Karnataka High Court
Sri H C Papanna vs The State Of Karnataka on 11 February, 2025
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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CRL.P No. 882 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 11TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
CRIMINAL PETITION NO. 882 OF 2023 (482(Cr.PC) / 528(BNSS)
BETWEEN:
SRI H C PAPANNA
S/O LATE CHIKKANNA,
AGED ABOUT 63 YEARS,
R/AT NO.356, 6TH MAIN, 3RD CROSS,
IDEAL HOME TOWN,
RAJARAJESHWARINAGAR,
BANGALORE - 560 098.
...PETITIONER
(BY SRI. GIRIDHAR S V, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
THE STATION HOUSE OFFICER,
BASAVANGUDI POLICE STATION,
BENGALURU.
2. SRI PRASHANTH PRABHAKAR
BRANCH MANAGER,
BASAVANGUDI BRANCH,
Digitally KOTAK MAHINDRA BANK LIMITED.,
signed by
LEELAVATHI NO.60, GANDHI BAZAR MAIN ROAD,
SR BASAVANGUDI,
Location: BENGALURU-560 004.
High Court
of Karnataka ...RESPONDENTS
(BY SRI.THEJESH.P, HCGP FOR R-1
SERVICE OF NOTICE TO R-2 IS
HELD SUFFICIENT VIDE ORDER DATED: 11.02.2025)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO QUASH THE
ORDER DATED 08.05.2015 IN C.C.No. 12380/2015 ON THE FILE OF IV
ADDL.C.M.M., BENGLAURU IN SO FAR AS THE SAME RELATES TO
TAKING COGNIZANCE AGAINST THE PETITIONER IS CONCERNED AND
PASS AN ORDER TO THE COST ON THE PRESENT PROCEEDINGS.
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CRL.P No. 882 of 2023
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER
WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, petitioner seeks for the following reliefs:-
" a. Call for records in C.C.No.12380/2015 on the file of IV Additional Chief Metropolitan Magistrate, Bangalore city at Bangalore.
b. Quash the Order dated: 08.05.2015 in C.C.No. 12380/2015 on the file of the IV Additional Chief Metropolitan Magistrate, Bangalore City at Bangalore insofar as the same relates to taking cognizance against the petitioner is concerned.
c. Pass an order to the cost on the present proceedings; and d. Pass such other Order as this Hon'ble Court deems fit to grant in the circumstances of the case, in the interest of justice and equity."
2. Heard learned counsel for the petitioner and learned HCGP for 1st respondent - State and perused the material on record. Though the notice of this petition has been served on the 2nd respondent, he has chosen remain unrepresented. Hence, service of notice is held sufficient.
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3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner-accused No.2 invited my attention complaint dated 14.11.2013 in order to point out that the entire allegations are directed only against accused No.1 who is alleged to have withdrawn the various amounts, thereby causing loss to the 2nd respondent - Bank. It is further pointed out that the petitioner-
accused No.2 had no role whatsoever in the alleged withdrawal or fraud committed by accused No.1 and in the absence of necessary ingredients constituting the offences punishable under Section 420 r/w 34 IPC, the impugned proceedings qua petitioner - accused No.2 deserves to be quashed.
4. Before adverting to the contentions urged by the petitioner, it would be apposite to refer to the recent judgment of the Apex Court in the case of Delhi Race Club (1940) Ltd., & Ors. Vs. State of Uttar Pradesh & Anr. -2024 INSC 626, while dealing with the offence punishable under Section 420 of IPC and Section 406, wherein it is held as under:-
" Similarly, in respect of an offence under Section 420 IPC, the essential ingredients are: --4-
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1) deception of any person, either by making a false or misleading representation or by other action or by omission;
2) fraudulently or dishonestly inducing any person to deliver any property, or
3) the consent that any persons shall retain any property and finally intentionally inducing that person to do or omit to do anything which he would not do or omt;
26. Further, in both the aforesaid sections, mens rea i.e. intention to defraud or the dishonest intention must be present, and in the case of cheating it must be there from the very beginning or inception.
27. In our view, the plain reading of the complaint fails to spell out any of the aforesaid ingredients noted above. We may only say, with a view to clear a serious misconception of law in the mind of the police as well as the courts below, that if it is a case of the complainant that offence of criminal breach of trust as defined under Section 405 of IPC, punishable under Section 406 of IPC, is committed by the accused, then in the same breath it cannot be said that the accused has also committed the offence of cheating as defined and explained in Section 415 of the IPC, Punishable under Section 420 of the IPC.
28. Every act of breach of trust may not result in a penal offence of criminal breach of trust unless there is evidence of manipulating act of fraudulent -5- NC: 2025:KHC:6174 CRL.P No. 882 of 2023 misappropriation. An act of breach of trust involves a civil wrong in respect of which the person may seek his remedy for damages in civil courts but, any breach of trust with a mens rea, gives rise to a criminal prosecution as well. It has been held in Hari Prasad Chamaria v. Bishun Kumar Surekha & Ors., reported in (1973) 2 SCC 823 as under:
"4. We have heard Mr. Maheshwari on behalf of the appellant and are of the opinion that no case has been made out against the respondents under Section 420 Penal Code, 1860. For the purpose of the present appeal, we would assume that the various allegations of fact which have been made in the complaint by the appellant are correct. Even after making that allowance, we find that the complaint does not disclose the commission of any offence on the part of the respondents under Section 420 Penal Code, 1860. There is nothing in the complaint to show that the respondents had dishonest or fraudulent intention at the time the appellant parted with Rs. 35.000/- There is also nothing to indicate that the respondents induced the appellant to pay them Rs. 35,000/- by deceiving him. It is further not the case of the appellant that a representation was made, the respondents knew the same to be false. The fact that the respondents subsequently did not abide by their commitment that they would show the appellant to be the proprietor of Drang Transport Corporation and would also render accounts to him in the month of December might create civil liability on the respondents for the offence of cheating."
29. To put it in other words, the case of cheating and dishonest intention starts with the very inception of the transaction. But in the case of criminal breach of trust, a person who comes into possession of the movable property and receives it legally, but illegally retains it or converts it to his own use against the terms of the contract, then the question is, in a case like this, whether the retention is with dishonest intention or not, -6- NC: 2025:KHC:6174 CRL.P No. 882 of 2023 whether the retention involves criminal breach of trust or only a civil liability would depend upon the facts of each case.
5. In the instant case, the impugned complaint given by the 2nd respondent - Bank who is the complainant reads as under:-
" 1. During the course of our banking business one of our customer Mr.N.Srimurthy maintaining an account bearing no. No.04230020000313 with our Basavangudi Branch deposited 2 cheques bearing Nos.627 and 630 dated 15.03.2013 and 01.03.2013 respectively favouring him for Rs. 26 lacks each drawn on Union Bank of India (UBI), Vijaya Nagar Branch issued by Mr. H C Papanna, on 02.04.2013 for clearing house. The said cheques were physically sent for collection through MICR( Magnetic Ink Character Recognition) clearing on 02.04.2013 to the clearing house. Since the said physical cheques were not were not received in return by the Bank till 03.04.2013, the account of Mr.Srimurthy was credited with the amount of Rs. 52,00,000/- on 03.04.2013, under the bonafide b were cleared by Union Bank of India
2. On 03.04.2013 due to the system issues with our vendor, all the outward clearing cheques were processed in MICR clearing instead of Cheque Truncating System clearing (which is other form of clearing based on the image of the cheques sent through mail by way of scan copies without physically sending the cheques as in the case of MICR clearing) by our erstwhile Local Clearing Cell (LCC) Head at Bengaluru Ms. Shyamala and other -7- NC: 2025:KHC:6174 CRL.P No. 882 of 2023 LCC staff Mr.Ramesh Konduru. The said process was completed by them at around 8.30 PM and thereafter while tallying the return of the cheque sent for outward clearing on 02.04.2013 they have found out that the totalling to Rs.52,05,000/- (Rupees Fifty Two Lacs Five Thousands only) in the returns and have tired to contact UBI, Service Branch through phone, but since it was around 9.45 PM there was no response from UBI.
However they parked the difference of Rs.52,05,000/-in receivables to tally the returns, erroneously in CTS Zone instead of MICR Zone, due to which clear balance in customer Mr.N.Srimurthy's account instead of reflecting as unclear balance.
3. Subsequently on 04.04.2013 they have intimated to UBI clearing person about non-receipt of return cheques but before he could confirm about the fate of the s received in return from Development Credit Bank Ltd during the normal clearing time, at around 2:30 p.m. on 04.04.2013 since the same had been mistakenly Development Credit Bank Limited (DCBL) by the drawer's banker(viz., union Bank of India) instead of depositing the same in the drop-box of Kotak Mahindra Bank Ltd., Thereafter on verification of the settlement statement issued by the Clearing House it was found that the said cheques had been dishonoured and Union Bank of India had debited our Clearing settlement account on 03.04.2013 with a sum of Rs. 52 lakhs. However before the credit of Rs. 52,00,000/- could be reversed, Mr. N. Srimurthy withdrew/ utilised the amount of Rs. 46,60,296/-
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4. It is important to note that the two withdrawals which were made on 04.04.2013, by Mr. N. Srimurthy were out of the ordinary compared to the previous transactions made by him in his account. One transaction was of a cash withdrawal of Rs.18 lacs made by him. The second transaction was an RTGS (Bank Electronic Transfer) of Rs.28 lacs to the account of one Mr.N.Srimurhty account. From the sum of Rs. 52 lacs, a sum of 46 lacs was withdrawn by Mr.N. Srimurthy. Total amount he was not entitled, since the cheques got dishonoured. However despite his attention being drawn to the fact that the cheques were returned for the reasons ' Account is inoperative/Dormant', and despite assurances, he did not care to refund the amount to us. Even the communication sent by the Bank was not accepted by him. The letter dated 08.04.2013, through registered post on 09.04.2013, along with the dishonoured cheques bearing no's 000627 and 000630 was returned undelivered for the reasons "Not Accepted". So also the letter dated 15.04.2013 sent through Blue Dart courier on 16.04.2013 was returned undelivered for the reasons "Refused to Accept". Even an e-mail sent on 02.05.2013 to his email id [email protected]' registered with the Bank was returned with failure message. The above facts clearly indicate the wrongful intentions of Mr.N.Srimurthy perhaps in collusion with the drawer of the cheque. The dubious intentions are established from the fact that he has not e cared to collect the original cheques from the bank and to initiate action thereon.
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5. Subsequently, on his further assurance that the amount wrongly withdrawn would be re-paid on his oral request on 05.04.2013, the branch honoured a cheque issued by Mr.N.Srimurthy amount of Rs.4,15,000/-, which had come through clearing in favour of one "Raashi Agri B Pvt.Ltd." on 08.04.2013. However it appears that with the clear intention of cheating misappropriating, the amount, an amount of Rs.50,15,000/- stood withdrawn wrong! Mr.N.Srimurthy. After this incident, several attempts were made by the Bank to co Mr.N.Srimurthy to return the amount misappropriated by him. Several meetings, telecons were had with him. Based on his initial assurances and hoping that sense will prevail, the Bank initiate any legal proceedings. However Mr.N.Srimurthy has refused to return the am Rs.50,15,000/. After setting off amounts of Rs.1,72,134.60/- standing to the credited above mentioned account and a sum of Rs,2,63,624.30/- standing to the credit of his account bearing no 04232180000223, an amount of Rs.47,64,241.10 stands misappropriate by him.
6. All this has been done as part of a conspiracy. It seems that Mr.N.Srimurthy having tasted success of this modus operandi, made a second attempts at the same Branch. On 05.04.13, he again deposited cheque No.000629 for Rs.16,40,000/- and cheque No.000628 for Rs.18,10,000/- drawn on Union Bank of India issued to him by Mr.H.C.Papanna. These cheques were again dishonoured 06.04.2013 for the same reason i.e. the account was inoperative/dormant. Thus despite knowing that the account is dormant, the cheques were presented.
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NC: 2025:KHC:6174 CRL.P No. 882 of 2023 Inquiries have revealed that the said H.C.Papanna is reputed to be involved in criminal cases and it is said that he has also some also some CBI case registered against him. It is clear from the facts that Mr.N.Srimurthy has Mr.H.C.Papanna and other unknown persons. Despite his assurance and demands made by the Bank, he has refused to make good the amount dishonestly withdrawn by the belonged to him and to which he was not entitled, with the intention of causing himself and to other persons and causing a corresponding wrongful loss to the Bank.
Mr.N.Srimurthy has cheated the Bank and has caused wrongly gain to himself by conspiring with H.C.Papanna and in view of the above, we request that a criminal case be registered and appropriate action be taken as per law."
6. A plain reading of the allegations made in the complaint, even taken at its face value is sufficient to come to the conclusion to indicate the ingredients of constituting the offence of cheating under Section 420 r/w 34 of IPC are conspicuously absent in the complaint, which are attributed and directed only against accused No.1 who is beneficiary of the alleged fraud said to have been committed by him. It is also pertinent to note that during the course of alleged transaction which allegedly resulted in accused No.1 withdrawing the huge sums of money to his account from the 2nd respondent - Bank, the petitioner had no role or control over the
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NC: 2025:KHC:6174 CRL.P No. 882 of 2023 said transaction coupled with the fact that the petitioner - accused No.2 undisputedly did not have any account with the 2nd respondent - Bank nor is there anything else to show that the petitioner conspired or acted in connivance or collusion with accused No.1 for the purpose of withdrawal of the said amounts by him. In fact, the petitioner had issued cheques in favour of accused No.1 and the same were merely returned 'dishonoured' and subsequently withdrawn from the account of accused No.1 by the 2nd respondent - Bank without the involvement of the petitioner and under the bonafide belief that the amounts had been cleared from the account of the petitioner i.e., of Union Bank of India. Under these circumstances, in the absence of any valid, legal or acceptable material to incriminate the petitioner for the alleged offences, I am of the considered opinion that the continuation of proceedings against petitioner - accused No.2 would amount to abuse of process of law warranting interference in the present petition.
7. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
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(ii) The impugned proceedings in C.C.No.12380/2025 pending on the file of IV ACMM, Bangalore, insofar as the petitioner is concerned, are hereby quashed.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE Srl.
List No.: 3 Sl No.: 4