- 1 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CRIMINAL PETITION NO. 13530 OF 2024 BETWEEN: 1. SRI. VIJAY RAJ AGED ABOUT 43 YEARS S/O SRI. NARAYAN (LATE) RESIDENT OF NO.K-140/A 21ST CROSS, BHUVANESHWARINAGARA DASARAHALLI MAIN ROAD BENGALURU-560 024. ALSO BUSINESS ADDRESS AT SHOP AT NO.889, MES ROAD JALAHALLI, BENGALURU CITY KARNATAKA PIN-560013. …PETITIONER (BY SRI. SHIVAKUMAR .U, ADVOCATE) AND: 1. THE STATE OF KARNATAKA BY R.T.NAGARA POLICE STATION J.C.NAGARA SUB-DIVISION BENGALURU CITY- 560 032 REPRESENTED BY SPP 2. SRI. ELUMALAI .P AGED 40 YEARS S/O PONNAN RESIDING AT NO.16 MAHARAJA STREET, UDAYANAGARA Digitally signed by AL BHAGYA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 DOORAVANI NAGARA, BENGALURU 560 016. …RESPONDENTS (BY SRI. RAHUL RAI, HCGP FOR R1; SRI. R. MANJUNATH, ADVOCATE FOR R2) THIS CRL.P IS FILED U/SEC.482 CR.PC (FILED U/S 528 BNNS) PRAYING TO QUASH THE ENTIRE PROCEEDINGS IN RESPECT OF THE CHARGE SHEET REGISTERED AS C.C.NO.7961/2023, NOW PENDING ON THE HONBLE 8TH ADDL. CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY, FOR THE ALLEGED OFFENCES P/U/S 506, 34, 504, 420, 465, 467, 468 AND 471 OF IPC. THIS PETITION, COMING ON FOR FRESH MATTERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER The present petition is filed by the petitioner – accused No.1 seeking quashing of the proceedings in C.C.No.7961/2023 for offences punishable under Sections 506, 34, 504, 420, 465, 467, 468 and 471 of IPC. 2. Learned counsel for the petitioner, reiterating the grounds urged in the petition, submits that respondent No.2, despite there being several contractual arrangements between the petitioner, other accused, and - 3 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 respondent No.2 – complainant, has attempted to give a criminal colour to what is essentially a civil dispute. It is contended that the complainant has launched a criminal prosecution alleging cheating and forgery, though the dispute pertains to performance of agreements. Referring to the first two agreements executed between the petitioner, other accused, and respondent No.2, it is pointed out that the parties had initially agreed for transfer of CL-9 license in favour of respondent No.2. Under these agreements, respondent No.2 – complainant paid a sum of Rs.20,75,000/- to the Guarantor, C.M. Lokesh. Subsequently, under a second agreement dated 22.03.2019, an additional sum of Rs.1,35,00,000/- was deposited with the said Guarantor. It was specifically agreed that only upon deposit of the balance sale consideration, the full consideration of Rs.2,35,00,000/- would be paid to the license holder, namely, the present petitioner. - 4 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 3. Adverting to the third agreement, learned counsel submits that since the petitioner could not complete transfer of the license, respondent No.2 – complainant entered into a fresh agreement dated 25.09.2020 with one K. Sharada for transfer of CL-9 license, wherein the repayment of amounts earlier deposited with the Guarantor was specifically provided. 4. On the basis of these three agreements, it is contended that despite having entered into a fresh agreement with K. Sharada, respondent No.2 has lodged a false complaint against the petitioner. It is urged that such complaint is nothing but an arm-twisting tactic to coerce the petitioner into meeting his demands regarding return of the money allegedly due. 5. Per-contra, learned counsel for the defacto complainant – respondent No.2 contends that in reality, the advance consideration of Rs.1,80,00,000/- was paid directly to petitioner No.1. It is alleged that petitioner - 5 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 No.1, in collusion with other accused, has forged the third agreement purportedly entered into between the complainant and said K. Sharada. It is therefore argued that there are sufficient materials to proceed against the petitioner and no ground is made out to interfere. 6. Learned HCGP, adopting the submissions of respondent No.2, submits that this is a fit case where the petitioners are required to face trial and therefore, no indulgence is warranted at this stage. 7. Having heard learned counsel on both sides and having perused the material placed on record, this Court has given its anxious consideration to the three agreements relied upon by the petitioner – accused No.1. 8. On close examination of the first agreement dated 10.10.2018, it is evident that respondent No.2 – complainant paid a sum of Rs.20,75,000/- out of the total sale consideration of Rs.2,20,75,000/-. The said amount was paid to one C.M. Lokesh, who acted as the Guarantor. - 6 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 For clarity, this Court deems it appropriate to extract Clause-1 of the said agreement. "1. That the consideration for the transfer of the license is agreed to be a sum of Rs.2,20,75,000/- (Rupees Two Crore Twenty Lakhs Seventy Five Thousand Only) and out of the said sum of Rs.2,20,75,000/- (Rupees Two Crore Twenty Lakhs Seventy Five Thousand Only) a sum of Rs.20,75,000/- (Rupees Twenty Lakhs Seventy Five Thousand Only) has been paid today that is the date of execution of this agreement from transferee P.Elumalai to the Guarantor C.M.Lokesh as a confirmation advance amount and C.M.Lokesh will be individual responsible for the confirmation advance amount. And the remaining sum of Rs.2,00,00,000/- (Rupees Two Crore Only) shall be paid in two (2) payments, first payment of Rs.1,00,00,000/- (Rupees One Crore Only) within 60 days and second payment of Rs.1,00,00,000/- (Rupees One Crore Only) within 120 days from the date of this agreement." 9. This Court further deems it appropriate to extract Clause-1 of the second agreement for transfer of license dated 22.03.2019, which reads as follows: "1. That the consideration for the transfer of the License is agreed to be a sum of Rs.2,35,00,000/- (Rupees Two Crores Thirty Five Lakhs Only) and out of - 7 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 the said sum Rs.2,35,00,000/- (Rupees Two Crore Thirty Five Lakhs Only), a sum of Rs.1,35,00,000/- (Rupees One Crore Thirty Five Lakhs Only) has been paid today as confirmation advance that is the date of execution of this agreement from the Transferee P.Elumalai to the Guarantor C.M.Lokesh as a confirmation advance amount as Transferee P.Elumalai came in touch to License Holder through Guarantor - C.M.Lokesh. C.M.Lokesh will be holding the advance amount of Rs.1,35,00,000/- till the date of License get transferred. The Guarantor - C.M.Lokesh will be solely responsible for the advance amount. The License Holder is not responsible for advance amount of Rs.1,35,00,000/- on the date of License Transfer, full amount of Rs.2,35,00,000/- will be paid to the License Holder. Till the date of License Transfer, the advance amount of Rs.1,35,00,000/- will be in the custody of Guarantor C.M.Lokesh and the remaining sum of Rs.1,00,00,000/- shall be paid by the Transferee P.Elumalai in one payment within 120 days from the date of this agreement in the following manner; a) Rs.20,00,000/- by way of cheque bearing No.000001 dated ______ drawn on HDFC Bank, Bangalore. b) Rs.20,00,000/- by way of cheque bearing No.000002 dated _______ drawn on HCFC Bank, Bangalore. c) Rs.10,00,000/- by way of cheque bearing No.000003 dated ________ drawn on HDFC Bank, Bangalore. - 8 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 d) Rs.50,00,000/- by way of cash." 10. Insofar as the disputed third agreement for transfer is concerned, Clause-7 assumes significance, and the same is extracted herein below: "7. The parties agree that the Agreements for Transfer of liquor license dated 10.10.2018 and 22.03.2019 entered into between Transferee and the Facilitators are hereby declared as cancelled with immediate effect upon execution of this Agreement. The parties further agrees that the amounts though not as much as referred in the Agreements dated 10.10.2018 and 22.03.2019 but whatever paid by the Transferee to the Facilitators has beenn paid to the Transteror and neither the Transferor nor the Transferee shall have no claim whatsoever over the Facilitators under the Agreements for Transfer of liquor license dated 10.10.2018 & 22.03.2019." 11. On a close scrutiny of all the three agreements and more particularly in the backdrop of the serious challenge raised by the complainant to the third agreement for transfer of the CL-9 license, this Court is of the considered view that the dispute essentially bears the character of a civil dispute. The complainant has - 9 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 contended that though the recitals in the first two agreements specifically disclose that the monies were deposited with the Guarantor - Accused No.2, namely, C.M. Lokesh, in reality, the said sums were received by petitioner No.1 – the license holder. On the other hand, the stand of petitioner No.1 is that the recitals unequivocally establish that the amounts were deposited only with the Guarantor and that the license holder was entitled to receive the sale consideration only upon deposit of the entire consideration through the Guarantor. 12. The genesis of the present controversy lies in the agreement for transfer of the CL-9 license dated 25.09.2020. The petitioner asserts that as he was unable to effect transfer of his own CL-9 license, he facilitated the transfer of a license held by one K. Sharada. The petitioner has relied heavily on this third agreement, contending that it supersedes the earlier agreements and that Clause-7 of the said agreement, already extracted supra, clearly records repayment made by petitioner No.1. Thus, - 10 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 according to the petitioner, the said agreement clinches the issue and demonstrates that no liability could be fastened upon him in the manner alleged by respondent No.2. 13. Having examined these agreements, this Court finds that complex and disputed questions of fact are at the core of the controversy. The case set up by respondent No.2 is that though the payments were ostensibly made to the Guarantor, the same in fact reached the hands of petitioner No.1. This assertion, however, is stoutly denied by petitioner No.1, who relies upon the recitals in the agreements to demonstrate otherwise. These rival versions cannot be resolved in proceedings under Section 482 of Cr.P.C. nor through a criminal prosecution, but are matters falling squarely within the realm of a civil suit for recovery. It is only in such proceedings, upon adducing of evidence, that the true nature of the transaction and the flow of money can be determined. - 11 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 14. Learned counsel appearing for petitioner No.1 has also drawn the attention of this Court to the fact that similar complaints were filed by one Sharada and that in those cases, the Investigating Officers, after due enquiry, have submitted a ‘B’ report. It is thus urged that the present criminal complaint lodged by respondent No.2 is an afterthought and is nothing more than an attempt to pressurize the petitioner into repayment, thereby converting a civil dispute into a criminal prosecution. 15. Be that as it may, on an overall appreciation of the agreements placed on record, it is not in dispute that the monies under the first two agreements were deposited with the Guarantor – C.M. Lokesh. These agreements themselves relate to the proposed transfer of the CL-9 license between the petitioner – accused No.1, the license holder, and respondent No.2 – complainant. In these circumstances, this Court is of the considered opinion that resorting to criminal proceedings, when the underlying dispute is clearly civil in nature, is wholly unwarranted. - 12 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 Permitting continuation of such proceedings would amount to an abuse of the process of law. Accordingly, in order to secure the ends of justice, this Court finds it just and proper to quash the impugned proceedings, while at the same time reserving liberty to respondent No.2 to avail himself of the appropriate civil remedy by instituting a suit for recovery in accordance with law. ORDER (i) The petition stands allowed. (ii) The charge sheet registered as C.C.No.7961/2023 arising out of Crime No.30/2023 and pending on the file of the VIII Additional Chief Metropolitan Magistrate, Bengaluru City, for the offences punishable under Sections 506, 34, 504, 420, 465, 467, 468 and 471 of the IPC, is hereby quashed insofar as it concerns petitioner – accused No.1. (iii) Liberty is, however, reserved in favour of respondent No.2 – complainant to avail appropriate remedies before the - 13 - HC-KAR NC: 2025:KHC:34664 CRL.P No. 13530 of 2024 competent Civil Court in the manner known to law. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE NBM List No.: 1 Sl No.: 10