Criminal Petition No. 119 of 2025 · The High Court
Case Details
- 1 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR CRIMINAL PETITION NO. 119 OF 2025 BETWEEN: SHREESHA L.S., (AS PER AADHAR CARD), MENTIONED AS LAKKAVALLY SIDAPPA NAIK SRISHA IN PCR S/O SIDDAPPA NAIK, AGED ABOUT 42 YEARS, R/AT KATTINAMANE ESTATE, SURYADEVASTHANA POST, HIREKODIGE, KOPPA, CHICKMAGALUR - 577 126. (BY SRI. NISHIT KUMAR SHETTY., ADVOCATE) AND: M/S. BOLAS AGRO PRIVATE LIMITED, CIN NO.U15490KA2020PTC133036, REGD. OFFICE: GROUND FLOOR, BLOCK NO.K-56, KEDINJE, KARKALA TALUK, UDUPI DISTRICT - 574 110. REPRESENTED BY THEIR SPECIAL POWER OF ATTORNEY HOLDER, MR. PRASADA BABRAYA ACHAR, S/O BABRAYA ACHAR, AGED 32 YEARS, R/AT NO.1-76/1, RAGINDHODI, Digitally signed by KAVYA R Location: High Court of Karnataka …PETITIONER - 2 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 PALADKA VILLAGE AND POST, MANGALORE, D.K.DISTRICT - 574 226. …RESPONDENT
Legal Reasoning
(BY SRI. CHANDRANATH ARIGA K., ADVOCATE) THIS CRL.P. IS FILED U/S 482 CR.P.C. (FILED U/S 528 BNSS) PRAYING TO ALLOW THE PETITION AND QUASH THE ENTIRE PROCEEDINGS AGAINST THE PETITIONER IN C.C.NO.1458/2024 FOR THE OFFENCE P/U/S 138 R/W 142 OF NI ACT PENDING BEFORE THE COURT OF THE PRL.CIVIL JUDGE AND J.M.F.C KARKALA UDUPI DISTRICT. THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR ORAL ORDER 1. This petition by accused No.2 in C.C.No.1458/2024 seeks quashing of the impugned proceedings instituted by the respondent - complainant against the petitioner and accused No.1 for offences punishable under Sections 138 r/w 142 of the Negotiable Instruments Act, 1881. 2. Heard learned counsel for the petitioner and learned counsel for the respondent. - 3 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 3. Perusal of the material on record will indicate that the respondent – complainant instituted the aforesaid proceedings against the petitioner – accused No.2 as well as one Lakkavally Siddappa Nayak Harsha – accused No.1. It is a matter of record and undisputed fact that both the petitioner and accused No.2 as well as aforesaid Lakkavally Siddappa Nayak Harsha are partners of Hyper Market Services on whose behalf the accused No.1 issued the subject cheque in favour of the complainant, who has initiated the proceedings under the provisions of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the NI Act', for brevity). In this context, the impugned private complaint in PCR No.348/2024 filed by the respondent would read as under: "IV. That the complainant firm supplied Cashew Kernel to the accused as per Invoice No.GTI/45097/23-24 dated 13.03.2024 for Rs.27,71,475/-. That the accused promised to pay the amount of the said Cashew Kernel supplied to it on a future date. That in discharge of the part payment of the amount due in respect of the said Cashew Kernel supplied by the complainant, the accused issued a cheque bearing No.947825 dated 14.09.2024 drawn on the State Bank of India, Girinagar 3rd Phase, Bengaluru Branch for Rs.3,22,455/- (Rupees Three lakh Twenty two thousand four hundred fifty five only) in favour of the complainant's Company. V. That the complainant has presented the said cheque for encashment before his Banker the State Bank of India, Salmara, - 4 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 Karkala Branch. But the said cheque has been returned to the complainant on 20.09.2024 with an endorsement that 'Exceeds arrangement'. The accused has intentionally and deliberately defrauded the complainant. VI. That the complainant later got issued a notice dated 24.09.2024 by RPAD to the accused on 25.09.2024 and the said notice issued to the 2nd address was duly served to the accused on 28.09.2024. The accused has received the said notice without demure and the notice sent to the 1st address was returned on 30.09.2024 with endorsement that 'insufficient address'. That even after giving sufficient opportunity to the accused, the accused has intentionally failed to repay the said amount and committed default. That the accused has sent a false and frivolous reply to the said notice through his counsel to obtain unlawful gain. That contents of said reply notice sent by the counsel of the accused is an afterthought and the same is not tenable either under law or on facts." 4. Similar allegations are made in the notice dated 24.09.2024, issued on behalf of the respondent to the petitioner as well as accused No.1. 5. Perusal of the allegations made in the notice and the complaint will clearly indicate that though the subject cheque was signed only by accused No.1 as a partner of the partnership firm M/s. Hyper Market Services, of which the petitioner was also a partner, necessary averments as required under Section 141 of the NI Act has not been made in the impugned complaint. In fact, except stating that both accused persons issued the cheque, which - 5 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 had been dishonored, there is no specific averment in the complaint to the effect that the petitioner was incharge for the conduct of the business of the company as well as that the petitioner was responsible for the conduct of the business of the company. In recent judgment, Hon'ble Apex Court in the case of HITESH VERMA VS. M/S. HEALTH CARE AT HOME INDIA PVT. LTD., in Crl. Appeal No.462/2025 dated 29.01.2025 [Arising out of SLP (Crl.) No.8368/2019], has categorically held that so long as the complaint does not satisfy the twin requirement contained in Section 141 of the NI Act by specific averments that the accused person was incharge for the conduct of the business of the company as well as was responsible to the company for the conduct of the business of the company, proceedings under Section 138 of the NI Act would not be maintainable against such a person and in the light of the explanation appended to Section 141 of the NI Act by including a partnership firm within the meaning of the expression 'Company', the impugned proceedings as against the petitioner – accused No.2 would clearly not be maintainable in the facts and circumstances of the instant case. - 6 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 6. In the case of HITESH VERMA (SUPRA), the Hon'ble Apex Court has held as under: "4. As the appellant is not a signatory to the cheque, he is not liable under Section 138 of the 1881 Act. As it is only the signatory to the cheque is liable under Section 138, unless the case is brought within the four corners of Section 141 of the 1881 Act, no other person can be held liable. Section 141 reads thus: “141. Offences by companies.—(1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a the Central financial corporation owned or controlled by Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.—For the purposes of this section, — (a) “company” means any body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.” - 7 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 5. There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no assertion in the complaints that the appellant, at the time of commission of the offence, was in charge of the business of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the aid of sub-Section (1) of Section 141 of the 1881 Act. 6. Accordingly, the impugned orders are set aside and the order taking cognizance of the complaints filed by the first respondent stands quashed and set aside only as against the present appellant who is arraigned as accused no.3. We make it clear that we have made no adjudication on the merits of the complaints and all issues are left open to be decided by the Trial Court." 7. In view of the aforesaid facts and circumstances and the absence of necessary averments so as to incriminate the petitioner for offences under Section 138 of the NI Act, particularly when the petitioner had undisputedly not signed or issued the cheque which had been signed and issued only by accused No.1 on behalf of the partnership firm, without there being necessary averments that the - 8 - NC: 2025:KHC:6563 CRL.P No. 119 of 2025 accused person was incharge for the conduct of the business of the company as well as was responsible to the company for the conduct of the business of company, I am of the view that the impugned proceedings qua the petitioner, deserves to be quashed.
Decision
8. In the result, I pass the following: ORDER The petition is hereby allowed. The entire proceedings qua the petitioner in C.C.No.1458/2024 for the offence punishable under Sections 138 r/w 142 of the NI Act, pending before the court of Principal Civil Judge & JMFC, Karkala, Udupi District, is here quashed. The trial court is directed to proceed further against accused No.1 and dispose of the proceedings in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE RD