(PER: THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY)

1. The above captioned two criminal petitions are filed by the petitioner who is an accused, with a prayer to quash the entire proceedings in C.C.No.814/2023 arising out of PCR No.20/2023 and C.C.No.815/2023 arising out of PCR No.19/2023 pending before the Court of Civil Judge and JMFC, Hagaribommanahalli, Vijayanagara district for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the NI Act ').

2. Heard learned counsel for the parties.

3. Learned counsel for the petitioner submits that respondents herein and another had deposited money with the petitioner as investment and therefore, it cannot be said that petitioner was due to discharge legally recoverable debt. He submits that out of Rs.20 lakhs received from the respondents and another, petitioner has paid a sum of Rs.6 lakhs and therefore part payment has been already made. Under the circumstances proceedings -4- NC: 2025:KHC-D:10583 CRL.P No. 102370 of 2024 C/W CRL.P No. 102369 of 2024 HC-KAR under Section 138 of the NI Act could not be initiated against the petitioner. In support of his argument, he has placed reliance on Section 56 of the Negotiable Instruments Act, 1988. He submits that the sum covered in the cheques in question is lesser than the amount paid by the respondents to the petitioner and therefore proceedings under Section 138 of the NI Act could not have been initiated. He also submits that cheques in question were issued as a security after the amount was deposited by the respondents with the petitioner and therefore the same could not have been presented for encashment.

4. In support of his argument, he has placed reliance on the judgment of the Hon'ble Supreme Court in the case of Gunmala Sales (P) Ltd. Vs.Anu Mehta reported in (2015)1 SCC 103 and the judgment of the Hon'ble Bombay High Court in the case of Vishnupant s/o Chaburao Khaire vs. Kailash s/o Balbhir Madan reported in 2010 SCC OnLine Bom 133.

NC: 2025:KHC-D:10583 CRL.P No. 102370 of 2024 C/W CRL.P No. 102369 of 2024 HC-KAR

5. From a reading of the complaints filed in these two cases, it is found that the complainants who are the father and son and another Smt.Huligemma Vammari, totally had invested a sum of Rs.20 lakhs in the petitioner Company. Out of the aforesaid amount of Rs.20 lakhs, Rs.5 lakhs was invested by Huligemma Vammari and remaining amount of Rs.15 lakhs was invested by the respondents. In the complaint, it is stated that when the amount which was invested, was demanded by the complainants and aforesaid Huligemma Vammari, a sum of Rs.6 lakhs was returned to Huligemma Vammari, who is sister of Mudukappa Basarkod, the respondent in Criminal Petition No.102370/2024 and the said amount of Rs.6 lakhs included the amount of Rs.5 lakhs deposited by Smt.Huligemma and interest earned.

6. It is the specific case of the complainants that when they met the petitioner and demanded repayment of the money which they had invested, he allegedly had informed them that he was not in a position to pay interest -6- NC: 2025:KHC-D:10583 CRL.P No. 102370 of 2024 C/W CRL.P No. 102369 of 2024 HC-KAR to them, but he would be paying them totally a sum of Rs.14 lakhs as one time settlement and accordingly, he had issued two cheques for a sum of Rs.7 lakhs each respectively. When the aforesaid two cheques issued to the respondents, who are the father and son, were presented for realisation, the drawee Bank had dishonoured the same with a shara 'funds insufficient'. Thereafter, after completing statutory requirement as provided under the NI Act , by issuing legal notice to the petitioner, the respondents had filed private complaint against the petitioner for the offence punishable under Section 138 of the NI Act.

7. The contention urged on behalf of the petitioner that, part amount has been paid and therefore the criminal proceedings initiated for the offence punishable under Section 138 of the NI Act is bad in law is liable to be rejected for the simple reason that the amount of Rs.6 lakhs that was paid by the petitioner was towards its liability to Smt.Huligemma Vammari who had deposited a -7- NC: 2025:KHC-D:10583 CRL.P No. 102370 of 2024 C/W CRL.P No. 102369 of 2024 HC-KAR sum of Rs.5 lakhs with the petitioner. So far as the respondents herein are concerned, they had separately deposited a sum of Rs.15 lakhs and towards full and final settlement of the said amount deposited by the respondents, the petitioner had issued two cheques to the respondents for a sum of Rs.7 lakhs each and therefore the proceedings initiated by respondents against the petitioner based on the aforesaid cheques which were dishonoured by the drawee Bank for insufficient funds in the Bank Account of the petitioner, cannot be said to be bad in law. The grounds urged in the petitions are all the defence which are required to be raised by the petitioner before the trial Court and on the said ground, the prayer made in these petitions cannot be granted.

8. Section 56 of Negotiable Instruments Act, 1881 reads as follows:

8. In the present case, there is no such writing on the instrument, which purports to transfer only a part of the amount appearing to be due on the instrument nor the respondents were paid any amount after the cheques in question were issued to them, and therefore question of obtaining any endorsement on the instrument does not arise. The respondents together had deposited a total sum of Rs.15 lakhs through Bank transactions. Towards full and final settlement of the same, two separate cheques were individually issued in their favour for a sum of Rs.7 lakhs, which was dishonoured by the drawee Bank. The payment made to Huligemma Vammari, who had separately deposited an amount of Rs.5 lakhs cannot be considered as a part payment made to the respondents herein and therefore, I do not find any merit in the contention urged on behalf of the petitioner.

9. The judgment in the case of Gunmala Sales (P) Ltd., as well as in the case of Vishnupant s/o -9- NC: 2025:KHC-D:10583 CRL.P No. 102370 of 2024 C/W CRL.P No. 102369 of 2024 HC-KAR Chaburao Khaire (supra) are not applicable to the facts and circumstances of the present cases and therefore no reliance can be placed on the same. Under the circumstances, I do not find any good ground to entertain these two petitions. Accordingly, the following: