Karnataka High Court
M/S Yash Investment Consultants vs Mr Kartik Ravichander on 17 April, 2017
Author: John Michael Cunha
Bench: John Michael Cunha
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF APRIL 2017
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
CRIMINAL PETITION NO.1058 OF 2017
C/W
CRIMINAL PETITION NO.1059 OF 2017
CRIMINAL PETITION NO.1060 OF 2017
CRIMINAL PETITION NO.1061 OF 2017
CRIMINAL PETITION NO.1062 OF 2017
CRIMINAL PETITION NO.1063 OF 2017
CRIMINAL PETITION NO.1064 OF 2017
CRIMINAL PETITION NO.1065 OF 2017
IN CRIMINAL PETITION NO.1058 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
2
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE FOR
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: SHISHIRA AMARNATH &
SRI: VISHWANATH, ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16756/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
IN CRIMINAL PETITION NO.1059 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
3
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE FOR
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: SHISHIRA AMARNATH &
SRI: VISHWANATH, ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16757/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
4
IN CRIMINAL PETITION NO.1060 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE A/W
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
5
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16759/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
IN CRIMINAL PETITION NO.1061 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
6
(By Sri: PUNEETH K. ADVOCATE A/W
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16760/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
IN CRIMINAL PETITION NO.1062 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
7
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098 ... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE A/W
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032 ... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16761/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
IN CRIMINAL PETITION NO.1063 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
8
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE FOR
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16762/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
9
IN CRIMINAL PETITION NO.1064 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098
... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE FOR
SRI: NATARAJ R, ADVOCATE)
AND
MR KARTIK RAVICHANDER
AGED ABOUT 30 YEARS,
S/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
10
... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16758/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
IN CRIMINAL PETITION NO.1065 OF 2017
BETWEEN
1. M/S YASH INVESTMENT CONSULTANTS
REPRESENTED BY ITS PROPRIETRIX
MRS. PRITHI B
NO.15, 5TH CROSS,
GANDHINAGAR
BANGALORE-560 009
2. MRS PRITHI B
W/O MR. SUNIL LAL THAKKAR
AGED ABOUT 35 YEARS,
R/AT FLAT NO.005,
M SQUARE MELODIES
60 FEET MAIN ROAD,
BEHIND RAJARAJESHWARI NAGAR
POLICE STATION,
BEML LAYOUT,
RAJARAJESHWARI NAGAR
BANGALORE-560 098 ... PETITIONERS
(By Sri: PUNEETH K. ADVOCATE FOR
SRI: NATARAJ R, ADVOCATE)
11
AND
SMT PADMA RAVICHANDER
AGED ABOUT 56 YEARS,
W/O MR.RAMANATHAN RAVICHANDER
R/AT NO.293,
9TH CROSS, 2ND BLOCK
R.T.NAGAR BANGALORE-560 032
... RESPONDENT
(By Sri: VISHWANATH & SRI: SHISHIRA AMARNATH,
ADVOCATES-ABSENT)
THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET
ASIDE THE ORDER DATED 20.10.2016 CONSEQUENTLY QUASH
THE ENTIRE ORDER SHEET IN C.C.NO.16763/2016 ON THE FILE
OF XIX A.C.M.M., BANGALORE..
THESE CRIMINAL PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 07.04.2017 AND COMING ON FOR
PRONOUNCEMENT OF ORDER THIS DAY, JOHN MICHAEL
CUNHA. J, MADE THE FOLLOWING:-
ORDER
As the question involved in all these cases is similar, these petitions are heard and disposed of by a common order.
2. The respondent herein filed eight private complaints against the petitioners under section 138 of the Negotiable 12 Instruments Act, 1881 (for short "the N.I. Act) alleging dishonour of eight separate cheques issued by the petitioner No.2 of the total value of Rs.41,31,98,976/-. The XIX Addl. Chief Metropolitan Magistrate, Bengaluru City, took cognizance of the offence, recorded the sworn statement of the respondent in each case and issued summons to the petitioners returnable by 25.10.2016. However, before the scheduled date of appearance, on 20.10.2016 itself, the respondent got the case advanced and on the same day, the petitioner No.2 appeared before the Court and a submission was made before the learned Magistrate that at the intervention of the conciliators, the parties have amicably settled the matter and both the parties filed joint memos before the Court and the learned Magistrate on 20.10.2016 passed identical orders in following cases:-
C.C.No.16756/2016, C.C.No.16757/2016, C.C.No.16759/2016, C.C.No.16761/2016, C.C.No.16762/2016 & C.C.No.16758/2016 Complainant present.
Accused present.
The complainant and accused have submitted that in the intervention of the conciliators they have amicably settled the matter for Rs.5,00,00,000/- towards total 13 cheque amount of Rs.5,00,00,000/- (Five Crores).
Both the parties jointly filed joint memo by stating that they have settled the matter for Rs.5,00,00,000/-.
Both parties have been duly represented by learned respective counsels.
As the parties have settled the matter, office to refer the case before Lok-Adalath for orders on 05.11.2016.
As the matter has been settled between the parties today the accused released on self-bond for Rs.50,00,000/-.
Office to take bond.
In C.C.No.16760/2016, on 20.10.2016, the learned Magistrate passed the following order:-
Complainant present.
Accused present.
The complainant and accused have submitted that in the intervention of the conciliators they have amicably settled the matter for Rs.5,48,69,376/- towards total cheque amount of Rs.5,48,69,376/-.
Both the parties jointly filed joint memo by stating that they have settled the matter for 5,48,69,376/-.
Both parties have been duly represented by learned respective counsels. 14
As the parties have settled the matter, office to refer the case before Lok-Adalath for orders on 05.11.2016.
As the matter has been settled between the parties today the accused released on self-bond for Rs.50,00,000/-.
Office to take bond.
The order dated on 20.10.2016 in C.C.No.16763/2016 reads as under:-
Complainant present.
Accused present.
The complainant and accused have submitted that in the intervention of the conciliators they have amicably settled the matter for Rs.5,83,29,600/- towards total cheque amount of Rs.5,83,29,600/-.
Both the parties jointly filed joint memo by stating that they have settled the matter for 5,83,29,600/-.
Both parties have been duly represented by learned respective counsels.
As the parties have settled the matter, office to refer the case before Lok-Adalath for orders on 05.11.2016.
As the matter has been settled between the parties today the accused released on self-bond for Rs.50,00,000/-.
Office to take bond.15
3. Thereafter, on 5.11.2016, both the parties along with their counsel appeared before the Lok Adalath and admitted the execution of the joint memos. The Lok Adalath accepted the joint memos and consequently, dismissed the individual complaints as withdrawn and the petitioners/accused Nos.1 and 2 were discharged of the offence punishable under section 138 of the N.I. Act. The order sheet reveals that on 23.12.2016, the cases were advanced on board at the instance of the respondent and the learned counsel appearing for the respondent/ complainant submitted that the cheques issued by petitioner No.2 in terms of the compromise dated 5.11.2016 came to be dishonoured. Based on this submission, learned Magistrate issued FLW to petitioner No.2 on 23.12.2016 returnable by
21.1.2017 and on 21.1.2017, issued NBW and FLW against the petitioner/accused No.2 "till she has been arrested and produced".
4. The petitioners/accused Nos.1 and 2 have now approached this court under section 482 of Cr.P.C., seeking to set aside the order dated 20.10.2016 and consequently, to 16 quash the entire order sheet. It is contended that the respondent - a practicing Lawyer brought investment into the trade through the petitioners and in respect of the said transaction, the respondent retained several documents/cheques as security for the amount invested by him. As on 5.7.2016, the petitioners were liable to pay a sum of Rs.10,00,00,000/- and odd to the respondent. Due to demonetization and sudden slump in the market, the petitioners could not return the invested amount. The respondent utilized eight blank cheques lying with him and claimed Rs.41,31,98,976/- against the outstanding sum of Rs.10,00,00,000/- and odd and instituted private complaints against the petitioners. Even before the summons were served, the respondent being an Advocate by profession, forced the petitioners to appear before the Trial Court and admit the liability. The petitioners relented to the pressure exerted by the respondent through various means and appeared before the Court. The colleague of the respondent represented the petitioners and the petitioner No.2 was asked to sign the papers in the court. The seal of petitioner No.2 appearing in the vakalath was created by the respondent. The 17 petitioner No.2 later realized that the cheques lying with the respondent were made use of to satisfy the claim of the respondent under the joint memos.
5. It is further contended that after the disposal of the cases, the respondent got the cases advanced and sought issuance of fine levy warrant on the ground that the cheques issued by the petitioners were dishonoured. It is contended that once the petitioners and the respondent settled the dispute before the Lok Adalath, the Trial Court has no jurisdiction to proceed with the matter. The award passed in the Lok Adalath is a decree of the Civil Court and therefore, the Court had no jurisdiction to issue NBW and FLW against the petitioners. It is further contended that the proceedings before the Trial Court and the consequent compromise are the results of force coercion exerted by the respondent. The joint memos filed before the Trial Court were not voluntary. Hence, the petitioners have sought to quash the impugned orders passed by the learned Magistrate.
18
6. I have heard learned counsel for the petitioners and the learned counsel for the respondent.
7. The learned counsel for the petitioners has placed reliance on the case of K.N.GOVINDAN KUTTY MENON vs. C.D.SHAJI reported in AIR 2012 SC 719, to buttress his argument that every award of the Lok Adalat is deemed to be a decree of a Civil Court and as such executable before the Civil Court. The Act does not make out any such distinction between the reference made by a Civil Court and Criminal Court. Even if a matter is referred by a criminal court under section 138 of the Negotiable Instruments Act, 1881 by virtue of the deeming provisions in section 21, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court. Hence the issuance of FLW and NBW against the petitioners is exfacie illegal and without jurisdiction.
8. Per contra, learned counsel for the respondent defends the impugned orders by placing reliance on the case laws in R.UNNIKRISHNAN & Another vs. V.K.MAHANUDEVAN & Others (2014) 4 SCC 434;
19K.D.SHARMA vs. STEEL AUTHORITY OF INDIA LIMITED & Others (2008) 12 SCC 481 and STATE OF CHHATTISGARH & Others vs. DHIRJO KUMAR SENGAR (2009) 13 SCC 600 and submits that the petitioner No.2 having appeared before the Lok Adalath and having filed a joint memo undertaking to repay the amount agreed therein, cannot be permitted to question the validity of the order passed by the Lok Adalath on the purported ground that his/her consent was obtained by force and misrepresentation. Learned counsel submits that the petitioner No.2 is bound by the order passed by the Lok Adalath and moreover, the petitioner No.2 having taken the benefit of discharge under section 138 of N.I. Act, is not entitled to maintain the petition before this court under section 482 of Cr.P.C.
9. At the outset, it has to be noted that what is impugned in these petitions are the orders dated 20.10.2016 passed by the learned Magistrate referring the parties to Lok Adalath. The petitioners have not sought for quashing the order 20 or award passed by the Lok Adalath. One such order passed by the Lok Adalath reads as follows:-
Case called before Lok Adalat Complainant and accused No.1 and have submitted that in the intervention of the conciliators they have amicably settled the matter between themselves.
The complainant and accused have filed joint memo by stating that they have settle the matter for Rs.5 Crore towards the cheque amount of Rs.5 Crore.
The Accused has agreed to pay the entire agreed cheque amount of Rs.5 Crore and they in order to pay the cheque amount have issued a cheque bearing No.370267 dt.21.12.2016 drawn on Indian Bank, Sadashivanagar Branch, Bengaluru and the same is acknowledged by the complainant.
The accused has admitted the
transaction and also admitted the
issuance of cheque towards the
repayment of debt.
Both the parties have admitted the
execution of joint memo before us and
they appear to be voluntary. The
compromise entered by the parties is in accordance with law. The offence alleged against the accused punishable under section 138 of N.I. Act is compoundable in nature. Therefore joint memo is accepted and allowed and proceed to pass the following:21
ORDERS In view of the memo complaint dismissed as withdrawn.
Accused No.1 and 2 are discharged for the offence punishable under section 138 of N.I. Act.
10. As could be seen from the above order, that even before the Lok Adalath the petitioners did not pay any amount to the respondent in discharge of the alleged debt. On the other hand, fresh cheques were received by the respondent and when the said cheques came to be dishonoured, the respondent once again approached the learned Magistrate by reopening the cases which were already disposed of and the learned Magistrate issued FLW and NBW to the petitioners. These orders on the face of it are indefensible and are contrary to the law laid down by the Hon'ble Supreme Court of India in K.N.GOVINDAN KUTTY MENON vs. C.D.SHAJI wherein it is held that: "in view of the unambiguous language of section 21 of the Legal Services Authority Act (39 of 1987), every award of Lok Adalath shall be deemed to be a decree of the Civil Court and as such, it is executable by that court." In the said decision it is held that 22 even if a matter is referred by a Criminal Court under section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provision, the award passed by the Lok Adalath based on a compromise has to be treated as a decree capable of execution by a Civil Court.
11. In the above case, the Hon'ble Supreme Court has upheld the view taken by the High Court of Madras in the case of M/s.Valarmathi Oil Industries & Another vs. M/s.Saradhi Ginning Factory (AIR 2009 Madras 180) wherein, at the request of both the parties, the Magistrate referred the parties to Lok Adalath for settlement. Before the Lok Adalath the parties agreed for the settlement and the petitioner/accused agreed to pay Rs.3,75,000/- to the respondent/complainant on or before 3.9.2007. The Lok Adalath passed the award in terms of the compromise and the same was placed before the judicial Magistrate for further orders. Based on the award, the learned Magistrate found the accused guilty and convicted them under section 138 of N.I. Act. When this order was carried in revision to the High Court, the High Court held that the award made by 23 the Lok Adalath is final and binding on the parties to the criminal revision and as contemplated under section 21(2) of the Act, no appeal shall lie to any court against the award. The High Court further held that in such circumstances, the learned Judicial Magistrate became functus officio, to decide the case after the award passed by the Lok Adalath. This view has been upheld by the Hon'ble Supreme Court in the case of K.N.Govindan Kutty Menon. In the light of the ratio laid down in the said decision, the order passed by the learned Magistrate issuing NBW and FLW to the petitioners cannot be sustained. Even otherwise, the dishonour of the cheques issued by the petitioners pursuant to the compromise before the Lok Adalath furnished an independent cause of action for the respondent to proceed against the petitioners under section 138 of N.I. Act and therefore, the learned Magistrate could not have assumed jurisdiction either to reopen the case or to issue FLW and NBW to the petitioners for dishonour of the cheques which were not the subject matter of any complaint before the learned Magistrate. Therefore, viewed from any angle the order passed by the 24 learned Magistrate being patently illegal and contrary to the law laid down in the above decision is liable to be set aside.
12. In the instant cases, apart from the above illegality, there is a larger issue which needs to be addressed. As already narrated above, the petitioners have come up with the allegations that the compromise entered into between the petitioners and the respondent was not voluntary. The petitioners have alleged that the respondent/complainant had brought in investment into the trade run by the petitioners and as on 5.7.2006, the petitioners were liable to pay a sum of Rs.10,00,00,000/- and odd to the respondent, but the respondent tricked the petitioners to admit to a liability to the extent of Rs.41,31,98,976/-. The petitioners have come up with a specific allegation that in respect of the above transactions, the respondent had taken blank cheques from the petitioners which were made use of by the respondent to lay a claim for Rs.41,31,98,976/- as against the outstanding sum of Rs.10,00,00,000/-. The respondent has denied these allegations. Though in normal circumstances the court would 25 not enter into the alleged controversy especially when the matter is settled before the Lok Adalath and the alleged contention is based on disputed question of fact, yet in the instant cases, on going through the order-sheet maintained by the learned Magistrate as well as the documents produced by the respondent along with the statement of objections, I find substance in the argument canvassed by the learned counsel for the petitioners in this regard. That apart the procedure adopted by the learned Magistrate in dealing with the matter as well as the order passed by the Lok Adalath calls for a re-look into the subject.
13. As already narrated above, eight private complaints were presented by the respondent alleging dishonour of eight cheques amounting in all Rs.41,31,98,976/-. In the complaints averments were made that the complainant was engaged in the business of trading and he advanced the amounts shown in the respective cheques and the same was acknowledged and accepted by the accused. It is further stated that the accused had guaranteed that the said amount would be repaid and 26 executed an investment agreement dated 30.1.2016. The respondent has produced a copy of the said investment agreement along with his statement of objections. It reads:
INVESTMENT AGREEMENT This investment agreement ("Agreement") is made and effective form the 30th of January, 2016 ("Effective Date") BY AND BETWEEN Karthik Ravichander, s/o Ramanathan Ravichander an overseas citizen of India, having his primary place of residence at 11/3-5, Palace loop road, Vasanthnagar, Bengaluru 560052 (hereinafter called 'Investor' which expression shall where the context so admits include his successors-in-title, representative and permitted assigns) of the FIRST PART;
AND Prithi B, w/o Sunil Lal Thakkar, having her residence at Flat No.005, M.Square Melodies, 60 Feet Main Road, Behind Raja Rajeshwari Nagar Police Station, BEML Layout, Rajajeshwari Nagar, Bengaluru 560098 (hereinafter called "Investee" which expression shall where the context so admits include its successors-in-title, representatives and permitted assigns) of the OTHER PART;
The Investor and the Investee shall hereinafter individually be referred to as "Party" and collectively as "Parties".
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the parties hereto agree as follows:27
Clause 1. INVESTMENT 1.1 Investor has invested with the Investee, a sum of Rs.30,48,69,376 (Rupees Thirty Crore Forty Eight Lakhs Sixty Nine Thousand Three Hundred and Seventy Six Only), ("Investment Amount") and the Investee may accordingly use the funds to invest in diverse portfolios from the Effective Date. 1.2 The break up of the Investment Amount is as follows:
Sno Investment
Amount (INR)
1 18,16,00,000/- Investment
Amount 1
2 3,54,00,000/- Investment
Amount 2
3 2,60,40,000/- Investment
Amount 3
4 2,91,64,800/- Investment
Amount 4
5 3,26,64,576/- Investment
Amount 5
Clause 2. TERM
The term of this Agreement for each Investment Amount shall commence on the Effective Date and shall expire as per the table below ("Term") 2.1 The Investment Amount will be returned as per the following table:
Sno. Investment Investment amount
Amount due date
1 18,16,00,000/- 25th September 2017
2 3,54,00,000/- 25th January 2018
3 2,60,40,000/- 25th February 2018
4 2,91,64,800/- 25th March 2018
5 3,26,64,576/- 25th April 2018
28
Clause 3. INTEREST PAYMENT AND RETURN OF INVESTMENT AMOUNT 3.1 The Investee will pay the Investor interest on his investment on or before 10th of each calendar month for the amounts mentioned in Schedule A. No amounts under this Agreement will be compounded for payment.
Clause 4. SECURITY 4.1 The Investee has provided the Investor with undated cheques as security for the Investment Amount. The Investee agrees that the Investor may enforce the security cheques in case the Returns are not paid before the 25th of the calendar month. 4.2 The following are the details of the cheques:
Sno Cheque Amount (INR)
No.
1 533981 5,00,00,000/-
2 533982 5,00,00,000/-
3 533983 5,00,00,000/-
4 533984 5,00,00,000/-
5 533985 5,00,00,000/-
6 533986 5,48,69,376/-
Clause 5. TAXES
Each Party will be responsible for the payment of their respective state and central taxes.
This agreement also provides for arbitration in case of any breach of the any conditions of the agreement.
14. Thus, from the above agreement, it could be deciphered that the transactions between the parties were purely 29 a commercial transaction which was subject to the terms and conditions of the aforesaid agreement including arbitration. The cheques in question were received by the respondent as security for compliance of the terms of the aforesaid agreement. The time for repayment of the investment was to commence only from 25.9.2017. But much before the said date, the respondent appears to have presented the cheques and initiated criminal action against the petitioners. If the agreement produced by the respondent is true, it goes to show that as on the date of the presentation of the cheques, the liability of the petitioners had not arisen. But the order-sheets indicate that the petitioners have voluntarily appeared before the Court and the Lok Adalath and had filed as many as eight joint memos undertaking to repay the amount claimed by the respondent and have issued fresh set of cheques. Therefore, the petitioners cannot be allowed to defy the undertaking given to the court and the Lok Adalath on the plea that the petitioners were tricked by the respondent to sign the joint memos and to part with the cheques. The rule of law favours finality to binding judicial decisions pronounced by the courts that are competent to deal 30 with the subject matter. Public interest is against individuals being vexed twice over with the same kind of litigation. As held by the Hon'ble Supreme Court in R.UNNIKRISHNAN & Another vs. V.K.MAHANUDEVAN & Others (2014) 4 SCC 434, "A wrong decision by a court having jurisdiction is as much binding between the parties as a right one and may be superseded only by appeals to higher tribunals or other procedure like review which the law provides." Hence the contention urged by the petitioners that the order passed by the Lok Adalath is illegal and beyond jurisdiction cannot be countenanced.
15. Nonetheless, it needs to be noted that while dealing with the complaints, the learned Magistrate and the Lok Adalath have failed to perform their respective responsibilities cast on them as the law requires. The object of enacting section 138 into the statute was to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. It is not intended to provide a short cut to unscrupulous moneylenders and investors to help them to 31 recovery the capital invested in their business in their business holding the cheques as ransom to enforce their dues. When the complainant approached the court alleging dishonour of as many as eight cheques amounting to more than Rs.40,00,00,000/-, it was incumbent upon the learned Magistrate to ascertain the basic facts and verify the supporting documents before accepting the joint memos and directing them to Lok Adalat for settlement. No doubt it is true Section 147 of the N.I. Act enables the litigants to opt for compounding the offences; but in the absence of any specific rules or guidelines in this regard, Hon'ble Apex Court in the case of DAMODAR S.PRABHU vs. SAYED BABALAL H. (2010) 5 SCC 663 has laid down certain guidelines/directions to encourage the litigants in cheque dishonour cases to opt for compounding during early stages of litigations to ease chocking of criminal justice system. One of the directions issued by the court is along with the summons, a suitable direction be issued to the accused that he should make an application for compounding of the offence at the first or second hearing of the case and that if such an application is 32 made, compounding may be allowed by the court without imposing any cost on the accused.
16. In the later decision rendered by the Hon'ble Supreme Court in the case of MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY vs. PRATEEK JAIN & Another (2014) 10 SCC 690 it is held that when a case is decided in the Lok Adalath, the requirement of following the guidelines contained in Damodar S.Prabhu case should normally not be dispensed with. Even in the said decision, it is emphasized that an application should be moved by the accused opting for compounding the offence apparently to ensure that the compromise is initiated at the instance of the accused rather than the complainant. But in the instant case, the records reveal that much before the date of appearance, the complainant himself got the case advanced and on that date, complainant and the accused moved joint memos to the effect that the dispute between them has been amicably settled at the intervention of the conciliators. It is not known as to how the parties who were at loggerheads could settle their dispute at the 33 instance of the conciliators even before referring them to the mediation or Lok Adalath. Be that it may, without even ascertaining the correctness of the settlements made in the joint memos, the learned Magistrate referred the parties to Lok Adalath by accepting the joint memos filed before it. The procedure adopted by the learned Magistrate is highly deprecable. If infact there was genuine settlement between the parties, there was absolutely no necessity for the learned Magistrate to refer the parties to Lok Adalath. In this context, it may be apt to refer to the caustic remark made by the Hon'ble Supreme Court in the case of M.P.State Legal Services Authority referred above wherein the Hon'ble Supreme Court has observed as under:-
17. In the first instance, we do not understand as to why the matter was sent to Lok Adalat when the parties had settled the matter between themselves and application to this effect was filed in the Court. In such a situation, the Court could have passed the order itself, instead of relegating the matter to the Lok Adalat. We have ourselves highlighted the importance and significance of the institution of Lok Adalat. We would be failing in our duty if we do not mention that, of late, there is some criticism as well which, inter alia, relates to the manner in which cases are posted before the Lok Adalats. We 34 have to devise the methods to ensure that faith in the system is maintained as in the holistic terms access to justice is achieved through this system. We, therefore, deprecate this tendency of referring even those matters to the Lok Adalat which have already been settled. This tendency of sending settled matters to the Lok Adalats just to inflate the figures of decision/settlement therein for statistical purposes is not a healthy practice. We are also not oblivious of the criticism from the lawyers, intelligentsia and general public in adopting this kind of methodology for window-dressing and showing lucrative outcome of particular Lok Adalats.
17. Even this Court had an occasion to consider one such similar instance in the case of Smt.AKKUBAI vs. Shri VENKATRAO & Others (ILR 2014 Karnataka 2051). Paragraph 11 of the said judgment is worth reproducing. It reads as under:-
11. I really wonder, whether the Learned Judge who has entertained this matter was aware of the elementary aspects of judicial functioning and the Lok Adalath.
A common order-sheet cannot be maintained by the Court as well as the Lok Adalath. A court cannot be converted into a Lok Adalath. In the order-sheet maintained by the Court, a portion of the proceedings is referable to the Court proceedings and another portion refers to the proceedings of Lok Adalath. The Conciliator has no place inside the Court. The very object of accepting this Lok Adalath as an alternative 35 mode of resolution of dispute is that, all matters do not need adjudication. The matter which could be resolved by persuasion, negotiation and understanding should be taken out of adjudication process and should be resolved by means of Lok Adalath satisfactorily, so that the cases are disposed of expeditiously and the Courts will be saving the time of adjudicatory process, and they can utilize that time which is saved, in adjudicating the cases. If on the day the plaint is presented, the parties are also present before the Court, they are ready with the compromise petition and when they are filing an application under Order 23 Rule 3 CPC, when they are admitting the terms of the compromise and execution of the terms and condition, then the Court before which it is presented, is the competent Court to record the compromise and dispose of the suit in terms of the compromise. The question of referring the said dispute to the Lok Adalath would notarise. If it is referred, it is a farce. If this is accepted and encouraged, both the judicial system and this alternative dispute resolution mechanism gets a bad name and would be subjected to ridicule in the eyes of public. All persons who are indulging in the process would be doing great injustice and dis-
service to the judicial system. They are not conscious of their action and its repercussions and the image of the Judiciary, which would create in the mind of the public. That is not the object with which neither Legal Services Authority Act of 1987 is passed by the Parliament providing for the institution of Lok Adalath nor Section 89 was introduced by the Parliament amending CPC. The essence of these provisions is neither understood by the Learned Judge nor by the Learned Counsels who are appearing for the parties.
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18. The learned Magistrate appears to have been blissfully oblivious of the above decisions and has given a go by to the salutary guidelines laid down by the Hon'ble Supreme Court and the High Court of Karnataka and has acted contrary to the rules and procedures governing the subject thereby causing prejudice to the litigants as well as to the cause of justice. Hence, I find it necessary to remind the learned Magistrate to adhere to the judicial precedents and scrupulously follow the guidelines laid down by the higher courts in dealing with the matters in future. With this fond hope, the registry is directed to send a copy of this order to the learned Magistrate for future guidances.
19. In the light of the above discussion and for the above reasons, the petitions are partly allowed.
The FLW and NBW issued against the petitioners in C.C.No.16756/2016, C.C.No.16757/2016, C.C.No.16759/2016, C.C.No.16760/2016, C.C.No.16761/2016, C.C.No.16762/2016, C.C.No.16758/2016, and C.C.No.16763/2016 are set aside. The 37 respondent is at liberty to execute the award passed by the Lok Adalath in all the above cases.
Sd/-
JUDGE Bss.