Karnataka High Court
Smt.Saraswati Narayan Hegde vs The Karnataka Bank Ltd on 10 May, 2022
Bench: M.Nagaprasannapresided Bymnpj
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,
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
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.
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
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
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.
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
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
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
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
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.
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
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
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
