Criminal proceedings under Section 138 of N.I. Act can coexist with arbitration clauses if the cheques represent a legally enforceable debt.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21^ST 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 Digitally AGED ABOUT 76 YEARS signed by NO.326, 5TH MAIN, 10TH CROSS, REKHA R

4TH STAGE, VINAYAKA LAYOUT Locatio n:

NAGARABHAVI, BENGALURU-560072 High Court of Karnataka 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)

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 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.

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