IMPORTANT POINT
Parallel proceedings under the Arbitration Act and criminal action under Section 138 of the N.I. Act can coexist, as established by Supreme Court precedents.

JUDGMENT :

(Anil B. Katti, J.)

Appellant/complainant feeling aggrieved by Judgment of Trial Court on the file of XXII Addl. Chief Metropolitan Magistrate, Bangalore city, in C.C.No.9212/2019 and C.C.No.9213/2009 dated 11.04.2014, preferred these appeals.

2. Parties to both the appeals are referred with their ranks as assigned in the Trial Court for the sake of convenience.

3. These two cases are arising out of joint development agreement dated 27.01.2005 between complainant and accused, further, the cheque issued by accused in respective case for return of security deposit came to be dishonoured and the common question of law is to be decided in both these cases. Hence, both the appeals are taken up together for consideration.

4. Heard the arguments of both sides.

5. After hearing the arguments of both sides and on perusal of the Trial Court records, so also the impugned Judgment under appeal, the following points arise for consideration:

i) Whether the impugned Judgment under appeal passed by the Trial Court in acquitting accused for the offence punishable under Section 138 of N.I. Act is perverse, capricious and legally not sustainable?

ii) Whether interference of this Court is required?

6. On careful perusal of oral and documentary evidence placed on record, it would go to show that Complainant-M/s.Durga Projects Inc., is a registered partnership firm entered into registered joint development agreement dated 27.01.2005 with B.G.Babu Reddy, B.G.Seenappa and B.G.Narayana Reddy. The complainant has deposited a sum of Rs.27,00,000/- as refundable security deposit, which shall be refunded by the above referred persons after completion of the construction/project and after delivery of owner's share without any interest thereon. Out of them, B.G.Narayana Reddy and B.G.Babu Reddy issued cheque in respective cases referred above for refund of security deposit being their share amount. The said cheque, on presentation by complainant, came to be dishonoured. Therefore, complainant filed complaint against B.G.Narayana Reddy and B.G.Babu Reddy for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as `N.I. Act' for the sake of brevity).

7. The Trial Court, after hearing arguments of both sides and on appreciation of oral and documentary evidence placed before it, acquitted B.G.Narayana Reddy and B.G.Babu Reddy in respective cases referred above vide Judgment dated 11.04.2014.

8. Complainant has challenged the said Judgment of acquittal in both these appeals contending that finding of the Trial Court that pursuant to joint development agreement dated 27.01.2005, the nature of dispute attracts civil action and without approaching the arbitrator under Arbitration and Conciliation Act, the complainant cannot maintain the complaint against accused for the offence punishable under Section 138 of the N.I. Act, cannot be legally sustained. It is open for the complainant to maintain parallel proceedings, both by invoking the provisions of Arbitration Act and also penal action in terms of Section 138 of N.I. Act.

9. Per contra, learned counsel for the accused in both the appeals have argued that in view of the arbitration clause in the joint development agreement dated 27.01.2005, the dispute ought to have been raised by the complainant before the Arbitrator and criminal action cannot be maintained for the offence under Section 138 of N.I. Act. The liability of accused to pay the amount covered under the cheque which was given as a security refundable deposit could arise only when the completion certificate is issued by the competent authority and the possession is delivered to the accused.

10. On careful perusal of the Judgment of the Trial Court in both the cases, it would go to show that the Trial Court having recorded the finding that nature of dispute between the parties purely attracts the civil nature and without approaching the arbitrator under Arbitration and Conciliation Act, the complaint filed