✦ High Court of India · 30 Jan 2026

KRISHIL CAPITAL HOLDINGS PVT LTD v. VARUN RAJENDRA

Case Details High Court of India · 30 Jan 2026

Court

High Court of India

Case No.

Sc No. 0192 of 1994

Decided

30 Jan 2026

Bench

S R KRISHNA KUMAR

Length

30,323 words

Acts & Sections

Code of Civil Procedure Code of Criminal Procedure §138 Code of Criminal Procedure §357 Code of Criminal Procedure §482 Code of Criminal Procedure KAR identical sections in other Acts like the Food Safety and Standards Act 2006 Prevention of Food Adulteration Act 1954 Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act 1956

Cited in this judgment

Judgment

3. KRISHIL CAPITAL HOLDINGS PVT LTD NO. 37, M.N. KRISHNA RAO ROAD, LALABAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004 A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR K. R. CHOUDHARY ONDOT CORPORATE SERVICES PVT LTD NO. 37, M.N. KRISHNA RAO ROAD, LALBAGH WEST GATE BASAVANAGUDI, BENGALURU – 560 004 A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR B. SUDHAKAR PAI SRI. K. R. CHOUDHARY DIRECTOR, AGED ABOUT 61 YEARS, KRISHIL CAPITAL HOLDINGS PVT LTD NO. 37, M.N. KRISHNA RAO ROAD, LALBAGH WEST GATE BASAVANAGUDI, BENGALURU – 560 004 Digitally signed by MADHURI S Location: High Court of Karnataka - 2 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

4. SRI. B SUDHAKAR PAI DIRECTOR, AGED ABOUT 74 YEARS, ONDOT CORPORATE SERVICES PVT LTD SUDHAKAR PAI ASSOCIATES NO. 83, 1ST FLOOR, ABOVE BANK OF INDIA, DIAGONAL ROAD, V.V.PURAM, BENGALURU – 560 004. (BY SRI. UDAYA HOLLA, SENIOR COUNSEL FOR SRI.GOVINDRAYA KAMATH K., ADVOCATE) AND: VARUN RAJENDRA AGED ABOUT 38 YEARS, S/O PARTHASARTHY RAJENDRA, NO.674, 4TH C MAIN, OMBR LAYOUT, BENGALURU – 560 043. …PETITIONERS …RESPONDENT (BY SRI. UNNIKRISHNAN M., ADVOCATE) THIS CRL.P IS FILED U/S 482 CR.PC PRAYING TO ALLOW THE PRESENT PETITION AND QUASH ENTIRE PROCEEDINGS IN C.C.NO.50958/2023, ARISING OUT OF PCR NO.57020/2022, PENDING ON THE FILE OF THE XXXIV ADDL. CHIEF METROPOLITAN MAGISTRATE, BENGALURU AS PER ANNEUXRE-A. IN CRL.P NO. 6964/2023 BETWEEN:

1. KRISHIL CAPITAL HOLDINGS PVT LTD NO 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004 A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR K. R. CHOUDARY - 3 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

4. ONDOT CORPORATE SERVICES PVT LTD NO 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004 A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR B. SUDHAKAR PAI SRI K. R. CHOUDHARY DIRECTOR, AGED ABOUT 61 YEARS, KRISHIL CAPITAL HOLDINGS PVT LTD NO 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004 SRI B. SUDHAKAR PAI DIRECTOR, AGED ABOUT 74 YEARS, ONDOT CORPORATE SERVICES PVT LTD, SUDHAKAR PAI ASSOCIATES, NO 83, 1ST FLOOR, ABOVE BANK OF INDIA, DIAGONAL ROAD, V. V. PURAM, BENGALURU – 560 004 (BY SRI. UDAYA HOLLA, SENIOR COUNSEL FOR SRI.GOVINDRAYA KAMATH K., ADVOCATE) ...PETITIONERS AND: SRI VARUN RAJENDRA AGED ABOUT 38 YEARS, S/O PARTHASARATHY RAJENDRA, NO 674, 4TH C MAIN, OMBR LAYOUT, BENGALURU – 560 043 ...RESPONDENT (BY SRI. UNNIKRISHNAN M., ADVOCATE) THIS CRL.P. IS FILED U/S.482 CR.P.C PRAYING TO ALLOW THE PRESENT PETITION AND QUASH ENTIRE PROCEEDINGS IN C.C.NO.50919/2023, ARISING OUT OF P.C.R.NO.57189/2022, PENDING ON - 4 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR THE FILE OF THE XXXIV A.C.M.M AT BENGALURU AS PER ANNEXURE-A & ETC., IN CRL.P NO. 6966/2023 BETWEEN:

4. KRISHIL CAPTIAL HOLDINGS PVT LTD NO. 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004, A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR K. R. CHOUDHARY. ONDOT CORPORATE SERVICES PVT. LTD., NO. 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004, A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, REPRESENTED BY ITS DIRECTOR B. SUDHAKAR PAI. SRI. K. R. CHOUDHARY DIRECTOR, AGED ABOUT 61 YEARS, KRISHIL CAPITAL HOLDINGS PVT. LTD., NO. 37, M. N. KRISHNA RAO ROAD, LALBAGH, WEST GATE, BASAVANAGUDI, BENGALURU – 560 004. SRI. B. SUDHAKAR PAI DIRECTOR, AGED ABOUT 74 YEARS ONDOT CORPORATE SERVICES PVT. LTD., SUDHAKAR PAI ASSOCIATES, NO. 83, 1ST FLOOR, ABOVE BANK OF INDIA, DIAGONAL ROAD, V.V. PURAM, BENGALURU – 560 004. (BY SRI. UDAYA HOLLA, SENIOR COUNSEL FOR SRI.GOVINDRAYA KAMATH K., ADVOCATE) ...PETITIONERS - 5 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR AND: SRI. VARUN RAJENDRA AGED ABOUT 38 YEARS, S/O. PARTHASARATHY RAJENDRA, NO. 674, 4TH C MAIN, OMBR LAYOUT, BENGALURU – 560 043. ...RESPONDENT (BY SRI. UNNIKRISHNAN M., ADVOCATE) THIS CRL.P. IS FILED U/S.482 CR.P.C PRAYING TO ALLOW THE PRESENT PETITION AND QUASH ENTIRE PROCEEDINGS IN C.C.NO.51053/2023, ARISING OUT OF P.C.R.NO.58253/2022, PENDING ON THE FILE OF THE XXXIV A.C.M.M AT BENGALURU AS PER ANNEXURE-A. THESE PETITIONS, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER In Crl.P.No.6958/2023, petitioners have sought for the following reliefs:- “ A. Allow the present petition and quash entire proceedings in C.C.No.50958/2023, arising out of P.C.R. No.57020/2022, pending on the file of the XXXIV Addl. Chief Metropolitan Magistrate, Bengaluru as per Annexure-A; B. Pass any other Order(s) as this Hon’ble court may deem fit and proper in the facts and circumstances of the present case.” - 6 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR In Crl.P.No.6964/2023, petitioners have sought for the following reliefs:- “ A. Allow the present petition and quash entire proceedings in C.C.No.50919/2023, arising out of P.C.R. No.57189/2022, pending on the file of the XXXIV Addl. Chief Metropolitan Magistrate, Bengaluru as per Annexure-A; B. Pass any other Order(s) as this Hon’ble court may deem fit and proper in the facts and circumstances of the present case.” In Crl.P.No.6966/2023, petitioners have sought for the following reliefs:- “ A. Allow the present petition and quash entire proceedings in C.C.No.51053/2023, arising out of P.C.R. No.58253/2022, pending on the file of the XXXIV Addl. Chief Metropolitan Magistrate, Bengaluru as per Annexure-A; B. Pass any other Order(s) as this Hon’ble court may deem fit and proper in the facts and circumstances of the present case.”

2. A perusal of the material on record will indicate that the respondent – complainant instituted the impugned proceedings against the petitioners – accused for offences punishable under Section 138 and 142 of the N.I.Act. It is a matter of record and an undisputed fact that petitioners 1 and 2 – accused Nos. 1 and 2 in - 7 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR all the three petitions are private limited companies incorporated under the Companies Act, while petitioners 3 and 4 – accused Nos. 3 and 4 are the Directors of the petitioners 1 and 2 – companies respectively. After entering appearance impugned proceedings, petitioners are before this Court by way of the present petitions seeking quashing of the impugned proceedings.

3. Since the petitioners – accused and respondent – complainant in all the three petitions are the same and since common questions of law and fact arise for consideration in all the three petitions, they are taken up together for consideration and disposed of by this common order.

4. Heard learned Senior counsel for the petitioners and learned counsel for the respondent and perused the material on record.

5. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioners invited my attention to the subject cheques in order to contend that the same had been signed by petitioner No.4 – accused No.4 in his individual capacity and not on - 8 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR behalf of petitioners 1 to 3 – accused Nos. 1 to 3 and as such, the impugned proceedings qua petitioners 1 to 3 were not maintainable and the same deserve to be quashed. It is also submitted that even insofar as petitioner No.4 – accused No.4 was concerned, the respondent – complainant had not placed any material to establish that the subject cheques had been signed and issued by petitioner no.4 towards legally enforceable debt or liability towards the complainant and the impugned proceedings qua petitioner no.4 also deserves to be quashed. In support of his submissions, learned Senior counsel for the petitioners places reliance upon the following judgments:- (i) P.J.Agro Tech Limited vs. Waterbase Limited – (2010) 12 SCC 146; (ii) Alka Khandu Avhad vs. Amar Syamprasad Mishra – (2021) 4 SCC 675; (iii) Rohit Raghu Shetty vs. Vedu Ramachandra Uchila – 2021:KHC-D:.5688; (iv) Hariharakrishnan vs. J.Thomas – (2018) 13 SCC 663; (v) Mrs.Gayathri vs. S.R.Jayaraman – 2009 (3) MWN(Cr)DCC 128;

6. Per contra, learned counsel for the respondent – complainant would invite my attention to the material on record in - 9 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR order to contend that necessary ingredients attracting the offences punishable under Sections 138 and 142 of N.I.Act had been made out by the respondent. In this context, he would point out that the respondent – complainant had issued a statutory notice dated

23.08.2022 to all the petitioners – accused who issued a joint / common reply dated 18.10.2022, which was been suppressed by the petitioner who had not produced the same but the same having been produced by the respondent along with his statement of objections will clearly indicate that the transactions between all the petitioners including issuance of the cheque had been clearly admitted by all the petitioners in the said reply and the various explanations, contentions etc., in the said reply prior to initiation of the impugned proceedings give rise to disputed questions of fact which would necessarily have to be adjudicated upon after trial and it is impermissible in law to consider the same in the present petition under Section 482 Cr.P.C. which is liable to be dismissed. In support of his submissions, learned counsel placed reliance upon the following judgments:- (i) M/s.Sri.Om Sales vs. Abhaykumar @ Abaypatel – Crl.A.No.5588/2025 dated 19.12.2025; - 10 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR (ii) S.P.Chengalvaraya Naidu (Dead) by L.R.s vs. Jagannath (Dead) L.Rs. and Ors. – MANU/SC/0192/1994 (iii) S.P. Mani and Mohan Dairy vs. Snehalatha Elangovan – MANU/SC/1189/2022 (iv) Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited – MANU/SC/1021/2016 iv) M.M.T.C.Ltd. and Ors. Vs. Medchi Chemicals & Pharma (P) Ltd and Ors. – MANU/SC/0728/2001 (vi) The Assistant Commissioner, Assessment- II, Bangalore and Ors. Vs. Velliappa Textiles Ltd, and Ors. – MANU/SC/0721/2003 (vii) I.C.D.S. Ltd vs. Beena Shabeer and Ors. – MANU/SC/0669/2002 (viii) S.V. Muzumdar and Ors. Vs. Gujarat State Fertilizer Co.Ltd and Ors. – MANU/SC/0318/2005 (ix) S.A. Nanjandeswara vs. M.S.Varlak Agrotech Pvt.Ltd., - MANU/SC/0941/2001 (x) Womb Laboratiories Pvt.Ltd vs. Vijay Ahuja and Ors. – MANU/SC/1499/2019 (xi) Rangappa vs. Mohan – MANU/SC/-376/2010 (xii) State of Haryana and Ors. Vs. Ch. Bhajan Lal and Ors. – MANU/SC/0115/1992 (xiii) HMT Watches Ltd. Vs. M.A. Abida and Ors. – MANU/SC/0296/2015 (xiv) Rallis India Ltd vs. Poduru Vidya Bhushan & Ors. - MANU/SC/0422/2011 - 11 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR (xv) Mr. Pesi Savak Patel vs. M/s. Kurlon Enterprise Ltd., - Crl.P.No.3387/2025 c/w Crl.P No. 3359/2025.

7. I have given my anxious consideration to the rival submissions and perused the material on record.

8. Before adverting to the rival contentions, it would be apposite to refer to the impugned complaint as hereunder: “ COMPLAINT UNDER SECTION 138 AND 142 OF THE NEGOTIABLE INSTRUMENTS ACT, READWITH SECTION 200 OF THE CODE OF CRIMINAL PROCEDURE: The Complainant above named humbly submits as follows:

1. The Address of the Complainant for the purposes of notice, summons etc., of this Hon'ble Court is as shown in the Cause title. He can also be served through his Counsel, Sri. Unnikrishnan M., Advocate, No.46, 1st A 'Cross', AECS Layout Road (Near ISRO), RMV II stage Bangalore-560 094. 2 The address of the Accused for the purposes of Summons/Warrants of this Hon'ble Court is as shown in the Cause Title.

3. The Complainant submits that 1st and 2nd Accused are companies, registered under the provisions of the Companies Act. The 3rd Accused Mr. K.R. Choudhary is the director of the 1st Accused Company whereas, the 4th - 12 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

Accused Mr. B. Sudhakar Pai is the Directors of the 2nd Accused Company.

4. The Complainant submits that the 1st Accused was allotted lands bearing Survey No. 16/P & 76/P of Doddanekkundi Industriai Area, by the Karnataka Industrial Areas Development Board. Likewise, the 2nd Accused was also allotted land bearing Survey Nos.15/P & Survey No.16/P of Doddanekkundi Industrial Area, Bangalore, by the Karnataka Industrial Areas Development Board. The further submits that he was informed that the said allotments were made for the purpose of a Hitech Project

5. The Complainant submits the aforesaid allotment of the lands being somewhere in the year 2002, was allotted by the Karnataka Industrial Areas Development Board to the 1st and 2nd Accused with litigation and encroachments. In fact, whilst, the lands were handed over to the companies i.e. the 1st and 2nd Accused, there were many hutments, unauthorized constructions, factories etc, over the same.

6. The complainant submits that the complainant has had previous business transactions with the 3rd and 4th Accused. It is further submitted that the complainant is also into the business of Earth Moving, Excavation activities and civil works. Accordingly, the 1st and 2nd accused, being companies represented by Mr. B.Sudhakar Pai and Mr. K.R.Choudhary i.e. the 4th and 3rd Accused approached the complainant, to assist and help in shifting of encroachments, securing possession and also protecting the properties - 13 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR bearing Survey No.16/P & 76/P of Doddanekkundi Industrial Area and Survey No.15/P & Survey No. 16/P of Doddanekkundi Industrial Area. This was primarily due to the fact that the 1st and 2nd Accused, owned the aforesaid lands which were contiguous to one another.

7. The Complainant submits that after examining the issue and noticing that the encroachers, were squatting on the properties without any just authority and legal rights, negotiated with them to vacate the same. Likewise, pending litigations were also sorted out. In fact, contempt cases were also filed against the 1st and 2nd accused and it was the Complainant who had pressed the Litigants to amicably resolve the issues.

8. It is further submitted that, the said lands being vast and with encroachers and antisocial elements and lands grabbers eying the same, it was imperative that the same be secured till the Hitech Project as envisaged by 1st and 2nd Accused takes off. Accordingly, the Complainant apart from having secured the properties and handed over vacant possession to the 1st and 2nd Accused Companies (since the possession given by the Karnataka Industrial Areas Development Board was only on paper and not in reality as stated above) had also protected the property from 2016 till

9. The Complainant submits that the 1st and 2nd Accused represented by its Directors i.e, Mr. K.N.Choudhary and Mr. B.Sudhakar Pai respectively while appreciating the professional approach the complainant and agreed compensate him for executing the work as stated supra. It is - 14 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR submitted that the 3rd and 4th Accused initially agreed for a total remuneration of Rs. 500 lakhs which was later reduced to Rs. 4 Crores/400 Lakhs. Since it was agreed the sum of Rs.4 Crores/400 Lakhs inclusive of taxes as professional service charges was to be paid to the Complainant, the 3rd and 4th Accused i.e., Mr. B.Sudhakar Pai and Mr. K.N.Choudhary had also issued a letter of confirmation to that effect on 23.10.2019 on behalf and representing the 1st and 2nd accused companies. That in terms of the same, a sum of Rs.400 lakhs was to be paid in tranches with Rs.1 Crore to be paid within 23.10.2019 and the balance 75% to be paid in 15 monthly installments thereafter.

10. The Complainant submits that though all the parties had agreed to make payments of Rs.400 Lakhs in terms of the aforesaid time schedule, however, the Accused No.1 to 4 sought for time citing liquidity issues. The Complaint, in view of the relationship he had with the 3rd and 4th Accused, reluctantly agreed to the same as he had no other option but to be pushed for accepting payment on later date. It is further submitted that, even though the payments had to be made by 2019, the Accused No. 1 to 4 procrastinated the issue on one frivolous ground or the other and finally after constant follow up, the 1st and 2nd Accused companies have issued the following cheques in favour the Complainant. a) Cheque bearing No.698860, Dated: 30.06.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. - 15 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR b) Cheque bearing No.698861, Dated: 31.07.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. c) Cheque bearing No.698862, Dated: 31.08.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. d) Cheque bearing No.698863, Dated: 30.09.2022 for Rs.50 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. The aforesaid cheques having been issued by Accused No.3 from the account maintained by him for the discharge of the aforesaid liability of all the Accused persons. Further the 3rd and 4th Accused as the Directors of the 1st and 2nd Accused are aware of the liability of the 1st and 2nd Accused to the Complainant and also aware of the issuance of the aforesaid cheques to clear the legally enforceable liability of the 1st and 2nd Accused. That apart 3rd and 4th Accused being committed and incharge of and responsible the 1st and 2nd Accused Company respectively for the conduct of its business are aware of the transactions leading to the liability of the 1st and 2nd Accused to the Complainants and for due payment thereof.

11. The Complainant submits that out of a sum Rs.400 Lakhs, the 1st and 2nd Accused have earlier paid the Complainant a sum of Rs.50 Lakhs by way of a cheque as part of the aforesaid liability of the 1st and 2nd Accused to my client. - 16 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

12. My client, accordingly presented the following two cheques in his account the State Bank of India, Banaswadi 4th Cross, Bangalore, bearing A/c. No.000061306869243 for encashment to his account. a) Cheque bearing No.698860, Dated: 30.06.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. b) Cheque bearing No.698861, Dated: 31.07.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. It is pertinent to submit that the above-mentioned cheques are only two out of four cheques given to the Complainant by the Accused No. 3 and 4 in respect of clearing the liability of the 1st and 2nd Accused.

13. The Complainant submits Complainant's utter shock and dismay, when two of the aforesaid cheques when presented for payment to the bank viz. the State Bank of India, Banaswadi Branch, Bangalore, both the cheques were returned unpaid on presentation vide Bank Endorsement "FUNDS INSUFFICIENT", dated

01.08.2022.

14. It is submitted that in the view of the above it is apparent that the aforesaid Cheques had been issued by the 3rd and 4th Accused with an intention to cheat and defraud the Complainant, knowing very well the consequences thereof and hence the Accused No.1 to 4 have no Valid reasons to dishonour the same. - 17 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

15. It is submitted that is apparent that the 1st and 2nd Accused being Private Limited Companies and the 3rd and 4th Accused being the Directors of the companies and being committed and in charge/responsible to 1st and 2nd Accused for the conduct of its business have issued the cheques to clear the dues/liability with a specific intention to cheat and defraud the Complainant. It is also manifest that the Accused are not interested in settling the amount outstanding for which the cheques had been issued. This act of the Accused No 1 to 4 is clearly a breach of trust and it threadbare demonstrates that the intention of the Accused persons is to cheat and defraud the Complainant of his legitimate money.

16. The complainant submits that a Legal Notice was issued to the Accused on 23.08.2022 demanding the Accused to clear their liabilities within 15 days of the receipt of the said notice. The notice was served on 24.08.2022 and the Accused No 1 to 4 have failed to respond to the said notice and hence, left with no other remedy the Complainant has filed this instant case after expiry of the statutory grace period on 08.09.2022.

17. The Cause of Action for this Complaint has arisen when the Accused issued a letter of confirmation accepting liability and when accused issued 4 cheques in favour of the Complainant, amounting Rs.3,50,00,000/- and dated

30.06.2022, 31.07.2022, respectively and On 01.08.2022 when the said cheques were dishonoured on presentation and on 23.08.2022, when the Demand Notice was issued to the Accused and on 24.08.2022 when the same was - 18 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR received by the Accused and thereafter when the Accused failed to comply with the demand of the Complainant within 15 days and on all subsequent dates within the jurisdiction of this Hon'ble Court

18. The Complainant submits that both Complainant and the Accused No.1 to 4 are residents of Bangalore and the above said cheque was presented at Bangalore, as such, this Hon'ble Court has territorial jurisdiction to take cognizance of the offence.

19. The Complaint is presented in time i.e., within one month from the date of expiry of the fifteen days grace given under the Notice for the payment of the said amount and the Complainant has complied with all the requirements of presenting the Complaint under Section 138 of Negotiable Instruments Act.

20. The Complainant prays leave of this Hon'ble Court to produce additional Documents and Witnesses as is necessary in the above case WHEREFORE, the Complainant prays Hon'ble Court be pleased to take cognizance of the offence, issue Summons to the Accused, enquire into the matter and punish the Accused with maximum sentence for the offence committed under Section 138 of the Negotiable Instruments Act, and further to compensate the Complainant under Section 357 of the Code of Criminal Procedure code, by directing the Accused to pay to the Complainant the sum equivalent of the fine amount, which this Hon'ble Court may - 19 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR be pleased to impose and levy against the Accused, in the interests of justice and equity.”

9. As can be seen from the averments made in the impugned complaint, the respondent has made several averments as regards the transactions, documents etc., entered into between the petitioners and respondent and leading to issuance of the subject cheques by petitioner No.4 – accused No.4 on behalf of himself and accused Nos. 1 to 3 in favour of the respondent – complainant. The said averments are a reiteration of the various averments made in the statutory notice dated 23.08.2022 issued by the respondent to all the petitioners – accused Nos. 1 to 4, who issued a common reply dated 18.10.2022 to the said notice. The contents of the notice and reply are as under:- NOTICE DATED 23.08.2022 To:-

1. KRISHIL CAPITAL HOLDINGS PVT. LTD, No.37. M.N.Krishna Rao Road, Lalbagh West Gate. Basavanagudi. Bengaluru 560 004. A company registered under the Provisions of the Companies Act And represented by its Director, Mr. K.R.Choudhary.

2. ONDOT CORPORATE SERVICES PVT. LTD, No.37, M.N.Krishna Rao Road, Lalbagh West Gate, - 20 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Basavanagudi. Bengaluru 560 004. A company registered under the Provisions of the Companies Act And represented by its Director, Mr. B.Sudhakar Pai

3. MR. B.SUDHAKAR PAI, Director Ondot Corporate Services Pvt. Ltd. Sudhakar Pai Associates. No.83, 1st Floor, Above Bank of India, Diagonal Road V.V Puram Bengaluru 56004

4. MR.K.R.CHOUDHARY, Director Krishil Capital Holdings Pvt. Ltd. No.37. M.N.Krishna Rao Road, Lalbagh West Gate. Basavanagudi. Bengaluru 560 004. Sir/s. Under instructions from my client. Sri. Varun Rajendra, No.674, 4th C Main, OMBR Layout, Bengaluru 560 043. I issue this notice to all of you as under: -

1. That the First & Second of you are companies, registered under the provisions of the Companies Act. The Third of you Mr. B.Sudhakar Pai is the Director of the First of you and the Fourth of you Mr. K.R.Choudhary is the Director of Krishil Capital Holding Pvt. Ltd.

2. That the First of you was allotted lands bearing Survey No.16/P & 76/P of Doddanekkundi Industrial Area, by - 21 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR the Karnataka Industrial Areas Development Board. Likewise, the Second of you was also allotted land bearing Survey Nos.15/P & Survey No.16/P of Doddanekkundi Industrial Area, Bangalore, by the Karnataka Industrial Areas Development Board. The said allotments being for the purpose of a Hitech Project as informed by all of you to my client.

3. My client informs me that the aforesaid allotment of the lands being somewhere in the year 2002. was allotted by the Karnataka Industrial Areas Development Board to the Fint & Second of you with litigaticin and encroachments. In fact, whilst, the lands were handed over to the First & Second of you, there were many hutments, unauthorized constructions, factories etc., over the same.

4. My client is known to the Third & Fourth of you he having previous business transactions with you. My client is also into the business of Earth Moving. Excavation activities and civil works. Accordingly, the First & Second of you being companies represented by Mr. B.Sudhakar Pal as the Director of the First of you and Mr. K.R.Choudhary also as the Director of Second of you approached my client, to assist and help in shifting of encroachments, securing possession and also protecting the properties bearing Survey No.16/P & 76/P of Doddanekkundi Industrial Area and Survey No.15/P & Survey No.16/P of Doddanekkundi Industrial Area. This was primarily due to the fact that the First & Second of you, owned the aforesaid lands which were contiguous to one another. - 22 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

5. My client after examining the issue and noticing that the encroachers, were squatting on the properties without any just authority and legal rights. negotiated with them to vacate the same. Likewise, pending litigations were alro sorted out. In fact, contempt cases were also filed against the First & Second of you and my client had also impressed upon the Complainants to amicably resolve the issues.

6. That apart, the said lands being vast and with encroachers and antisocial elements and lands grabbers eying the same, it was imperative that the same be secured till the Hitech Project as envisaged by First & Second of you takes off. Accordingly, my client apart from having secured the properties and handed over vacant possession to First & Second of you. (since the possession given by Karnataka Industrial Areas Development Board was only on paper and not in reality as stated above) had also protected the property from 2016 till 2019.

7. That the First & Second of you represented by its Directors i.e. Mr. B.Sudhakar Pai and Mr. K.N. Choudhary appreciating the professional approach of my client and as in consideration for executing the work as stated supra, agreed to pay a sum of Rs.4 Crores / 400 Lakhs inclusive of taxes as professional service charges to my client (In fact all of you had initially offered earthworks for the project also and had agreed for a total remuneration of Rs.500 Lakhs which was reduced to Rs.400 Lakhs as stated supra). In perspective, Mr. B.Sudhakar Pai and Mr. K.N.Choudhary, - 23 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR have also issued a letter of confirmation on 23.10.2019 on behalf and representing the First & Second of you. That in terms of the same, a sum of Rs.400 Lakhs was to be paid in tranches with Rs.1 Crore to be paid within 23.10.2019 and the balance 75% to be paid in 15 monthly installments thereafter.

8. My client Informs me that though all of you had agreed to make payments of Rs.400 Lakhs in terms of the aforesaid time schedule, however, all of you sought for time citing liquidity issues. My client, in view of the relationship he had with third and fourth of you, reluctantly agreed to the same as he had no other option but to be pushed for accepting payment on later date. It is further informed that even though the payments had to be made by 2019 and thereafter, all of you procrastinated the issue on one frivolous ground or the other and finally after follow up. the First & Second of you, as companies have issued the following cheques in favour of my client. a) Cheque bearing No.698860. Dated: 30.06.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. b) Cheque bearing No.698861. Dated: 31.07.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. c) Cheque bearing No.698862, Dated: 31.08.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru d) Cheque bearing No.698863, Dated: 30.09.2022 for Rs.50 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. - 24 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR The aforesaid cheques having been issued by Mr. B. Sudhakar Pal from the account maintained by him for the discharge of the aforesaid liability of the First & Second of you. Further Mr.B.Sudhakar Pal and Mr. K.N.Choudhary as the Directors of First & Second of you respectively are aware of the liability of the First & Second of you to my client and also aware of the issuance of the aforesald cheques to clear the legally enforceable liability of the First & Second of you respectively. That apart Mr. B.Sudhakar Pai and Mr. K.N.Choudhary being committed and incharge of and responsible to the First & Second of you for the conduct of the business of First & Second of you are aware of the transactions leading to the liability of the First & Second of you to my client and for due payment thereof. The cheques have been issued by the Third of you to clear the lawful liability of the First and Second of you.

9. My client also informs me that out of a sum Rs.400 Lakhs, the First & Second of you have paid my client a sum of Rs.50 Lakhs by way of a cheque as part of the aforesaid liability of the First & Second of you to my client.

10. My client, accordingly presented the following cheques (out of four cheques) in his account in the State Bank of India, Banaswadi 4th Cross. Bangalore. bearing A/c. No.000061306869243 for encashment to his account. a) Cheque bearing No.698860, Dated: 30.06.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. b) Cheque bearing No.698861, Dated: 31.07.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. - 25 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

11. However, to my client's utter shock and dismay, the aforesaid cheques when presented for payment by my client at his bank viz. the State Bank of India, Banaswadi Branch, Bangalore, both the cheques were returned unpaid on presentation Bank Endorsement "FUNDS INSUFFICIENT", dated 01.08.2022.

12. It is apparent that the aforesaid Cheques had been issued by the First to Fourth of you with an intention to cheat and defraud my client, knowing very well the consequences thereof and hence all of you have no valid reasons to dishonor the same. The amount payable by all of you to my client is a legally recoverable debt and this act of yours is punishable Under Section 138 of the Negotiable Instruments Act apart from other Criminal and Civil actions.

13. My client informs that in protecting your property my client develop anxiety and insomnia and had also to be admitted to Manipal Hospital and lost peace of mind and sleep for 6 months and after my client recovered, the Third and Fourth of you have also approached my client for other works apart from the foregoing without paying any money and to cheat my client yet again. My client after his past experience did not want to take any chances. However, all of you have requested my client to help in the same along with another company L&W. My client inspite of the bad experience he had with all of you supported you with L&W in order to maintains good relationship. However, even after the same his payments have not been honored and on the contrary the cheques have bounced/returned as stated - 26 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR above. This clearly demonstrates the intent of all of you to avoid payment to my client who is claiming the same not as a bounty but as right accrued by virtue of having rendered professional services to all of you.

14. That as stated earlier, the First & Second of you being Private Limited Companies and the Third & Fourth of you being the Directors of the First and Second of you respectively as stated supra and being committed and in charge and responsible to the First & Second of you for the conduct of its business are very well aware of the issue of the aforesaid cheques towards the settlement of the dues / liabilities of my client. Hence this demand notice against All of you. Therefore. I hereby call upon All of you to pay the said amount of Rs. 200 Lakhs (Rupees Two Hundred Lakhs only) (l.e. Rs.100 Lakhs + Rs. 100 Lakhs) within 15 days from the date of receipt of this notice. Further If all of you fail to comply with the demand made in the notice, my client has no other option except to initiate legal proceedings in a competent court of law holding all of you responsible for all costs and consequences arising thereof. The charge of this legal notice is Rs. 10,000/- payable by you to my client.” Reply dated 18.10.2022 “ To, Sri. Unnikrishnan.M Advocate No.46, 1st ‘A’ corss, AECS Layout (Near ISRO) RMV II Stage Bengaluru – 560 094. - 27 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Sir, My client Krishil Capital Holdings Pvt.Ltd., represented by its Director Mr.K.R.Choudary & Ondot Corporate Services Pvt.Ltd., represented by its Director Mr.B.Sudhakar Pai, No.37, M.N.Krishna Rao Raod, Lalbagh West Gate, Basavanagudi, Bangalore – 560 004, has placed notice dated: 12.09.2022 issued by your on behalf of your client Varun Rajendra, No.674, 4th ‘C’ Main, OMBR Layout, Bengaluru – 560 043, with an instructions to give reply to your notice as under: At the outset my client wishes to state:

1. My clients state that, My clients owns the Industrial converted property in survey No.15P, 16P & 76P at Doddenakundi Industrial Area, K.R.Puram Hobli, Bangalore East Taluk. My clients were looking for the person who can clear the encroachments in the above said property and to protect the said property from the land grabbers for a limited period. Further states that, your client is very well known to clients and expressed your client’s willingness to provide the services required for my clients. After several mutual discussions and on orals terms & conditions, my clients have engaged your client’s services to shift the encroachments, securing significant possession and protection of property situated in survey No.15P, 16P & 76P at Doddenakundi Industrial Area, K.R.Puram Hobli, Bangalore East Taluk, belongs to my clients from anti-social elements time to time for two years with effect from August 2017. - 28 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

2. My clients inform me to state that, originally, your client had agreed to extra if your client had completed work by 15th September 2017. The complete entire work for Rs.65,00,000/- and another Rs.5,00,000/-note dated 4th September 2017 signed by your client is already sent to you in our earlier reply for your ready reference Accordingly, vour client had started his services. Surprisingly your client submitted a bill for Rs. 1,65,00,000/- through a letter dated 14th September 2017, towards total work completed and one more bill dated 5th December 2017 for Rs.8.05,000/- towards CCTV and lights works through a letter and one more bill dated 5th December 2018 for Rs.7,00,000/- towards security charges. The copies of theses letter are already sent to you in our earlier reply for your ready reference. We agreed only for Rs.65,00,000/- and which was revised and settled as per bill for Rs. 1,65,00,000/- and finally revised mutually till 4,00,00,000/- because of close relationship between m clients and your client. As per understanding, my clients were payin the remunerations to your client. On 23/10/2019, our clients hay given confirmation letter to your client to that effect.

3. My client states that, as per confirmation letter dated 23/10/2019 balance 75% will be cleared 15 equal monthly installments.At request of your client Sri.B.Sudhakar Pai, has given 4 cheques to y client for the purpose of Security subject to final reconciliation, vide Cheque Numbers 698860 for Rs 1 Crores, 698 Or Rs 1 Crores, 698862 for Rs 1 Crores & 698863 for Rs-50 Lakhs, all are drawn on - 29 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Canada bank basavanagudi Bangalore, at the time ofletter to your client to this effect.

4. My client states that, as per the understandings between my clients and your clients, my clients have paid Rs.4,00,00,000/- to your client for the period from 31/08/2017 to 31/12/2021. Further your client has expressed his financial commitments and urgent need of money. requested our client to extend the financial help as hand loan. Since your client very well known to my clients has paid Rs.58,85,000/- (Rupees Fifty Eight Lakhs and Eighty Five Thousand Only) to your client as hand loan. The ledger account statement of your client is already sent to you in our earlier reply for your perusal. My clients have made it clear that all the dues liable to be paid to your client have been cleared and requested to return the amount of Rs.58,85,000/- taken by your client as hand loan from my client along with the cheques given as security as referred above.

5. My clients inform me to state that, when the matter stood thus, to the shock and surprise of my clients, that they have received a frivolous legal notice which was issued by youon 23/08/2022 at the false instructions of your client by suppressing true facts. The same was duly replied and hence my client has written a letter to the bank t stop the payment in case other cheque is deposited by your client.

6. Therefore, please advise your client so as to withdraw the notice w is replete with wrong information to give this frivolous notice. While the facts are as stated above our client wishes to reply to notice as under: - 30 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

7. The averments made in para No.1 to 6 of your notice are little relevance each other and the same may be true and the your client is put to strict proof of the same.

8. The averments made in Para No. 7 of your notice are little relevance each other and the same.

9. The averments made in para No & of your notice, exсеpt the details of the cheques mentioned in sub-para a0, b0, c) & d) all other averments and allegations are nothing but self-serving statements by cooking u client is put to strict proof of the same. The true facts are that, as per a story and the same are hereby strongly denied as false and your 15- equal monthly installments, towards the same my clients have confirmation letter dated 23/10/2019 the balance 75% will be cleared 15 equal monthly installments, towards the same my clients have given 4 cheques to your client for the purpose of Security vide Cheque Rs 1 Crores & 698863 for Rs 50 Lakhs, all are drawn on Canara Bank Numbers 698860 for Rs 1 Crores, 698861 for Rs 1 Crores, 698862 for letter. My client states that, as per the understandings between my clients and your clients, my clients have paid Rs.4,00,00,000/- to Basavanagudi, Bangalore, at the time of giving the said confirmation your client for the period from 31/08/2017 to 31/12/2021. Further your client has expressed his financial commitments and urgent need of money requested our client to extend the financial help as hand loan. Since your client very well known to my clients has paid Rs.58,85,000/- (Rupees Fifty Eight Lakhs and Eighty Five Thousand only) to your client as hand loan. My clients have made it clear that the dues liable to be paid to your client - 31 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR have been-cleared and requested to return the amount of Rs.58,85,000/- taken by your t as hand loan from my client along with the cheques given as security as referred above. When my clients are eagerly Waiting for герауment of Rs. 58,85,000/- and return of security cheques, frivolous notice was issued on 23/08/2022. The same was duly replied and hence my client has written a letter to the bank to stop the payment in case other cheque is deposited by your client.

10. The averments made in Para No. 9 of your notice regarding making payment only Rs.50 lakhs to your client by my clients, Infact, my clients have not only made the payment of Rs.50 lakhs but also paid Rs.4,58,85,000/- to your client.

11. With regard to Para No.10 & 11 of your notice, since the cheques were not issued towards clearance of any legal debt, the question of depositing the cheque for encashment does not arise Infact my clients are not liable to pay single rupee to your client an your client has not intimated to our client regarding presenting respective cheques. In order to escape from the liability of your clic of return of amount of Rs. 58,85,000/- to my clients and return cheques given for security, your client had presented the cheque encashment, only with malafide intention to make wrongful gain my clients. My clients reserve their liberty to take appropriate action against your client for recovery of the said amount 58,85,000/- and other reliefs. - 32 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

12. The averments made in para 12 & 13 of your legal not self serving statements to suit his convenience to make with an intention to cheat my clients to make wrongful gain- hence the same are hereby strongly denied as false and your client is put to strict proof of the same. Infact the alleged cheques mentioned in your notice are not issued to your client to clear any legally recoverable debt.

13. There is not legally dischargeable debt payable by my client to your client. Hence your deemed can not be complied with. Therefore please advice your client suitably not to precipitate the matter further which my client is ready to defend the illegal acts of matter further which my client is ready to defend the illegal acts of your client at the cost of your client. Further direct your client to withdraw the said legal notice by returning the said cheque which belongs to my client within 15 days from the date of receipt of this reply notice, failing which my client will be constrained to initiate criminal proceedings against your client and also defend in appropriate court of law. Your client is liable to pay Rs. 50,000/- being the charges of this Reply notice.”

10. It is a matter of record that even in the sworn statement before the learned Magistrate, the respondent – complainant has reiterated the very same averments as PW-1, which is as under:- SWORN STATEMENT BY WAY OF AN AFFIDAVIT - 33 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR I. SRI. VARUN RAJENDRA. 5/o Parthasarathy Rajendra Ra No.674. 4 C Main, OMBR Layout. Bengaluru 560 043, the Complainant in the above case do hereby state, that what has been stated above is true to the best of knowledge, information and belief.s

1. I submit that I am the Complainant in the above case and well conversant with the facts of the case. Hence I am swearing to this affidavit.

2. I submit that 1 and 2 Accused are companies, registered under the provisions of the Companies Act. The 3 Accused Mr. K.R. Choudhary is the director of the 1st the 4" Accused Mr. B. Accused Company whereas, Sudhakar Pai is the Directors of the 2nd Accused Company. 3. 1 submit that the 1" Accused was allotted lands bearing Survey No.16/P & 76/P of Doddanekkundi Industrial Area, by the Karnataka Industrial Areas Development Board. Likewise, the 2 Accused was also allotted land bearing Survey Nos.15/P & Survey No.16/P of Doddanekkundi Industrial Area. by Industrial Areas Development Board. It further submits that he was informed that the said allotments were made for the purpose of a Hitech Project. the Karnataka

4. I submit that the aforesaid allotment of the lands being somewhere in the year 2002, was allotted by the Karnataka Industrial Areas Development Board to the 1st and 2nd Accused with litigation and encroachments. In fact, bilst, the lands were handed over to the companies le the 1st and 2nd etc.. over the same.

5. I submit that I had previous business transactions with the 3rd and 4" Accused. It is further submitted that I am also into the business of Earth Moving. Excavation activities and civil works. Accordingly, the 1 and 2 accused, being companies represented by Mr. B.Sudhakar Pal and Mr. KR.Choudhary le. the 4" and 3 Accused approached me, to assist and help in shifting of encroachments, securing possession and also protecting the properties bearing - 34 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Survey No.16/P & 76/P of Doddanekkundi Industrial Area and Survey No.15/P & Survey No.16/P of Doddanekkundi Industrial Area. This was primarily due to the fact that the 1 and 2 Accused, owned the aforesaid lands which were contiguous to one another.

6. I submit that after examining the issue and noticing that the encroachers were squatting on the properties without any just authority and legal rights, negotiated with them to vacate the same. Likewise, pending litigations were also sorted out. In fact, contempt cases were also filed against the 1 and 2 accused and it was me who had pressed the Litigants to amicably resolve the issues.

7. It is further submitted that, they said lands being vast and with encroachers and antisocial elements and lands grabbers eying the same. it was imperative that the same be secured till the Hitech Project as envisaged by 1" and 2 Accused takes off. Accordingly. I, apart from having secured the properties and handed over vacant possession to the 1 and 2 Accused Companies (since the possession given by the Karnataka Industrial Areas Development Board was only on paper and not in reality as stated above) had also protected the property from 2016 till 2019.

8. I submit that the 1 and 2 Accused represented by its Directors i.e. Mr. K.R.Choudhary and Mr. B.Sudhakar Pai respectively while appreciating the professional approach me and agreed to compensate me for executing the work as stated supra . It is submitted that 3rd and 4th Accused initially agreed for a total remuneration of Rs.500 lakhs which was later reduced to Rs. 4 Crore /400 Lakhs. Since it was agreed the sum of Rs. 4 Crores / 400 Lakhs inclusive of taxes as Professional service charges was to be paid to me, the 3rd and 4th Accused I.e ,Mr . B.sudhakar Pai and Mr.K.N Choudhary had also issued a letter of confirmation to that effect on 23.10.2019 on behalf and representing the 1 and 2 ^ (nd) accused companies. That in terms of the same, a sum - 35 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR of Rs.400 Lakhs was to be paid in tranches with Rs.1 Crore to be paid within 23.10.2019 and the balance 75% to be paid in 15 monthly installments thereafter.

9. I submit that though all the parties had agreed to make payments of Rs.400 Lakhs in terms of the aforesaid time schedule, however, the Accused No.1 to 4 sought for time citing liquidity issues. I, in view of the relationship I had with the 3rd prime prime and 4th. Accused, reluctantly agreed to the same as I had no other option but to be pushed for accepting payment on later date. It is further submitted that, even though the payments had to be made by 2019. the Accused No. 1 to 4 procrastinated the issue on one frivolous ground or the other and finally after constant follow up, the 1st and 2nd Accused companies have issued the following cheques in my favour. a) Cheque bearing No.698860. Dated: 30.06.2022 for Rs.100 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. b) Cheque bearing No.698861. Dated: 31.07.2022 for Rs.100 Lakhs. drawn on Canara Bank, Basavanagudi Branch, Bengaluru. c) Cheque bearing No.698862, Dated: 31.08.2022 for Rs.100 Lakhs. drawn on Canara Bank, Basavanagudi Branch, Bengaluru. d) Cheque bearing No.698863, Dated: 30.09.2022 for Rs.50 Lakhs, drawn on Canara Bank, Basavanagudi Branch, Bengaluru. The aforesaid cheques having been issued by Accused No.3 from the account maintained by him for the discharge of the aforesaid llability of all the Accused persons. Further the 3rd and 4th Accused as the Directors of the 1 and 2 Accused are aware of the liability of the 1st and 2nd Accused to me and also aware of the issuance of the aforesaid cheques to clear the Tegally enforeeable liability of the 1 and 2nd Accused. That apart 3rd and 4th. - 36 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Accused being committed and in charge of and responsible to the 1st and 2nd Accused Company respectively for the conduct of its business are aware of the transactions leading to the liability of the 1st and 2nd Accused to me and for due payment thereof.

10. I submit that out of a sum Rs.400 Lakhs, the 1 and 2 ^ (nd) Accused have earlier paid me a sum of Rs.50 Lakhs by way of a cheque as part of the aforesaid liability of the 1 and 2 ^ (rd) Accused to me.

11. 1, accordingly presented the following one cheque in my account in the State Bank of India. Banaswadi 4 ^ a Cross. Bangalore, bearing A/c. No.000061306869243 for encashment to my account. a) Cheque bearing No.698860 Dated : 30.06.2022 for Rs.100 lakhs drawn on Canara Bank, Basavanagudi Branch , Bengaluru. b) Cheque bearing No. 698801 dated: 31-07-2022 for Rs.100 lakh drawn on Canara Bank , Basavanagudi Branch , Bengaluru. It is pertinent to submit that the above -mentioned Cheque is only two out of four cheques given to me by the accused No.3 and 4 in respect of clearing the liability of the 1st and 2nd Accused.

12. I submit that to my utter shock and dismay, when two of the aforesaid cheques when presented for payment to the bank viz. the State Bank of India, Banaswadi Branch. Bangalore, both the cheques were returned unpaid on presentation "FUNDS INSUFFICIENT", dated 01-08-2022 Endorsement Bank

13. It is submitted that in the view of the above it is apparent that the aforesaid Cheques had been issued by the 3rd and 4th Accused with an intention to cheat and defraud - 37 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR me, knowing very well the consequences thereof and hence the Accused No.1 to 4 have no valid reasons to dishonor the same.

14. It is submitted that it is apparent that the 1st and 2nd Accused being Private Limited Companies and the 3rd and 4th Accused being the Directors of the companies and being committed and in charge/ responsible to 1 and 2nd Accused for the conduct of its business have issued the cheques to clear the dues/liability with a specific intention to cheat and defraud me. It is also manifest that the Accused are not interested in settling the amount outstanding for which the cheques had been issued. This act of the Accused No 1 to 4 is clearly a breach of trust and it threadbare demonstrates that the Intention of the Accused persons is to cheat and defraud me of my legitimate money.

15. I submit that a Legal Notice was issued to Accused or 23-08-2022 demanding the accused to clear thier liabilities within 15 days of the receipt of the said notice. The notice was served on 24-08-2022 and the accused No.1 to 4 have failed to respond to the said notice and hence, left with no other remedy I have filed this Instant Cose after expiry of the statutory grace period on 29.10.2022.

16. The Cause of Action for this Complaint has arisen when the Accused issued a letter of confirmation accepting liability and when accused issued 4 cheques in my favour, amounting Rs.3.50.00.000/- and dated 30.06.2022. 31.07.2022, 31.08.2022, 31.09.2022 respectively and On 23- 08-2022 when the sald cheque was/were dishonoured on presentation and on 12.10.2022. when the Demand Notice - 38 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR was issued to the Accused and on 29-08-2022 when the same was received by the Accused and thereafter when the Accused falled to comply with my demand within 15 days and on all subsequent dates within the jurisdiction of this Hon'ble Court.

17. I submit that both I and the Accused No.1 to 4 are residents of Bangalore and the above said cheque was presented at Bangalore, as such, this Hon'ble Court has territorial jurisdiction to take cognizance of the offence.

18. The Complaint is presented in time l.e.. within one month from the date of expiry of the fifteen days grace given under the Notice for the payment of the said amount and I have complied with all the requirements of presenting the Complaint under Section 138 of the Negotiable Instruments Act. WHEREFORE. I pray that this Hon'ble Court be pleased to issue Summons to the Accused and punish them in accordance with law, in the interest of justice and equity. What is stated above is true and correct to the best of my knowledge. Information, records and belief.”

11. The cumulative effect of the aforesaid documents and the material on record will clearly indicate that the question / issue in controversy involved in the impugned proceedings as to whether the petitioners / accused are guilty of offences punishable under Section 138 and 142 of the N.I.Act gives rise to disputed questions of fact and adjudication of the rival contentions which would necessarily have to be decided only after trial and not in a petition - 39 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR under Section 482 Cr.P.C. In this context, as rightly contended by the learned counsel for the respondent, to the common notice issued by the respondent to all the petitioners / accused, they issued a common / reply prima-facie admitting transactions, documents etc., between both parties prior issuance of the statutory notice and took up various contentions including disputed questions of fact which would require / warrant adjudication only after trial. In fact, at paragraph-9 of their reply supra, petitioners have specifically contended that the subject cheques were given towards security and were eagerly waiting for return of the security cheques and repayment of Rs.58,85,000/- by the respondent to the petitioners. This specific stance / stand put forth by the petitioners in their reply, has been seriously disputed and denied by the respondent which would also have to be adjudicated upon after trial in the impugned proceedings.

12. So also, along with his statement of objections, respondent has produced a letter / communication dated

23.10.2019 said to have been issued by petitioners 3 and 4 towards remuneration payable to the respondent on account of petitioners 1 and 2 and even this letter / communication and the - 40 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR rival contentions in this regard would also have to be considered only after trial after giving an opportunity to both parties to adduce oral and documentary evidence.

13. Under these circumstances, I am of the considered opinion that merely because the subject cheques have been signed by the petitioner No.4 – accused No.4, in the light of the material on record which gives rise to disputed questions of fact warranting trial by the learned Magistrate, it is impermissible in law in the present petition to conduct roving enquiry into disputed questions of fact at the pre-trial stage especially when the impugned complaint and other material on record discloses the necessary ingredients of an offence under Section 138 of the N.I.Act and scuttling the proceedings at the threshold without trial in the exercise of jurisdiction of this Court under Section 482 Cr.P.C.

14. In Sri.Om Sales case supra, the Apex Court held as under:- “11. The law is well settled that while considering a prayer to quash the criminal complaint and the consequential proceedings at the threshold, the Court is required to examine whether the allegations made in the complaint along with materials in support thereof make out a prima - 41 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR facie case to proceed against the accused or not. If upon reading the complaint allegations and perusing the materials filed in support thereof, a prima facie case is made out to proceed against the accused, the complaint cannot be quashed, particularly, by appreciating the evidence/ materials on record because the stage for such appreciation is at the trial. No doubt, in exceptional circumstances, the Court may take notice of attending circumstances conclude that continuance of the proceedings would amount to an abuse of the process of the Court, or where quashing of the proceedings is necessary to secure the ends of justice.

12. In the instant case, the complaint clearly spells out the necessary ingredients for commission of an offence punishable under Section 138 of the N.I. Act. It is also alleged in the complaint that the cheque was issued in the discharge of liability qua goods supplied by the complainant. The cheque was brought on record along with the dishonor memo of the bank concerned which indicated that it was returned unpaid for insufficient funds in the drawer’s account. The complaint also indicated that complainant had served notice of demand within the specified period and despite service of notice of demand, no payment was made. In such circumstances, the necessary ingredients of an offence punishable under Section 138 of N.I. Act were disclosed by the complaint warranting issuance of process to the accused (i.e., the first respondent).

13. However, the High Court, in its jurisdiction under Section 482, proceeded to test whether the cheque was issued for the discharge, in whole or in part, of any debt or - 42 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR other liability. In our view, such an exercise was unwarranted because, under Section 139 of the N.I. Act, there is a presumption that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption can be rebutted by evidence led in trial. A fortiori, the said issue can appropriately be decided either at the trial, or later, upon conclusion of trial, by the appellate/ revisional court.

14. In Maruti Udyog Ltd. v. Narender and others - (1999) 1 SCC 113 , this Court held that a presumption must be drawn that the holder of the cheque received the cheque of the nature referred to in Section 138, for the discharge of any debt or other liability unless the contrary is proved and, therefore, the High Court was not justified in entertaining and accepting the plea of the accused at the initial stage of the proceedings and quash the complaint.

15. Likewise, in Rangappa v. Sri Mohan - (2010) 11 SCC 441 , it was held that the presumption mandated by Section 139 of the N.I. Act includes the existence of a legally enforceable debt or liability. It was observed that such a presumption is rebuttable, and the accused must raise its defense in the trial.

16. In Rajeshbhai Muljibhai Patel v. State of Gujarat it was held that the High Court should not quash the criminal complaint under Section 138 of N.I. Act by going into disputed questions of fact regarding the cheque in question being issued for the discharge of debt or liability. Moreso, when Section 139 of the N.I. Act raises a statutory - 43 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR presumption as regards the cheque being issued discharge of debt or liability.

17. In Rathish Babu Unnikrishnan v. State (NCT of Delhi)7 (2022) 20 SCC 661 , this Court held that when there is a legal presumption under Section 139 of N.I. Act, it would not be judicious to carry out a detailed enquiry on a disputed question of fact at a pre-trial stage to quash the complaint. The relevant observations in the judgment are extracted below: “17. The proposition of law as set out above makes it abundantly clear that the court should be slow to grant the relief of quashing a complaint at a pre-trial stage, when the factual controversy is in the realm of possibility particularly because of the legal presumption, as in this matter. What is also of note is that the factual defense without having to adduce any evidence need to be of an unimpeachable quality, so as to altogether disprove the allegations made in the complaint.

18. The consequences of scuttling the criminal process at a pretrial stage can be grave and irreparable. Quashing proceedings at preliminary stages will result in finality without the parties having had an opportunity to adduce evidence and the consequence then is that the proper forum i.e., the trial court is ousted from weighing the material evidence. If this is allowed, the accused may be the criminal given an unmerited advantage process. Also, because of the legal presumption, when the cheque and the signature are not disputed by the appellant, the balance of convenience at this stage is in favor of the complainant / prosecution, as the accused will have the opportunity to adduce defense evidence during the trial, to rebut the presumption.

19. Situated thus, to non-suit the complainant, at the stage of the summoning order, when the factual controversy is yet to be canvassed and considered by the trial court will not in our opinion be judicious. - 44 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Based upon a prima facie impression, an element of criminality cannot entirely be ruled out here subject to the determination by the trial court. Therefore, when the proceedings are at a nascent stage, scuttling of the criminal process is not merited.”

18. Having regard to the aforesaid decisions of this Court as also the provisions of Section 139 of the N.I. Act, we are of the considered view that the High Court committed an error by conducting a roving enquiry, at the pre-trial stage, as regards the cheque being issued for the discharge of debt or liability. Such an exercise, in our view, was not merited in exercise of power under Section 482 of the Code more so when the complaint allegations disclosed that the cheque was issued for discharge of liability. As fulfillment of the necessary ingredients of Section 138 N.I. Act are prima facie made out from the complaint allegations, in our view, neither the summoning order nor the complaint could have been quashed by the High Court at the pre-trial stage.

19. For the aforesaid reasons, this appeal allowed. The order of the High Court is set aside. The criminal complaint in question is restored on the file of the concerned Magistrate and shall be dealt with in accordance with law.

20. We make it clear that we have not expressed any opinion as to whether the cheque in question was issued for the discharge, in whole or in part, of any debt or liability. The said issue shall be decided by the Trial Court independently without being prejudiced by any of this order.

21. Pending application(s), if any, shall stand disposed of.” - 45 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

15. In Rangappa’s case supra, the Apex Court held as under:- “ 9. Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act. With respect to the facts of the present case, it must be clarified that contrary to the trial court's finding, Section 138 of the Act can indeed be attracted when a cheque is dishonoured on account of `stop payment' instructions sent by the accused to his bank in respect of a post-dated cheque, irrespective of insufficiency of funds in the account. This position was clarified by this Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula D'Souza, (2003) 3 SCC 232, wherein it was held: "Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. These provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post- dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted - 46 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR by adducing evidence and the burden of proof is on the person who wants the presumption. This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138. A contrary view would render S. 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong. ..."

10. It has been contended on behalf of the appellant- accused that the presumption mandated by Section 139 of the Act does not extend to the existence of a legally enforceable debt or liability and that the same stood rebutted in this case, keeping in mind the discrepancies in the complainant's version. It was reasoned that it is open to the accused rely on the materials produced by complainant for disproving the existence of a legally enforceable debt or liability. It has been contended that since the complainant did not conclusively show whether a debt was owed to him in respect of a hand loan or in relation to expenditure incurred during the construction of the accused's house, the existence of a legally enforceable debt or liability had not been shown, thereby creating a probable defence for the accused. Counsel appearing for the appellant- accused has relied on a decision given by a division bench of this Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, the operative observations from which are reproduced below (S.B. Sinha, J. at Paras. 29-32, 34 and 45): "29. Section 138 of the Act has three ingredients viz.: (i) that there is a legally enforceable debt - 47 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds.

30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.

31. The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.

32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different. - 48 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is `preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies." (emphasis supplied) Specifically in relation to the nature of the presumption contemplated by Section 139 of the Act, it was observed; "45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."

11. With respect to the decision cited above, counsel appearing for the respondent-claimant has submitted that the - 49 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR observations to the effect that the `existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act' and that `it merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability' [See Para. 30 in Krishna Janardhan Bhat (supra)] are in conflict with the statutory provisions as well as an established line of precedents of this Court. It will thus be necessary to examine some of the extracts cited by the respondent-claimant. For instance, in Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16, it was held (Ruma Pal, J. at Paras. 22-23): "22. Because both Sections 138 and 139 require that the Court `shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn, ..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused (...). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the - 50 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR accused adduces evidence showing reasonable probability of the non-existence of the presumed fact.

23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."

12. The respondent-claimant has also referred to the decision reported as Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm & Ors., 2008 (8) SCALE 680, wherein it was observed: "Under Section 118(a) of the Negotiable Instruments Act, the court is obliged to presume, until the contrary is proved, the promissory note was made consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the non- existence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the non-existence of the consideration either by direct evidence - 51 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal. ..." This decision then proceeded to cite an extract from the earlier decision in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12): "Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbably or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of - 52 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist." (emphasis supplied) Interestingly, the very same extract has also been approvingly cited in Krishna Janardhan Bhat (supra).

13. With regard to the facts in the present case, we can also refer to the following observations in M.M.T.C. Ltd. and Anr. v. Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234 (Para. 19): "... The authority shows that even when the cheque is dishonoured by reason of stop payment instruction, by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the `stop payment' instructions were not issued because of - 53 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. ..."

14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation dishonour of cheques, the rebuttable presumption under - 54 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined the private parties involved commercial transactions. In such a scenario, the test of proportionality should construction interpretation reverse clauses accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.

15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment' instructions to his bank. Furthermore, - 55 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR instructions to `stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant.

16. In conclusion, we find no reason to interfere with the final order of the High Court, dated 26-10-2005, which recorded a finding of conviction against the appellant. The present appeal is disposed of accordingly.” - 56 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

16. In HMT Watches Ltd., case supra, the Apex Court held as under:- “ 10. Having heard learned counsel for the parties, we are of the view that the accused (respondent no.1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petition under Section 482 of the Code of Criminal Procedure, to come to a conclusion that the offence is not made out. The High Court has erred in law in going into the factual aspects of the matter which were not admitted between the parties. The High Court further erred in observing that Section 138(b) of N.I. Act stood uncomplied, even though the respondent no.1 (accused) had admitted that he replied the notice issued by the complainant. Also, the fact, as to whether the signatory of demand notice was authorized by the complainant company or not, could not have been examined by the High Court in its jurisdiction under Section 482 of the Code of Criminal Procedure when such plea was controverted by the complainant before it.

11. In Suryalakshmi Cotton Mills Limited v. Rajvir Industries Limited and others[1], this Court has made following observations explaining the parameters of - 57 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR jurisdiction of the High Court in exercising its jurisdiction under Section 482 of the Code of Criminal Procedure: - "17. The parameters of jurisdiction of the High Court in exercising its jurisdiction under Section 482 of the Code of Criminal Procedure is now well settled. Although it is of wide amplitude, a great deal of caution is also required in its exercise. What is required is application of the well-known legal principles involved in the matter. xxx xxx xxx 22. Ordinarily, a defence of an accused although appears to be plausible should not be taken into consideration for exercise of the said jurisdiction. Yet again, the High Court at that stage would not ordinarily enter into a disputed question of fact. It, however, does not mean that documents of unimpeachable character should not be taken into consideration at any cost for the purpose of finding out as to whether continuance of the criminal [pic]proceedings would amount to an abuse of process of court or that the complaint petition is filed for causing mere harassment to the accused. While we are not oblivious of the fact that although a large number of disputes should ordinarily be determined only by the civil courts, but criminal cases are filed only for achieving the ultimate goal, namely, to force the accused to pay the amount due to the complainant immediately. The courts on the one hand should not encourage such a practice; but, on the other, cannot also travel beyond its jurisdiction to interfere with is otherwise the proceeding which genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable.'

12. In Rallis India Limited v. Poduru Vidya Bhushan and others[2], this Court expressed its views on this point as under:- "12. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged - 58 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR respondents of the said liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the respondents ceased to be the partners of the firm." In view of the law laid down by this Court as above, in the present case High Court exceeded its jurisdiction by giving its opinion on disputed questions of fact, before the trial court.

13. Lastly, it is contended on behalf of the respondent no.1 that it was not a case of insufficiency of fund, as such, ingredients of offence punishable under Section 138 of the N.I.Act are not made out. We are not inclined to accept the contention of learned counsel for respondent no.1. In this connection, it is sufficient to mention that in the case of Pulsive Technologies P. Ltd. vs. State of Gujarat[3], this Court has already held that instruction of "stop payment" issued to the banker could be sufficient to make the accused liable for an offence punishable under Section 138 of the N.I. Act. Earlier also in Modi Cements Ltd. vs. Kuchil Kumar Nandi[4], this Court has clarified that if a cheque is dishonoured because of stop payment instruction even then offence punishable under Section 138 of N.I. Act gets attracted.

14. For the reasons as discussed above, we find that the High Court has committed grave error of law in quashing the criminal complaints filed by the appellant in respect of offence punishable under Section 138 of the N.I. Act, in exercise of powers under Section 482 of the Code of Criminal Procedure by accepting factual defences of the - 59 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR accused which were disputed ones. Such defences, if taken before trial court, after recording of the evidence, can be better appreciated.

15. Therefore, for the reasons, as discussed above, these appeals deserve to be allowed. Accordingly, the appeals are allowed. The impugned order dated 25.2.2004 passed by High Court of Kerala in Criminal M.C. Nos. 2366 of 2008 and 2367 of 2008 is hereby quashed. The trial court shall proceed with the trial in the criminal complaint cases. It is clarified that we have not expressed our opinion as to correctness of the defence pleas taken by the respondent no.1. No order as to costs.”

17. So also, in Rallis India’s case supra, the Apex Court held as under:- “ 10. To analyze the case before us in proper perspective, it is necessary to scrutinize all the Criminal Complaints one by one. On perusal of the complaints, we observe that the specific averment of vicarious criminal liability as mandated by the three Judge Bench of this Court in the case of S.M.S. Pharmaceuticals Limited Vs. Neeta Bhalla and Another, reported in 2005 (8) SCC 89, is contained in them in the form mentioned in Para 4 hereinabove.

11. Thus, in the light of the aforesaid averments as found by us in the Criminal Complaint, we are of the considered opinion that sufficient averments have been made against the Respondents that they were the partners of the firm, at the relevant point of time and were looking after day to - 60 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR day affairs of the partnership firm. This averment has been specifically mentioned by the Appellant in the complaint even though denied by the Respondents but the burden of proof that at the relevant point of time they were not the partners, lies specifically on them. This onus is required to be discharged by them by leading evidence and unless it is so proved, in accordance with law, in our opinion, they cannot be discharged of liability. Consequently, High Court committed an error in discharging them. Also, at the cost of repetition, by virtue of their own submissions before the High Court (reproduced in Para 6 above), the Respondents have admitted the fact that the Appellant had referred to them in their capacity as partners who were incharge of the affairs of the firm in the initial complaints. The question as to whether or not they were partners in the firm as on 31.03.2004, is one of fact, which has to be established in trial. The initial burden by way of averment in the complaint has been made by the Appellant.

12. The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, proviso to Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his knowledge or he had exercised due diligence to prevent the commission of such offence, he will not be liable of punishment. Needless to say, final judgment - 61 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners "qua" the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced - if they are eventually found to be not guilty, as a necessary consequence thereof would be acquitted.

13. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of the said liability at the threshold. Unless parties are given opportunity to lead evidence, it is not possible to come to definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the Respondents ceased to be the partners of the firm.

14. Before concluding the present discussion, we also take this opportunity to strike a cautionary note with regard to the manner in which High Courts ought to exercise their power to quash criminal proceedings when such proceeding is related to offences committed by companies. The world of commercial transactions contains numerous unique intricacies, many of which are yet to be statutorily regulated. More particularly, the principle laid down in Section 141 of the Act (which is pari materia with identical sections in other Acts - 62 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR like the Food Safety and Standards Act, the erstwhile Prevention of Food Adulteration Act etc. etc.) is susceptible to abuse by unscrupulous companies to the detriment of unsuspecting third parties. In the present case, there are several disputed facts involved - for instance, the date when the partnership came into being, who were the initial partners, if and when the Respondents had actually retired from the partnership firm etc.

15. Strictly speaking, ratio of the SMS Pharmaceuticals (supra) can be followed only, after the factum that accused were the Directors or Partners of a Company or Firm respectively at the relevant point of time, stands fully established. However, in cases like the present, where there are allegations and counter-allegations between the parties regarding the very composition of the firm, the above rule of `specific averment' must be broadly construed. Indeed, it would be nothing short of a travesty of justice if the Directors of a Company of Partners of a Firm, who, having duped a third-party by producing false documents (like a fake partnership deed) or making false statements (that some others were in charge of the Company/Firm), at a subsequent stage, seek protection from prosecution on the ground that they were not directly indicted in the complaint - such a proposition strikes against one of the very basic tenets of the law of natural justice, which is, that none shall be allowed to take advantage of his own default. Of course, the above observation is of a general nature, and has no bearing on the present case, but nonetheless, the power to quash a criminal proceeding with respect to an offence under Section 141 of - 63 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR the Act, must be exercised keeping this advisory note and caveat in mind.

16. On account of foregoing discussion, we are of the considered opinion that the impugned judgment and order passed by learned Single Judge exercising the jurisdiction conferred on him under Section 482 of the Cr.P.C. cannot be sustained in law. The same are hereby set aside and quashed. The trial court is directed to dispose of the Criminal complaints filed by Appellant at an early date, after giving opportunity of hearing to both sides, in accordance with law. However, the Trial Court would not be influenced by any of the observations made hereinabove and would decide the matters in accordance with law.”

18. In S.P.Mani’s case supra, the Apex Court held as under:- “ 16. Since the arguments of both the sides have proceeded mainly on the averments made in the complaint and to analyze the case before us in proper perspective, it is necessary to scrutinize the statutory notice as well as the complaint. The statutory notice dated 14.08.2017 reads thus: “To,

1. Sira Marketing Service, Represented by it's Partner/ Authorized Signatory, Rajesh, Old No.60, New No.30, 28th Cross St, Indhira Nagar, Adyar, Chennai20. 2. Rajesh, Partner/ Authorized Signatory, Sira Marketing Service, Old No.60, New No. 30, 28th Cross St, Indhira Nagar, Adyar, Chennai20. - 64 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

3. Dr. Mrs. Snehalatha Elangovan, W/o. Elangovan, Partner / Authorized Signatory, Sira Marketing Service, Old No.60, New No.30, 28th Cross St, Indhira Nagar, Adyar, Chennai20. Sir, Please take notice that we are instructed by our client S.P. Mani and Mohan Dairy, Represented by its Managing Partner: R.Mohanasundaram, No.34 & 84, Jeevanantham Street, Kollampalayam, Erode638 002 to issue this notice to you. You No.1 is a Partnership Firm, You No.2 and 3 are Partners and incharge and responsible for the daytoday affairs of You No. 1, you No.2 and 3 are regularly looking after and actively taking part in the daytoday business of You No.1. Our client is doing business in Milk and Milk Products: You used to purchase Milk and Milk Products from our client on credit basis. Our client is maintaining true and correct accounts. As per accounts maintained by our client you have to pay a balance of Rs. 10,71,434.60 to our client. In order to discharge the part of the said balance amount and liability you No.2 on behalf of you No.1 and with the knowledge and consent of you No.3 issued the following cheque which is drawn on TamilNad Mercantile Bank Ltd., Thiruvanmiyur Branch, Chennai Sl.No. 1 Cheque Date 05.05.2017 Cheque No. 411618 Cheque Amount Rs.10,00,000/- - 65 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR On your request our client presented the above said cheque for collection on 13.06.2017 through HDFC Bank Ltd., Sathy Road Branch, Erode and the same was returned as "Funds Insufficient" on 14.06.2017. Again on your request our client presented the above said cheque for collection on

20.07.2017 through HDFC Bank Ltd., Sathy Road Branch, Erode and the same was returned as "Funds Insufficient" on

21.07.2017. Without sufficient funds in your account, you have issued the above said cheque. You issued the above said cheque assuring payment on presentation of the same. At the time of issuing the said cheque, you represented that you are having an account in which you will have sufficient amount in your account. But you purposely allowed the same to be dishonoured with an intention to cheat and defraud our client. Therefore, you have committed an offence punishable U/S 138 of the Negotiable Instruments Act. You are hereby called upon to pay the above said amount of Rs.10,00,000/due under the above said cheque dated 05.05.2017 within is days from the date of receipt of this notice. Please note that on your failure to make the payment within the abovementioned time, legal action will be taken against you under section 138 of the Negotiable Instruments Act 1881 and thereupon you will be held liable for all the costs and consequences arising thereof.” [Emphasis supplied]

17. At the cost of repetition, we may state that there is no dispute that the aforesaid notice issued to the respondent was duly acknowledged by her, however, the respondent thought fit not to give any reply the same. The - 66 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR acknowledgement receipt has also been placed on record. The learned counsel appearing for the respondent fairly submitted that her client was in receipt of the notice however, no reply has been given to the same.

18. The complaint filed under Section 138 of the NI Act reads thus: “The complainant is a Partnership Firm registered under the Partnership act and carrying on business in the above said address. The Partners of the said firm resolved that D. Gokulnath, S/o. M. Dhanapal the Manager of the said complainant who knows personally about each and every transaction of this case to be and he is authorized to represent the firm in this case. A copy of power of attorney is produced herewith. The accused No.1 is a Partnership Firm, the accused No.2 and 3 are Partners and incharge and responsible for the daytoday affairs of the accused No.1, the accused No.2 and 3 are regularly looking after and actively taking part in the daytoday business of the accused No.1. The complainant is doing business in Milk and Milk Products. The accused used to purchase Milk and Milk Products the complainant on credit basis. The complainant is maintaining true and correct accounts. As per accounts maintained by the complainant, the accused have to pay a balance of Rs.10,71,434.60 to the complainant. In order to discharge the part of the said balance amount and liability the accused No.2 on behalf of the accused No. 1 and with the knowledge and consent of the accused No.3 issued the following cheque which is drawn on TamilNad Mercantile Bank Ltd., Thiruvanmiyur Branch, Chennai 41. - 67 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Sl. No. 1 Cheque Date 05.05.2017 Cheque No. 411618 Cheque Amount Rs.10,00,000/- On the request of the accused the complainant presented the above said cheque for collection on

13.06.2017 through HDFC Bank Ltd., Sathy Road Branch, Erode and the same was returned as "Funds Insufficient" on

14.06.2017. Again, on the request of the accused the complainant presented the above said cheque for collection on 20.07.2017 through HDFC Bank Ltd., Sathy Road Branch, Erode and the same was returned as "Funds Insufficient" on 21.07.2017. Without sufficient funds in their account accused have issued the above said cheque. The accused issued the above said cheque assuring payment on presentation of the same. At the time of issuing the said cheque, the accused represented that they are having an account in which they will have sufficient amount in their account. But the accused purposely allowed the same to be dishonoured with an intention to cheat and defraud the complainant. Therefore, the accused have committed an offence punishable u/s 138 of the Negotiable Instruments Act. Thereupon the complainant issued a lawyer notice on

14.08.2017 to the accused calling upon them to pay the above said sum of Rs.10,00,000/ due under the said cheque dated 05.05.2017 within 15 days from the date of receipt of this notice. The accused received the above said notice on

16.08.2017. But they failed to pay the above said cheque amount within 15 days. Hence the accused has committed - 68 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR an offence punishable u/s 138 r/w. 142 of Negotiable Instruments Act 1881 as amended by Act 55 of2002. The complainant submits that he had produced the relevant documents relating to this offence. He further submits that he has filed this complaint within one month from the date of expiry of 15 days grace time given in the notice for the payment of above said cheque's amount. The above said cheque was presented for collection through HDFC Bank Ltd., Sathy Road Branch, Erode which is situated in Erode Karungalpalayam Police Station limit. Hence this Hon'ble court is having jurisdiction to cognizance the offence. A court fee of Rs.5,000/ is paid under Tamilnadu Court Fee Act. It is therefore, prayed that this Hon'ble Court may be pleased to take this case on file, issue summon to the accused, enquire the matter, punish the accused with maximum sentence and direct the accused to pay compensation to the complainant u/s 357 CPC and render justice.”

19. Thus, from the aforesaid the following averments in the complaint are evident: (a) Accused No.1 is a Partnership Firm, the accused Nos. 2 and 3 resply are the partners and in charge and responsible for the daytoday affairs of the firm, the accused Nos. 2 and 3 are regularly looking after and actively taking part in the daytoday business of the firm; (b) In order to discharge the part liability, the accused No. 2 on behalf of the firm and with the consent and - 69 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR knowledge of the accused No. 3 issued the cheque drawn on the Tamilnad Mercantile Bank Ltd., Thiruvanmiyur Branch, Chennai41.

20. The aforesaid averments are not only found to be read in the complaint but in the notice too.

21. We shall now proceed to look into the impugned order passed by the High Court. The same order reads thus: “This criminal original petition has been filed to quash the proceedings in STC No. 583 of 2017, pending on the file of the Judicial Magistrate Fast Track Court No.II Erode.

2. The respondent has filed a complaint under Section 138 of the Negotiable Instruments Act. The petitioner has been arrayed as A~ 3 in the complaint. This quash petition has been filed primarily on two grounds. The first ground is that the Partnership Firm was dissolved during February 2017 and the subject cheque is said to have been issued by A~2 on 05.05.2017, after the dissolution of the Partnership Firm. The 2nd ground that has been raised is that the allegations made in the complaint does not satisfy the requirements of Section 141 of the Negotiable Instruments Act.

3. Heard Mr. K. Kannan, learned counsel for the petitioner and Mr. M. Guruprasad, learned counsel for the respondent.

4. Insofar as the first issue that is raised by the petitioner, the same cannot be gone into by this Court and it is a factual issue which can be decided only in the course of trial.

5. Insofar as the second issue is concerned, it will be beneficial to extract the relevant portion from the complaint filed by the respondent hereunder: - 70 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR "The accused No. 1 is a Partnership Firm, the accused No.2 and 3 are Partners and incharge and responsible for the daytoday affairs of the accused No. 1, the accused No.2 and 3 are regularly looking after and actively taking part in the daytoday business of the accused No. 1. The complainant is doing business in Milk and Milk Products. The accused used to purchase Milk and Milk Products from the complainant on credit basis. The complainant maintaining true and correct accounts. As per accounts maintained by the complainant, the accused have to pay a balance of Rs. 10,71,434. 60/ to the complainant. In order to discharge the part of the said balance amount and liability the accused No.2 on behalf of the accused No.1 and with the knowledge and consent of the accused No. 3 issued the following cheque which is drawn on Tamil Nadu Mercantile Bank Ltd., Thiruvanmiyur Branch, Chennai41.” Sl.No. 1 Cheque Date 05.05.2017 Cheque No. 411618 Cheque Amount Rs.10.00.000/-

6. In the present case, A~ 1 is the Partnership Firm and A~2 who is the partner is the signatory of the cheque. The petitioner A~ 3 has been roped in as an accused since she is a partner of A~ 1 Firm. The complaint can be prosecuted as against the petitioner only if the allegations made in the complaint satisfies the requirements of Section 141 of the Negotiable Instruments Act.

7. In the present case, the respondent has merely repeated the words used under Section 141 of - 71 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Negotiable Instruments Act and there is absolutely no allegation as to how and in what manner the petitioner is in- charge and responsible for the conduct of the business. In the absence of such an allegation, the complaint is not maintainable as against the petitioner. The law on this issue is well settled.

8. In the result, the proceedings in STC No. 583 of 2017, on the file of the Judicial Magistrate Fast Track Court No.II, Erode, is hereby quashed insofar as the petitioner is concerned. The Court below is directed to complete the proceedings in STC No.583 of 2017, against the other accused persons within a period of three months from the date of receipt of a copy of this order.

9. This criminal original petition is allowed with the above directions. Consequently, connected miscellaneous petitions are closed.”

22. Thus, the plain reading of the impugned order passed by the High Court as aforesaid would indicate that the proceedings came to be quashed essentially on the ground that there was nothing to indicate that in what manner the respondent herein was incharge and responsible for the day today affairs of the firm so as to make her vicariously liable for the alleged offence with the aid of Section 141 of the NI Act. To put it in other words, the High Court proceeded on the footing that mere averments in the complaint as regards the role of the respondent as a partner in the firm is not sufficient. Analysing Section 141 of the Negotiable Instrument Act, - 72 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

23. The provisions of Section 138 and Section 141 reply of the NI Act read as under: “Section 138. Dishonour of cheque for insufficiency, etc. of funds in the account.— Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque or with both: Provided that nothing contained in this Section shall apply unless— (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the - 73 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation: For the purposes of this Section, “debt or other liability” means a legally enforceable debt or other liability.” “Section 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 subsection 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 financial corporation owned or controlled by the Central 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 subsection (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 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 - 74 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR 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.”

24. Evidently, the gist of Section 138 is that the drawer of the cheque shall be deemed to have committed an offence when the cheque drawn by him is returned unpaid on the prescribed grounds. The conditions precedent and the conditions subsequent to constitute the offence are drawing of a cheque on the account maintained by the drawer with a banker, presentation of the cheque within the prescribed period, making of a demand by the payee by giving a notice in writing within the prescribed period and failure of the drawer to pay within the prescribed period. Upon fulfilment of these requirements, the commission of the offence which may be called the offence of ‘dishonour of cheque’ is complete. If the drawer is a company, the offence is primarily committed by the company. By virtue of the provisions of subsection (1) of Section 141, the guilt for the offence and the liability to be prosecuted and punished shall be extended to every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of its business; irrespective of whether such person is a director, manager, secretary or other officer of the company. It would be for such responsible person, in order to be exonerated in terms of the first proviso, to prove that the - 75 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR offence was committed without his knowledge or despite his due diligence.

25. Under the separate provision of subsection (2), if it is proved that the offence was committed with the consent or connivance of or was attributable to the neglect on the part of any director, manager, secretary or other officer of the company, such person would also be deemed to be guilty for that offence. Obviously, the burden of alleging and proving consent, connivance or neglect on the part of any director, etc. would rest upon the complainant. The non obstante clause with which the subsection (2) opens indicate that the deeming provision is distinct and different from the deeming provision in subsection (1) in which the office or designation of the person in charge of and responsible to the company for the conduct of its business is immaterial. 26. While the essential element for implicating a person under subsection (1) is his or her being in charge of and responsible to the company in the conduct of its business at the time of commission of the offence, the emphasis in subsection (2) is upon the holding of an office and consent, connivance or negligence of such officer irrespective of his or her being or not being actually in charge of and responsible to the company in the conduct of its business. Thus, the important and distinguishing feature in subsection (1) is the control of a responsible person over the affairs of the company rather than his holding of an office or his designation, while the liability under subsection (2) arises out of holding an office and consent, connivance or neglect. While all the persons covered by subsection (1) and sub section (2) are liable to be - 76 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR proceeded against and also punished upon the proof of their being either in charge of and responsible to the company in the conduct of its business or of their holding of the office and having been guilty of consent, connivance or neglect in the matter of commission of the offence by the company, the person covered by subsection (1) may, by virtue of the first proviso, escape only punishment if he proves that the offence was committed without his knowledge or despite his due diligence.

27. As for the requisite evidence, the burden upon the prosecution would be discharged under subsection (1) when a person is proved to be in charge of and responsible to the company in the conduct of its business and would shift upon the accused to prove that he was ignorant or diligent, if that be his defence; whereas under subsection (2) prosecution would be required to allege and prove the consent, connivance or neglect and holding of the office by the accused. There is nothing to suggest that the same person cannot be made to face the prosecution either under subsection (1) or subsection (2) or both. A director or manager can be arraigned and proved to be guilty as the person in charge of and responsible to the company as well as the director of the company who, as such, might have consented to, connived at or been negligent in respect of the offence of dishonour of cheque, be logically deduced that a person can be arraigned in a complaint as the accused along with the company if it prima facie appears that he was in charge of and responsible to the company for the conduct of its business, although he may or may not be or may not have - 77 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR continued to be a director or other officer of the company, as mentioned in sub section (2). It would be sufficient if the complaint indicates that such person has been arraigned on the basis of averments which disclose him or her to be the person in charge of and responsible to the company in the conduct of its business at the time the offence was committed. Evidently, a person who signs the cheque or who has the authority to sign the cheque for and on behalf of the company, regardless of his office or capacity, can, prima facie, be assumed to be in charge of and responsible to the company in the conduct of its business. And, where such person is prosecuted, then, if it be his defence that the offence was committed without his or her knowledge or that he or she has exercised all due diligence to prevent the commission of such offence, the burden to prove that would be on him or her and can only be discharged at the stage of evidence.

28. While dealing with a reference to resolve the apparent conflict between the judgments of this Court in the Municipal Corporation of Delhi v. Ram Kishan Rohtagi, (1983) 1 SCC 1, and the U.P. Pollution Control Board v. Modi Distillery, (1987) 3 SCC 684, in the context of vicarious liability under the provisions of Section 141 of the NI Act, this Court in P. Rajarathinam v. State of Maharashtra, (2000) 10 SCC 529, pertinently observed as under: “4. A bare reading of the provision mandates that some facts must come on the record in order to figure as to who should answer the charge ultimately. Necessarily, pre charge evidence assumes importance. The complainant will - 78 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR have to put his side of the case as given out in the complaint and the persons summoned would have to put on the record all what is material to extricate themselves out. In any case, the crucial time would be when framing charge whereat a decision in that respect would be required to be made by the court. Presently, it appears to us premature to be resolving the conflict and the ratio deduced thereby, may turn out to be obiter. Therefore, we think that we need not resolve such conflict at present and leave it to the court concerned to pass appropriate orders at the time of framing of charge. In this manner, we dispose of these appeals.” [Emphasis supplied]

29. The seminal issue raised and requires to be settled in the present case is one relating to a person liable to be proceeded against under the provisions of subsection (1) of Section 141 for being incharge of and responsible to the company “at the time the offence was committed.” It would, therefore, be important to find out the “time” when the offence under Section 138 can be said to have been committed by the company. It is common place that an offence means an aggregate of facts or omissions which are punishable by law and, therefore, can consist of several parts, each part being committed at different time and place involving different persons. The provisions of Section 138 would require a series of acts of commission and omission to happen before the offence of, what may be loosely called “dishonour of cheque” can be constituted for the purpose of prosecution and punishment. It is held by the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510, that: “14. The offence under Section 138 of the Act can - 79 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice.”

30. Different persons can be incharge of the company when each of the series of acts of commission and omission essential to complete the commission of offence by the company were being committed. To take an example, in the case of a company, “A” might be in charge of the company at the time of drawing the cheque, “B” might be in charge of the company at the time of dishonour of cheque and “C” might be in charge of the companyat the time of failure to pay within 15 days of the receipt of the demand notice. In such a case, the permissibility of prosecution of A, B and C reply or any of them would advance the purpose of the provision and, if none can be prosecuted or punished, it would frustrate the purpose of the provisions of Section 138 as well as Section

141. The key to this interpretation lies in the use of the phrase: “every person shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly” as it occurs in subsection (1) of Section 141 and the use of the phrase “provided that nothing contained in this sub section shall render any person liable to punishment if he proves…” that occurs in the first proviso. Every person who was in charge of and was responsible to - 80 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR the company for the conduct of its business at the time any of the components necessary for the commission of the offence occurred may be “proceeded against”, but may not be “punished” if he succeeds in proving that the offence was committed without his knowledge and despite his due diligence; the burden of proving that remaining on him. Therefore, it also has to be held that the time of commission of the offence of dishonour of cheque cannot be on the stroke of a clock or during 15 days after the demand notice has to be construed as the time when each of the acts of commission and omission essential to constitute the offence was committed. The word “every” points to the possibility of plurality of responsible persons at the same point of time as also to the possibility of a series of persons being in charge the sequence of events culminating commission of offence by the company were taking place. As to what this ‘relevant time’ is, was a question that this Court was called to answer, inter alia, in N Rangachari v. Bharati Sanchar Nigam Limited, AIR (2007) SC 1682. In this case, Data Access, a company had issued two cheques to the BSNL, which were duly presented, but were dishonoured for insufficiency of funds. A complaint under Section 138 of the NI Act was filed. While the BSNL held the directors liable, the appellant, a chairman in the company contended that he being a nominated chairman and holding an Honorary post in the Company, was never assigned with any of the company’s financial or other business activities. He was the Chairman for name sake and was never entrusted with any job or business or constituted a signing authority. Resolving - 81 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR the issue of when the liability could be fastened, this Court said: “In the case on hand, reading the complaint as a whole, it is clear that the allegations in the complaint are that at the time at which the two dishonoured cheques were issued by the company, the appellant and another were the Directors of the company and were in charge of the affairs of the company. It is not proper to split hairs in reading the complaint so as to come to a conclusion that the allegations as a whole are not sufficient to show that at the relevant point of time the appellant and the other are not alleged to be persons incharge of the affairs of the company. Obviously, the complaint refers to the point of time when the two cheques were issued, their presentment, dishonour and failure to pay in spite of notice of dishonour.” [Emphasis supplied]

31. As held by this Court in Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1, the phrase “as well as” used in sub- section (1) of Section 141 of the NI Act would embroil the persons mentioned therein within the tentacles of the offence on par with the offending company. Therefore, when the company or firm is the drawee of the cheque, such company or firm is the principal offender and the fiction created by the legislature. When the offence is attributed to a juristic person or a body made up of several individuals and the liability to be prosecuted and punished is extended to embroil by legal fiction certain human beings, that legal fiction has to be so interpreted and applied that the individuals intended to be embroiled may not escape the liability by mere fact of having not been in charge at the time when one of the other of the - 82 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR events essential to complete the offence by the company happened. Borrowing again from K. Bhaskaran (supra), the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure.

32. In the aforesaid context, we may straight away proceed to look into the following observations made by this Court in the case of Monaben Ketanbhai Shah v. State of Gujarat in Criminal Appeal No. 850 of 2004 decided on

10.08.2004 reported in (2004) 7 SCC 15: “Section 138 of the Act makes dishonour of the cheque an offence punishable with imprisonment or fine or both. Section 141 relates to offences by the company. It provides that 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. Thus, vicarious liability has been fastened on those who are in charge of and responsible to the company for the conduct of its business. For the purpose of Section 141, a firm comes within the ambit of a company. It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole. If the substance of the allegations made in the complaint fulfill the requirements of Section 141, the complaint has to proceed and is required to be tried with. It is - 83 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR also true that in construing a complaint a hypertechnical approach should not be adopted so as to quash the same. The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting in enactment of Sections 138 and 141 has to be borne in mind. These provisions create a statutory presumption of dishonesty exposing a person to criminal liability if payment is not made within statutory period even after issue of notice. It is also true that the power of quashing is required to be exercised very sparingly and where, read as a whole, factual foundation for the offence has been laid in the complaint, it should not be quashed. All the same, it is also to be remembered that it is the duty of the Court to discharge the accused if taking everything stated in the complaint as correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking.” [Emphasis supplied]

33. Thus, the legal principles discernible from the aforesaid decision of this Court may be summarised as under: (a) Vicarious liability can be fastened on those who are in charge of and responsible to the company or firm for the conduct of its business. For the purpose of Section 141, the firm comes within the ambit of a company; (b) It is not necessary to reproduce the language of Section 141 verbatim in the complaint since the complaint is required to be read as a whole; (c) If the substance of the allegations made in the complaint fulfil the requirements of Section 141, the complaint has to proceed in regards the law. - 84 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR (d) In construing a complaint a hypertechnical approach should not be adopted so as to quash the same. (e) The laudable object of preventing bouncing of cheques and sustaining the credibility of commercial transactions resulting the enactment of Sections 138 and 141 respectively should be kept in mind by the Court concerned. (f) These provisions create a statutory presumption of dishonesty exposing a person to criminal liability if payment is not made within the statutory period even after the issue of notice. (g) The power of quashing should be exercised very sparingly and where, read as a whole, the factual foundation for the offence has been laid in the complaint, it should not be quashed. (h) The Court concerned would owe a duty to discharge the accused if taking everything stated in the complaint is correct and construing the allegations made therein liberally in favour of the complainant, the ingredients of the offence are altogether lacking.

34. The interrelationship between the Sections 138 and 141 respectively of the NI Act has been succinctly explained by this Court in SMS Pharmaceuticals v. Neeta Bhalla, AIR (2005) 3512, in the following words: “It will be seen from the above provisions that Section 138 casts criminal liability punishable with imprisonment or fine or with both on a person who issues a cheque towards discharge of a debt or liability as a whole or in part and the cheque is dishonoured by the Bank on presentation. Section 141 extends such criminal liability in case of a Company to every person who at - 85 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR the time of the offence, was incharge of and was responsible for the conduct of the business of the Company. By a deeming provision contained in Section 141 of the Act, such a person is vicariously liable to be held guilty for the offence under Section 138 and punished accordingly.” Who is liable? Vicarious liability:

35. This Court in Assistant Commissioner, AssessmentII, Bangalore and Ors. v. Velliappa Textiles Ltd. and Ors. AIR (2004) SC 86, introduced the concept of ego and alter ego in relation to the employee and the employer corporation. The Court elucidated this principle in the following words: “In order to trigger corporate criminal liability for the actions of the employee (who must generally be liable himself), the actoremployee who physically committed the offence must be the ego, the centre of the corporate personality, the vital organ of the body corporate, the alter ego of the employer corporation directing mind. Since company/corporation has no mind of its own, its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. To this extent there are no difficulties in our law to fix criminal liability on a company. The common law tradition of alter ego or identification approach is applicable under our existing laws.”

36. Now, the logical question that would follow is who would be liable through the company for this offence? Can the company itself be prosecuted for this offence? Answering - 86 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR this question, the Section 141 says, ‘every person who was in charge of’ and ‘was responsible to the company for the conduct of the business’ shall be deemed to be guilty of the offence. This concept of vicarious liability has been explained this Court in Sabhitha Ramamurthy v. RBS Channabasavaradhya, AIR (2006) SC 3086, as: “Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance with the statutory requirements would be insisted.” [Emphasis supplied]

37. At this stage, we should look into the decision of this Court in the case of K.K. Ahuja v. V.K. Vora, (2009) 10 SCC 48, in K.K. Ahuja (supra), wherein this Court discussed the principles of vicarious liability of the officers of a company in respect of dishonour of a cheque and held “27. The position under section 141 of the Act can be summarized thus: (i) If the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company, for the conduct of the business of the company. It is sufficient if an averment is made that the accused was the Managing Director or Joint Managing - 87 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Director at the relevant time. This is because the prefix “Managing” to the word “Director” makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company. (ii) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise responsibility under subsection (2) of Section 141. (iii) In the case of a Director, Secretary or Manager (as defined in Section 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1) of the Act. No further averment would be necessary in the complaint, though some particulars will be desirable. They can also be made liable under Section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub section. (iv) Other Officers of a company cannot be made liable under subsection (1) of Section 141. Other officers of a company can be made liable only under subsection (2) of Section 141, by averring in the complaint their position and duties in the - 88 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR company and their role in regard to the issue and dishonour the cheque, disclosing consent, connivance or negligence.” [Emphasis supplied]

38. In a very recent pronouncement in the case of Sunita Palita v. M/s Panchami Stone Quarry (2022) SC Online SC 945, this Court, after referring to K.K. Ahuja (supra) referred to above, observed as under: “When the accused is the Managing Director or a Joint Managing Director of a company, it is not necessary to make an averment in the complaint that he is in charge of, and is responsible to the company for the conduct of the business of the company. This is because the prefix “Managing” to the word “Director” makes it clear that the Director was in charge of and responsible to the company, for the conduct of the business of the company. A Director or an Officer of the company who signed the cheque renders himself liable in case of dishonour. Other officers of a company can be made liable only under subsection (2) of Section 141 of the NI Act by averring in the complaint, their position and duties, in the company, and their role in regard to the issue and dishonour the cheque, disclosing consent, connivance or negligence.”

39. In yet one another recent pronouncement in the case of Ashutosh Ashok Parasrampuria v. Gharrkul Industries Pvt. Ltd. reported in (2021) SCC Online SC 915, this Court after due consideration of the decisions in the case of SMS Pharmaceuticals (supra); S.K. Alagh v. State of Uttar Pradesh (2008) 5 SCC 662; Maharashtra State Electricity Distribution Co. Ltd. v. Datar Switchgear Ltd., (2010) 10 SCC - 89 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR 479, and GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505, observed as under: “In the light of the ratio in SMS Pharmaceuticals Ltd. (supra) and later judgments of which a reference has been made what is to be looked into is whether in the complaint, in addition to asserting that the appellants are the Directors of the Company and they are incharge of and responsible to the Company for the conduct of the business of the Company and if statutory compliance of Section 141 of the NI Act has been made, it may not open for the High Court to interfere under Section 482 CrPC unless it comes across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abused of process of Court. Despite the presence of basic averment, it may come to a conclusion that no case is made out against the particular Director for which there could be various reasons.” [Emphasis supplied]

40. The principles discernible from the aforesaid decision of this Court in the case of Ashutosh Ashok Parasrampuriya (supra) is that the High Court should not interfere under Section 482 of the Code at the instance of an accused unless it comes across some unimpeachable and incontrovertible evidence to indicate that the Director/partner of a firm could not have been concerned with the issuance of cheques. This Court clarified that in a given case despite the presence of basic averments, the High Court may conclude that no case is made out against the particular Director/ - 90 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR partner provided the Director/partner is able to adduce some unimpeachable and incontrovertible evidence beyond suspicion and doubt. Specific Averments in the complaint:

41. In Gunmala Sales Private Limited (supra), this Court after an exhaustive review of its earlier decisions on Section 141 of the NI Act, summarized its conclusion as under: “a) Once in a complaint filed under Section 138 read with Section 141 of the NI Act the basic averment is made that the Director was in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed, the Magistrate can issue process against such Director; b) If a petition is filed under Section 482 of the Code for quashing of such a complaint by the Director, the High Court may, in the facts of a particular case, on an overall reading of the complaint, refuse to quash the complaint because the complaint contains the basic averment which is sufficient to make out a case against the Director; c) In the facts of a given case, on an overall reading of the complaint, the High Court may, despite the presence of the basic averment, quash the complaint because of absence of more particulars about role of the Director in the complaint. It may do so having come across some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of the process of the court. - 91 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Despite the presence of basic averment, it may come to a conclusion that no case is made out against the Director. Take for instance a case of a Director suffering from a terminal illness who was bedridden at the relevant time or a Director who had resigned long before issuance of cheques. In such cases, if the High Court is convinced that prosecuting such a Director is merely an armtwisting tactics, the High Court may quash the proceedings. It bears repetition to state that to establish such case unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or some totally acceptable circumstances will have to be brought to the notice of the High Court. Such cases may be few and far between but the possibility of such a case being there cannot be ruled out. In the absence of such evidence or circumstances, complaint cannot be quashed; d) No restriction can be placed on the High Court's powers under Section 482 of the Code. The High Court always uses and must use this power sparingly and with great circumspection to prevent inter alia the abuse of the process of the Court. There are no fixed formulae to be followed by the High Court in this regard and the exercise of this power depends upon the facts and circumstances of each case. The High Court at that stage does not conduct a mini trial or roving inquiry, but nothing prevents taking unimpeachable evidence or totally acceptable circumstances into account which may lead it to conclude that no trial is necessary qua a particular Director.” - 92 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

42. The principles of law and the dictum as laid in Gunmala Sales Private Limited (supra), in our opinion, still holds the field and reflects the correct position of law.

43. In the case on hand, we find clear and specific averments not only in the complaint but also in the statutory notice issued respondent. There are specific averments that the cheque was issued with the consent of the respondent herein and within her knowledge. In our view, this was sufficient to put the respondent herein to trial for the alleged offence. We are saying so because the case of the respondent that at the time of issuance of the cheque or at the time of the commission of the offence, she was in no manner concerned with the firm or she was not incharge or responsible for daytoday affairs of the firm cannot be on the basis of mere bald assertion in this regard. The same is not sufficient. To make good her case, the respondent herein is expected lead unimpeachable and incontrovertible evidence. Nothing of the sort was adduced by respondent before the High Court to get the proceedings quashed. The High Court had practically no legal basis to say that the averments made in the complaint are not sufficient to fasten the vicarious liability upon the respondent by virtue of Section 141 of the NI Act.

44. We may also examine this appeal from a different angle. It is not in dispute, as noted above, that no reply was given by the respondent to the statutory notice served upon her by the appellant. In the proceedings of the present type, it is essential for the person to whom statutory notice is issued under Section 138 of the NI Act to give an appropriate reply. - 93 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR The person concerned is expected to clarify his or her stance. If the person concerned has some unimpeachable and incontrovertible material to establish that he or she has no role to play in the affairs of the company/firm, then such material should be highlighted in the reply to the notice as a foundation. If any such foundation is laid, the picture would be more clear before the eyes of the complainant. The complainant would come to know as to why the person to whom he has issued notice says that he is not responsible for the dishonour of the cheque. Had the respondent herein given appropriate reply highlighting whatever she has sought to highlight before us then probably the complainant would have undertaken further enquiry and would have tried to find out what was the legal status of the firm on the date of the commission of the offence and what was the status of the respondent in the firm. The object of notice before the filing of the complaint is not just to give a chance to the drawer of the cheque to rectify his omission to make his stance clear so far as his liability under Section 138 of the NI Act is concerned.

45. Once the necessary averments are made in the statutory notice issued by the complainant in regard to the vicarious liability of the partners and upon receipt of such notice, if the partner keeps quiet and does not say anything in reply to the same, then the complainant has all the reasons to believe that what he has stated in the notice has been accepted by the noticee. In such circumstances what more is expected of the complainant to say in the complaint. - 94 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

46. When in view of the basic averment process is issued the complaint must proceed against the Directors or partners as the case may be. But, if any Director or Partner wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case that making him stand the trial would be an abuse of process of court. He cannot get the complaint quashed merely on the ground that apart from the basic averment no particulars are given in the complaint about his role, because ordinarily the basic averment would be sufficient to send him to trial and it could be argued that his further role could be brought out in the trial. Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner.

47. Our final conclusions may be summarised as under: a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the - 95 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment. b.) The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141 respectively of the NI Act shows that on the other elements of an offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm. c.) Needless to say, the final judgement and order would depend on the evidence adduced. Criminal liability is - 96 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners ‘qua’ the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually to be not guilty, as a necessary consequence thereof would be acquittal. d.) If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to the process either furnish sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court.

48. We reiterate the observations made by this Court almost a decade back in the case of Rallis India Ltd v. Poduru Vidya Bhusan & Ors., (2011) 13 SCC 88, as to how the High Court should exercise its power to quash the criminal proceeding when such proceeding is related to offences committed by the companies. “The world of commercial transactions contains numerous unique intricacies, many of which are yet to be statutorily regulated. More particularly, the principle laid down in Section 141 of the NI Act (which is pari materia with - 97 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR identical sections in other Acts like the Food Safety and Standards Act, 2006; the erstwhile Prevention of Food Adulteration Act, 1954; etc.) is susceptible to abuse by unscrupulous companies to the detriment of unsuspecting third parties.”

49. In the result, this appeal succeeds and is hereby allowed with no order as to costs. The impugned order passed by the High Court is hereby set aside.

50. Pending application, if any, also stands disposed of.”

19. In MMTC Ltd.,’s case supra, the Apex Court held as under:- “ 6. Respondents filed two petitions for quashing of the complaints. By the impugned order both the complaints have been quashed.

7. At this stage it must be mentioned respondents had also issued, to the appellants, four other cheques. Those cheques were also dishonoured when presented for payment. Four other complaints, under Section 138 of the Negotiable Instruments Act, had also been filed by the appellants. Those four complaints had also been lodged by the same Shri Lakshman Goel. In those four cases the respondents filed separate applications for discharge. Those discharge applications were on identical grounds as urged by the respondents in the two petitions for quashing the complaints. The Magistrate accepted the contention and discharged the respondents. The High Court allowed the Revision filed by the appellants and set aside the Order of - 98 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR discharge. The High Court held, as between the same parties, that the Magistrate had erred in holding that the complaints filed by Lakshman Goel were not maintainable. The High Court held that, at this stage, it was not possible to accept defence that complainant/appellants were not entitled to present the cheques as respondents had expected the goods. The High Court restored the four complaints and directed the Magistrate to proceed with accordance with law. The respondents filed SLPs before this Court which were summarily dismissed.

8. In this case the respondents have identical contentions their petitions to quash complaints viz. that the complaints filed by Mr. Lakshman Goel were not maintainable and that the cheques were not given for any debt or liability. It was pointed out to the learned Judge that, between the same parties and on identical facts, it had already been held that as case for discharge was made out. Yet the learned Judge chose to ignore those findings and proceeded to hold to the contrary.

9. In the impugned Judgment it has been held that the complaints filed by Mr. Lakshman Goel were not maintainable. It was noticed that in those two complaints, at a subsequent stage, one Mr. Sampath Kumar, the Deputy General Manager of the appellant was allowed to represent the appellants. The High Court held that it is only an Executive Director of the Company who has the authority to institute legal proceedings. It is held that the complaint could only be filed by a person who is in charge of or was responsible to the Company. It is held that authorisation - 99 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR must be on the date when the complaint is filed and a subsequent authorisation does not validate the complaint. It is held that the absence of a complaint by a duly delegated authority is not a mere defect or irregularity which could be cured subsequently. It is held that if the record does disclose any authorisation, then taking cognizance of the complaint was barred by Section 142(a) of the Negotiable Instruments Act. It has been held that Senior Manager (who had lodged the complaints) and the Deputy General Manager (who was substituted) had not been authorised by the Board of Directors to sign and file the complaint on behalf of the Company or to prosecute the same. It is held that the Manager or the Deputy General Manager were mere paid employees of the Company. It is then held as follows: "Therefore, it is clear that the legal position as crystallised by the rulings is to the effect that a complaint under Section 138 of the Negotiable Instruments Act can be filed for and on behalf of a Body such as Corporation, who has only artificial existence through a particular mode and when that mode is not followed, any proceedings initiated or any complaint filed will be vitiated from very inception. In my opinion, here, the complaint is signed and presented by a person, who is neither an authorised agent nor a person empowered under the articles of Association or by any resolution of the Board to do so. Hence, the complaint is not maintainable. The taking cognizance of such a complaint is legally not acceptable. Hence, these two complaints filed for and on behalf of MMTC Limited against the Petitioners herein, which were taken on file in C. C. Nos. 3324 of 1995 and 3325 of 1995 are not maintainable at all and that cognizance of the said complaints ought not to have been taken by the Magistrate. "

10. In our view the reasoning given above cannot be sustained. Section 142 of the Negotiable Instruments Act - 100 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR provides that a complaint under Section 138 can be made by the payee or the 0holder in due course of the said cheque. The two complaints, in question, are by the appellant Company who is the payee of the two cheques.

11. This Court has, as far back as, in the case of Vishwa Mitter v. O. P. Poddar reported in (1983) 4 SCC 701, held that it is clear that anyone can set the criminal law in motion by filing a complaint of facts constituting an offence before a Magistrate entitled to take cognizance. It has been held that no court can decline to take cognizance on the sole ground that the complainant was not competent to file the complaint. It has been held that if any special statute prescribes offences and makes any special provision for taking cognizance of such offences under the statute, then the complainant requesting the Magistrate cognizance of the offence must satisfy the eligibility criterion prescribed by the statute. In the present case, the only eligibility criteria prescribed by Section 142 is that the complaint must be by the payee or the holder in due course. This criteria is satisfied as the complaint is in the name and on behalf of the appellant Company.

12. In the case of Associated Cement Co. Ltd. v. Keshvanand reported in (1998) 1 SCC 687, it has been held by this Court that the complainant has to be a corporeal person who is capable of making a physical appearance in the court. It has been held that if a complaint is made in the name of a incorporeal person (like a company or corporation) it is necessary that a natural person represents such juristic person in the court. It is held that the court looks - 101 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR upon the natural person to be the complainant for all practical purposes. It is held that when the complainant is a body corporate it is the de jure complainant, and it must necessarily associate a human being as de facto complaint to represent the former in court proceedings. It has further been held that no Magistrate shall insist that the particular person, whose statement was taken on oath at the first instance, alone can continue to represent the company till the end of the proceedings. It has been held that there may be occasions when different persons can represent the company. It has been held that it is open to the de jure complainant company to seek permission of the court for sending any other person to represent the company in the court. Thus, even presuming, that initially there was no authority, still the Company can, at any stage, rectify that defect. At a subsequent stage the Company can send a person who is competent to represent the company. The complaints could thus not have been quashed on this ground.

13. The learned Judge has next gone into facts and arrived at a conclusion that the cheques were issued as security and not for any debt or liability existing on the date they were issued. In so doing the learned Judge has ignored. well settled law that the power of quashing criminal proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an arbitrary - 102 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a conclusion that there was no existing debt or liability.

14. It is next held as follows: "This is a special provision incorporated in the Negotiable Instrument Act. It is necessary to allege specifically in the complaint that there was a subsisting liability and an enforceable debt and to discharge the same, the cheques were issued. But, we do not find any such allegation at all. The absence of such vital allegation, considerably impairs the maintainability."

15. In the case of Maruti Udyog Ltd. v. Narender reported in (1999) 1 SCC 113, this Court has held that, by virtue of Section 139 of the Negotiable Instruments Act, the Court has to draw a presumption that the holder of the cheque received the cheque for discharge of a debt or liability until the contrary is proved. This Court has held that at the initial stage of the proceedings the High Court was not justified in entertaining and accepting a plea that there was no debt or liability and thereby quashing the complaint.

16. A similar view has been taken by this Court in the case of K. N. Beena v. Muniyappan reported in 2001 (7) SCALE 331, wherein again it has been held that under Section 139 of the Negotiable Instruments Act the Court has to presume, in a complaint under Section 138, that the cheque had been issued for a debt or liability.

17. There is therefore no requirement that the Complainant must specifically allege in the complaint that - 103 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR there was a subsisting liability. The burden of proving that there was no existing debt or liability was on respondents. This they have to discharge in the trial. At this stage, merely on basis of averments in the Petitions filed by them the High Court could not have concluded that there was no existing debt or liability.

18. Lastly it was submitted that a complaint under Section 138 could only be maintained if the cheque was dishonoured for reason of funds being insufficient to honour the cheque or if the amount of the cheque exceeds the amount in the account. It is submitted that as payment of the cheques had been stopped by the drawer one of the ingredients of Section 138 was not fulfilled and thus the complaints were not maintainable.

19. Just such a contention has been negatived by this Court has, in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi reported in (1998) 3 SCC 249. It has been held that even though the cheque is dishonoured by reason of 'stop payment' instruction an offence under Section 138 could still be made out. It is held that the presumption under Section 139 is attracted in such a case also. The authority shows that even when the cheuqe is dishonoured by reason of stop payment instructions by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge, in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the "stop payment" instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in - 104 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then an offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a Court cannot quash a complaint on this ground.

20. In this view of the matter, the impugned Judgment cannot be sustained and is set aside. The learned VII Metropolitan Magistrate, G.T. Chennai is directed to proceed with the complaints against respondents 1 and 3 in accordance with law. It is made clear that the setting aside of the impugned Order will not tantamount to preventing the respondents from taking, at the trial, please available to them including those taken herein.

21. The Appeals stand disposed of accordingly. There will be no costs.”

20. In SV Muzumdar’s case supra, the Apex Court held as under:- “ 8. We find that the prayers before the courts below essentially were to drop the proceedings on the ground the allegations would not constitute a foundation for action in terms of Section 141 of the Act. These questions have to be adjudicated at the trial. - 105 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR Whether a person is in charge of or is responsible to the company for conduct of business is to be adjudicated on the basis of materials to be placed by the parties. Sub-section (2) of Section 141 is a deeming provision which as noted supra operates in certain specified circumstances. Whether the requirements the application of the deeming provision exist or not is again a matter for adjudication during trial. Similarly, whether the allegations contained are sufficient to attract culpability is a matter for adjudication at the trial.

9. Under Scheme of the Act, the person committing an offence under Section 138 of the Act is a company, by application of Section 141 it is deemed that every person who is in charge of and responsible to the company as well as the company are guilty of the offence. A person who proves that the offence was committed without his knowledge or that he had exercised all due diligence is exempted from becoming liable by operation of the proviso to sub-section (1). The burden in this regard has to be discharged by the accused.

10. The three categories of persons covered by Section 141 are as follows: (1) The company who committed the offence. (2) Everyone who was in charge of and was responsible for the business of the company. (3) Any other person who is a director or a manager or a secretary or officer of the company with whose connivance or due to whose neglect the company has committed the offence. - 106 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR

11. Whether or not the evidence to be led would establish the accusations is a matter for trial. It needs no reiteration that proviso to sub-section (1) of Section 141 enable the accused to prove his innocence by discharging the burden which lies on him.

12. Therefore, the High Court was justified in rejecting the petition filed by the appellants. The larger Bench is considering issues referred to. The decision to be rendered by the larger Bench obviously would govern the trial. As rightly submitted by the respondents in these appeals, there is no challenge to the validity of any provision and grievance essentially related to the prayer for dropping the proceedings. Therefore, we find no substance in the plea for tagging these matters with those pending before the large Bench.

13. Taking into account the fact that the cases have been pending for nearly a decade, we direct that the matter be taken up on 8th of August, 2005 by the trial Court. If the appellants file applications in terms of Section 205 of the Code for dispensing with their personal attendance, the trial Court will do to take note of the same and dispense with the personal attendance by stipulating conditions in terms of Section 205(2) of the Code. It has to be borne in mind that while dealing with an application in terms of Section 205 of the Code, the Court has to consider whether any useful purpose would be served by requiring the personal attendance of the accused or whether progress of the trial is likely to be hampered on account of his absence. We make it clear that if at any stage the trial Court comes to the - 107 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR conclusion that the accused persons are trying to delay the completing of trial, it shall be free to refuse the prayer for dispensing with personal attendance. The trial Court would do well to complete the trial by the end of November, 2005. The parties shall co-operate in that regard. We make it clear that we have not expressed any opinion on the merits of the case.

14. The appeals are accordingly dismissed.”

21. In the instant cases, as stated supra, the cumulative effect of the material on record obtaining in the instant cases comprising of the rival contentions, averments in the complaint, statutory notice, reply etc., are sufficient to come to the conclusion that the veracity, validity, legality etc., of the rival contentions and allegations / counter allegations would necessarily have to be tested and adjudicated after trial and the same are incapable of being adjudicated upon by this Court in the exercise of its jurisdiction under Section 482 of Cr.P.C. and as such, the various contentions urged on behalf of the petitioners cannot be accepted.

22. Insofar as the contention urged on behalf of the petitioners that the subject cheques were signed and issued only by petitioner No.4 / accused No.4 in his individual capacity and not on behalf of the remaining accused Nos.1 to 3 is concerned, as - 108 - NC: 2026:KHC:5436 CRL.P No. 6958 of 2023 C/W CRL.P No. 6964 of 2023 CRL.P No. 6966 of 2023 HC-KAR stated earlier, in the backdrop of the material on record referred to hereinbefore, even this contention would have to be considered and adjudicated after trial and not in a petition under Section 482 Cr.P.C., in which, it is impermissible in law to conduct a mini trial and adjudicate upon disputed questions of fact and consequently, even this contention urged on behalf of the petitioners cannot be accepted.

23. In view of the foregoing reasons, I am of the considered opinion that the present petitions are not cases for interference by this Court in the exercise of its jurisdiction under Section 482 Cr.P.C. or Articles 226 and 227 of the Constitution of India and accordingly, the petitions are hereby dismissed. It is however made clear that dismissal of the present petitions will not come in the way of both parties urging their rival contentions before the trial court in accordance with law and no opinion is expressed on the merits / demerits of the rival contentions. Sd/- (S.R.KRISHNA KUMAR) JUDGE SRL List No.: 3 Sl No.: 2

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