Karnataka High Court
Smt.Saraswati Narayan Hegde vs The Karnataka Bank Ltd on 10 May, 2022
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 10TH DAY OF MAY, 2022
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.101948 OF 2015
C/W
CRIMINAL PETITION No.101946 OF 2015
CRIMINAL PETITION No.101947 OF 2015
CRIMINAL PETITION No.101949 OF 2015
IN CRIMINAL PETITION No.101948 OF 2015
BETWEEN:
SMT.SARASWATI NARAYAN HEGDE
W/O NARAYAN MAHABLAIYYA HEGDE
AGED ABOUT 78 YEARS
RESIDENT OF WAJGOD VILLAGE
SIDDAPUR TALUK
NORTH CANARA - 581 322.
... PETITIONER
(BY SRI HANUMANTHAREDDY SAHUKAR, ADVOCATE)
AND:
1. THE KARNATAKA BANK LTD.,
REPRESENTED BY
ITS BRANCH MANAGER
BANKING COMPANY REGISTERED
UNDER THE INDIAN COMPANIES ACT
2
HAVING ITS BRANCH OFFICE
AT TILAKWADI SHUKRAWARPETH,
TILAKWADI, BELGAUM.
2. THE STATE OF KARNATAKA
REPRESENTED BY ITS DY.SP
TILAKWADI P.S
BELGAUM
BY ITS STATE PUBLIC PROSECUTOR
HIGH COURT BUILDING
DHARWAD.
... RESPONDENTS
(BY SRI C.V.ANGADI, ADVOCATE FOR R1 (VIDEO
CONFERENCING);
SRI RAMESH CHIGARI, HCGP FOR R2)
THIS CRIMINAL PETITION IS FILED UNDER SECTION
482 OF CR.P.C., PRAYING TO QUASH THE ENTIRE
CRIMINAL PROCEEDINGS INITIATED AGAINST THE
PETITIONER IN CC NO 1143 OF 2006 FOR OFFENCES
PUNISHABLE UNDER SEC. 420, 405, 406, 418 R/W 34 OF
IPC. ON THE FILE OF THE JUDICIAL MAGISTRATE OF THE
FIRST CLASS, IV COURT, BELGAUM.
IN CRIMINAL PETITION No.101946 OF 2015
BETWEEN:
SHRI SRIDHAR NARAYAN HEGDE
S/O NARAYAN MAHABLAIYYA HEGDE
AGED ABOUT 58 YEARS
RESIDENT OF WAJGOD VILLAGE
SIDDAPUR TALUK
NORTH CANARA - 581 322. ... PETITIONER
(BY SRI HANUMANTHAREDDY SAHUKAR, ADVOCATE)
3
AND:
1. THE KARNATAKA BANK LTD.,
REPRESENTED BY
ITS BRANCH MANAGER
BANKING COMPANY REGISTERED
UNDER THE INDIAN COMPANIES ACT
HAVING ITS BRANCH OFFICE
AT TILAKWADI SHUKRAWARPETH,
TILAKWADI, BELGAUM.
2. THE STATE OF KARNATAKA
REPRESENTED BY ITS DY.SP
TILAKWADI P.S
BELGAUM
BY ITS STATE PUBLIC PROSECUTOR
HIGH COURT BUILDING
DHARWAD.
... RESPONDENTS
(BY SRI C.V.ANGADI, ADVOCATE FOR R1 (VIDEO
CONFERENCING)
SRI RAMESH CHIGARI, HCGP FOR R2))
THIS CRIMINAL PETITION IS FILED UNDER SECTION
482 OF CR.P.C., PRAYING TO QUASH THE ENTIRE
CRIMINAL PROCEEDINGS INITIATED AGAINST THE
PETITIONER IN CC NO 1142 OF 2006 FOR OFFENCES
PUNISHABLE UNDER SEC. 420, 405, 406, 418 R/W 34 OF
IPC. ON THE FILE OF THE JUDICIAL MAGISTRATE OF THE
FIRST CLASS, IV COURT, BELGAUM.
4
IN CRIMINAL PETITION No.101947 OF 2015
BETWEEN:
SHRI.SRIDHAR NARAYAN HEGDE
S/O NARAYAN MAHABLAIYYA HEGDE
AGED ABOUT 58 YEARS
RESIDING OF WAJGOD VILLAGE
SIDDAPUR TALUK
NORTH CANARA - 581 322.
... PETITIONER
(BY SRI HANUMANTHAREDDY SAHUKAR, ADVOCATE)
AND:
1. THE KARNATAKA BANK LTD.,
REPRESENTED BY
ITS BRANCH MANAGER
BANKING COMPANY REGISTERED
UNDER THE INDIAN COMPANIES ACT
HAVING ITS BRANCH OFFICE AT
TILAKWADI, SHUKRAWARPETH
TILAKWADI, BELGAUM.
2. THE STATE OF KARNATAKA
REPRESENTED BY ITS DY.SP
TILAKWADI P.S
BELGAUM
BY ITS STATE PUBLIC PROSECUTOR
HIGH COURT BUILDING
DHARWAD.
... RESPONDENTS
(BY SRI C.V.ANGADI, ADVOCATE FOR R1;
SRI RAMESH CHIGARI, HCGP FOR R2))
5
THIS CRIMINAL PETITION IS FILED UNDER SECTION
QUASH THE ENTIRE CRIMINAL PROCEEDINGS INITIATED
AGAINST THE PETITIONER IN CC NO 1141 OF 2006 FOR
OFFENCES PUNISHABLE UNDER SEC. 420, 405, 406, 418
R/W 34 OF IPC. ON THE FILE OF THE JUDICIAL
MAGISTRATE OF THE FIRST CLASS, IV COURT, BELGAUM.
IN CRIMINAL PETITION No.101949 OF 2015
BETWEEN:
SMT.SARASWATI NARAYAN HEGDE
W/O NARAYAN MAHABLAIYYA HEGDE
AGED ABOUT 78 YEARS
RESIDENT OF WAJGOD VILLAGE
SIDDAPUR TALUK
NORTH CANARA - 581 322.
... PETITIONER
(BY SRI HANUMANTHAREDDY SAHUKAR, ADVOCATE)
AND:
1. THE KARNATAKA BANK LTD.,
REPRESENTED BY
ITS BRANCH MANAGER
BANKING COMPANY REGISTERED
UNDER THE INDIAN COMPANIES ACT
HAVING ITS BRANCH OFFICE AT
TILAKWADI, SHUKRAWARPETH
TILAKWADI, BELGAUM.
2. THE STATE OF KARNATAKA
REPRESENTED BY ITS DY.SP
TILAKWADI P.S, BELGAUM
BY ITS STATE PUBLIC PROSECUTOR
HIGH COURT BUILDING
DHARWAD. ... RESPONDENTS
6
(BY SRI C.V.ANGADI, ADVOCATE FOR R1;
SRI RAMESH CHIGARI, HCGP FOR R2))
THIS CRIMINAL PETITION IS FILED UNDER SECTION
482 OF CR.P.C., PRAYING TO QUASH THE ENTIRE
CRIMINAL PROCEEDINGS INITIATED AGAINST THE
PETITIONER IN CC NO.1144 OF 2006 FOR OFFENCES
PUNISHABLE UNDER SEC. 420, 405, 406, 418 R/W 34 OF
IPC. ON THE FILE OF THE JUDICIAL MAGISTRATE OF THE
FIRST CLASS, IV COURT, BELGAUM.
THESE CRIMINAL PETITIONS HAVING BEEN HEARD
AND RESERVED FOR ORDERS ON 18.02.2022, COMING
ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE
THE FOLLOWING:-
ORDER
Criminal Petition Nos. 101946 and 101947 of 2015 are filed by one Sridhar Narayan Hegde and Criminal Petition Nos. 101948 and 101949 of 2015 are filed by Smt. Saraswathi Narayan Hegde. Respondents in all these cases are common viz., Karnataka Bank Limited and the State. The cases arise out of issuance of cheques and their dishonor. Separate transactions are registered with separate crimes and have now become separate criminal petitions as aforesaid and are, 7 therefore taken up together and disposed of by this common order.
2. Criminal Petition No.101946 of 2015 concern C.C.No.1142 of 2006 (PC.No.984/2004); Criminal Petition No.101947 of 2015 concern C.C.No.1141 of 2006 (PC.No.983/2004); Criminal Petition No.101948 of 2015 concern C.C.No.1143 of 2006 (PC.No.985/2004) and Criminal Petition No.101949 of 2015 concern C.C.No.1144 of 2006 (PC.No.986/2004).
3. Complainant in the cases at hand is the 1st respondent/Karnataka Bank Limited. Private complaints were registered by the Karnataka Bank alleging offences punishable under Section 138 of the Negotiable Instrument Act, 1881 ('the Act' for short) against the petitioners. The drawers of cheques are the petitioners in all these cases. The instruments involved in these petitions were four cheques. All these cheques presented were discounted by the Bank and later came 8 to be dishonoured when they were processed for realization in the Bank. Four different private complaints came to be filed by the 1st respondent/Bank. The JMFC-IV, Belgaum convicted the petitioners in all the four cases. The petitioners called in question the order of conviction before the learned Sessions Judge, Belgaum who also dismissed the appeals confirming the order passed by the learned Magistrate convicting the petitioners. The petitioners then preferred criminal revision petitions before this Court in Criminal Revision Petition Nos. 659 of 2006 and connected cases. This Court by its order dated 21.11.2008 allowed revision petitions, set aside both the orders of the learned Magistrate and that of the Sessions Judge, holding that discounting of cheques had happened during the normal course of operation of business and the Bank was not and could not be considered to be holder in due course of cheques to become legally enforceable debt. This order has become final.
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4. During the pendency of the proceedings under Section 138 of the Act, the 1st respondent/Bank had also registered a private complaint before the learned Magistrate in P.C.R.No.984 of 2004 and connected cases for offences punishable under Section 420, 405, 406, 418 read with Section 34 of the IPC. The Police, after investigation, filed a 'B' report on 11-01-2005. The learned Magistrate by his order dated 30-04-2005 rejected the 'B' report and directed fresh investigation into the matter. After investigation, the Police file a charge sheet on 31-12-2005, upon which, the learned Magistrate took cognizance by his order dated 04-08-2006 against the petitioners for the afore-quoted offences. The petitioners then file an application seeking their discharge on the ground that the petitioners were already convicted for offence under Section 138 of the Act which came to be reversed by this Court and they cannot be tried again for the same offence under the Indian Penal Code. This also came to 10 be rejected on the ground that both the proceedings are separate and can continue notwithstanding the conviction and acquittal of the petitioners. The cases were posted for hearing before charge on 15-05-2015. It is at that juncture the petitioners have knocked the doors of this Court in the subject petitions.
5. One factor which needs to be noticed before considering the submissions of the petitioners or the respondents is that the Bank had instituted four civil suits seeking recovery of money against the petitioners in O.S.Nos. 290 of 2003, 295 of 2003, 296 of 2003 and 297 of 2003. O.S.No.295 of 2003 came to be decreed on 11-02-2009 holding the petitioners to be jointly and severally liable to pay the Bank Rs.6,07,658/- along with interest. Identical orders were passed decreeing other suits. Execution petitions were filed by the Bank against the petitioners and agricultural lands could not be attached by the Bank and accordingly execution 11 petitions were closed. Currently entire amount that was discounted then remains unpaid even as on date.
6. The learned counsel appearing for the petitioners would contend that once proceedings having been instituted under Section 138 of the Act again proceedings could not have been instituted for offences punishable under the Indian Penal Code and would contend that the Bank having lost the case before this Court holding that it is not the holder of cheques in due course and it was not a legally enforceable debt, the petitioners cannot be held liable for cheating or otherwise. He would further submit that civil suit were filed against the petitioners which were all decreed and execution failed. The failure of execution has become final and the Bank did not choose to challenge it any further. Therefore, he would submit that the present proceedings would become an abuse of the process of law.
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7. On other hand, the learned counsel appearing for the 1st respondent/Bank would contend that cheques discounted in the year 2002 still remain unpaid and execution of decrees of the civil suits could not be taken forward as all the properties attached were agricultural lands. He would submit that two are independent and proceedings under Section 420 of the IPC can always be taken up notwithstanding the fact of acquittal in proceedings under Section 138 of the Act. Above all, it is his submission that cognizance was taken on 04-08-2006 against the petitioners and the said order of cognizance is challenged in the year 2015 after about 9 years after the order taking cognizance and these petitions have to be dismissed on account of delay and laches only.
8. This Court having entertained the petitions, admitted them for final hearing and granted an interim 13 order of stay of further proceedings in the year 2015 and the same is in operation as on date.
9. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record.
10. The afore-narrated facts, dates and events are not in dispute. What is germane to be noticed is the order passed by this Court in Criminal Revision Petition No.659 of 2006 and connected cases. This Court by its order dated 21-11-2008 upturned the order of the learned Sessions Judge convicting the petitioners by observing as follows:
"................It is not his say that payee disclosed that he drawers of cheques have issued them towards discharge of any debt or liability due and that the drawer owed amount to payees. The payee of the cheques who discounted the cheques with the complainant Bank have not been examined to show that drawers of the cheques owed any money to them and that the cheques were issued for discharge of such debt. As noticed, the specific case of the complainant is that cheques issued by the accused were discounted by the payee of the cheques. Discounting of a cheque by 14 the Bank is a normal business operation of the Bank. Mere fact that the cheques drawn by a third party in favour of its clients are discounted by the Banks, does not lead to any privity of contract between the drawer of the cheque or the Bank to attract criminal liability. Therefore, the aspect of civil liability cannot be imported into the question of criminal liability as the criminal liability has to be covered from the specific statutory provisions in that behalf. Admittedly, the cheques in question were not drawn in favour of the Bank. The existence of any legally enforceable debt or liability between the drawer or the payee of the cheque is not even remotely indicated. May the complainant Bank can enforce its civil right against the drawer and the payee of the cheques in a civil Court. It is in the evidence of PW-1 that the complainant bank has already instituted civil suits before the jurisdictional court for recovery of the amounts covered under these cheques. It is also in the evidence of PW-1 that the complainant Bank initiated disciplinary proceedings against its Manager who discounted these cheques and that the Manager was found guilty and has been demoted. From this, it is clear that there was patent gross negligence on the part of the Manager who discounted the cheques. While considering point NO.1, I have already held that there was patent gross negligence on the part of the Officer of complainant Bank in paying the amount to the payees by discounting the cheques, as such, the complainant Bank cannot be considered as "holder in due course" of these cheques. Therefore, the complainant cannot maintain criminal action against the drawer of cheques, for offence under Section 138 of the Act. Therefore, having regard to the various facts and circumstances of this case, I am of the opinion that the courts below are not justified in holding that the accused are guilty of offence under Section 138 of the Act. The statutory presumptions even if they are drawn against the accused, in the light of the various circumstances indicated above, have stood rebutted. In the light of the discussions made above, I hold that the judgment of the 15 courts below convicting the accused persons is perverse and contrary to the evidence on record. Therefore, it is liable to be set aside. Accordingly, I answer point No.3. In view of the above discussion, revision petition deserves to be allowed.
29. Accordingly, the revision petitions are allowed. The judgment of conviction and sentence dated 1-06-2005 passed by the JMFC-IV Court Belgaum in C.C.Nos.754/2002, 755/2002, 98 of 2003 and 284 of 2003 and the common judgment dated 14-02-2006 passed by the Presiding Officer, Fast Track Court-III and Additional Sessions Judge, Belgaum in Criminal Appeal Nos. 95, 96, 102 and 103 of 2005 affirming the judgments of the trial Court are hereby set aside. The accused are acquitted of the charge leveled against them. The bail and surety bonds of the accused are ordered to be discharged. The complaints filed by the complainant/Bank are dismissed."
This Court clearly holds that cheques had been discounted by the Bank as a part of the banking business. Mere fact that cheques had been drawn by a third party there cannot be any privity of contract between the drawer and the Bank to attract criminal liability. Holding thus, this Court holds that the aspect of civil liability cannot be imported into the question of criminal liability as the criminal liability has to be covered from the specific statutory provisions in that 16 behalf. It is these observations by the Court that disentitles any relief to the Bank/complainant in the case at hand.
11. The finding of the Court is that there can be no criminal liability in the light of there being no contract between the parties and only civil liability can be availed of. It is also an admitted fact that the Bank itself noticing that it was purely a civil liability also filed four suits for recovery and took the suits for recovery to their logical end. That having turned into a fiasco, the same cannot be laid on the petitioners. Discounting of cheques is not an act completely attributable only to the petitioners; it is attributable to Bank officials even, as discounting of cheques tendered by a private party cannot happen in the normal course of business, unless the officials of the Bank accede to such request. If it is illegal to the petitioners it is equally illegal to the officials of the Bank even.
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12. The contention of the learned counsel appearing for the petitioners that once the petitioners who were convicted and thereafter acquitted under Section 138 of the Act cannot be prosecuted under the IPC offences is unacceptable. It is no concept of law that once having convicted or acquitted for offences punishable under Section 138 of the Act, no proceedings under Section 420 of the IPC can be brought about. The Apex Court in plethora of cases has considered this issue and held that notwithstanding registration of a case under Section 138 of the Act, a crime punishable under Section 420 or Section 406 of the IPC would become maintainable. But, in the peculiar facts of this case, this Court has already held that there cannot be any criminal liability and it is only a civil liability which the Bank has admittedly exercised and taken to its logical end, as also the fact that there is no inducement by the petitioners over the 1st respondent/Bank for discounting of cheques, as 18 discounting of cheques happens only when meeting of minds happen between the petitioners and the person who discounted the cheques.
13. The ingredients of Section 415 of the IPC that are necessary to prove the offence under Section 420 of the IPC are absent in the case at hand, as there is no allegation that the petitioners induced the Bank to discount the cheques. Throughout the defence of the Bank is discounting of cheques had happened in the normal business operations of the Bank. In fact this is the finding of this Court in the aforesaid case which has become final. The cheques were discounted in the year 2002 twenty years ago. The contention of the Bank that amounts still remain unpaid cannot be the ground to continue the prosecution against the petitioners for the aforesaid offences, as the Bank itself instituted civil suits and the suits were decreed against the petitioners. The bank having failed to recover the amount, cannot 19 result in continuation of proceedings against the petitioners in these cases. In the peculiar facts of this case, permitting further proceedings against the petitioners, would amount to abuse of the process of law and degenerate into harassment against the petitioners.
14. For the aforesaid reasons, I pass the following:
ORDER
(i) Criminal Petitions are allowed.
(ii) Impugned proceedings in C.C.No.1141 of 2006, C.C.No.1142 of 2006, C.C. No.1143 of 2006 and C.C.No.1144 of 2006 pending before the Judicial Magistrate, First Class, IV Court, Belgaum registered against the petitioners for the offences punishable under Sections 420, 405, 406 and 418 r/w Section 34 of the IPC stand quashed.
Sd/-
JUDGE bkp CT:MJ