- 1 - NC: 2025:KHC-D:267 CRL.P No. 101737 of 2018 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 8TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR CRIMINAL PETITION NO. 101737 OF 2018 (482(Cr.PC)/528(BNSS)) BETWEEN: 1. SRI. DHRUVA TALWALKAR S/O DR. P.A. TALWALKAR, AGED ABOUT 47 YEARS, OCC- MANAGING DIRECTOR, M/S. UNIVERSAL POWER TRANSFORMER PVT. LTD., RESIDING AT DIN 31530, 312, EMBASSY WOODS, CUNNINGHAM ROAD, BENGALURU-560 001. 2. SRI.NARASIMHA DWARKANATH S/O SRI. S.N.R. SASTRY AGED ABOUT 62 YEARS, OCC- DIRECTOR M/S. UNIVERSAL POWER TRANSFORMER, DIN 319008, RESIDING AT #65, 4TH MAIN, 18TH CROSS MALLESWARAM, BENGALURU-560 055. …PETITIONERS (BY SRI. SHIVRAJ S. BALLOLI, ADVOCATE) AND: M/S. SWASTIK WIRE INDUSTRIES A PARTNERSHIP FIRM REGISTERED UNDER THE PARTNERSHIP ACT, 1932, HAVING ITS REGISTERED OFFICE AT: M-4, INDUSTRIAL ESTATE GOKUL ROAD, HUBLI-580030, REPRESENTED BY ITS MANAGING PARTNER MR.VIKRAM JAIN. …RESPONDENTS (BY SRI. G.I. GACHCHINAMATH, ADVOCATE) THIS CRIMINAL PETITION IS FILED U/S 482 OF CR.P.C. SEEKING TO QUASH THE ENTIRE PROCEEDINGS IN CC NO.5106/2016 ARISING OUT OF PCR NO.273/2016 ON THE FILE OF THE JMFC-I COURT, HUBBALLI FOR THE COMMISSION OF THE ALLEGED OFFENCES PUNISHABLE U/S 406, 420 AND 114 OF THE IPC, 1860 IN SO FAR AS THE SAME RELATES TO PETITIONERS/ACCUSED NO.2 AND 3 ARE CONCERNED. Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.01.21 07:28:40 +0530 - 2 - NC: 2025:KHC-D:267 CRL.P No. 101737 of 2018 THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR ORAL ORDER 1. The petitioners challenge the cognizance taken by the learned Magistrate for the offences punishable under Sections 406, 420, and 114 of the Indian Penal Code (IPC). 2. The respondent filed a private complaint under Section 200 of the Code of Criminal Procedure, 1973 (Cr.P.C.), alleging that he is a manufacturer of copper wires and strips, and the petitioners, who are regular customers, used to purchase these items on credit and maintained a running account. In order to partially discharge the outstanding balance due to the complainant, accused No.2 issued a cheque dated 16.02.2016 for ₹41,97,857/- in favor of the complainant to clear a legally recoverable debt. It was alleged that the accused persons assured the complainant that they had sufficient funds in their account and that the cheque would not be dishonored. Relying on their assurance, the complainant presented the cheque for realization; however, it was dishonored with the endorsement “Refer to Drawer,” thereby committing the alleged offences. 3. Learned counsel for the petitioners argued that there are no allegations in the complaint to substantiate that the petitioners induced the complainant to supply copper wires and strips with an intention to deceive at the inception. Therefore, the - 3 - NC: 2025:KHC-D:267 CRL.P No. 101737 of 2018 essential ingredients to constitute offences under Sections 406 and 420 of IPC are conspicuously absent. In the absence of such essential elements, the cognizance taken by the learned Magistrate lacks substance. In support of his contentions, he relied on the following decisions: i) Vijay Kumar Ghai & Others vs. The State of West Bengal & Others ii) A.M. Mohan vs. The State iii) Umar Farooq vs. State of Karnataka 4. In response, learned counsel for the complainant argued that the petitioners issued a cheque towards a legally recoverable debt, assuring that it would be honored. However, contrary to their assurance, the cheque was dishonored due to insufficient funds. He contended that the petitioners committed criminal breach of trust and cheating. He further submitted that parallel proceedings under IPC and Section 138 of the Negotiable Instruments Act, 1881 (NI Act), are maintainable. In support of his arguments, he relied on the following decisions: i) Sangeetaben Mahendrabhai Patel vs. State of Gujarat & Another ii) Rashmi Tandon & Another vs. The State of Karnataka & Another iii) Prakash vs. Vijaykumar & Another - 4 - NC: 2025:KHC-D:267 CRL.P No. 101737 of 2018 5. The arguments of the learned counsel for both parties have been duly considered. 6. The Apex Court in Sangeetaben’s case held that while proceedings under the NI Act require a formal complaint to be filed, proceedings under the IPC do not require such a condition. There may be some overlap in facts, but the ingredients of the offences are different. Therefore, the contention of the complainant that parallel proceedings under IPC and Section 138 of the NI Act are maintainable is accepted. 7. In Vijay Kumar Ghai’s case, the Apex Court ruled that to attract the ingredients of Sections 406 and 420 of IPC, the complainant must prima facie establish that the accused intended to cheat or defraud the complainant right from the inception. Furthermore, it must be shown that the alleged act of cheating resulted in wrongful loss to the complainant and corresponding wrongful gain to the accused. In the absence of these elements, proceedings are not permissible in law. 8. In the instant case, there is no allegation that the petitioners/accused induced the complainant to supply copper wires and strips with an intention to cheat. The complainant has admitted that there was a running account maintained by the accused and that partial payments were made towards the purchase of the goods. Therefore, the allegation that the petitioners/accused issued a cheque promising that it would be - 5 - NC: 2025:KHC-D:267 CRL.P No. 101737 of 2018 honored does not satisfy the essential elements to constitute offences under Sections 406 and 420 of IPC. 9. Learned counsel for the petitioners, upon receiving instructions, submitted that after the issuance of the cheque, the company went into liquidation, and hence, the cheque could not be honored. This claim is disputed by the complainant, and the dispute can be adjudicated before the appropriate forum. 10. For the foregoing reasons, I am of the considered view that the continuation of criminal proceedings against the petitioners would amount to an abuse of the process of law. Accordingly, the proceedings are liable to be quashed. Accordingly, the petition is allowed. The impugned proceedings in CC No.5106/2016 on the file of learned JMFC-I Court, Hubballi, are hereby quashed. Sd/- (HEMANT CHANDANGOUDAR) JUDGE JTR Ct:vh List No.: 1 Sl No.: 61