P KRISHNOJI RAO Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) Petitioners herein availed loan from respondent No.2 - Bank of India. By way of security, they mortgaged their immovable property situated at No.28, House List No.763, Mallasandra Village, T. Dasarahalli, Bangalore. Without discharging the entire loan amount, during the subsistence of mortgage, on the strength of xerox copies of the documents, petitioners sold the above property to one Sri. Srinivas. The purchaser appears to have issued a cheque for Rs.47,18,000/- towards the consideration. The said cheque was deposited by petitioners with the creditor-Bank. However, the said cheque came to be dishonoured and separate proceedings were initiated in respect of the said transaction. As the petitioners committed default in repayment of the loan, recovery proceedings were initiated and ultimately the mortgaged properties were sold in Court auction and the amount due to the Bank has been recovered. The instant complaint came to be lodged against the petitioners on the allegation that the property which was mortgaged to Bank has been alienated by the petitioners with an intention to cheat and defraud the bank. After investigation charge-sheet has been laid against the petitioners for the offence under Sections 406 and 420 r/w 34 of IPC.

(2.) Learned counsel for the petitioners submits that the facts alleged in the charge-sheet do not constitute the ingredients of either the offence under Sections 405 or 420 of IPC. In order to constitute an offence under Section 405 of IPC, there must be entrustment of the property. In the instant case, petitioners themselves were the owners of the property. Placing reliance on the decision of the Hon'ble Supreme Court in the case of ANAND KUMAR MOHATTA & ANR. VS. STATE (GOVT. OF NCT OF DELHI) DEPARTMENT OF HOME & ANR., 2019 AIR(SC) 210 learned counsel has emphasized that in the absence of any material to show that there was entrustment of property and that the petitioners have dishonestly converted the said property to their own use or disposed of the property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, the petitioners cannot be held culpable for the alleged offence under Section 405 of IPC.

(3.) Insofar as the offence under Section 420 is concerned, learned counsel submits that the material on record clearly indicates that there was no intention of any fraud or deception on the part of the petitioners either at the inception of contract or at a later point of time. On the other hand, the material on record clearly discloses that after selling the property, whatever consideration petitioners received, was deposited in the bank towards the discharge of debt/loan. If the petitioners had an intention to misappropriate the said amount so as to dupe the bank, they would not have deposited the said cheque with the bank.