Karnataka High Court
M/S Sanghavi Bros vs M/S Rajanayak on 24 August, 2012
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 24TH DAY OF AUGUST 2012
BEFORE
THE HON'BLE MR JUSTICE K. N. KESHAVANARAYANA
CRIMINAL APPEAL No.49/2005 (A)
BETWEEN:
M/s.Sanghavi Bros,
No.289, Avenue Road,
Bangalore-560 002.
Represented by its Proprietor,
Sri.S.Seshmal,
S/o Samratmal. .....Appellant
(By Sri.V.B.Shiva Kumar, Advocate)
AND :
M/s.Rajanayak,
Secretary,
Koramangala Kalaniketan
Education Society,
KI Convent, 15th Cross,
11th Main, Wilson Garden,
Bangalore-560 027 ....Respondent
(By Sri.R.B.Sadashivappa, Advocate)
This Criminal Appeal is filed under Section 378
Cr.P.C by the advocate for the appellant praying to set
aside the Judgment dated 30.09.2004 passed by the Fast
Track Court-VII, Bangalore City in Criminal Appeal
No.11/2002 and confirm the judgment of the XV Additional
Chief Metropolitan Magistrate, Bangalore City, for the
offence punishable under Section 138 of N.I.Act.
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This Criminal Appeal coming for orders on this day,
the court delivered the following:
JUDGMENT
Though this appeal is listed for orders today regarding non-submission of the records from the trial Court in spite of issue of reminders, having regard to the short question involved in the appeal and since the matter is covered by the recent decision of the Apex Court, this appeal was heard on merits with the consent of the learned counsel appearing for the parties.
2) This appeal is by the complainant questioning the legality and correctness of the judgment and order dated 30.09.2004 passed by the Presiding Officer, Fast Track Court-VII, Bangalore City, in Criminal Appeal No.11/2002 allowing the said appeal and setting aside the judgment of conviction and order of sentence dated 06.12.2001 passed by the 15th Additional CMM,, Bangalore, in C.C. No.33366/1999 and acquitting the respondent- 3 accused of the offence punishable under Section 138 of the Negotiable Instruments Act (for short, 'N.I. Act').
3) The case of the appellant-complainant was that, he had supplied note books and stationary materials to the accused on credit and towards the value of those materials, the accused had issued the cheque in question for a sum of Rs.61,000/- and when the said cheque was presented for encashment, the same was returned un-paid for insufficient funds and in spite of service of notice, the accused failed to pay the amount covered under the cheque. The respondent-accused pleaded not guilty for the accusation made against him for the offence punishable under Section 138 of the N.I. Act and claimed to be tried.
4) After recording the evidence of the parties, the learned Magistrate held the respondent guilty of the offence punishable under Section 138 of the N.I. Act and sentenced him to pay fine of Rs.80,000/-. In appeal filed by the respondent-accused, the Appellate Court reversed the said judgment mainly on the ground that since the cheque in 4 question had been drawn on the account held by Koramangala Kalanikethana Education Society with a banker and since the said society is a 'Company' within the meaning of Section 141 of the N.I. Act, without prosecuting the said society, the prosecution brought against the signatory of the cheque is not maintainable. This very point had come-up for consideration before a Three Judge Bench of the Apex Court in Aneeta Hada Vs. Godfather Travels and Tours Private Limited and connected cases reported in 2012 AIR SCW 2693.
5) As could be seen from the opening paragraph of the above decision, the preposition of law for consideration of the Apex Court was, "whether the authorised signatory of a company would be liable for prosecution under Section 138 of the N.I. Act without the company being arraigned as accused." The Apex Court on analysis of several earlier decisions on the point, has held thus in Paragraphs-42 &
43. 5
42. xxx xxx xxx Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words as well as the company appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted."
43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same 6 has been stipulated in the provision itself. xxx xxx xxx xxx."
6) The above principle laid down squarely applies to the facts of this case. Admittedly, the cheque in question relates to the account held by Koramangala Kalanikethana Education Society, a society registered under the Karnataka Societies Registration Act and the respondent- accused functions as the Secretary of the said society and in that capacity, he appears to have signed the cheque in question. Admittedly, the said society was not arraigned as accused in the complaint lodged by the appellant. The society being an association of individuals, it falls within the Explanation to Section 141 of the N.I. Act, therefore it is a 'company'. Having regard to the fact that the society, which is the principal offender has not been arraigned as accused, as held by the Apex Court in the aforesaid decision, vicarious liability cannot be fastened on its functionaries. In this view of the matter, the lower Appellate Court is justified in holding that the complaint 7 only against the respondent herein is not maintainable. The lower Appellate Court has not committed any error of law or facts in acquitting the respondent-accused. Therefore, I find no merit in this appeal. Accordingly, the appeal is dismissed.
SD/-
JUDGE KGR*