Karnataka High Court
M/S Al Arif Poultry Company vs Punith Kumar S/O Basappa Putta ... on 27 June, 2024
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NC: 2024:KHC-D:8836
CRL.P No. 103868 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 27TH DAY OF JUNE, 2024
BEFORE
THE HON'BLE MR JUSTICE VENKATESH NAIK T
CRIMINAL PETITION NO.103868 OF 2023 (482)
BETWEEN:
1. M/S. AL-ARIF POULTRY COMPANY,
VAKWADY ROAD, KUMBHASHI POST,
KUNDAPUR-576257, KARNATAKA.
2. ARIF H. H. S/O. B. M. HAMZA,
AGED ABOUT 40 YEARS,
1-629, AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
3. AFHAQ S/O. B. M. HAMZA,
AGED ABOUT 35 YEARS
1-629, AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
4. HAMZA MAMMUNJI BEARY
S/O. MAMMUNJI SAHEB,
AGED ABOUT 67 YEARS, 1-629,
AL-ARIF MANZIL, VOKWADY ROAD,
Digitally KUMBHASHI, KUNDAPUR-576257.
signed by
MANJANNA E 5. MOHAMMED MASHOOD B. H.
Location: S/O. B. M. HAMZA,
HIGH COURT
OF AGED ABOUT 45 YEARS, 1-629,
KARNATAKA AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
6. MOHAMMED MUSTAQ B. H. S/O. B.M. HAMZA,
AGED ABOUT 43 YEARS, NO.234,
CUDA LAYOUT, RURAL POLICE STATION,
1ST PHASE, KALYAN NAGAR,
CHIKKAMAGALURU-577101.
7. B. H. MOHAMMAD ASEER
S/O. B. H. HAMZA,
AGED ABOUT 41 YEARS, 1-629,
AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
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NC: 2024:KHC-D:8836
CRL.P No. 103868 of 2023
8. HUSAAINUR B. H.
S/O. B.M. HAMZA,
AGED ABOUT 39 YEARS, 1-629,
AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
9. B. H. ASAINAR S/O. B. M. HAMZA,
AGED ABOUT 39 YEARS, 1-629,
AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576257.
10. BIJADY HAMZA AATHIKABI,
W/O. B. M. HAMZA,
AGED ABOUT 64 YEARS, 1-629,
AL-ARIF MANZIL, VOKWADY ROAD,
KUMBHASHI, KUNDAPUR-576 257.
...PETITIONERS
(BY SRI H. R. GUNDAPPA, ADVOCATE)
AND:
PUNITH KUMAR
S/O. BASAPPA PUTTA THAMMANAVAR,
AGE: 27 YEARS, OCC: AGRICULTURIST,
SRI. BASAVESHWARA TRADING COMPANY
GENERAL MERCHANTS & COMMISSION AGENT,
MAASUR, RATTIHALLI TALUK,
HAVERI DISTRICT-581110.
...RESPONDENT
(BY SRI CHETAN T. LIMBIKAI, ADVOCATE)
THIS CRIMINAL PETITION IS FILED U/S. 482 OF CR.P.C.
PRAYING TO CALL FOR THE RECORDS FROM THE SENIOR CIVIL
JUDGE AND JMFC COURT AT HIREKERUR, UNDER C.C.NO.484/2022
AND TO QUASH THE PRIVATE COMPLAINT FILED BY THE
RESPONDENT/COMPLAINANT ON THE FILE OF SENIOR CIVIL JUDGE
AND JMFC COURT AT HIREKERUR IN P.C. NO.41/2022, ORDER
DATED 02.08.2022 TAKING OF COGNIZANCE FOR THE OFFENCE
PUNISHABLE UNDER SECTION 138 OF NI ACT BY THE SENIOR CIVIL
JUDGE AND JMFC COURT AT HIREKERUR, ORDER DATED 29.09.2022
AND REGISTERING C.C.NO.484/2022 BY ISSUING PROCESS TO THE
PETITIONERS/A1 TO 10 VIDE ANNEXURE-A AND B AND ETC.
THIS CRIMINAL PETITION IS COMING ON FOR ADMISSION,
THIS DAY, THE COURT MADE THE FOLLOWING:
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NC: 2024:KHC-D:8836
CRL.P No. 103868 of 2023
ORDER
The petitioners-accused Nos.1 to 10 have filed this petition under Section 482 Cr.P.C to quash the P.C.No.41/2022, order dated 02.08.2022 taking cognizance of the offence punishable under section 138 of NI Act, by the learned Senior Civil Judge and JMFC Court at Hirekerur in C.C.No.484/2022 by issuing process to the petitioners/accused Nos.1 to 10.
Heard the arguments of learned counsel for the petitioners and learned counsel for respondent-complainant.
2. The brief facts of the complainant's case before the trial Court is as under:-
The complainant filed a private complaint in P.C.No.41/2023 under Section 200 Cr.P.C. for the offence punishable under Section 138 of N.I. Act alleging that accused Nos.2 to 10 are the partners of accused No.1 company M/s. AL-ARIF Poultry Farms, and accused Nos.2 to 10 are the directors of the said company had commercial transaction with complainant. Accused No.6 on behalf of petitioner's company, was familiar with complainant for last 8 to 10 years had transacted with the complainant for supply of maize in the name of Basaveshwara Trading company, Masoor, during the year 2020-2021, for Rs.40.00 lakhs regarding purchase of maize right from 08.10.2020 to 13.10.2020 from the complainant and he was due for -4- NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 a sum of Rs.38,28,975/- to the complainant. In this regard, petitioner No.6/accused No.6 issued a cheque bearing No.691742 dated 01.06.2022 for a sum of Rs.38,28,975/- in favour of the complainant for and on behalf of petitioner's company, drawn on Karnataka Bank, Chickmagalur. On presentation of the said cheque, it was returned with a shara 'account closed' on 14.06.2022. Hence, after receipt of the bank endorsement, the complainant issued legal notice to the petitioners calling upon them to pay the amount due under the cheque. But the petitioners neither paid the amount nor replied to the said notice. Hence, the complainant filed a private complaint under Section 200 Cr.P.C. for the offences punishable under Sections 138 and 148 of N.I. Act.
3. Soon after the institution of the complaint, the trial court recorded the sworn statement of the complainant and the witnesses, took cognizance and issued process against the accused persons.
Taking exception to the same, the petitioners have filed this petition contending that they are innocent of the alleged offences, they have not committed any offence. The complainant has unnecessarily made all the directors as accused persons in the complaint, which is against to Section 142 of N.I. Act. Infact, the persons responsible and liable shall be made as accused in the complaint. Hence, learned counsel relied upon the copy of the Deed of Reconstitution of Partnership and judgment of the Hon'ble Apex Court in the case of Susela -5- NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 Padmavathy Amma v. M/s. Bharti Airtel Limited reported in 2024 SCC Online SC 311. Hence, learned counsel prayed to allow the petition.
4. Per-contra, learned counsel for respondent-defacto complainant contended that accused No.1 is not a registered company under the Companies Act, 1956 and it is only a unregistered Deed of Reconstitution of Partnership, wherein, at paras 8, 9 and 10, it is clearly mentioned as "all the partners are working partners, that they are jointly and severally liable in case of any liability". Therefore, the complainant has rightly impleaded all the partners in the complaint and there is no error in issuing process against the accused persons.
Perused the material on record.
5. As per the complaint, petitioner No.6/accused No.6 issued a cheque for and on behalf of accused No.1 and all the directors are working partners. As per clause 8 of the Deed of Reconstitution of Partnership, it is accused No.4 to 7 are the managing partners, who shall look after the day-to-day affairs of firm of accused No.1.
Further, all the partners are acting and working partners, who may take such remuneration every month or at end of the year, calculated at the rate of Rs.25,000/- per month. As per column No.10 of the -6- NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 Deed, for the loan borrowed by accused No.1 company, all the partners are jointly and severally liable.
6. Learned counsel of the petitioners relied upon the case of Susela Padmavathy Amma v. M/s. Bharti Airtel Limited reported in 2024 SC Online SC 311, wherein it is held at para Nos. 1 to 19 as under:-
1. Leave granted.
2. The present appeals challenge the common judgment and order dated 26th April, 2022 passed by the High Court of Judicature at Madras (hereinafter referred to as "High Court"), in Crl. O.P. Nos. 3470 & 5767 of 2019 and Crl.
M.P. Nos. 2224, 2225 & 3255 of 2019, whereby the High Court rejected the prayer for quashing of C.C. Nos. 3151 & 3150 of 2017, on the file of learned XVIII Metropolitan Magistrate, Saidapet, Chennai (now transferred to the learned Metropolitan Magistrate, Fast Track Court-III, Saidapet, Chennai), in connection with the offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the N.I. Act").
3. The facts, in brief, giving rise to the present appeals are as follows:
4. M/s. Bharti Airtel Limited (hereinafter referred to as, "complainant" or "respondent"), is a company engaged in the business of providing telecommunication services, under a license issued by the Government of India, in various telecom circles in India.
5. One M/s. Fibtel Telecom Solutions (India) Private Limited (hereinafter referred to as, "Fibtel Telecom Solutions" or "Company"), a company registered with the Telecom Regulatory Authority of India (TRAI) as a telemarketer, had approached the respondent intending to obtain telecom resources for the purpose of transactional -7- NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 communication and requested the complainant for allotment of telecom resources for the said purpose. One Manju Sukumaran Lalitha is the Director & Authorized Signatory of Fibtel Telecom Solutions and one Susela Padmavathy Amma, the appellant herein, is the Director of Fibtel Telecom Solutions.
6. Based on the representation made by Fibtel Telecom Solutions, the respondent had agreed to provide the required services, whereupon the parties entered into a Service Agreement, vide which Fibtel Telecom Solutions had to pay Rs. 14,00,000/- as fixed monthly recurring charges to the respondent. It is the thus the case of the respondent that Fibtel Telecom Solutions owes a sum of Rs. 2,55,08,309/-, in lieu of the service provided to it by the respondent.
7. However, the grievance of the respondent is that in-spite of regular follow-ups and reminders, Fibtel Telecom Solutions failed and neglected to clear the respondent's dues. Only thereafter, upon repeated demands made by the respondent, Fibtel Telecom Solutions furnished five post- dated cheques to the complainant, on 17th June 2016, details of which are as given below:
Sr. No. Cheque No. Cheque Dated Cheque Amount 1 414199 25.06.2016 Rs. 25,00,000/-
2 414196 31.08.2016 Rs. 50,00,000/-
3 414204 31.08.2016 Rs. 80,00,000/-
4 414195 31.07.2016 Rs. 45,00,000/-
5 414205 30.09.2016 Rs. 80,00,000/-
8. On deposit of the cheque mentioned at Sr. No. 1 in the table, bearing cheque no. 414199 and dated 25th June 2016, by the respondent, the said cheque was returned to it unpaid with reason "payment stopped by drawer". Aggrieved thereby, the respondent issued a legal notice to Fibtel Telecom Solutions, on receipt of which & following an oral agreement between them, a payment schedule was agreed to and a cheque for an amount of Rs. 25,00,000/- drawn by Fibtel Telecom Solutions was honoured by it. However, when the complainant deposited the remaining -8- NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 four cheques as mentioned at Sr. No. 2 to 5 in the table, the same were returned to it unpaid with reason "payment stopped by drawer". Details of deposit & return of cheques are as given below:
Cheque No. Cheque Cheque Legal Reply
Presented On Returned On Notice
414196 23.09.2016 26.09.2016 13.10.2016 12.11.2016
414204 23.09.2016 26.09.2016 13.10.2016 12.11.2016
414195 25.10.2016 26.10.2016 09.11.2016 No reply
414205 17.10.2016 18.10.2016 10.11.2016 29.11.2016
9. Accordingly, the respondent filed two complaints under Section 190(i)(a) of the Code of Criminal Procedure, 1973 ("CrPC" for short) for offences punishable under Section 138 & 142 of the N.I. Act, being C.C. No. 3151 of 2017 dated 30th November, 2016 and C.C. No. 3150 of 2017 dated 23rd December, 2016, before the learned XVIII Metropolitan Magistrate, Saidapet, Chennai.
10. Both the complaints have been filed against three accused persons namely, Fibtel Telecom Solutions, arrayed as Accused No. 1; Manju Sukumaran Lalitha, arrayed as Accused No. 2 & Susela Padmavathy Amma, the appellant herein, arrayed as Accused No. 3.
11. Accused No. 3, who is a female senior citizen and the Director of Fibtel Telecom Solutions, filed Crl. O.P. No. 3470 of 2019 against C.C. No. 3151 of 2017 & Crl. O.P. No. 5767 of 2019 against C.C. No. 3150 of 2017, before the High Court under Section 482 of the CrPC for quashing of the criminal complaints qua her.
12. Vide impugned judgment and order, dated 26th April, 2022, the High Court dismissed Crl. O.P. Nos. 3470 & 5767 of 2019 and Crl. M.P. Nos. 2224, 2225 & 3255 of 2019, but directed the concerned trial court to dispose of the case within a period of three months.
13. Aggrieved by the rejection of the petition for quashing of criminal complaints, the appellant herein filed the present appeal.
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14. Vide order dated 12th December 2022, this Court had issued notice and stay of further proceedings qua the appellant was granted.
15. We have heard Shri Manoj V. George, learned counsel for the appellant and Shri Lakshmeesh S. Kamath, learned counsel appearing for the respondent.
16. Shri Manoj V. George, learned counsel for the appellant submitted that the appellant is an aged-lady and was not involved in the day-to-day affairs of the Company. It is submitted that even in the complaint there are no averments that the appellant was in-charge of day-to-day affairs of the Company. It is further submitted that the appellant was also not a signatory to the cheque in question. It was only the accused No.2 who was the signatory to the cheque. It is, therefore, submitted that the High Court has grossly erred in not allowing the petition for quashing of criminal complaints qua the appellant. Learned counsel relied on the judgments of this Court in the cases of N.K. Wahi vs. Shekhar Singh and others, (2007) 9 SCC 481, S.M.S. Pharmaceuticals Ltd. vs Neeta Bhalla, (2005) 8 SCC 89, Ashoke Mal Bafna vs. Upper India Steel Manufacturing and Engineering Company Limited, (2018) 14 SCC 202, Krishi Utpadan Mandi Samiti vs Pilibhit Pantnagar Beej Ltd, (2004) 1 SCC 391 and Laxmi Dyechem vs. State of Gujarat, (2012) 13 SCC 375 in support of his submissions.
17. Shri Lakshmeesh S. Kamath, learned counsel for the respondent, on the contrary, submitted that the learned judge of the High Court has rightly, after considering the material on record, dismissed the petition for quashing of criminal complaints qua the appellant. It is submitted that the grounds raised are the defense of the accused and it can only be raised at the stage of the trial. It is, therefore, submitted that no interference is warranted in the present appeal.
18. In the case of State of Haryana vs. Brij Lal Mittal, (1998) 5 SCC 343, 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
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NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 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, 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."
19. 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
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NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 responsible to the company for the conduct of its business."
7. In view of the decision cited supra, every person connected with the company will not fall within the ambit of the Section 141 of the N.I. Act. Only those persons who were incharge and responsible for the conduct of the business of the company at the time of commission of the offences will be liable for criminal action. The Directors who were not incharge and were not responsible for the conduct of the business of the company at the relevant time, will not be liable for offence under Section 141 of N.I. Act. Further, Section 141 is a penal provision creating vicarious liability and which as per settled law, must be strictly construed. It is therefore, not sufficient to make bald and personal statement in the complaint that the Directors in- charge and responsible of the company for the conduct of business of the company, without knowing more as to the role of the Directors.
8. Whereas in the instant case, accused No.1 is a partnership company which is not a company registered under the Companies Act, 1956. Infact at column No.8, 9 and 10 of the Deed of Reconstitution, it is clearly mentioned that all partners are responsible jointly and severally liable in case of liability. Though accused No.6 issued a cheque for and on behalf of the accused partnership firm, all partners are liable. In this case, the petitioners
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NC: 2024:KHC-D:8836 CRL.P No. 103868 of 2023 have disputed the question of fact that, whether they are responsible or not. Hence, the disputed fact cannot be gone into under Section 482 Cr.P.C. Hence, there is no merit in the petition. Accordingly, the petition is dismissed being devoid of merits.
In view of dismissal of the main petition, all pending IAs, if any, stand disposed of.
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JUDGE MN List No.: 1 Sl No.: 32