- 1 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JULY, 2025 BEFORE THE HON'BLE MS. JUSTICE J.M.KHAZI CRIMINAL PETITION NO. 4876 OF 2023 (482(Cr.PC) / 528(BNSS)) BETWEEN: 1. TIRUMALA CONSTRUCTIONS A PARTNERSHIP FIRM BEARING REGISTRATION NO.65/2007-8 NO.326, 5TH MAIN, 10TH CROSS, 4TH STAGE, VINAYAKA LAYOUT NAGARABHAVI, BENGALURU-560072 REPRESENTED BY ITS PARTNERS 2. SRI R MOHAN S/O SRI M RANGANATH PARTNER OF TIRUMALA CONSTRUCTIONS AGED ABOUT 76 YEARS NO.326, 5TH MAIN, 10TH CROSS, 4TH STAGE, VINAYAKA LAYOUT NAGARABHAVI, BENGALURU-560072 3. SRI PRAVEEN MOHAN S/O MOHAN R PARTNER OF TIRUMALA CONSTRUCTIONS AGED ABOUT 43 YEARS, NO.326, 5TH MAIN, 10TH CROSS, 4TH STAGE, VINAYAKA LAYOUT NAGARABHAVI, BENGALURU-560072 …PETITIONERS (BY SRI. CHETHAN KUMAR K, ADVOCATE) Digitally signed by REKHA R Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 AND: M/S. KARE CONSTRUCTIONS A PARTNERSHIP FIRM REGISTERED BEARING NO.SJN-F1107/2014-15 OFFICE AT BEARING NO.1, 1ST FLOOR, 4TH STREET, KAMARAJ ROAD CROSS SIVAN CHETTY GARDEN CROSS BANGALORE-560042 REPRESENTED BY ITS PARTNERS / AUTHORIZED SIGNATORY MR PREETHAM KIRAN …RESPONDENT (BY SRI. CHANDRASHEKAR H B, ADVOCATE) THIS CRL.P IS FILED U/S 482 CR.PC BY THE ADVOCATE FOR THE PETITIONER PRAYING TO QUASH ORDER DATED 18.08.2022 PASSED IN C.C.NO.26752/2022 PENDING BEFORE XXXVIII A.C.M.M, AT BENGALURU FOR THE ALLGED OFFENCES P/U/S 138 OF N.I ACT R/W SEC.200 OF CR.PC AND TO ACQUIT THE PETITIONERS. THIS PETITION, COMING ON FOR DICTATING ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MS. JUSTICE J.M.KHAZI ORAL ORDER Petitioners who are arraigned as accused Nos.1 to 3 have filed this petition under Section 482 Cr.P.C, with a prayer to quash the order dated 18.08.2022 in C.C.No. 26752/2022 on the file of XXXVIII Additional Chief Metropolitan Magistrate, Bengaluru for the offences - 3 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 punishable under Section 138 of Negotiable Instrument Act. (for short "N.I.Act"). 2. In support of the petition, the petitioners have contended that the complaint filed by respondent is based on joint development agreements (JDA) which are civil in nature. Clause 'O' of JDA dated 20.02.2015 (Annexure-E) and clause '26' of (Annexures F and G ) clearly state that any dispute regard to the project/agreement shall be referred to arbitration. Respondent filed Civil Miscellaneous petition in CMP.No.456/2022 before this Court for referring the dispute to the Arbitrator, it was allowed on 02.12.2022 appointing Arbitrator. As per the order of the High Court, respondent filed statement of claim against the petitioners in Arbitration case No.126/2023 and Arbitrator issued notice to the petitioners to file written statement and said proceedings is still pending. Despite knowing this respondent has filed cheque bounce case against the petitioners. - 4 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 3. Earlier respondent and petitioners were partners and developers. They have constructed building by name "Tirumal LN Luxuria" by entering into JDA with land owner. Later they cancelled registered JDA dated 30.10.2014 vide cancellation deed dated 21.10.2016. On the same day they entered into MOU (Ex.P5), wherein, it is alleged that accused agreed to pay Rs.2,06,00,000/- and issued disputed cheques by way of security. It is alleged that out of the said sum accused have paid Rs.1,69,00,000/- and Rs.37 lakhs is balance. It clearly goes to show that respondent has misused the cheques and filed the complaint. In the complaint it is alleged that the balance due is Rs.78,45,494/-, but complaint is filed for Rs.80 lakhs. 4. There is no clause regarding the interest payable in the JDA and therefore, it is for the Arbitrator to decide whether interest is payable and if so what extent. Respondent on its own has calculated interest at 24% p.a., and claiming Rs.97,20,358/- as interest. The complaint is - 5 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 filed after 5 years to harass the petitioners. Continuation of the proceedings would amount to abuse of the process of the Court and hence, the petition. 5. In support of his arguments, learned counsel for petitioners has relied upon the following decisions: i) K.N.Raju Vs. Manjunath T V. (K.N.Raju)1 ii) Sami Labs Limited Vs. Mr.M.V.Joseph (Sami Labs)2 iii) Dashrathbhai Trikambhai Patel Vs. Hitesh Mahendrabhai Patel and anr (Dashrathbhai)3 iv) Bidar Urban Co-Operative, Bank Ltd,. Vs Girish (Girish)4 6. On the other hand learned counsel for respondent has filed statement of objections stating that the petitioners have questioned the validity or otherwise of proceeding initiated by the respondent under Section 138 of N.I Act. After recording sworn statement cognizance is taken and process is issued against the petitioners. Unless 1 Crl.A.No.302/2010 dated 16.03.2018 2 ILR 2019 KAR 1953 3 Crl.A.No.1497/2022 dated 11.10.2022 4 (2021) 1 AIR Kar 600 - 6 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 the taking of cognizance is questioned before the proper forum, petitioners cannot challenge the entire proceedings. Since taking of cognizance is discretionary power of Magistrate and it required to be challenged before the Sessions Court and the present petition is not maintainable. The grounds urged is the defence of the petitioners, which they can canvass at the trial. When the matter is in the pre-trial stage, the defence cannot be used before this Court in a petition under Section 482 Cr.P.C. The petition is not maintainable for the reason that no case is made out touching irregularity vitiating proceedings. 7. Even though there is arbitration clause parallel proceedings are not a bar. It is a fact that the complaint under challenge is in respect of partial payment of the amount and the arbitral proceedings is in respect of recovery of entire amount together with interest. In view of settled proposition of law there is no bar to initiate the recovery proceedings and criminal proceeding under - 7 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 N.I.Act. Petitioners have appeared before the trial Court and secured time to cross-examine the respondent and have approached this Court. In the light of the various decisions of the Hon'ble Supreme Court this is a premature stage to quash the criminal proceedings and prays to dismiss the petition. 8. In support of his arguments, learned counsel for respondent has relied upon the following decisions: i) M/s Durga Project INC, Vs. Sri B.G.Babu Reddy (B.G.Babu)5 ii) Rathish Babu Unnikrishnan Vs. The State (Govt.of NCT of Delhi) and Anr (Rathish Babu)6 9. Heard arguments and perused the record. 10. It is not in dispute that the petitioners and respondent entered into a joint development agreement along with the owner of the land and M/s Krishna constructions for the project "Tirumala LN Luxuria" dated 5 Crl.A.No.434/2014 c/w Crl.A.No.433/2014 dated 15.02.2024 6 2022 Live Law (SC) 413 - 8 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 15.09.2014 and "Tirumala Kare Gruham" dated 20.02.2015. Later, at the request of petitioners, the "Tirumala LN luxuria" was not continued by respondent and the joint development agreement and GPA were cancelled through cancellation deed dated 21.10.2016. 11. It is the case of the respondent that the accused agreed that the amount invested in Tirumala LN Luxuria would be adjusted in the Tirumala Kare Grahma project. It is also not in dispute that as per the memorandum of understanding dated 21.10.2016, accused persons issued four cheques for a total sum of Rs.2,06,00,000/. "Tirumala Kare Graham" project was completed and during sale of the flats, both petitioners and respondent have equally shared the sale consideration. However, according to the respondent, out of Rs.1,42,20,994/- paid in excess by the respondent, a sum of Rs.31,45,494/- was due with regard to Tirumala LN luxuria, as per the memorandum of understanding dated 21.10.2016, out of Rs.2,06,00,000/- petitioners have paid - 9 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 only Rs.1,69,00,000/- and therefore Rs.37,00,000/- was due from them. 12. The respondent had paid a sum of Rs.20 lakhs to the petitioners through cheque and out of it, they have repaid only a sum of Rs.10 lakhs and remaining 10,00,00/- was due. 13. Thus, in all, according to the respondent, a total sum of Rs.78,45,494/- was due from the petitioners and together with interest at 24% per annum, as on 30.11.2021 in all sum of Rs.1,75,73,852/- was due and when the respondent approached the petitioners through common friend, they agreed to pay a sum of Rs.1,75,00,000/- lakhs and to show their bonafides issued cheque No.015188 dated 03.12.2021 for Rs.20,00,000/- and directed the respondent to present the said cheque and also cheque No.012948 for Rs.50 lakhs, cheque No.012950 for Rs.10 lakhs and balance would be paid within two weeks. - 10 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 14. Accordingly, the respondent presented the cheque Nos.015188 for Rs.20 lakhs, cheque No.012948 for Rs.50 lakhs, cheque No.012950 for ₹10,00,000/-. However, they are returned for want of "sufficient funds". Admittedly, the respondent has sent legal notice to the petitioners to their address and they have been returned unserved 'as not claimed'. Consequently, the petitioners have not come up with any specific defence with regard to the said cheques. Even though there is arbitration clause and in fact, the sole arbitrator was appointed and his award is also forthcoming, wherein the Arbitrator has clearly held that respondent is entitled for Rs.78,45,494/- as principal amount and interest at the rate of 24% per annum from 01.04.2019 till 01.03.2023 and future interest at 18% from 02.03.2023 till recovery of the entire amount. The Arbitrator has also awarded Rs.5 lakhs as damages and compensation. - 11 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 15. Admittedly, the proceedings before the criminal Court under Section 138 of N.I.Act., is not for recovery of the amount due under the cheques, but to punish the petitioners for not arranging for the amount due under the said cheques. Since the cheques presented is for a total sum of Rs.80 lakhs, it is towards repayment of part of the debt or liability, which is legally recoverable, the complaint is perfectly maintainable. As held by the Hon'ble Supreme Court in Sunil Todi Vs. State of Gujarat and Anr. (Sunil Todi)7, cheque issued towards security of the amount due is also covered by Section 138 of the N.I. Act, when after the debt becomes due, payment is not made. Of course, the contentions raised in this petition and the grounds urged in the defence of petitioners is to be established at the trial. There is prima facie material to proceeded against the petitioners for the dishonor of cheques. The disputed facts cannot be decided in petition under Section 482 Cr.P.C and as such the petition is liable to be rejected and accordingly the following: 7 AIR 2022 SC 147 - 12 - HC-KAR NC: 2025:KHC:27290 CRL.P No. 4876 of 2023 ORDER i) Petition find by the accused under Section 482 Cr.P.C is hereby rejected. ii) The Registry is directed to send a copy of this order to the trial Court through e-mail. Sd/- (J.M.KHAZI) JUDGE ASN List No.: 1 Sl No.: 52