Karnataka High Court
Mr. Biju Karnan vs Lakshmi Venktateshwara Traders on 26 September, 2025
Author: S.Vishwajith Shetty
Bench: S.Vishwajith Shetty
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NC: 2025:KHC-D:13471
WP No. 106258 of 2024
C/W WP No. 106471 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA, AT DHARWAD
DATED THIS THE 26TH DAY OF SEPTEMBER, 2025
BEFORE
THE HON'BLE MR JUSTICE S.VISHWAJITH SHETTY
WRIT PETITION NO. 106258 OF 2024 (GM-RES)
C/W
WRIT PETITION NO. 106471 OF 2024(GM-RES)
IN W.P. NO.106258 OF 2024:
BETWEEN:
MR. BIJU KARNAN, DIRECTOR,
M/S. KKR PRODUCTS AND MARKETING PVT. LTD.,
OKKAL POST, KALADY, ERNAKULAM DISTRICT,
PIN-683 550.
MR. BIJU KARNAN S/O. MR. K.K. KARNAN,
AGED ABOUT 48 YEARS, (15/MAY/1976),
RESIDING AT: KURUVAMPADATHU HOUSE,
OKKAL P.O., CHELAMATTOM PART,
KALADY, ERNAKULAM DISTRICT,
KERALA STATE, PIN CODE-683 550.
... PETITIONER
(BY SRI. SHIJU ABRAHAM VERGHIS, ADVOCATE)
AND:
Digitally
signed by
RAKESH S
RAKESH HARIHAR
LAKSHMI VENKTATESHWARA TRADERS,
S Location:
HIGH
HARIHAR COURT OF
KARNATAKA
R/BY SRIDHAR BONAGERI
DHARWAD
BENCH
S/O. LATE VENKAPPA BONEGERI,
AGED 65 YEARS, C/O. GOURISHANKAR COLD
STORAGE (P) LTD. AND KIADB INDUSTRIAL AREA,
BENGALURU ROAD, BALLARI,
KARNATAKA STATE, PIN CODE-583 102,
... RESPONDENT
(BY SRI. PRASHANT F. GOUDAR, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA R/W SECTION 528 OF BNSS, 2023, PRAYING TO CALL FOR THE ENTIRE FILE OF THE IMPUGNED ANNEXURE-'A' CC# 31 OF 2024, PENDING BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT, ARISING OUT OF PCR -2- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR # 137 OF 2023, BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT AND QUASH THE ENTIRE PROCEEDINGS PERTAINING TO THE IMPUGNED ANNEXURE-'A' CC# 31 OF 2024, PENDING BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT, ARISING OUT OF PCR # 137 OF 2023, BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT. IN W.P. NO.106471 OF 2024:
BETWEEN:
MRS. JINI BIJIMAN, DIRECTOR, M/S. KKR PRODUCTS AND MARKETING PVT. LTD., OKKAL POST, KALADY, ERNAKULAM DISTRICT, PIN-683 550.
MRS. JINI BIJU W/O. MR. BIJU KARNAN, AGED ABOUT 39 YEARS, (06/OCT/1994), RESIDING AT: KURUVAMPADATHU HOUSE, OKKAL P.O., CHELAMATTOM PART, KALADY, ERNAKULAM DISTRICT, KERALA STATE, PIN CODE-683 550.
... PETITIONER (BY SRI. SHIJU ABRAHAM VERGHIS, ADVOCATE) AND:
LAKSHMI VENKTATESHWARA TRADERS, R/BY SRIDHAR BONAGERI S/O. LATE VENKAPPA BONEGERI, AGED 65 YEARS, C/O. GOURISHANKAR COLD STORAGE (P) LTD. AND KIADB INDUSTRIAL AREA, BENGALURU ROAD, BALLARI, KARNATAKA STATE, PIN CODE-583 102, ... RESPONDENT (BY SRI. PRASHANT F. GOUDAR, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA R/W SECTION 528 OF BNSS, 2023, PRAYING TO CALL FOR THE ENTIRE FILE OF THE IMPUGNED ANNEXURE-'A' CC# 31 OF 2024, PENDING BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT, ARISING OUT OF PCR # 137 OF 2023, BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT AND QUASH THE ENTIRE PROCEEDINGS PERTAINING TO THE IMPUGNED ANNEXURE-'A' CC# 31 OF 2024, -3- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR PENDING BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT, ARISING OUT OF PCR # 137 OF 2023, BEFORE THE I ADDL. CIVIL JUDGE AND JMFC, BALLARI, BALLARI DISTRICT.
THESE PETITIONS ARE HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 15.09.2025, COMING ON FOR PRONOUNCEMENT, THIS DAY, ORDER IS MADE THEREIN AS UNDER:
CAV ORDER (PER: THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY)
1. Accused nos.2 and 3 are before this Court in these two writ petitions filed under Articles 226 and 227 of the Constitution of India read with Section 528 of the BNSS 2023 with a prayer to quash the entire proceedings in C.C. No.31 of 2024 pending before the Court of I Additional Civil Judge and JMFC, Ballary, arising out of PCR No.137 of 2023 registered for offence punishable under Section 138 of the Negotiable Instruments Act.
2. Heard the learned counsel for the parties.
3. Facts leading to filing of these two petitions narrated briefly are, respondent herein has filed a private complaint in PCR No.137/2023 before the Court of First Additional Civil Judge and JMFC, Ballari against M/s KKR Products and Market Private Limited, represented by its -4- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR Managing Director and in the said complaint, petitioners herein are arraigned as accused nos.2 and 3 in their capacity as Managing Director and Director of the first accused company. After taking cognizance of the alleged offence, the learned Magistrate had issued summons to the accused in CC No.31 of 2024 and aggrieved by the same, petitioners are before this Court in these two petitions.
4. Learned counsel for the petitioners having reiterated the grounds urged in the petitions submits that the accused are not liable to pay any legally recoverable debt to the complainant and therefore, impugned proceedings cannot be sustained. He submits that initially, a legal notice dated 06.12.2022 was issued to the petitioners herein informing the petitioners that the three cheques in question which were in possession of the complainant would be presented for realisation. The cheques in question were only given towards security. The validity of the cheques is only for a period of 3 months. The cheques in question which were in possession of the complainant as on the date -5- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR of issuing the first notice dated 06.12.2022, have been presented for realization to drawee bank after expiry of the validity period of 3 months. He submits that after the cheques in question were dishonoured, a second legal notice was issued on 26.06.2023 and based on the same, the impugned criminal proceedings has been initiated which is bad in law. He refers to the judgment of the Hon'ble Supreme Court in the case of Tameeshwar Vaishnav Vs. Ramvishal Gupta reported in (2010) 2 SCC 329, in support of his contention. He submits that accused no.3 is only a Director of the first accused and she is not the signatory to the cheques in question. Accused no.2 is the Managing Director of the first accused company and he is the signatory of the cheques in question. Only to harass and coerce the petitioners herein accused no.3 who is the wife of accused no.2, has been arraigned as accused to the impugned proceedings, which is not permissible in view of the judgments of the Hon'ble Supreme Court in the case of Susela Padmavathy Amma Vs. M/s Bharati Airtel Ltd. -6-
NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR reported in 2024 INSC 206 and in Siby Thomas Vs. M/s Somany Ceramics Ltd. in SLP No. 12/2020.
5. He submits that after the issuance of the first legal notice dated 06.12.2022 a sum of ₹16,51,093/- was credited to the bank account of the complainant on 10.02.2023 and therefore, the accused were not liable to pay the amount covered under the cheques in question to the complainant. Even on this ground, the impugned criminal proceedings is liable to be quashed.
6. Per contra, learned counsel appearing for the respondent-complainant submits that a total sum of ₹1,66,36,805.42/- was due to be paid by the accused towards supply of red chilli by the complainant. The business transaction between the parties is evidenced by purchase orders, invoices and other correspondence between the parties. After the first legal notice dated 06.12.2022 was issued, a sum of ₹16,51,093/- was paid by the accused, which also proves the business transaction between the parties. Since the outstanding amount as -7- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR claimed in the legal notice dated 06.12.2022 was not paid, the three cheques in questions were presented for realization after writing the dates on the same and since the cheques in question were dishonoured by the drawee bank, statutory notice was issued to the accused and thereafter, the impugned criminal proceedings has been initiated against them. He submits that amount due to be paid by the accused is more than the amount covered under the cheques in question. Accused no.2 is the Managing Director and accused no.3 is the Director of accused no.1 company and both of them are actively taking part in the day to day administration affairs of the company and there is specific pleading to the said effect. The transaction between the parties is proved by the account statement which is already produced before the trial Court. He submits that after the cheques in question were dishonoured, only one legal notice is issued on 26.06.2023 and therefore, the judgment in the case of Tameeshwar Vaishnav (supra), is not applicable -8- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR to the facts and circumstances of the case. Accordingly, prays to dismiss the writ petitions.
7. It is the case of the complainant firm that it had business transaction with the accused and as per the purchase orders raised by the accused, red chillis were supplied and towards supply of the said goods, the accused were totally liable to pay a sum of ₹1,66,36,805.42/- and to prove the transaction between the parties, statement of account has been already produced before the trial Court. According to the complainant, three cheques in question was issued towards security for the purpose of amount due by the accused and therefore, legal notice dated 06.12.2022 was issued to the accused calling upon them to pay the aforesaid amount due by them and in the said legal notice, it was also stated that failing repayment of the amount due, the cheques in question would be presented for realization. It is not in dispute that the cheques in question are drawn on the bank account maintained in the drawee bank in the name of the first accused company. Accused no.2 is the -9- NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR Managing Director of the company and he is also the signatory to the cheques in question. Accused no.3 who is the wife of accused no.2 is the Director of the first accused company.
8. It appears that since the accused had not paid the alleged due amount of ₹1,66,36,805.42/- to the complainant, legal notice dated 06.12.2022 was issued to accused nos.2 and 3 calling upon them to pay the aforesaid amount of ₹1,66,36,805.42/- and in the said notice, it was also stated that the cheques in question were issued by the accused towards their commitment to repay the amount due and the said cheques would be presented for realisation in the event the amount due by them is not repaid.
9. It appears that the aforesaid three cheques which were issued by the accused were subsequently presented for realization in the month of June 2023 and since the cheques in question were dishonoured, by the drawee bank, legal notice dated 26.06.2023 was issued to accused nos.1 to 3 and in spite of service of the statutory
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR legal notice, since the amount covered under the cheques in question was not paid to the complainant, a private complaint was filed before jurisdictional Court against the accused for the offence punishable under Section 138 of the N.I.Act.
10. The Hon'ble Supreme Court in the case of Bir Singh Vs. Mukesh Kumar reported in 2019 4 SCC 197 in para Nos.33 to 36 has observed as follows:
"33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
35. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.
36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
11. The signatures found in the cheques in question is not in dispute. In the case of Bir Singh Vs. Mukesh Kumar reported in 2019 4 SCC 197 the Hon'ble Supreme Court has observed that if a signed blank cheque is voluntarily presented to payee, towards some payment, the payee may fill up the amount and other particulars and such a cheque is valid cheque. In the present case, in the legal notice dated 06.12.2022, it is specifically mentioned about the issuance of cheques in question by the accused and on receipt of aforesaid legal notice, part payment of Rs.16,51,093/- has been paid by the accused to the
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR complainant which shows that they have not only admitted the transaction, but also issuance of the aforesaid three disputed cheques in question.
12. In the present case, in order to prove the transaction between the parties, the complainant has produced documents before the trial Court such as invoices, purchase orders, account statement etc. In addition to the same after the first notice dated 06.12.2022 was issued, the accused have paid a sum of ₹16,51,093/- and therefore, a sum of ₹1,49,85,712.42/- was allegedly still due to be paid to the complainant. Therefore, the contention of the petitioners that the accused are not liable to pay any legally recoverable debt, does not merit consideration.
13. The validity of a cheque commences from the date which the said cheque bears. In the case on hand, it appears that the dates were written by the complainant in the three cheques in question which were issued by the accused towards part payment of the amount due by them
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR and thereafter, the said cheques were presented for realization. Out of the three cheques in question, 2 are dated 14.06.2023 and another is dated 12.06.2023. The cheques were presented to the drawee Bank in the month of June 2023 itself. Therefore, it cannot be said that the cheques were presented beyond the period of its validity. In the light of the judgment of the Hon'ble Supreme Court, in the case of BIR Singh, no fault can be found if the complainant has written the dates in the cheques in question, in which the signature found is not in dispute.
14. Material on record would go to show that the total amount due by the accused was ₹1,66,36,805.42/- and out of the said amount only a sum of ₹16,51,093/- was paid. The amounts covered under the cheques in question totally comes to ₹1,35,00,000/-. Therefore, the amount covered under the cheques in question is not in excess of the amount that is allegedly due to be paid by the accused and therefore, I do not find any merit in the contention urged on behalf of the petitioners that since part amount
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR was paid after the first legal notice was issued, the impugned criminal proceedings is bad in law.
15. Accused no.2 is the Managing Director and signatory of the cheques in question and therefore, in view of the judgment of the Hon'ble Supreme Court in the case of K.K.AHUJA AND V.K.VORA AND ANOTHER - (2009) 10 SCC 48, he is liable to be prosecuted for the offence punishable under Section 138 of the N.I.Act. So far as the accused no.3 is concerned, except the bald averment that she is also actively taking part in the day to day affairs of the first accused company, there is no other material to show her participation in the day to day administrative affairs of the first accused company. Learned counsel for the complainant during the course of his arguments has fairly admitted this aspect of the matter.
16. In the case of Susela Padmavathy Amma Vs. M/s Bharati Airtel Ltd. reported in (2024 INSC 206) in paragraph Nos.7 and 8 the Hon'ble Supreme Court has observed as follows:
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR "7. In the case of State of Haryana vs. Brij Lal Mittal and others, this Court observed thus:
"8. Nonetheless, we find that the impugned judgment of the High Court has got to be upheld for an altogether different reason. Admittedly, the three respondents were being prosecuted as directors of the manufacturers with the aid of Section 34(1) of the Act which reads as under:
"34. Offences by companies.--(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub- section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence."
It is thus seen that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. Conversely,
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR without being a director a person can be in charge of and responsible to the company for the conduct of its business. From the complaint in question we, however, find that except a bald statement that the respondents were directors of the manufacturers, there is no other allegation to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business."
8. It could thus be seen that this Court had held that simply because a person is a director of the company, it does not necessarily mean that he fulfils the twin requirements of Section 34(1) of the said Act so as to make him liable. It has been held that a person cannot be made liable unless, at the material time, he was in-charge of and was also responsible to the company for the conduct of its business."
17. In the case of Siby Thomas, (supra) the Hon'ble Supreme Court in Paragraph Nos.12 and 15 and 16 has observed as follows:
"12. Bearing in mind the afore-extracted recitals from the decisions in Gunmala Sales Private Limited's case (supra) and S.P. Mani's case (supra), we have carefully gone through the complaint filed by the respondent. It is not averred anywhere in the complaint that the appellant was in charge of the conduct of the business of the company at the relevant time when the offence was committed. What is stated in the
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR complaint is only that the accused Nos. 2 to 6 being the partners are responsible for the day-to-day conduct and business of the company. It is also relevant to note that an overall reading of the complaint would not disclose any clear and specific role of the appellant. In the statutory notice dated 10.09.2015 (Annexure-P6) at paragraph 3 it was averred thus:-
"3. That for liquidation of the aforesaid legal liability/outstanding, you noticee No. 2 to 6 issued cheque number 005074 dated 21.08.2015, amounting to Rs. 27,46,737/- drawn on Punjab National Bank, Ernhipalam (Kozhikode) branch in favour of my client from the account of noticee No. 1."
In response to that in Annexure- P7 reply the appellant herein stated thus:-
"In this regard, I would like to convey you that, I have retired from M/s Tile store as partner way back on 28-5- 2013 and I am not a partner of M/s. Tile Store any more. (Copy of Retirement deed enclosed). During the time of my retirement, there were no dues to M/s. Somany Ceramics Ltd. from M/s. Tile Store as full payments were made for the consignments taken from them. (Copy of accounts statements up to 31-05-2013 enclosed)"
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR
15. Paragraph 19 of the Ashok Shewakramani's case (supra) is also relevant for the purpose of the case and it, in so far as relevant, reads thus:
"19. Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision. The vicarious liability is attracted when the ingredients of subsection 1 of Section 141 are satisfied. The Section provides that every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the company, as well as the company shall be deemed to be guilty of the offence under Section 138 of the NI Act. In the light of sub-section 1 of Section 141, we have perused the averments made in the complaints subject matter of these three appeals. The allegation in paragraph 1 of the complaints is that the appellants are managing the company and are busy with day to day affairs of the company. It is further averred that they are also in charge of the company and are jointly and severally liable for the acts of the accused No.1 company. The requirement of sub-section 1 of Section 141 of the NI Act is something different and higher. Every person who is sought to be roped in by virtue of sub-section 1 of Section 141 NI Act
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR must be a 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. Merely because somebody is managing the affairs of the company, per se, he does not become in charge of the conduct of the business of the company or the person responsible for the company for the conduct of the business of the company. For example, in a given case, a manager of a company may be managing the business of the company. Only on the ground that he is managing the business of the company, he cannot be roped in based on sub-section 1 of Section 141 of the NI Act. The second allegation in the complaint is that the appellants are busy with the day-to-day affairs of the company. This is hardly relevant in the context of subsection 1 of Section 141 of the NI Act. The allegation that they are in charge of the company is neither here nor there and by no stretch of the imagination, on the basis of such averment, one cannot conclude that the allegation of the second respondent is that the appellants were also responsible to the company for the conduct of the business. Only by saying that a person was in charge of the company at the time when the offence was committed is not sufficient to attract sub-section 1 of Section 141 of the NI Act."
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR
16. Thus, in the light of the dictum laid down in Ashok Shewakramani's case (supra), it is evident that a vicarious liability would be attracted only when the ingredients of Section 141(1) of the NI Act, are satisfied. It would also reveal that merely because somebody is managing the affairs of the company, per se, he would not become in charge of the conduct of the business of the company or the person responsible to the company for the conduct of the business of the company. A bare perusal of Section 141(1) of the NI Act, would reveal that only that 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 alone shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished. In such circumstances, paragraph 20 in Ashok Shewakramani's case (supra) is also relevant. After referring to the Section 141(1) of NI Act, in paragraph 20 it was further held thus:
"20 On a plain reading, it is apparent that the words "was in charge of" and "was responsible to the company for the conduct of the business of the company" cannot be read
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR disjunctively and the same ought be read conjunctively in view of use of the word "and" in between."
18. The Hon'ble Supreme Court in the case of K.K. Ahuja vs. V.K. Vora and another1 has observed as follows:
"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 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 1 (2009) 10 SCC 48
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.
(iii) In the case of a Director, Secretary or Manager (as defined in Sec. 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). 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 can not be made liable under sub-section (1) of section 141. Other officers of a company can be made liable only under sub-section (2) of Section 141, be averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.
19. This Court in the case of Agarwal Coal Corporation Pvt. Ltd., vs. Benaka Sponge Iron Pvt Ltd. and others2 has observed as follows:
2
In Crl.P.No.100988/2024 & connected matters disposed of on 19.08.2025
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR "7. Section 141 of the N.I. Act provides for criminal liability for dishonour of cheque committed by company. In the case of K.K.AHUJA AND V.K.VORA AND ANOTHER - (2009) 10 SCC 48, the Hon'ble Supreme Court after referring to the judgment of SMS PHARMACEUTICALS V. NEETA BHALLA & ANR - 2005 (8) SCC 89 has observed that signatory of a cheque which is dishonoured is clearly responsible for the act and his liability is covered under Section 141(2) of N.I. Act. Therefore, no specific averments would be necessary to make him liable to be prosecuted for offence under Section 138 of N.I. Act. Similarly Managing Director and Deputy Managing Director by virtue of their office which they holding would come under Section 141(1) of N.I. Act even if there is no specific averments against them. Insofar as the other directors are concerned there has to be specific averments as against them in the complaint with regard to their role and responsibility in the conduct of business of the company and in the absence of such allegation or averments the other directors cannot be prosecuted for the alleged offences."
20.Under the circumstances, I find that averments found in the complaint against accused no.3 in the absence of necessary particulars are not sufficient to satisfy the
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NC: 2025:KHC-D:13471 WP No. 106258 of 2024 C/W WP No. 106471 of 2024 HC-KAR mandatory requirements of Section 141(1) of the Negotiable Instruments Act and prosecute accused no.3 for the alleged offence. Therefore, the impugned proceedings initiated insofar as accused no.3 is concerned liable to be quashed.
21. Accordingly, the following order:-
WP No.106258/2024 filed by accused No.2 is dismissed.
WP No.106471/2024 filed by accused No.3 is allowed and the entire proceedings in C.C.No.31 of 2024 pending before the Court of I Additional Civil Judge and JMFC, Ballary, Haveri District arising out of PCR No.137 of 2023 registered for offence punishable under Section 138 of the Negotiable Instruments Act is quashed as against accused No.3.
Sd/-
(S.VISHWAJITH SHETTY) JUDGE VMB CT:BCK LIST NO.: 1 SL NO.: 2