Karnataka High Court
Divya vs Balappa on 10 October, 2023
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NC: 2023:KHC-K:8163
CRL.P No. 200900 of 2023
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 10TH DAY OF OCTOBER, 2023
BEFORE
THE HON'BLE MR. JUSTICE VENKATESH NAIK T
CRIMINAL PETITION NO. 200900 OF 2023 (482)
BETWEEN:
DIVYA
W/O. DEVIDAS GAONKAR
AGE: 48 YEARS, OCC: PARTNER
R/O. NAGARJUNA APARTMENTS,
100 FEET RING ROAD,
OPP. ICICI BANK,
J. P. NAGAR,
6TH PHASE,
BANGALORE- 560078.
Digitally signed ...PETITIONER
by SHILPA R (BY SRI. SATHISH KUMAR D. GADKAR,
TENIHALLI SMT. SUMAN HEGDE, ADVOCATES)
Location: HIGH
COURT OF
KARNATAKA AND:
BALAPPA
S/O. AMARAPPA JAMAKHANDI
AGE: 44 YEARS, OCC: AGRICULTURE,
R/O. MANAGULI,
TQ. BASAVANABAGEWADI
DISTRICT VIJAYAPURA 586203
...RESPONDENT
(BY SRI. SHIVANAND V. PATTANASHETTI, ADVOCATE)
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NC: 2023:KHC-K:8163
CRL.P No. 200900 of 2023
THIS CRL.P IS FILED U/S.482 OF CR.P.C. PRAYING TO
QUASH THE ENTIRE PROCEEDINGS IN C.C. NO. 1767/2022
(P.C. NO. 20/2022) PENDING ON THE FILE OF ADDL. SENIOR
CIVIL JUDGE AND JMFC COURT AT BASAVANABAGEWADI,
DISTRICT VIJAYAPURA, FOR THE OFFENCE PUNISHABLE
U/SEC. 138 OF N.I. ACT AGAINST THE PETITIONER.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
Heard learned counsel for the petitioner and learned counsel for respondent.
2. The petitioner/accused No.3 - Divya has filed this petition under Section 482 of the Code of Criminal Procedure, 1973, (for short, 'Cr.P.C.') praying to quash the entire proceedings in Criminal Case No.1767 of 2022 (Private Complaint No.20 of 2022) pending on the file of the Additional Senior Civil Judge and Judicial Magistrate First Class Court, Basavanabagewadi, Vijayapura, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'N.I. Act'). -3-
NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023
3. For the sake of convenience, the parties are referred to as per their ranking before the trial Court. The petitioner is accused No.3 and respondent is the complainant.
4. The brief facts of the complainant's case are that, the complainant is an agriculturist and having a good income in his occupation. Accused No.1 is a Company by name, Sunbio Agritech and accused Nos.2 to 4 are its Partners/Directors. Accused No.1 - Company has introduced through one Venkanagouda and Suresh, who are familiar persons to the complainant, introduced accused No.1 and its Directors/Partners, thus, they are very close to the complainant. It is alleged that, the accused persons have introduced business of accused No.1
- Company and its mission on assisting and supporting the marginal and small farmers in aiding rural forming activities including raw materials, farming animal husbandry, logistics, buyback, maintenance, finance and sales as per the need of the Indian farmers by way of their -4- NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 design, skill, technical knowledge, supermarket etc., and to provide benefits to farmer community.
5. Believing the assurance and version placed before the complainant and verifying by all side about accused No.1 - Company, the complainant and his many farmer friends have agreed to join with the business of accused No.1 - Company, accordingly, accused No.1 - Company issued proposal forms to the complainant and to other farmers, they paid a sum of Rs.6,00,000/- in the year 2018-2019 in different installments by way of cash to the Directors of accused No.1 - Company. Accordingly, accused No.2 has issued receipt for consideration amount of Rs.6,00,000/- to the complainant. Later, accused No.1
- Company failed to perform its obligation assured to complainant and other farmers, thus, during the month of May, 2022, accused No.2 issued two cheques for a sum of Rs. 3,00,000/- each for refund of the amount to the complainant, but, same were dishonoured for the reason 'Account Inactive', hence, the complainant got issued legal notice calling upon accused No.2 to pay the amount due -5- NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 under the cheques. In spite of issuance of legal notice, accused No.2 has not paid any amount, hence, the complainant filed a private complaint before the Trial Court in P.C.No.20/2022.
6. After institution of the complaint, the Trial Court took cognizance of the offence against the accused persons and issued process against them including the present petitioner. Taking exception of the same, the petitioner/accused No.3 - Divya has filed this petition under Section 482 of Cr.P.C.
7. The learned counsel for the petitioner contended that, petitioner is innocent, she has not committed any offence; the petitioner is a law abiding citizen, having no other criminal antecedents; petitioner is neither a Director nor a Partner of accused No.1 - Company and she is not signatory to cheques in question, same were issued by her husband i.e., accused No.2 - Devidas Gaonkar, in his individual capacity, hence, the provisions of Section 141 of N.I. Act, not applicable to the -6- NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 petitioner; the presence of petitioner is not at all required in this case, thus, the initiation of criminal proceedings against the petitioner is purely abuse of process of law. Hence, prayed to quash the proceedings.
8. The learned counsel for the respondent submits that, petitioner is also partner of accused No.1 - Company, thus, she is also vicariously liable, as accused No.2 has issued cheques for and on behalf of accused No.1 - Company. The counsel further submits that, the petitioner is disputing question of fact, which cannot be gone into under Section 482 of Cr.P.C. Thus, prayed to dismiss the petition.
9. On perusal of the material available on record, it appears that, as per the contents of complaint, accused Nos.2 to 4 representing accused No.1 - Company, have entered a transaction between the complainant and others and received a sum of Rs.6,00,000/- for supporting the marginal and small farmers in aiding rural forming activities including raw materials, farming animal -7- NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 husbandry, logistics, buyback, maintenance, finance and sales as per the need of the Indian farmers by way of their design, skill technical knowledge, supermarket etc., and to provide benefits to farmer community and later failed to perform the obligation and accordingly, issued cheques in favour of the complainant and same were dishonoured.
10. On perusal of cheques at Exs.P1 and P3 dated 25.05.2022, for a sum of Rs.3,00,000/- each, issued by accused No.2 - Devidas in favour of complainant. Exs.P1 and P3 do not bear signature of petitioner - Divya. No document is placed on record to substantiate that, petitioner is one of the Director/Partner of accused No.1 - Company/Partnership Firm and cheques in question have been issued in the name of accused No.1 Company/Partnership Firm. Thus, there is no material against the petitioner/accused No.3 to proceed against her for the offence under Section 138 of N. I. Act.
11. On further perusal of the material on record, the petitioner has not signed the cheque which has been -8- NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 dishonored and the same was signed by her husband (accused No.2) and hence, she cannot be prosecuted under the provisions of Section 138 of the N.I. Act. However, it is seen that the petitioner is not a signatory to the cheque and it is the specifically averred that it is not a joint account also. In the complaint also, it is specifically stated by the respondent that accused No.2, who is the husband of the petitioner, has issued the cheque. Therefore, the petitioner is individually not liable under Section 141 of the N.I. Act and thus, the petitioner cannot be arraigned as accused for dishonor of cheques issued by her husband and he alone can be prosecuted for the same.
12. Learned counsel for the petitioner has relied upon the decision of the Hon'ble Apex Court in the case of MRS. APARNA A. SHAH v. M/S. SHETH DEVELOPERS PVT. LTD. AND ANOTHER reported in Criminal Appeal No. 813 of 2013 disposed of on 1-7-2013, wherein at paragraph Nos.22 and 23, it has held as under: -9-
NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 "22. In the light of the above discussion, we hold that under Section 138 of the Act, it is only the drawer of the cheque who can be prosecuted. In the case on hand, admittedly, the appellant is not a drawer of the cheque and she has not signed the same. A copy of the cheque was brought to our notice, though it contains name of the appellant and her husband, the fact remains that her husband alone put his signature. In addition to the same, a bare reading of the complaint as also the affidavit of examination-in-chief of the complainant and a bare look at the cheque would show that the appellant has not signed the cheque.
23. We also hold that under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the N.I. Act" be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act. Even the High Court has specifically recorded the stand of the appellant that she was not the signatory of the cheque but rejected the contention that the amount was not due and payable by her solely on the ground that the trial is in progress. It is to be noted that only after issuance of process, a person can approach the High Court seeking quashing of the same on various grounds available to him. Accordingly, the High Court was clearly wrong in holding that the prayer of the appellant cannot even be considered. Further, the High Court itself has directed the Magistrate to carry out the process of admission/denial of documents.
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 In such circumstances, it cannot be concluded that the trial is in advanced stage."
13. Learned counsel for the petitioner has further relied upon the decision of the Hon'ble Apex Court in the case of ALKA KHANDU AVHAD v. AMAR SYAMPRASAD MISHRA AND ANOTHER reported in Criminal Appeal No.258 of 2021 disposed of on 8-3-2021, wherein at paragraph No.8.1, it has observed as under:
"8.1 Section 141 of the NI Act is relating to the offence by companies and it cannot be made applicable to the individuals. Learned counsel appearing on behalf of the original complainant has submitted that "Company" means any body corporate and includes, a firm or other association of individuals and therefore in case of a joint liability of two or more persons it will fall within "other association of individuals"
and therefore with the aid of Section 141 of the NI Act, the appellant who is jointly liable to pay the debt, can be prosecuted. The aforesaid cannot be accepted. Two private individuals cannot be said to be "other association of individuals". Therefore, there is no question of
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 invoking Section 141 of the NI Act against the appellant, as the liability is the individual liability (may be a joint liabilities), but cannot be said to be the offence committed by a company or by it corporate or firm or other associations of individuals. The appellant herein is neither a Director nor a partner in any firm who has issued the cheque. Therefore, even the appellant cannot be convicted with the aid of Section 141 of the NI Act. Therefore, the High Court has committed a grave error in not quashing the complaint against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act. The criminal complaint filed against the appellant for the offence punishable under Section 138 r/w Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quashed and set aside."
14. Learned counsel for the respondent submitted that, the petitioner is one of the partners of accused No.1- Company; though the petitioner is not a signatory to the cheque, she is vicariously liable with accused No.2, who is none other than her husband; whether accused No.2
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 issued cheques for himself or on behalf of accused No.1- Company is a disputed question of fact; when a disputed question of facts are involved, it need not be adjudicated under Section 482 of the Cr.P.C., thus prayed to reject the petition.
15. On perusal of the material available on record, it appears that, the respondent/complainant has furnished a copy of the Partnership Deed executed by accused Nos.2 and 3 to substantiate that accused Nos.2 and 3 are the Partners of accused No.1-Company. But, as per the ratio laid down in the case of ALKA KHANDU AVHAD supra, two private individuals cannot be said to be other association of individuals and therefore, there is no question of invoking Section 141 of the N.I. Act, against the petitioner, as the liability is the individual one, but it cannot be said to be the offence committed by a company or by its Directors or corporate or firm or other association of individuals.
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023
16. The Hon'ble Supreme Court in case of Ashok Shewakaramani and Ors., vs. State of Andhra Pradesh and Anr., reported in 2023 INSC 692, held that, "a vicarious liability would be attracted only when the ingredients of Section 141(1) of the N.I. Act, are satisfied. 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, 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".
17. On perusal of the complaint, it is not averred anywhere in the complaint that the petitioner was in- charge of the conduct of the business of the Company/Firm at the relevant time when the offence was committed. What is stated in the complaint is only that accused No.2 to 4/3 to 5 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
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 reading of the complaint would not disclose any clear and specific role of the petitioner. In fact, vicarious liability is attracted only when the person accused was in-charge of and responsible for the conduct of the Company's/Firm's business at the time of the offence. The complaint lacked these specific averments regarding the petitioner's role, thus, failing to establish vicarious liability.
18. In the instant case, the very fact that the petitioner being accused No.3 is not the signatory to cheque and she is not vicariously liable under Section 141 of the N.I. Act and thus, the proceedings against the petitioner definitely said to be abuse of process of law. Hence, it is liable to be set aside.
19. Accordingly, I pass the following ORDER i. Criminal petition is allowed.
ii. The entire proceedings in Criminal Case No.1767 of 2022 (Private Complaint No.20 of 2022) pending on
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NC: 2023:KHC-K:8163 CRL.P No. 200900 of 2023 the file of the Additional Senior Civil Judge and Judicial Magistrate First Class Court, Basavanabagewadi, Vijayapura, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, against the petitioner/ accused No.3 - Divya, is hereby quashed. It is clarified that any observation made in this petition is only for disposal of this petition and the trial Court shall not be influenced by any observation made in this petition. The trial Court shall proceed with the trial in accordance with the law.
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JUDGE KVK List No.: 1 Sl No.: 41