A settlement agreement in a cheque dishonor case subsumes the original complaint, and failure to comply with the settlement terms gives rise to a fresh cause of action under Section 138 of the Negotiable Instruments Act, allowing for recovery under Section 421 of the Cr.P.C.

ORDER

M. Nagaprasanna, J.

The petitioner/accused No.1 has filed the instant criminal petition seeking the following reliefs:

(a) Call for the records in C.C.No.52590 of 2022 from the file of XXXIV Additional Chief Metropolitan Magistrate, Mayo Hall, Bengaluru arising out of PCR No.50022 of 2022;

(b) Set aside the order dated 15-12-2022 (Annexure-A) in C.C.No.52590 of 2022 on the file of the XXXIV Additional Chief Metropolitan Magistrate, Mayo Hall, Bengaluru arising out of PCR No.50052 of 2022 for offence under Section 421 of Cr.P.C., 1973.

(c) Set aside Order dated 22-02-2023 (Annexure-B) passed by the learned XXXIV Additional Chief Metropolitan Magistrate, Mayo Hall, Bengaluru.

(d) Grant such other reliefs that this Hon'ble Court may deem fit in the interest of justice'

2. Heard Sri S.S.Naganand, learned senior counsel appearing for the petitioner and Sri Sandesh J. Chouta, learned senior counsel appearing for the respondent.

3. Facts, in brief, germane are as follows:-

On 21-06-2011 one M/s Valdel Retail Private Limited (referred to as 'the Company' for short hereinafter), represented by its authorized representative one Mr.Suraj P. Shroff enters into an agreement of sale for purchase of a particular piece of land. Another agreement is entered into on 05-07-2011 for the same purpose. On 29-09-2021 the petitioner/accused No.1 makes a communication of resolution of a dispute between the two and issues 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 presented which comes to be dishonoured for the reason of funds being insufficient. On 20-10-2021 a further cheque for 2/- crores was deposited, which again gets 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, 1881 (hereinafter referred to as 'the Act') by causing a legal notice on 13-11-2021.

4. When the proceedings were pending before the learned Magistrate, both the petitioner and the complainant agree 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 had agreed to pay 2,99,83,904/- by way of demand draft. That having not been done, the respondent invokes Section 421 of the Cr.P.C., The learned Magistrate, on 17-01-2023, issues a fine levy warrant against the petitioner and the other accused -accused No.2 who is not before the Court. On 21-02-2023, it is the averment that the jurisdictional Police knocks at the doors of the Company at a particular address and seeks to attach moveables. It is then the representative of the Company files an application and informs the Court that the Company is not in existence in the said address and submits a demand draft for 10,00,000/-. On the same day, the respondent files details of the personal immovable properties of the petitioner and sought attachment of the same. The Court again issues notice for attachment of personal properties of the petitioner. It is then the subject criminal petition is preferred.

5. The learned senior counsel Sri S.S. Naganand appearing for the petitioner would contend that the transaction happens between the Company and the respondent. While registering the proceedings under the Act, the Company is not made a party. Only representative of the Company is made a party. Therefore, the very proceeding, by not making a Company a party, was illegal. He would submit that if the Company is not made a party all proceedings would tumble down. He places reliance upon a judgment of the Apex Court in the case of ANEETA HADA v. GODFATHER TRAVELS AND TOURS PRIVATE LIMITED, (2012) 5 SCC 661 to buttress