Karnataka High Court
M/S Vishal Infrastructure vs Mr Akshar K Murthy on 7 May, 2024
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CRL.RP No. 161 of 2021
C/W CRL.RP No. 232 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 07TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MR JUSTICE S RACHAIAH
CRIMINAL REVISION PETITION NO. 161 OF 2021
C/W
CRIMINAL REVISION PETITION NO. 232 OF 2021
IN CRIMINAL REVISION PETITION NO. 161 OF 2021
BETWEEN:
1. M/S VISHAL INFRASTRUCTURE
NO.1, 225/A, ANUGRAHA APARTMENTS,
RUKMINI DEVI COLONY
# "TRINSHANTHI", 180
WEST MARREDAPALLY
SECUNDERABAD - 500 026.
REP. BY MILIND KUMAR DESHPANDE
DIRECTOR,
AGE 62 YEARS
2. MR. MILIND KUMAR DESHPANDE
DIRECTOR,
AGE 62 YEARS
NO.5, 2ND MAIN, 4TH CROSS
MICO LAYOUT, AREKERE
BANNERGHATTA ROAD
BENGALURU - 560 076.
3. MS. RANJANA GERA
AGE 56 YEARS, ADDITIONAL DIRECTOR
F-21, BLOCK, F3
LAJPAT NAGAR II
NEW DELHI - 110 024.
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CRL.RP No. 161 of 2021
C/W CRL.RP No. 232 of 2021
4. MR. MOHAN PRABHAKAR DESHPANDE
NO. 68-A, SHIVAJINAGAR
ADDITIONAL DIRECTOR
NAGPUR - 440 010
5. MR. V KEDARNATH MUDDA
AGE 50 YEARS
NO.17, SHANKAR NILAYA
FFI, 8TH MAIN, 18TH CROSS
UPPER PALACE ORCHADRS
SADASHIVANAGAR
BENGALURU - 560 080.
...PETITIONERS
(BY SRI. S P KULKARNI, SENIOR ADVOCATE FOR
SRI. VASANTHAKUMAR, ADVOATE)
AND:
MR AKSHAR K MURTHY
S/O B K KRISHNAMURTHY
AGED ABOUT 30 YEARS
R/AT NO. 274/A
37TH CROSS, VIII BLOCK
JAYANAGAR
BENGALURU - 560 070.
...RESPONDENT
(BY SRI JACOB ALEXANDER, ADVOCATE)
THIS CRL.RP IS FILED U/S. 378 (4) OF CR.P.C PRAYING
TO SET ASIDE THE ORDER OF CONVICTION AND SENTENCE
DATED 12.04.2017 MADE IN C.C.NO.28893/2014 PASSED BY
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CRL.RP No. 161 of 2021
C/W CRL.RP No. 232 of 2021
THE XV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE
COURT, BENGALURU AND ETC.,
IN CRIMINAL REVISION PETITION NO. 232 OF 2021
BETWEEN:
1. M/S VISHAL INFRASTRUCTURE
NO.1, 225/A, ANUGRAHA APARTMENTS,
RUKMINI DEVI COLONY
# "TRINSHANTHI", 180
WEST MARREDAPALLY
SECUNDERABAD - 500 026.
REP. BY MILIND KUMAR DESHPANDE
DIRECTOR,
AGE 62 YEARS
2. MR. MILIND KUMAR DESHPANDE
DIRECTOR,
AGE 62 YEARS
NO.5, 2ND MAIN, 4TH CROSS
MICO LAYOUT, AREKERE
BANNERGHATTA ROAD
BENGALURU - 560 076.
3. MS. RANJANA GERA
AGE 56 YEARS, ADDITIONAL DIRECTOR
F-21, BLOCK, F3
LAJPAT NAGAR II
NEW DELHI - 110 024.
4. MR. MOHAN PRABHAKAR DESHPANDE
NO. 68-A, SHIVAJINAGAR
ADDITIONAL DIRECTOR
NAGPUR - 440 010
5. MR. V KEDARNATH MUDDA
AGE 50 YEARS
NO.17, SHANKAR NILAYA
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CRL.RP No. 161 of 2021
C/W CRL.RP No. 232 of 2021
FFI, 8TH MAIN, 18TH CROSS
UPPER PALACE ORCHADRS
SADASHIVANAGAR
BENGALURU - 560 080.
...PETITIONERS
(BY SRI. S P KULKARNI, SENIOR ADVOCATE FOR
SRI. VASANTHAKUMAR, ADVOATE)
AND:
MRS. LALANA MURTHY
W/O. B.K.KRISHNAMURTHY
AGED ABOUT 55 YEARS
RESIDNG AT : NO.274/A
37TH CROSS, VIII BLOCK
JAYANAGAR
BENGALURU - 560 070.
...RESPONDENT
(BY SRI. JACOB ALEXANDER, ADVOCATE)
THIS CRL.RP IS FILED U/S. 378(4) OF CR.P.C PRAYING
TO SET ASIDE THE ORDER OF CONVICTION AND SENTENCE
DATED 12.04.2017 MADE IN C.C.NO.28895/2014 PASSED BY
THE XV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE
COURT, BENGALURU AND ETC.,
THESE PETITIONS HAVING BEEN HEARD AND RESERVED
ON 07.02.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY, THE COURT MADE THE FOLLOWING:-
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CRL.RP No. 161 of 2021
C/W CRL.RP No. 232 of 2021
ORDER
1. These two appeals are arising between the same parties,
therefore taken up together for consideration.
2. The petitioners herein are the directors of M/s.Vishal
Infrastructure Pvt. Ltd. and they have been convicted for
the offence under Section 138 of the Negotiable
Instruments Act (for short 'N.I Act') and they have been
sentenced to pay fine of Rs.25,00,000/- in C.C
No.28893/2014 and further they have been convicted for
the offence under Section 138 of Negotiable Instruments
Act and sentenced to pay a fine of Rs.25,00,000/- in C.C
No.28895/2014.
Brief facts of the case:
3. The respondents herein are the share holders of the
company namely of M/s.Vishal Infrastructure Pvt. Ltd.
Mr.Akshar K.Murthy being a complainant in C.C
No.28893/2014 had held shares of 18,75,000/-.
Smt.Lalana Murthy being another share holder having
share of 63,75,000. Both these respondents were eligible
to have dividend from the company. Mr.Akshar K.Murthy
had to get his dividend worth of Rs.5,62,500/-. The
company in order to pay the dividend issued two
cheques for Rs.56,250/- and Rs.5,06,250/-. Similarly
Smt.Lalana Murthy was entitled to have the dividend of
Rs.19,12,500/-. Accordingly, the company issued two
cheques worth of Rs.1,91,250/- and 17,21,250/-.
4. When the respondents presented their respective
cheques through their bank, both received endorsements
as 'payment stopped by the drawer'. Both have issued
separate legal notices regarding dishonor of cheques.
Despite notice being received by the petitioners, they
have failed to make payment, therefore, complaints
came to be registered by the respondents herein before
the jurisdictional Magistrate.
5. In order to prove their respective cases, Mr.Akshar
K.Murthy examined himself as PW.1 and got marked 30
documents as Exs.P1 to P30. Smt.Lalana Murthy
examined herself as PW.1 and got marked 30 documents
as Exs.P1 to P30. In both the cases, Sri.Milind Kumar
Deshpande representing the company examined himself
as DW.1 and got marked 7 documents as Exs.D1 to D7
and Exs.D1 to D3 respectively. The Trial Court after
appreciating the material on record, convicted the
petitioners for the offences stated supra. On appeals
being filed, the Appellate Court dismissed the appeals.
Hence these revision petitions.
6. Heard Sri S P Kulkarni, learned Senior Counsel for
the petitioners and Sri Jacob Alexander, learned counsel
for the respondents.
7. It is the contention of the learned Senior counsel for
the petitioners that both the Courts committed grave
error in recording the sentence against the petitioners
without following the principles of the Negotiable
Instruments Act and also against the evidence on record.
Therefore, the conviction is liable to be set aside.
8. It is further submitted that neither the company nor
the directors were liable to make any payment to the
respondents as on the date of the issuance of the
cheques, there was no existing debt or liability. It is
further submitted that the cheques were issued as
security for making payments in the form of dividends.
However, the respondents herein have misused those
cheques and presented them for encashment in spite of
payment having been made to them.
9. It is further submitted that the amount mentioned in
the cheques do not tally with the books of accounts or
the dividend as declared by the company. When there is
a contradiction in respect of the amount, the Trial Court
and the Appellate Court should have rejected the
complaints as not maintainable. However, both Courts
have wrongly held that the petitioners are liable to pay
the amount which is erroneous and baseless.
10. It is further submitted that the admissions of the
respondents in their evidence should have been
considered by both the Courts and should have acted
upon such admissions, in fact, those admissions are in
favour of the petitioners. Having failed to consider the
admissions resulted in passing the impugned judgments
which is required to be set aside. Making such
submission, the learned Senior counsel for the
petitioners prays to allow the petitions.
11. Per contra, Sri Jacob Alexander, learned counsel for
the respondents in both the cases submitted that the
cheques which were issued by the company much prior
to the settlement agreement arrived at between the
Sri.Krishnamurthy and the company. The respondents
herein had shares of 18,75,000 and 63,75,000
respectively as per Ex.D1. The said cheques were issued
for making payment of dividends for the year 2010-
2011, 2012-2013 respectively. The dividend declared
each year was to be paid to each shareholder on the
percentage of shares held in the company.
12. It is further submitted that even though the
petitioners took the contention that the amounts
mentioned in the cheques do not tally with the dividend
payable to the respondents, the said contention has
already been decided by both the Courts as per the
calculation given to the Courts below. Therefore, the said
contention need not be answered again as the Revisional
Court does not have jurisdiction to re-appreciate the
evidence.
13. It is further submitted that the petitioners contention
that cheques were issued as security and no liability
would be fastened to the cheques is concerned, even
though the cheques were issued as security, DW.1
admitted the liability regarding making payment as
dividend. After the issuance of the cheques, the
petitioner company deliberately issued stop-payment
instruction to the bank in order to avoid the payment. It
is further submitted that even though the petitioner
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contended that the dividend payable to the respondents
had been paid, no documents were produced to show
that payments were made. In the absence of
documentary evidence, mere oral statements regarding
payments are made is not sufficient to absolve the
liability of the petitioner.
14. It is further submitted that the Trial Court and the
Appellate Court after having appreciated the oral and
documentary evidence on record properly recorded the
conviction. No grounds are made out to interfere with
the said findings. Therefore, the petitions deserve to be
dismissed. Making such submission, learned counsel for
the respondents prays to dismiss the petitions.
15. Having heard the learned counsel for the respective
parties and also perused the findings of the Courts
below, it is an admitted fact that the respondents in both
cases were shareholders of the company. There was a
dispute between Sri.B.K.Krishnamurthy and the present
directors of the company, hence, a settlement
agreement was made between them on 29.04.2014 as
per Ex.P29.
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16. It is to be noted here that as per the settlement
agreement, the respondents herein have signed the said
agreement and in the said agreement it is mentioned
that 'receipt of consideration in full relating to the
transfer of shares'. However, there is no reference
regarding dividends payable on those shares. It is an
admitted fact that the respondents herein have sold the
shares to the third party for valuable consideration.
17. The defence of the accused is that there was no
existing debt or liability and neither the company nor
directors are liable to pay the amount mentioned in the
cheques. In fact, the father and husband of the
complainants was one of the directors of the company
and he has misused those cheques and presented them
for encashment in spite of notice issued by the accused
and directed them not to present those cheques for
encashment.
18. As per Ex.P29 which is termed as a settlement
agreement, both these complainants have affixed their
signatures and admitted the execution of the said
document. The said settlement agreement point No.2
which reads thus:
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"2. Second party hereby confirm the receipt of
consideration in full relating to the transfer of
14875000 equity shares to the prospective
buyers and nothing is accrue, due either from
the buyer or from the company either past or
present in whatsoever on such shares."
19. On reading of the above clause of the settlement
agreement which clearly indicates that the complainants
have sold equity shares to the prospective buyers.
According to them, nothing was due either from the
buyers or from the company, either past or present in
whatsoever on such shares. When the averments of the
said agreement clearly indicate that the complainants
have no rights to claim any amount in respect of shares
which they have sold or transferred, claiming the amount
based on the said shares is baseless and liability would
not be fastened either to the company or to the
directors.
20. The evidence of DW.1 clearly indicates that cheque
was issued to Krishnamurthy who is none other than the
father and husband of the complainants and who was
working as one of the directors of the said company.
Even if the evidence of DW.1 is considered as true in
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respect of dividends, the said dividend has to be paid to
the prospective buyers of the shares of the
complainants. In such a way, the accused has
successfully rebutted the presumption that the cheques
were issued other than the legally recoverable debt or
liability, however, the evidence of PW.1 in both cases
failed to demonstrate that they are entitled for the
legally recoverable debt or liability. Moreover, both the
complainants have failed to prove that there was existing
debt or liability as on the date of the alleged issuance of
the cheques. When the execution of Ex.P29 is admitted
by the complainants, clause No.2 has to be accepted as
true. Therefore, the complainants are not entitled for
any amount mentioned in the cheques. Therefore, I am
of the considered opinion that the concurrent findings
recorded by the Courts below regarding debt or liability
appear to be erroneous and untenable.
21. In the light of the observations made above, I proceed
to pass the following:-
ORDER
(i) The Criminal Revision Petitions are allowed.
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(ii) The judgment of conviction and order of
sentence dated 12.04.2017 in
C.C.No.28893/2014 passed by the XV
Additional Chief Metropolitan Magistrate
Court, Bengaluru and the judgment dated
07.12.2020 in Crl.A.No.720/2017 passed by
the LVIII Additional City Civil and Sessions
Judge, Bengaluru City, Bengaluru (CCH-59)
are set aside.
(iii) The judgment of conviction and order of
sentence dated 12.04.2017 in
C.C.No.28895/2014 passed by the XV
Additional Chief Metropolitan Magistrate
Court, Bengaluru and the judgment dated
07.12.2020 in Crl.A.No.719/2017 passed by
the LVIII Additional City Civil and Sessions
Judge, Bengaluru City, Bengaluru (CCH-59)
are set aside.
(iv) The petitioners / accused are acquitted for
the offence under Section 138 of NI Act.
(v) Bail bonds executed, if any, stand cancelled.
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(vi) If any deposits are made pursuant to Section
143 of N.I. Act, that may be refunded to the
accused in accordance with law.
Sd/-
JUDGE
