the petitioners, reiterating the grounds urged, has sought to persuade this Court that respondent No.2 – complainant, despite there being multiple agreements between the petitioners, other accused and himself, has sought to give a criminal colour to what is essentially a civil dispute by launching a prosecution on allegations of cheating and forgery. Referring to two agreements, counsel submits that the petitioners had initially agreed to transfer the CL-9 license in favour of respondent No.2. Under the terms of these agreements, respondent No.2, who intended to secure the transfer of the license, paid a sum of Rs.20,75,000/- to the Guarantor, one C.M. Lokesh, and under a subsequent agreement dated 22.03.2019, an additional sum of Rs.1,35,00,000/- was also deposited with the said Guarantor, with the understanding that upon payment of the balance, a total consideration of Rs.2,35,00,000/-

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would be made over to the present petitioner – license holder.

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3. Learned counsel further submits that, as petitioner No.1 was unable to effect the transfer, respondent No.2 himself entered into a fresh agreement for transfer of the CL-9 license with one K. Sharada on 25.09.2020, wherein repayment of the money earlier received by the Guarantor was also acknowledged. Relying on these three agreements, it is contended that despite entering into a fresh arrangement with K. Sharada, respondent No.2 has chosen to file a false complaint. According to the petitioners, this complaint is nothing but an arm-twisting tactic to compel repayment of money which is otherwise subject matter of civil adjustment.

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4. It is stated that respondent No.2 lodged a complaint on 15.04.2022 alleging that the petitioners, having agreed to transfer the CL-9 license and having received a sum of Rs.1,78,62,000/-, not only failed to effect the transfer but also abused and threatened him

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when he demanded repayment. On the basis of this written complaint, Crime No.94/2022 came to be registered, which culminated in a charge sheet being filed against the petitioners for offences punishable under Sections 420, 465, 467, 468, 471 read with Section 34 of IPC. It is in this background that the petitioners seek quashing of proceedings in Criminal Petition No.7689/2022.

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5. Per contra , learned counsel for respondent No.2 – complainant submits that a total advance consideration of Rs.1,80,00,000/- was in fact paid to petitioner No.1 directly, and that the petitioners, in collusion with others, fabricated the alleged third agreement with K. Sharada to shield themselves from liability. It is therefore contended that sufficient materials exist to proceed against the petitioners and no indulgence is warranted.

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6. Learned HCGP has also supported the stand of the complainant, submitting that the allegations disclose

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commission of cognizable offences and that this is a fit case for the petitioners to face trial.

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7. Having heard the rival submissions and on careful examination of all three agreements produced by petitioner No.1, this Court proceeds to consider the matter.

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8. On a closer examination of the written complaint lodged by respondent No.2 – complainant, it is evident that the allegations now made against the petitioners are substantially similar to those in the earlier proceedings. The subsequent complaint has resulted in registration of a second crime arising out of the very same transaction. Before proceeding further in the matter, this Court finds it appropriate to extract the terms of the agreement entered into between the parties.

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"1. That the consideration for the transfer of the license is agreed to be a sum of Rs.2,20,75,000/(Rupees Two Crore Twenty Lakhs Seventy Five Thousand Only) and out of the said sum of Rs.2,20,75,000/- (Rupees Two Crore Twenty Lakhs

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Seventy Five Thousand Only) a sum of Rs.20,75,000/(Rupees Twenty Lakhs Seventy Five Thousand Only) has been paid today that is the date of execution of this agreement from transferee P.Elumalai to the Guarantor C.M.Lokesh as a confirmation advance amount and C.M.Lokesh will be individual responsible for the confirmation advance amount. And the remaining sum of Rs.2,00,00,000/- (Rupees Two Crore Only) shall be paid in two (2) payments, first payment of Rs.1,00,00,000/- (Rupees One Crore Only) within 60 days and second payment of Rs.1,00,00,000/- (Rupees One Crore Only) within 120 days from the date of this agreement."

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9. This Court further considers it appropriate to reproduce Clause-1 of the second agreement for transfer of license dated 22.03.2019, which reads as follows:

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"1. That the consideration for the transfer of the License is agreed to be a sum of Rs.2,35,00,000/(Rupees Two Crores Thirty Five Lakhs Only) and out of the said sum Rs.2,35,00,000/- (Rupees Two Crore Thirty Five Lakhs Only), a sum of Rs.1,35,00,000/- (Rupees One Crore Thirty Five Lakhs Only) has been paid today as confirmation advance that is the date of execution of this agreement from the Transferee P.Elumalai to the Guarantor C.M.Lokesh as a confirmation advance amount as Transferee P.Elumalai came in touch to License Holder through Guarantor - C.M.Lokesh. C.M.Lokesh will be

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holding the advance amount of Rs.1,35,00,000/- till the date of License get transferred. The Guarantor - C.M.Lokesh will be solely responsible for the advance amount. The License Holder is not responsible for advance amount of Rs.1,35,00,000/- on the date of License Transfer, full amount of Rs.2,35,00,000/- will be paid to the License Holder. Till the date of License Transfer, the advance amount of Rs.1,35,00,000/- will be in the custody of Guarantor C.M.Lokesh and the remaining sum of Rs.1,00,00,000/- shall be paid by the Transferee P.Elumalai in one payment within 120 days from the date of this agreement in the following manner;

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a) Rs.20,00,000/- by way of cheque bearing No.000001 dated ______ drawn on HDFC Bank, Bangalore. b) Rs.20,00,000/by way of cheque bearing No.000002 dated _______ drawn on HCFC Bank, Bangalore.

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c) Rs.10,00,000/- by way of cheque bearing No.000003 dated ________ drawn on HDFC Bank, Bangalore.

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d) Rs.50,00,000/- by way of cash."

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10. Insofar as the disputed third agreement for

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transfer is concerned, Clause-7 therein is of particular relevance, and the same is extracted hereunder:

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"7. The parties agree that the Agreements for Transfer of liquor license dated 10.10.2018 and 22.03.2019 entered into between Transferee and the Facilitators are hereby declared as cancelled with immediate effect upon execution of this Agreement. The parties further agrees that the amounts though not as much as referred in the Agreements dated 10.10.2018 and 22.03.2019 but whatever paid by the Transferee to the Facilitators has beenn paid to the Transteror and neither the Transferor nor the Transferee shall have no claim whatsoever over the Facilitators under the Agreements for Transfer of liquor license dated 10.10.2018 & 22.03.2019."

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11. On a close scrutiny of all three agreements placed on record, and more particularly in the backdrop of the serious challenge raised by the complainant to the validity of the third agreement dated 25.09.2020 for transfer of the CL-9 license, this Court is of the considered view that the controversy between the parties is essentially civil in nature. While respondent No.2 – complainant contends that though the recitals in the first

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two agreements disclose that the amounts were deposited with the Guarantor/petitioner no.2, namely, C.M. Lokesh,

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in reality such payments were made directly to petitioner No.1 – the license holder, the stand of petitioner – accused No.1 is that the contractual terms clearly record that the monies were paid to the Guarantor/petitioner no.2 and that the petitioners were entitled to receive the sale consideration only upon deposit of the entire agreed sum through the Guarantor.

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12. It is evident that the core dispute revolves around the subsequent agreement dated 25.09.2020, which was entered into between the complainant and one K. Sharada. According to the petitioners, as petitioner No.1 was unable to transfer his CL-9 license, he facilitated the transfer of the license held by K. Sharada. On that premise, the petitioners contend that the said third agreement governs the transaction, and reliance is placed on Clause-7 thereof, which acknowledges repayment said to have been made by petitioner No.1.

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13. On examining these agreements collectively, this Court is of the opinion that the matter involves

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complex disputed questions of fact touching upon the mode of payment, the role of the Guarantor, and the effect of the third agreement. Such issues cannot be conclusively adjudicated in the present criminal proceedings and are more appropriately the subject matter of a civil action for recovery. If respondent No.2 asserts that the amounts deposited with the Guarantor/petitioner no.2 were in fact received by petitioner No.1, it is for him to establish the same in a properly instituted civil suit. Resorting to criminal prosecution for resolution of what is essentially a money claim cannot be permitted.

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14. Learned counsel appearing for petitioners has also invited the attention of this Court to the fact that similar complaints filed by one K. Sharada were investigated by the jurisdictional police, and the Investigating Officer, on due enquiry, has filed a ‘B’ report. Therefore, the present complaint launched at the instance of respondent No.2 cannot be viewed as bona fide and

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appears to be a device to exert pressure on the petitioners.

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15. Be that as it may, it is not in dispute that under the first two agreements the amounts were admittedly deposited with the Guarantor, C.M. Lokesh. When the transaction itself is evidenced by written contracts showing that payments were made to the Guarantor, this Court is of the view that initiation of criminal proceedings against the petitioners, in the absence of clear evidence of fraudulent intent at inception, is wholly unwarranted. Continuation of the present criminal case would therefore amount to an abuse of process of law.

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16. Accordingly, to secure the ends of justice, this Court finds it appropriate to quash the proceedings, while at the same time reserving liberty to respondent No.2 to institute appropriate civil proceedings for recovery of the amount claimed, if so advised, in accordance with law and proceeds to pass the following;

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ORDER

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(i) The petition is allowed.

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(ii) The charge sheet in C.C. No.5706/2023 arising out of Crime No.94/2022, pending before the Court of the 3rd Additional Chief Metropolitan Magistrate, Bengaluru City, for the offences punishable under Sections 506, 34, 504, 406 and 420 of the IPC, is hereby quashed insofar as petitioners – accused Nos.1 and 2 are concerned.

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(iii) Liberty is, however, reserved in favour of respondent No.2 – complainant to avail appropriate remedies before the competent Civil Court in the manner known to law.

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Sd/(SACHIN SHANKAR MAGADUM) JUDGE

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NBM

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List No.: 1

Sri N Vijayraj v. the State of Karnataka by

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Sri N Vijayraj v. the State of Karnataka by

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