The High Court · 2025

2. The State of Telangana, Rep by its Public prosecutor, High Court at Telangana, Hyderabad. ...Respondents Petition under Section 528 of BNSS praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the prosecution launched against the petitioner/Accused, U/s.138 of N.l.Act, in CC.No.778912021 , on the file of the Judiciat Magistrate of First Class (Excise), Rangareddy-cum-V Addl. Judicial Magistrate of First Class- cum-V AJCJ, RR District at L.B.Nagar, as Iaunching of the prosecution against the PetitioneriAccused, is nothing, but gross abuse and misuse of process of Law. l.A. NO: 1OF 2025 petition under Section 529 of BNS$ praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to grant stay of all further proceedings, including the personal appearance of the Petitioner/Accused in QC.No.778912021 , on the file of the Judicial Magistrate of First Class (Excise), Rangareddy-cum-V Addl.Judicial Magistrate of First Class-cum-V AJCJ, h.R District at L.B.Nagar, pending disposal of the Quash Petition, in the interest of justice. This Petition coming on for hearing, upon perusing the Memorandum of Grounds of Criminal Petition and upon hearing the arguments of Sri G. Ronald Raju, Advocate for the Petitioner and the Sri Syed Yasar Mamoon, Additional Public Prosecutor on behalf of the Respondent No.2 and None Appeared for the Respondent No.1. The Court made the following: ORDER ./ THE HONOURABLE SMT. JUSTICE K. STIJANA CRIMINAL PETITION No.7246 0F 2025 ORDER: This criminal petition is Illed under Section 528 of Bharatiya Nyaya Suraksl-ra Sanhita, 2023 by the petitioner/ zrccu sed seeking the Court to quash the proceedings against him in C.C.No.7789 of 2021 on the hle of Judicial Magistrate of First Class (Excise), Rargareddy-ctrm-V-Additional Judicial Magistrate of First Class cum-V-A,JCJ, Ranga Reddy District at L.B.Nagerr. The offence alleged against the petitioner is under Section 138 of Negotiable Instruments Act, 1881 (for short trl.l.Act').

2. The brir:f facts of the case are that the lsr respondcnt- complainant was that the Petitioner/Accu sed tras running a pharmaccutical company under the name and r;tyle of ,Gamy Pharmaceuticals" at Hyderabad. Believing the pe ti _ioner/ accu sed, the lst respondent entered into a partnership business wilh him and established "Sai Vijetha Pharma" at Hyderabai, a partnership firm for the distribution of pharmaceuticals. In September 2O14, a bank loan of Rs.4O Iakhs was availed, for which th( lsr respondent offered l-ris residential house as collateral secr.trity and after I 2 withdrau,al of the loan amount, the petitioner/accused allegedly began to avoid the 1"t respondent. Consequently, thc 1"t respondent retired from the partnership under a Memoraldum of Understanding dated 24.12.2014, wherein the petitioner/accused undertook to discharge the said bank loan and issued certain cheques belonging to M/ s.Gamy Pfrarmaceuticals as security. Upon failure of the petitioner/ accused to discharge the loan, thc l"t respondent approached the bank and was informed that suflicient funds were not available in the account of Gamy Pharmaceuticals. When questioned, the petitioner/ accu sed issued four cheques in favour of Sai VUe(ha Pharma Following the receipt of notices under the SARFAESI Act concerning his residential property, the 1"t respondegrt discharged the bank loan to protect the said property and subsequently hled a private complaint under Section s 406, 4201 and 5O6 of IPC, which is pending as C.C.No.359 of 2016 on the ftle of the XI Metropolitan Magistrate Court, L.B Nagar. The lst respondent further alleged that the petitioner/ accused later approached him and issued three more cheques for Rs. 40 lakhs in recognition of the l't respondent's repayment of the balk loan, but the same were a-lso ,;ti:!#:--* 5_ - -!: v dis-honored for insufficient funds. As such, hled complaint against the accused

3. Heard Sri G.Ronald Raju, learned counsel for the petitioner and Sri Syed Yasar Mamoon, learned Additional prblic prosecutor appearing for the respondent-State.

4. The contention of learned counsel for the petitioner is thaL petitioner has no personal liability towards the 1=t respondent. He has not issuecl the said cheques and there is no 1e5;a1ly cnforceable debt due to 1e 1"t respondent. Gamy pharmace rtical Company has no liabilty towards the 1sr respondent and it is; not arrayed as accused. As petitioner has no personal liability, no case under Section 138 of N.l.Act is made out. When Gamy pharmaceutical Company is not the accused, the petitioner cannot be zrrayed as accused and in support of his contention he rc:lied on Ashok Shewakramani Vs State of A.p.l, wherein it is observed that a person will bccome vicariousiy liable when the comltany is accused of the offencc under Section 138 of N.I.Act. As such, continuation of proceedings against the petitioner is nothing but abuse of L (2023) a Supreme Court Cases 473 4 process of law and prayed to quash the proceedings against the petltroner.

5. On the other hand, though notice is served on the 1st respondent, none appeared on his behralf.

6. Considering the submissions rtrrade by the learned counsel for the petitioner, the comptaint is filed against the pctitioner hcrein in personal capacity statinB that he had executed a Memorandum of underslarding dated 24.72 2014 and accused alone is responsible for the transaction of the hrm from the date of cxecution of the said MOU. The petitioner also undertook to pay entirc bank loan holding in the name of ltrm as per MOU The pctitioner has issued four chefiues belonging to Gamy Pharmaceutical Company as security against the bank loan availed. When the 1"t respondent enquired about the same, there is no bank balance in the balk aocount. Thereafter he again issued cheques and when they were presented before the bank, they were also dishonored for insullicient funds' 7 . The only contention of learned counsel for the petitioner herein is that cheque is in the name of GamY Pharmaceutical 5 Company but it is not made a party. Therefrrre, there is no vicarious liability on the petitioner. In support of h s contention, he relied on thc judgment in Bijoy Kumar Moni Vs paresh Manna2, whcrein the Hon'ble Supreme Court in para 7O and 72 held as under: "7O. It !l,ould havc becn altogether a different situation if the .rccused was prosecuted in his capacity as a Drrector of the Shilabati Hospital. in such a scen.rrio, the cheque drarvn lt,z him on an account nraintained b-y the Company would have satisfied the requiremcrlt of Section 138 of the Act but as the accr sed has been proceeded against for an offence under Section 138 of the Act in his indrvidual capacitl and rnasmuch as the cheque dir,honoured for insufficiencl of funds was drau,n on the account mair tained by the Companr,. namely, Shilabati Hospital pvt. Ltd., arl(l not by the accused herein, no offencc could be sard to have be,ln committed under Section 138 of the Acr_ The I.ligh Court rightly hr:td that in the absence of the principal offender having been arr:rigned as an accused, prosecution for the commission of an offence Lrnder Section 138 of the NI Act could not have proceeded against the accused. 72. Section 138 of the Act exposes the person wlro has drawn the chequc and rvhich has been relurned for insufhciencv of funds to criminal liabilit\'. Thc provision. therefore, musr ); construed strictl,v. However, such a strtct construction should not result in defeating the verv purpose for which the provision has been cnacted as held b1, rhis Court in the case of NEpC Micon Limitr:d and Others v. Magma l-easing Limited reported in (1999) 4 SCC 2Sli. At the s.tme timc, the statutorv provisions creating penal liabili:y cannot be stretched too ,-ar to embrace the persons and situarions patentll, excluded from tts purview as discernible from clear an,l unequivocil language used in the provision."

8. In the present case also the Gamy pharmact:utical Company is not a partv and cheques are issued in the name of the company but not issucd in individual capacity of petitioner. Further, for the 2 Criminal Appeal NO.5556 of 2024 I I 6 ..,: : ,,L (-l same set of facts, the 1"t respondent aiso hled crimina-I case and the statutory provisions creating criminal liability cannot be stretched without malang the company as accused when the cheque is issued in the name of company' As such, the proceedings cannot be initiated against the petitioner and the same is liable to be quashed.

9. Accordingly, the Criminal Petition is allowed and the proceedings against the peLitioner in C.C.No'7789 of 2O2 1 on thc hle of Judicial Magistrate of First Class (Excise), Rangareddy cum- V-Additional Judicial Magistrate of First Class-cum-V-AJCJ, Ranga Reddy District at L.B.Nagar are herefir quashed' Miscellaneous petitions, if any, pending shall stand closed' SD/.M.NAGAMANI ASSISTANT REGISTRAR I I //TRUE COPY// SECTION OFFICER To,

1. The Judicial Magistrate of First Class (Excise), Rangareddy-cum-V Addl. Judicial Magistrate of First Class-cum-V AJCJ, RR District at L.B.Nagar 2. The Station House Officer, Saroornagar Police Station, Ranga Reddy Diskict. 3. Two CCs to the Public Prosecutor, High Court for the State of Telangana at Hyderabad. [OUT]

4. One CC to Sri G. Ronald Raju, Advocate [OPUC] 5. Two CD Copies Kam/PSL M. HIGH COURT DATED:2510812025 l ORDER CRLP.No.7246 of 2025 , .// ,. ' //i 5 i'-.t t. ")\, c 0 [ SEP 205 ili'l -. 1).-, , ^ \i- ALLOWING THE CRIMINAL PETITION .Ui) q