Criminal Proceedings Should Be Restored Against Those Who Don't Adhere To Settlement In Cheque Dishonour Cases: Karnataka High Court

The Karnataka High Court has observed that criminal proceedings should be restored if an accused does not adhere to settlement arrived at between parties in a case registered under Section 138 of the Negotiable Instruments Act, with an intention only to dodge the issue after settlement. A single judge bench of Justice M Nagaprasanna dismissed a petition filed by one Mathikere Jayaram Shantharam questioning the order of the Magistrate court dated 17-01-2023, which issued a fine levy warrant and notice for attachment of personal properties of the accused. It was stated that on 21-06-2011 one M/s Valdel Retail Private Limited represented by its authorised representative one Suraj P. Shroff entered into an agreement of sale for the purchase of a particular piece of land. Another agreement was entered into on 05-07-2011 for the same purpose. On 29-09-2021 it was stated that the petitioner/accused No.1 made a communication of resolution of a dispute between the two and issued cheques to be presented on various dates in favour of the respondent/complainant. On 13-10-2021 the cheque issued for `50,00,000 was dishonoured for the reason of funds being insufficient. It was stated that on 20-10-2021 a further cheque for Rs 2 crores was deposited, which again was dishonoured on account of insufficient funds. Dishonouring of cheques for payment leads the complainant to begin proceedings under Section 138 of the Negotiable Instruments Act, of 1881. When the proceedings were pending before the Magistrate, both the petitioner and the complainant agreed to amicably settle the dispute and accordingly filed a joint memo before the concerned Court. Noticing the joint memo, the concerned Court passed an order acquitting the petitioner and directing the petitioner to pay certain sums of money to the complainant and reserving liberty to recover the amount in the event he would not pay under Section 421 of the Cr.P.C. The petitioner argued that the transaction happened between the Company and the respondent. While registering the proceedings under the Act, the Company is not made a party. Therefore, the very proceeding, by not making a Company a party, was illegal. It was said “Any amount of proceedings that has taken place including a settlement, without the Company a party, is a nullity in law. Therefore, it was sought to quash proceedings under Section 421 of the Cr.P.C.” The complaint argued that the Company was not made a party, but, the case did not get closed on account of it being decided on merits. It was a settlement arrived at between the parties. Further, it was said that on account of the said settlement, if liberty was not reserved in the complainant, as was done by the learned Magistrate, the complainant would suffer at the hands of the accused which would become highly unjust. Therefore, no fault can be found with the action of the concerned Court attaching the property of the petitioner. Findings: The bench rejected the contention of the petitioner that not making the company a party to the proceedings initially, would annul all the subsequent actions which emerged out of the settlement. It said “If it were to be a proceeding that has ended on merits, it would have been an altogether different circumstance. It ends up in a settlement.” “In the case at hand, the learned Magistrate had reserved liberty to invoke Section 421 of the Cr.P.C., No fault can be found with the said order,” it added. Observing that a bleak argument was projected that a decree passed by the Court without jurisdiction was null and invalid, the court said “The argument is so bleak, to even merit any consideration as the present proceeding does not suffer from want of jurisdiction qua any Court. The proceeding is initiated under Section 138 of the Act and non-compliance of it is also initiated before the concerned Court under Section 421 of the Cr.P.C.” Finally, it held that it was rather surprising that the accused who did not get away on the merit of the matter, got away on account of a settlement, and roamed free without adhering to the conditions of the settlement."It is in such cases, the criminal proceedings should be restored if the accused do not adhere to the settlement and the intention is only to dodge the issue after settlement,” the Court concluded. Accordingly, it dismissed the petition. Appearance: Senior Advocate S.S.Naganand for Advocate Sumana Naganand for Petitioner. Senior Advocate Sandesh J Chouta a/w Advocate Krutika Raghavan for Respondent Citation No: 2024 LiveLaw (Kar) 284 Case Title: Mathikere Jayaram Shantharam AND Pramod C Case No: CRIMINAL PETITION No.2998 OF 2023 Click Here To Read/Download Order

Criminal Proceedings Should Be Restored Against Those Who Don't Adhere To Settlement In Cheque Dishonour Cases: Karnataka High Court

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Criminal Proceedings Should Be Restored Against Those Who Don't Adhere To Settlement In Cheque Dishonour Cases: Karnataka High Court

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