- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU BEFORE THE HON BLE MRS.JUSTICE RATHNAKALA CRIMINAL PETITION NO.6472/2014

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1 - 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3 RD DAY OF DECEMBER 2015 BEFORE THE HON BLE MRS.JUSTICE RATHNAKALA CRIMINAL PETITION NO.6472/2014 BETWEEN: SRI DR.SENTILNATHAN S/O SRI KANAGASABI AGED ABOUT 57 YEARS M/S SRIDEVI DEVELOPERS HAVING ITS REGISTERED OFFICE AT NO.1620-A, 16 TH MAIN, ANNA NAGAR, CHENNAI PETITIONER (BY SRI K.SUMAN, ADV.) AND: M/S THE FORTUNE GROUP PROPSTAR L.L.P., A LIMITED LIABILITY PARTNERSHIP FIRM INCORPORATED UNDER THE PROVISIONS OF THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 HAVING ITS OFFICE AT NO.6, 3 RD FLOOR, PARK ROAD, TASKER TOWN BANGALORE REPRESENTED BY IT S MANAGING PARTNER SRI MOHAMMED GOUSE FAROOQ, S/O LATE SRI M.A.RAHIM AGED ABOUT 42 YEARS....RESPONDENT (BY SRI M.G.S.KAMAL, ADV.) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN PCR NO.4281/2012 ON THE FILE OF THE XII ACMM COURT,

2 - 2 - BANGALORE, THE ORDER HEREIN ENCLOSED AS DOCUMENT NO.1 THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 23/11/2015 AND COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:- O R D E R Petitioner is arrayed as accused in the proceedings initiated against him for commission of offence under Section 138 of the Negotiable Instruments Act ( the Act for short), on the complaint of the respondent herein. 2. In his private complaint filed before the Magistrate, the complainant alleged that there are agreements between the parties in respect of development of immovable property described in the complaint and a General Power of Attorney is executed by the accused in his favour; he has invested around Rs.3 crores in the said property. In pursuance of settlement talks between the parties that the accused will pay Rs.4,75,00,000/- in respect of the said transaction, the accused issued three post-dated cheques in respect of said amount. When the complainant presented the cheques for encashment with his Banker, the accused gave stop payment

3 - 3 - instruction, thus committed an offence under Section 138 read with Section 142 of the Act. He has cheated the complainant by fabricating documents such as, Power of Attorney agreement, etc., by forging the signatures of the complainant. The Managing Director filed civil suits and P.C.R. case obtained fraudulent decree and orders in respect of which, he has filed a separate complaint before the jurisdictional Police. 3. Sri. K. Suman, learned Counsel appearing for the petitioner submits that, in respect of the very same cheques, the GPA Holder of the complainant has already filed a private complaint and the matter came to be compromised by order dated The petitioner filed two civil suits in respect of the property in question. The complainant/respondent appeared in the said suit through his GPA Holder Mykhtiyar A.Ahmed and the suits were compromised. But the complainant denied the said compromise and on his application, the compromise is recalled and the suit is pending. The recall order is passed without notice to the petitioner. His signature is forged on the postal

4 - 4 - acknowledgment. The recall order is challenged before this Court. In the present petition, he is challenging the very cognizance taken by the Court in respect of the offence under the Act on the ground that, dispute between the parties pertaining to the three cheques in question is already settled by the compromise entered into between the petitioner and the GPA Holder of the respondent/complainant. Still the complainant is prosecuting this case. He has suppressed the material fact before the court below. The dispute is purely civil in nature and is pending adjudication before the court of proper jurisdiction. The P.C.R. case was compromised before Lok Adalath. The Award passed by the Lok Adalath is binding on the parties. In view of the Award, he is not due any amount to the complaint. As on the date of drawal of cheque, there ought to have been legally enforceable debt. The cheques in question having been given during the course of business transaction, criminal liability for the offence under Section 138 of the Act is not attracted as held by Apex Court in Indus Airways (P) Ltd. vs- Magnum Aviation (P) Ltd. reported in (2014) 12 SCC 539 in Criminal Appeal

5 - 5 - No.830/2014. Under the circumstance, the Magistrate had no jurisdiction to register the complaint and take cognizance for the alleged offence (Reliance is placed on 2015 (6) Supreme 384 in the matter of Mohd. Khalid Khan vs- State of U.P. and Another). Hence, the entire criminal proceeding of the court below is liable to be quashed. 4. In reply, Sri. M.G.S.Kamal, learned Counsel appearing for the respondent/complainant submits that, the respondent is engaged in the business of real estate development in and around the city of Bangalore. The petitioner owns the property at Peenya Plantation, Yeshwanthapur Hobli, Bangalore North Taluk and he requested the respondent to develop the project over the property, which was incomplete and the consideration was agreed for specific share in the proceeds of the project. Accordingly, on , agreement was entered into by both the parties. The petitioner by then owed money to Indian Overseas Bank, Chennai and he requested the respondent to make payments towards the aforesaid dues. The Asset Reconstruction Company Limited had taken over

6 - 6 - the loan amount. The respondent paid an aggregate of Rs.3 crores to the petitioner through his proprietorship concern M/s.Sridevi Hospital and also made direct payments. The respondent also expended huge amount for development of the property. He has made regular payments to Asset Reconstruction Company Limited, but the petitioner went on making unreasonable demands and neglected to get necessary documents executed from Asset Reconstruction Company Limited to release the charge over the subject property. At that stage, a memorandum of understanding was entered into between the parties. In that regard, petitioner issued three cheques towards payment of the loan of Rs.4.75 crores. Thereafter petitioner deliberately refrained from making payments in terms of the memorandum of understanding; when the cheques were presented before the Bank, they returned unpaid as payment stopped by the drawer. The petitioner filed a caveat petition against the respondent wherein there was a reference to an Original Suit in O.S.No.7282/2011 filed by the petitioner against the respondent and also with regard to a compromise decree

7 - 7 - passed in the said suit. On verification, he came to know that, by playing fraud, forgery and fabrication, in conspiracy and connivance with third and second respondent, petitioner had obtained the decree. Third respondent had filed a false complaint in P.C.R.No.21770/2011 before the IV Additional Chief Metropolitan Magistrate, Bangalore. In O.S.No.7056/2011, the petitioner had sought for declaration that, agreement dated , and are null and void and stand cancelled. In the earlier suit in O.S.No.7282/2011, he sought for permanent injunction against the respondent restraining him from interfering in the suit schedule property. The suit is based on the fraudulent compromise decree obtained in O.S.No.7056/2011. The petitioner forged the signature of the Managing Partner of the respondent viz., Mohammed Ghouse Farooq thereby fabricated and created Power of Attorney making it appear to have been executed by the aforesaid Managing Partner of the respondent in favour of third respondent. By using the said created Power of Attorney, petitioner filed a complaint on through third respondent before the IV A.C.M.M.,

8 - 8 - Bangalore, in PCR No.21770/2011 against the petitioner and second respondent. On he has filed O.S.No.7056/2011 at a.m. before the Court. On the very same day, the suit is decreed on the basis of the compromise petition entered into between the petitioner and the alleged GPA Holder/third respondent. Decree was drawn on the very next day. On , an application under Section 309 of Cr.P.C. is filed in P.C.R.No.21770/2011 with a prayer to withdraw the complaint on the ground that the matter is settled and compromised between the parties. The complaint was referred to Lok Adalath on and is disposed of as settled in Lok Adalath. The petitioner and third respondent hatched conspiracy against the respondent/complainant. It is mentioned in the agreement dated that the cheques were issued as collateral security and not towards payment of amount. Thereafter another suit in O.S.No.7282/2011 was filed on by the petitioner against the respondent once again making a third party as party to the suit for the decree of permanent

9 - 9 - injunction. Said suit is compromised within two days of its filing by playing fraud on the Court. Sri.M.G.S.Kamal, learned Counsel further submits, the respondent has filed a complaint against the petitioner and second respondent for forging and fabricating the documents; purposely the petitioner is avoiding notice of the said case. The property is in possession of the respondent. The petitioner has fraudulently named one Hussain M.F., son of K.M.Hussain as caretaker of subject property. Said Hussain M.F. along with others when attempted to interfere with the possession of the property, the respondent filed a complaint on against the petitioner herein and others. The fraudulent compromise decree is recalled and the matter is pending consideration. The petitioner had filed a complaint against the Managing Partner of the respondent before the Jalahalli Police Station and the Police after investigation have filed B report. When trial before the Magistrate Court is in progress, with malafide intention, this petition is filed and the same is liable to be dismissed.

10 Excluding the web of factual controversy between the parties, following point emerges for consideration: Whether the present proceedings under the Negotiable Instruments Act can be maintained parallel to the pending civil proceedings? 6. The petitioner has brought on record that the dispute was compromised in the civil form between the parties, but subsequently the Court recalled the compromise recorded, since the said order of the Trial Court was passed behind his back, he has challenged the recalling order before this Court. 7. The maintainability of the criminal proceedings parallel to civil proceeding is no more res integra. In Vishnu Dutt Sharma vs- Daya Sapra (Smt) reported in (2009) 13 SCC 729, the effect of a judgment passed in a criminal proceeding on a pending civil proceeding came up for consideration of Their Lordships. Though the present situation is converse (effect of compromise decree entered in a Civil Court is urged in this petition as a ground to quash the proceedings under the N.I. Act), the principles highlighted in the said judgment has a direct bearing on the question raised

11 in this petition. The Apex Court on a sojourn of earlier judgments upheld the right of a creditor to maintain both civil and criminal proceedings simultaneously and distinguished the standard of proof required in civil proceedings from that of criminal proceedings particularly where relevant statutory provisions i.e. Section 139 of the Act impose reverse burden on the accused. It was held that civil suit was not barred on the day it was filed; further held that acquittal in the criminal proceedings would not make criminal proceedings a basis of process of Court. In the above judgment, reference was made to the judgment of the Constitutional Bench of the Apex Court in M.S.Sheriff vs- State of Madras reported in AIR 1954 SC 397 wherein it was held that the criminal matter should be given precedence when civil suit and criminal case both are pending. As regards the permissibility of conflict in decisions, it was held that law envisages such an eventuality when it expressly refrains from making the decision of one Court binding on the other, or even relevant, except for certain limited purpose, such as sentences or damages.

12 read thus: 8. Paragraphs-25, 29 and 30 are of relevance which 25. If a primacy is given to a criminal proceeding, indisputably, the civil suit must be determined on its own keeping in view the evidence which has been brought on record before it and not in terms of the evidence brought in the criminal proceeding. The question came up for consideration in K.G.Premshanker v. Inspector of Police wherein this Court inter alia held: (SCC p.97, paras 30-31) 30. What emerges from the aforesaid discussion is (1) the previous judgment which is final can be relied upon as provided under Sections 40 to 43 of the Evidence Act; (2) in civil suits between the same parties, principle of res judicata may apply; (3) in a criminal case, Section 300 Cr.P.C. makes provision that once a person is convicted or acquitted, he may not be tried again for the same offence if the conditions mentioned therein are satisfied; (4) if the criminal case and the civil proceedings are for the same cause, judgment of the civil court, would be relevant if conditions of any of Sections 40 to 43 are satisfied, but it cannot be said that the same would be conclusive except as provided in Section 41. Section 41 provides which judgment would be conclusive proof of what is stated therein. 31. Further, the judgment, order or decree passed in a previous civil proceeding, if relevant, as provided under Sections 40 and 42 or other provisions of the Evidence Act then in each case, the

13 court has to decide to what extent it is binding or conclusive with regard to the matter(s) decided therein. Take for illustration, in a case of alleged trespass by A on B s property, B filed a suit for declaration of its title and to recover possession from A and suit is decreed. Thereafter, in a criminal prosecution by B against A for trespass, judgment passed between the parties in civil proceedings would be relevant and the court may hold that it conclusively establishes the title as well as possession of B over the property. In such case, A may be convicted for trespass. The illustration to Section 42 which is quoted above makes the position clear. Hence, in each and every case, the first question which would require consideration is whether judgment, order or decree is relevant, if relevant its effect. It may be relevant for a limited purpose, such as, motive or as a fact in issue. This would depend upon the facts of each case. 29. Another Constitution Bench of this Court had the occasion to consider the question in Iqbal Singh Marwah v. Meenakshi Marwah. Relying on M.S.Sheriff as also various other decisions, it was categorically held: (Iqbal Singh Marwah case, SCC pp , para 32) 32. Coming to the last contention that an effort should be made to avoid conflict of findings between the civil and criminal courts, it is necessary to point out that the standard of proof required in the two proceedings are entirely different. Civil cases are decided on the basis of preponderance of evidence while in a criminal case the entire burden lies on the

14 prosecution and proof beyond reasonable doubt has to be given. 30. The question yet again came up for consideration in P.Swaroopa Rani v. M. Hari Narayana wherein it was categorically held: (SCC p.769, para 11) 11. It is, however, well settled that in a given case, civil proceedings and criminal proceedings can proceed simultaneously. Whether civil proceedings or criminal proceedings shall be stayed depends upon the fact and circumstances of each case. 9. That makes it clear that the judgment of the Civil Court is not binding on a Criminal Court or vice-versa. Barring the question of maintainability of the proceedings under the Act, the petitioner disputes his liability in respect of three cheques which are under consideration before the Trial Court. But said contention since emerging from the disputed facts, he has to put forward the same before the Trial Court as his defence. When it is said defence, that does not mean only by way of leading defence evidence. In a prosecution for an offence under Section 138 of the Act, accused gets opportunity to build up his defence at the inception while replying to the statutory demand notice issued by the complainant, thereafter during the cross-examination of the

15 complainant and his witnesses and finally by way of defence evidence. It is up to the Criminal Court on an analysis of the relevant facts and appreciation of evidence to determine whether the cheques were issued by the accused towards the outstanding liability or otherwise and also to determine to what extent the pendency of the civil case has its bearing on the conclusion of the cheque bounce case. As such, the finding in the cheque bounce case will be on the rule of proof beyond reasonable doubt (however with the benefit of statutory presumption accorded to him under Section 139 of the Act which cast reverse burden on the accused) while a civil case will be adjudicated on the principle of preponderance of probability. 10. When the case was at the stage of recording the statement of the accused under Section 313 of Cr.P.C., the petitioner has filed this petition. It is a matter of He allowed the criminal proceedings to continue for two years. He has cross-examined the complainant. No valid grounds do exist in favour of the petitioner to quash the proceedings under the jurisdiction of Section 482 of Cr.P.C.

16 In the result, the petition is dismissed. Having regard to the length of period consumed so far before the Trial Court and this Court, the Trial Court is directed to dispose of the case as expeditiously as possible in accordance with law. KNM/- Sd/- JUDGE

2. The effect of a judgment passed in a criminal proceeding on a pending civil proceeding is the question involved herein.

2. The effect of a judgment passed in a criminal proceeding on a pending civil proceeding is the question involved herein. Supreme Court of India Vishnu Dutt Sharma vs Daya Sapra on 5 May, 2009 Author: S Sinha Bench: S.B. Sinha, Mukundakam Sharma REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL

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