DOMINIONS REALTY PVT. LTD. AND ORS. Vs. KARNATAKA LEGISLATURE SECRETARIAT EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LIMITED

JUDGEMENT

(1.) Itioners/ a private Company and its Managing Director are arrayed as accused in the proceedings initiated by the respondent/Housing Co-operative Society (for brevity society) in respect of the offence punishable under Section 138 of Negotiable Instruments Act (for brevity, Act).

(2.) The allegation of the complainant is, the society with an object to provide sites to its members in and around Bengaluru City, approached the accused, entered into Memorandum of Understanding (for short, MOU) dated 12.04.2013, to develop the land at Shankripura in Hosakote. But the accused identified the lands on IVC Road, Devanahalli; the parties entered into fresh MOU dated 7.10.2013 to develop said land within six months. The complainant paid Rs.2 Crores to the accused for the above said purpose by way of two cheques drawn on City Union Bank. The accused gave two cheques of different dates for Rs.75 lakhs and Rs.75 lakhs in favour of the complainant and executed the receipt for Rs.50 Lakhs as security for having received the sum of Rs.2 Crores from the complainant. But he failed to abide by the terms of the MOU and took excuse that the land identified is in dispute and is pending before the High Court. He sought for 6 to 8 months time to procure the land. The society gave him time vide its Resolution dated 28.06.2014 to procure the land and same was intimated to the accused by way of letter dated 05.07.2014. But the accused expressed inability. Hence, the society issued legal notice dated 01.09.2014 intimating the accused about cancellation of MOU dated 07.10.2013 and also informed him that the cheque issued by him will be deposited for encashment on 13.09.2014, and demanded the accused to keep sufficient balance in their account. When the cheque was presented to the Apex Cooperative Society, Vidhana Soudha Branch, it was dishonoured with an endorsement 'Account Closed', thereby the accused have committed an offence under Section 138 of the Act. But the accused issued untenable reply to the legal notice issued by the complainant.

(3.) Sri. V.V. Gunjal, learned counsel for the petitioners submits that as per MOU dated 07.10.2013 entered between the parties, the respondent was authorized to negotiate with the land owners and also owners of the adjacent lands for purchase of lands. The Society members were informed that there are certain legal contingencies which are yet to be resolved. It was the responsibility of the petitioner to take necessary sale permission, land conversion, layout approvers etc. Tentative rates were fixed at Rs.1150 sq.ft. and the respondent/complainant paid Rs.1.5 Crores as initial advance by way of two cheques and had agreed to pay further Rs.10 Crores within 60 days from the date of MOU. Since the dispute between the owners and their parties persisted, the parties could not proceed further. Undated cheque was given by the Petitioner. In the reply notice to the demand notice of the complainant, causes for impasse was explained that the dispute is arbitrary under the MOU and they will join arbitration proceedings against the Vendors of MS Ramaiah Foundation and warned the complainant not to present the cheque, to the Bank since it is contractual obligation giving rise to civil liabilities. Despite the same, undated cheque that was issued towards non5 existing legal liability was presented to the Bank only to harass the petitioners.