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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JANUARY, 2021
BEFORE
THE HON'BLE MR.JUSTICE K.SOMASHEKAR
CRIMINAL PETITION NO. 581 OF 2017
BETWEEN
Sri T. Karthik Raja
Aged about 38 years
S/o Thyagaraj
A.K. International
No.66, 2nd Right Cross
Puttappa Colony
New Thippasandra
Bengaluru - 560 075. ... Petitioner
(By Sri. Abhinav .R, Advocate)
AND
Sri V.M. Prabhakar
Aged about 48 years
S/o Late V.K. Madhavan
M/s. Maruthi Ginger Traders
Main Road, Kudige
Kushalnagar Hobli
Somwarpet Taluk
Kodagu District - 571 234. ... Respondent
(By Sri V.R. Sarathy, Advocate)
This Criminal Petition is filed under Section 482 of
the Code of Criminal Procedure, praying to quash the
proceedings in PCR No.118/2016 (C.C.No.435/2016) on
the file of Civil Judge and JMFC, Kushalnagar at
Annexure-A as well as the complaint filed by the
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Respondent in PCR No.118/2016 dated 09.06.2016 before
the Civil Judge and JMFC, Kushalnagar at Bangalore vide
Annexure-B.
This Criminal Petition coming on for Admission, this
day, the court made the following:
ORDER
This petition is filed by petitioner - Sri T.Karthik Raja/accused seeking quashing of the criminal proceedings in C.C.No.435/2016 arising out of PCR No.118/2016 for the offence punishable under Section 138 of the N.I.Act r/w Section 420 of IPC which is pending before the Court of Civil Judge and JMFC, Kushalnagar.
2. Heard Sri Abhinav.R, learned counsel for the petitioner and Sri V.R.Sarathy, learned counsel for the respondent. Perused the materials available on record.
3. It is transpired in the criminal prosecution initiated by the respondent/complainant Sri V.M.Prabhakar against the petitioner/accused in the aforesaid private complaint that the complainant is a reputed grower, trader and merchant of quality green ginger at Kudige, Kushalnagar Hobli, Somwarpet Taluk, Kodagu District. Coming to know about the same, the :3: accused came down to Kudige and started to deal with the complainant and was regularly purchasing green ginger, from the complainant at Kudige and used to transport the same, at his own costs and consequences in the lorries and vehicles belonging to him, with a clear understanding and assuring the complainant that the RMC invoices, Bills, permits would be the concern and responsibility of the accused and he would look after the same. The same has been narrated in the complaint filed by the complainant against accused - T.Karthik Raja.
4. On different dates, the petitioner / accused had come to Kudige and had purchased green ginger of 'Rigodi' variety at a specified rate for each bag and towards the payment of the amount, the accused issued cheque dated 10.03.2016, bearing No.000090 which was drawn on Bank of Baroda, No.274, V.R.Manor, 6th Main Bus Stop, Bangalore-560038 in favour of the complainant, informing him that said cheque for Rs.15,00,000/- would be honoured by the said Bank, on presentation of the said cheque on the due date mentioned in the said cheque or on subsequent date.
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5. Thereafter, it is stated that to the utter surprise of the complainant, he received a notice from the accused, making false statements and demanding to return back the cheque from Bank of Baroda which was allegedly given as PDC cheque. It is further transpired in the complaint that to the utter shock of complainant, he received another notice from the accused, claiming that the accused had been making payments through the Canara Bank account of the complainant and as well as by cash on various occasions on account basis and that the accused had allegedly requested the complainant to submit his bills supported by RMC permits in the name of the accused. However, the complainant is alleged to have failed to accept the alleged request of the accused for a long time. The accused was unable to reconcile his account as to understand the dues receivable or payable towards the supply by the complainant continued till the end of February 2016. It is further alleged that the complainant had allegedly supplied due to alleged application of improper bags used for packing with alleged inadequate mess in addition to the alleged reported receipt :5: of material in fungus formed and that cheque which was allegedly given as security at the commencement of the transaction had been revoked and the complainant states that the said statements made by accused are all false, tissues of imagination, made only to dupe the complainant of his money and also of the green ginger purchased by the accused, from the complainant.
6. Further the complainant presented the said cheque which was issued by the accused towards the legal liability for encashment, to Canara Bank, Branch Kudige, Kushalnagar Hobli, Somwarpet Taluk, Kodagu District and to his utter surprise, the said cheque was returned by the said Bank, with an Return Memo of Canara Bank, Madikeri Main Branch, Kodagu District, to the effect 'Payment Stopped by the drawer' thereby meaning that the accused had deliberately and intentionally stopped the payment of amount due to the complainant and also that there was no sufficient amount in the account of the accused in the said Bank to honour the cheque mentioned above.
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7. Subsequent to dishonouring of the cheque, the complainant issued legal notice to the accused under RPAD calling upon him to pay the amount covered under the above mentioned cheque. The accused gave reply to the notice sent by the complainant and he failed to pay the amount due to the complainant, despite of notice issued. Subsequently, after following of the requisite condition under Section 138 of N.I.Act, the complainant initiated private complaint as referred above before the Court of Civil Judge and JMFC, Kushalnagar.
8. Subsequent to initiation of the criminal prosecution against the accused before the court below, the complainant filed affidavit in lieu of his sworn statement to affirm the complaint averments made against the accused relating to bouncing of cheque with banking endorsement. On perusal of the materials on record relating to the said private complaint against the accused under Section 138 of the N.I.Act, the court below having found prima-facie materials against the accused, issued process against the accused and registered the case against in C.C.No.435/2016 arising out of PCR :7: No.118/2016, for the offence punishable under Section 138 of the N.I.Act r/w Section 420 of IPC.
9. Learned counsel for the petitioner addressed his arguments by referring to the judgment rendered by the Hon'ble Supreme Court reported in (2014) 12 SCC 539 (INDUS AIRWAYS PVT.LTD AND OTHERS VS. MAGNUM AVIATION PVT. LTD AND ANOTHER). In this judgment the Hon'ble Apex Court has dealt with "Debt, Financial and Monetary Laws - Negotiable Instruments Act, 1881 - S.138 - "Debt or other liability" - Meaning of - Held, means legally enforceable debt or liability - Advance payment for supply of goods not supplied not covered - Words and Phrases - "Debt or other liability"
10. In this judgment, learned counsel for the petitioner has mainly taken me through paras 4 and 5 of the judgment which reads as under:
"4. the purchasers challenged the order issuing summons in a revision petition under Section 397 of the code of Criminal Procedure, 1973. The Additional Sessions Judge, after hearing the parties, allowed the revision petition vide order dated 2.9.2008 and quashed the process issued by the Additional Chief Metropolitan Magistrate. :8:
5. The supplier challenged the order of the Additional Sessions Judge in a petition under Section 482 Cr.P.C. before the High Court. The High Court allowed the petition, set aside the order of the Additional Sessions Judge and restored the order of the Additional Chief Metropolitan Magistrate issuing process to the purchasers."
11. Further, in this judgment, reference has been also made to the case reported in 2006 CRI.L.J. 4330 (KER) SUPPLY HOUSE VS. ULLAS wherein it is held as under:
"In that case, the post-dated cheque was issued by the accused along with the order for supply of goods. The supply of goods was not made by the complainant. The accused first instructed the bank to stop payment against the cheque and then requested the complainant not to present the cheque as he had not supplied the goods. The cheque was dishonoured. The Single Judge of the Kerala High Court held:
"... Ext.P-1 cheque cannot be stated to be one issued in discharge of the liability to the tune of the amount covered by it, which was really issued, as is revealed by Ext.D-1 as the price amount for 28 numbers of mixies, which the complainant had not supplied...." :9:
12. Therefore, these two reliances are squarely applicable to the present case wherein there was a transaction in between the complainant and the accused. The cheque issued by him was only for the purpose of security, but the complainant has presented the cheque with his bank for the purpose of encashment, but the said cheque came to be returned with bank endorsement. Subsequent to the receipt of the bank endorsement, the complainant initiated the criminal prosecution against the accused by filing the private complaint as above.
13. It is contended by the petitioner's counsel that the trial court has committed an error in noticing the fact that even prior to the presentation of the cheque, the petitioner had sent communications informing the complainant that stop payment instructions have been issued as the cheque was not issued for discharge of any debt or liability. Therefore, the question of complainant presenting the said cheque for encashment by alleging that the same were issued for discharge of a debt or liability does not arise at all. This contention is taken by the learned counsel for the petitioner seeking intervention : 10 : of this Court to exercise the power under Section 482 of Cr.P.C, if not, there shall be miscarriage of justice to the gravamen of the accused.
14. It is further contended that the petitioner has sent as many as two communications informing the respondent/complainant that the cheque in question had not been issued in relation to any debt or liability and that they were given at the initial stages of the transaction. The said correspondence is not disputed by the respondent and no response was given to the said communication. Further, the complaint does not indicate as to what is the actual liability as no documents are produced showing any outstanding amounts and so also, reconciliated accounts are also not produced. He further contends that the averments made in the complaint do not even prima- facie indicate the punishing of any offence and consequently, the proceedings are required to be quashed. On this premise, learned counsel for the petitioner seeks for quashing of the criminal proceedings pending before the Court below by considering the grounds urged in this petition.
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15. Per contra, Sri V.R.Sarathy, learned counsel for the respondent in this petition has taken me through the cause notice issued by the complainant - Sri V.M.Prabhakar to the accused. The contentions taken in this cause notice are in conformity with the averments made in the private complaint filed by the respondent against the accused. Though the counsel for the respondent has referred the letter head of AK International as per Annexure-C dated 15.03.2016 addressed to Mr.V.M.Prabhakara, whereas in the subject column it is stated as request for submission of RMC bills from October 2015 to February 2016 to regularize account. In last line, it is stated that the cheque given as security at the commencement of the transaction is being revoked.
16. But subsequent to the issuance of the cheque by the accused, he has made some transaction in a letter correspondence and consequently, the cheque issued was returned with a return memo of Canara Bank, Madikeri Main Branch, Kodagu District to the effect 'payment stopped by drawer' thereby the accused had deliberately : 12 : and intentionally stopped the payment of the amount due to the complainant.
17. It is contended that respondent/complainant is a reputed grower, trader and merchant of quality green ginger at Kudige, Kushalnagar Hobli, Somwarpet Taluk, Kodagu District and on coming to know the same, the accused came down to Kudige and started to deal with the complainant and was regularly purchasing green ginger from the complainant at Kudige and used to transport the same at his own costs and consequences in his lorries and vehicles, with a clear understanding and assuring that RMC invoices, bills, permits would be the concern and responsibility of accused and to look after the same and whenever he was unable to come over to Kudige, personally, the accused wanted the complainant to supply the green ginger to him. These are all the facts that have been narrated in the cause notice dated 25.04.2016 issued by complainant to the petitioner. In this notice it is also stated that to the utter shock of the complainant, he received another notice dated 15.3.2016 claiming that the accused had been making payments through the Canara : 13 : Bank account of complainant. It is denied in the notice that the cheque was issued as PDC cheque as claimed by the accused. However, this cause notice was issued by the counsel of the complainant and thereafter, the criminal prosecution came to be registered by filing private complaints due to dishonour of the cheque issued by the accused. Therefore, it is contended by the respondent's counsel that the facts as narrated in the cause notice and so also, the reply notice made by the accused have to be subjected to test and also subjected to cross-examination under the relevant provisions of the Indian Evidence Act. Therefore, at this stage, it cannot be arrived at a conclusion that there are no prima-facie materials against the accused to constitute the offence and even for the offence under Section 138 of the N.I.Act relating to bouncing of cheque in a banking endorsement as "payment stopped by drawer". For initiation of the complaint against the accused to prosecute the case it is to be termed as civil in nature and after that it is to be criminal in nature, if any, punishment is issued by the competent authority having jurisdiction. But cognizance : 14 : has to be taken, it is only under Section 142 of the N.I.Act. But the offence under Section 138 of the N.I.Act, though it is dishonouring of the cheque, but it is dealt with a dual capacity civil as well as criminal in nature, but it is only depending upon to proceed with the case against the accused and so also, facilitating the evidence by the complainant who initiated private complaint against the accused by complying the requisite condition under Section 138 of N.I.Act which is pre-cognizance and thereafter as post cognizance. But in this case, the pre- cognizance has been complied by issuing cause notice to pay the amount covered by the cheque which has been returned and after reply notice received by the accused, that the cognizance it has been complied for requisite condition as under Section 138 of the N.I.Act and initiation of criminal prosecution against the accused. Thereafter, even either pre-cognizance or post cognizance it is a cognizance of that power and also taken which is vested with the judicial Magistrate having a jurisdiction to deal with the matters. But in the instant case, on compliance of the requisite condition of Section 138 of the : 15 : N.I.Act that the complainant has initiated the criminal prosecution against the accused for the offence punishable under Section 138 of the N.I.Act. Unless the material evidence in terms of list of documents filed by the complainant in his private complaint and so also, furnishing of list witnesses on his behalf and unless all these documents and witnesses are subjected to examination on the part of the complainant and subjected to test, it cannot be said that there are no prima-facie materials against the accused seeking to exercise the power under Section 482 of Cr.P.C. for quashing of the criminal proceedings initiated against the accused. On this premise, learned counsel for the respondent seeking for dismissal of all these petitions filed by the petitioner/accused, whereby accused is required to facing of trial and the list of documents have to be subjected to test and also list of witnesses have to be examined but only logically it cannot be come to conclusion that there are no prima-facie materials against the accused for the offence punishable under Section 138 of the N.I.Act. On : 16 : these grounds, learned counsel seeks for dismissal of the petitions filed by the petitioner/accused.
18. In this backdrop of the contentions advanced by the learned counsel for the parties, it is relevant to refer to Section 142 of the NI Act, 1881. This section deals with cognizance of offences, which reads thus:
"142. Cognizance of offences.--
Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974)--
(a) no court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the Payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:
Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate : 17 : of the first class shall try any offence punishable under Section 138."
The offences under Section 138 of the NI Act shall be enquired into and tried only by a court within its local jurisdiction. There is no dispute about the provision of Section 142 of the NI Act. But cognizance has arisen for offences under Section 138 of the NI Act, twice. Firstly, the pre-cognizance, that is soon after receipt of a banking memo to the effect that the cheque was returned or bounced within the period of limitation when the complaint was filed as contemplated under Section 138 of the NI Act before the Judicial Magistrate having jurisdiction.
Secondly, upon failure of the drawer to pay the money and even notice has been issued for compliance of the requisite condition under Section 138 of the NI Act, then the liability of the drawer for being prosecuted for the offences, arises.
According to Section 142 of the NI Act, no Court shall take notice of any offence which is regarded : 18 : punishable under the provisions mentioned in Section 138 of the Negotiable Instruments Act, 1881 unless in a complaint which is in writing made by the holder of the cheque. However, the complainant has followed all requisite conditions of Section 138 of the NI Act to initiate criminal prosecution against the accused. The same can be seen from the material available on record.
Whereas the complainant has initiated criminal prosecution against the accused for the offences punishable under Section 138 of the NI Act, and the complainant himself has alleged in his complaint that the cheque was dishonoured due to want of sufficient amount in the account. But in the instant case, the Bank had issued a memo to the effect of stopping of payment. Even if the payment was stopped as disclosed in the memo issued by the Bank, then the cause of action has arisen for complying with the requisite condition under Section 138 of the NI Act. As once the cause of action has arisen, the limitation will begin to run. But in the instant case, : 19 : the criminal prosecution has to be launched by the complainant within the stipulated period for prosecuting the case against the accused under Section 138 of the NI Act.
19. Whereas the learned counsel for the respondent Shri V.R. Sarathy has facilitated the judgment rendered by the Hon'ble Supreme Court of India in the case of V. RAVI KUMAR vs. STATE REPRESENTED BY INSPECTOR OF POLICE, DISTRICT CRIME BRANCH, SALEM, TAMIL NADU AND OTHERS (2019 (14) SCC 568). In this judgment, the Hon'ble Supreme Court has dealt in detail relating to the provision of Sections 154, 156, 200 to 204 and Section 482 of the Cr.P.C. In this reliance, the relevant portion reads thus:
"24. Exercise of the inherent power of the High Court under Section 482 of the Criminal Procedure Code would depend on the facts and circumstances of each case. It is neither proper nor permissible for the Court to lay down any straitjacket formula for regulating the inherent power of the High Court under Section 482 of the Cr.P.C.
25. Power under Section 482 Cr.P.C. might be exercised to prevent abuse of the process of law, but only when, the allegations, even if true, would not constitute an offence and/or were frivolous and vexatious on their face.: 20 :
26. Where the accused seeks quashing of the FIR, invoking inherent jurisdiction of the High Court, it is wholly impermissible for the High Court to enter into the factual arena to adjudge the correctness of the allegations in the complaint. Reference may be made to the decision of this Court, inter alia, in State of Punjab v. Subhash Kumar and Ors (2004) 13 SCC 437 and Janata Dal v. H.S. Chowdhary (1992) 4 SCC 305."
In this judgment, the Hon'ble Supreme Court has made an observation that exercise of inherent power of the High Court under Section 482 of the Cr.P.C. would depend on the facts and circumstances of each case. In the instant case, the complainant had initiated a private complaint against the accused for committing an offence under Section 138 of the NI Act wherein the accused had issued cheque in order to pay the amount under the transaction that took place between the complainant and the accused. But in the instant case, on presentation of the cheque, the same was returned with a bank endorsement effecting to stop payment. Then, cause of action has arisen to proceed for criminal prosecution against the accused. It is relevant to refer to the : 21 : judgment in the case of (A.R. RADHA KRISHNA vs. DASARI DEEPTHI AND OTHERS (2019) 15 SCC 550), wherein it reveals from the footnote as under:
"Exercise of inherent power - Petition for quashing prosecution of Director of company under Sections 138 and 141, NI Act - Factors to be examined by High Court, summarized - On facts, quashment against Directors set aside, and proceedings restored."
In the said judgment, the Hon'ble Supreme Court has dealt with the said issue at paragraph 7 wherein it is held as under:
"7. Having heard learned counsel for the parties and carefully scrutinizing the record, we are of the considered opinion that the High Court was not justified in allowing the quashing petitions by invoking its power under S.482, Cr.P.C. In a case pertaining to an offence under Section 138 and Section 141 of the Act, the law requires that the complaint must contain a specific averment that the Director was in charge of, and responsible for, the conduct of the company's business at the time when the offence was committed. The High Court, in deciding a quashing petition under Section 482 Cr.P.C., must consider whether the averment made in the complaint is sufficient or if some : 22 : unimpeachable evidence has been brought on record which leads to the conclusion that the Director could never have been in charge of and responsible for the conduct of the business of the company at the relevant time. While the role of a Director in a company is ultimately a question of fact, and no fixed formula can be fixed for the same, the High Court must exercise its power under S. 482 Cr.P.C. when it is convinced, from the material on record, that allowing the proceedings to continue would be an abuse of process of the Court."
Whereas in the instant case, the complainant has followed the requisite condition under Section 138 of the NI Act by issuing notice to the accused after receipt of a memo to the effect of stoppage of payment of the cheque which has been returned with an endorsement. The pre- cognizance has arisen and consequently, complainant has complied with the requisite conditions under Section 138 of the NI Act and initiated prosecution against the accused before the Judicial Magistrate having jurisdiction.
In this regard, it is relevant to refer to a judgment of the Apex Court in the case of SHREE DANESHWARI TRADERS vs. SANJAY JAIN AND ANOTHER ((2019) 16 : 23 : SCC 83)). In this judgment, the Hon'ble Supreme Court has dealt in detail in respect of the issues of debt, financial and monetary laws - Negotiable Instruments Act, 1881 - Sections 139 and 138 - Dishonour of cheque - Presumption under Section 139 - Rebuttal of - Defence that subject cheque was issued as security towards goods supplied for which payment was subsequently made by cash - Held, could not be established, as some purchases were paid for in cash and others by cheque - Evidence produced by complainant was sufficient to raise presumption under Section 139 in respect of subject cheque, which respondent accused was unable to rebut - Hence, acquittal reversed.
20. In the instant case, the complainant V.M. Prabhakar initiated a complaint against the accused for offences under Section 138 of the NI Act. The complainant had been supplying commodities namely Rigody ginger as per the understanding between the complainant and the accused. The same is even though not in dispute, but the accused had issued cheque in : 24 : respect of the transaction even though it is contended that it is for security purposes, but on presentation of the said cheque by the complainant in his Bank, the same was returned as payment having been stopped. From the date of receipt of that bank memo stopping of payment, cause of action would arise to the complainant to initiate criminal prosecution against the accused person. Therefore, the complainant followed the requisite provision and initiated proceedings and prosecution against the accused in PCR No.116/2016 relating to C.C.No.435/2016, for the offence punishable under Section 138 of the N.I.Act r/w Section 420 of IPC The list of documents and list of witnesses have been furnished by the complainant for initiation of criminal prosecution against the accused in the respective PCR Nos. and those witnesses and also list of documents have been subjected to test under the relevant provisions of the Cr.P.C., in order to arrive at an appropriate conclusion.
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21. Under Section 138 of the NI Act, once the cheque is issued by the drawer, a presumption under Section 139 of the NI Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the NI Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and the same was issued in discharge of a legally enforceable debt. It is for the accused to adduce evidence in relation to such facts and circumstances to rebut the presumption that such debt does not exist or that the cheque is not supported by consideration.
22. In the instant case, complaint has been filed only after issuance of process against the accused. After taking cognizance on verification of the materials as well as the material supplied, the case has been proceeded against the accused. But the oral and documentary evidence facilitated by the complainant and the accused : 26 : has to be appreciated by the Trial Court. It is the domain vested with the Trial Court in its jurisdiction. The complainant has to facilitate virtual evidence in order to sufficiently prove the guilt of the accused that it was a legally enforceable debt and that cheque was issued as a legally enforceable cheque. This is the right of the complainant. The court thereafter raises a presumption under Section 139 of the NI Act. But as already stated, the criminal law has been set into motion for offences under Section 138 of the NI Act and it is dual in nature of trial. It is civil in nature and also criminal in nature only after the guilt of the accused is proved beyond all reasonable doubt. Till proved, it is to be maintained and termed as civil in nature of the complainant and the accused. Whereas in this case, considering the cheque transaction between the complainant and the accused and so also initiation of criminal prosecution against the accused, but the material documents produced by the complainant while initiation of private complaint, defence theory taken by the accused have to be subjected to test under the relevant provisions of the Indian Evidence Act, : 27 : 1872. However in this case, though accused has not faced trial but he is seeking intervention under Section 482 of the Cr.P.C. for quashing the proceedings without any justified reasons. Inherent jurisdiction under Section 482 Cr.P.C. though wide, has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. In exercising its jurisdiction under Section 482 Cr.P.C., the High Court would not embark upon an enquiry as to whether the evidence in question is reliable or not or whether on a reasonable appreciation of it, accusation would not be sustained at this stage of proceedings.
23. In the instant case, there is no substance in the contentions made by the learned counsel for the petitioner/accused in this petition seeking to quash the criminal proceedings initiated in the aforesaid private complaint. In view of the aforesaid reasons and findings, I proceed to pass the following:
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ORDER The petition filed by the petitioner / accused under Section 482 of the Cr.P.C. is hereby dismissed. Consequently, the trial court is directed to take up the trial of the case in C.C.No.435/2016 arising out of PCR No.118/2016 in accordance with law wherein the petitioner / accused requires to face trial.
Sd/-
JUDGE DKB/KS